Our financial system is crumbling this week.

[BW23]

I really wish I understood all of this better.

Which part is throwing you off?

I'm not so interested in who is to blame (as probably everyone involved is), but I wish I understood it all better as to get a better grip as to what would be best to fix it.

[UK]

I really wish I understood all of this better.

I have a feeling this isn't going to help my house sell any faster, if EVER.

Not right now, there's no creditors willing to lend.

[AWvsCBsteeeerike3]

Down 778 points, biggest single day drop in history. I guess I'll just push my retirement plans back to 2090.

This will actually help your retirment plans assuming you aren't going to do so in the next few years. For a while, you'll be able to buy stocks cheaper and eventually the stock market will go back up. When it gets to 15,000, you'll be glad you got your stocks when the market was at 10K or lower.....

[AWvsCBsteeeerike3]

I really wish I understood all of this better.

I have a feeling this isn't going to help my house sell any faster, if EVER.

Not right now, there's no creditors willing to lend.

That's completely untrue. There's just no one willing to give out money to people without jobs or that can't afford to pay the mortgage. I have two good friends that each closed on a house last week and I worked a charity event wednesday night with a realtor that sold 2 houses that day.

Banks are just getting back to normal practices. This "sky is falling" argument is becoming extremely transparent the longer we go without the bailout.

What's ridiculous is people are buying this like it actually needs to happen. In reality, all they're really doing is taking taxpayers money and giving it to the rich, greedy bankers that created this mess because everyone has bought into the notion that the world can't live without rich, greedy bankers because rich, greedy bankers have said as much. What a crock.

[Freed Roger]

Pelosi's statement on paper didn't seem all that inflammatory IMO. not sure of the timing and tone of it though.

Pelosi's not the only one being opportunistic with the grandstanding, some in the GOP even had the cajones to call for an end to capital gains tax. Sure its hard for some de-regulating fanatics in the GOP to eat crow. But, as Leroy said, 40% of dems voted against it too. but the rejection of the bailout is as much a reflection of the pissed off mood of the people now and confused politicians uncertain what to do about it considering the upcoming congressional elections.

[Arthur Dent]

Down 778 points, biggest single day drop in history. I guess I'll just push my retirement plans back to 2090.

That's only in nominal terms which are meaningless for historical comparisons. Today, the Dow fell about 7%. On Black Monday (1987), the Dow fell by 22.6% which is more than three times as much.

In any case, the stock market really isn't the most important thing to be looking at. I'm much more concerned about how this crisis will affect the real economy.

[Freed Roger]

Down 778 points, biggest single day drop in history. I guess I'll just push my retirement plans back to 2090.

This will actually help your retirment plans assuming you aren't going to do so in the next few years. For a while, you'll be able to buy stocks cheaper and eventually the stock market will go back up. When it gets to 15,000, you'll be glad you got your stocks when the market was at 10K or lower.....

I'm not so sure about this approach Bsteeeeeerike3. stocks will go up and down from day to day. and sure there probably are some bargains out there.

Yes, the US stock market has always gone up over time, but when you study world history, economies (and their markets, currency value, etc) do faulter. dynasties like Roman empire and Great Britain were knocked back because they were overextended. I keep thinking of a book I read most of (too complex, I couldn't finish) called "Wealth and Democracy" by Kevin Phillips. He takes the long view, and points out a lot of current US economic trends that mirror former dynasties that passed their peak.

Older economies in Europe maxxed out on their potential long ago - they used up their natural resources and developed most of their space. Now their economies aren't as powerful. I guess, what I'm getting at - the US economy based on brain-dead consumerism and endless expansion is not sustainable. But something slightly less could be, and actually wouldn't be all that bad.

I don't think the sky is falling by any means-there are so many factors and variables to weigh - like potential growth in green tech, globalization, world sharing of risk. We're talking about stuff that makes heads spin.

[Arthur Dent]

What's ridiculous is people are buying this like it actually needs to happen. In reality, all they're really doing is taking taxpayers money and giving it to the rich, greedy bankers that created this mess because everyone has bought into the notion that the world can't live without rich, greedy bankers because rich, greedy bankers have said as much. What a crock.

There's some of that, but the crisis is not an invention. There have already been several huge bank failures. It's true that there is still money available for government backed home loans, but interbank lending and short term commercial financing are in trouble while the interest rates on government debt have gone to near zero as investors avoid risk. The situation is very volatile, so doing nothing and hoping for the best is an unacceptable risk.

It's perfectly possible to construct a bailout that doesn't involve just handing money to rich greedy bankers. Consider this article on Sweden's response to a very similar crisis. Banks could only receive government financing if existing shareholders were cleaned out first and taxpayers were given partial ownership in the banks, so as to earn a return after recovery. Anyone just trying for free cash would not be interested in such a program.

Then came the imperative to bleed shareholders first. Mr. Lundgren recalls a conversation with Peter Wallenberg, at the time chairman of SEB, Sweden’s largest bank. Mr. Wallenberg, the scion of the country’s most famous family and steward of large chunks of its economy, heard that there would be no sacred cows.

The Wallenbergs turned around and arranged a recapitalization on their own, obviating the need for a bailout. SEB turned a profit the following year, 1993.

“For every krona we put into the bank, we wanted the same influence,” Mr. Lundgren said. “That ensured that we did not have to go into certain banks at all.”

By the end of the crisis, the Swedish government had seized a vast portion of the banking sector, and the agency had mostly fulfilled its hard-nosed mandate to drain share capital before injecting cash. When markets stabilized, the Swedish state then reaped the benefits by taking the banks public again.

[UK]

I really wish I understood all of this better.

I have a feeling this isn't going to help my house sell any faster, if EVER.

Not right now, there's no creditors willing to lend.

That's completely untrue. There's just no one willing to give out money to people without jobs or that can't afford to pay the mortgage. I have two good friends that each closed on a house last week and I worked a charity event wednesday night with a realtor that sold 2 houses that day.

Banks are just getting back to normal practices. This "sky is falling" argument is becoming extremely transparent the longer we go without the bailout.

What's ridiculous is people are buying this like it actually needs to happen. In reality, all they're really doing is taking taxpayers money and giving it to the rich, greedy bankers that created this mess because everyone has bought into the notion that the world can't live without rich, greedy bankers because rich, greedy bankers have said as much. What a crock.

You're dead wrong, citing 5 examples doesn't excuse an entire sectoral problem. People are struggling to secure mortgage loans and small business loans. You think your neighborhood bank has the resoucres to allocate these loans without having to borrow from the banks that are dominating the headlines?

When they cut credit, so do your regional banks.

They need the bailout, it's unfortunate but they need it.

Of course, it's far from the only thing they need to address.

[AWvsCBsteeeerike3]

I'm not so sure about this approach Bsteeeeeerike3. stocks will go up and down from day to day. and sure there probably are some bargains out there.

Yes, the US stock market has always gone up over time, but when you study world history, economies (and their markets, currency value, etc) do faulter. dynasties like Roman empire and Great Britain were knocked back because they were overextended. I keep thinking of a book I read most of (too complex, I couldn't finish) called "Wealth and Democracy" by Kevin Phillips. He takes the long view, and points out a lot of current US economic trends that mirror former dynasties that passed their peak.

Older economies in Europe maxxed out on their potential long ago - they used up their natural resources and developed most of their space. Now their economies aren't as powerful. I guess, what I'm getting at - the US economy based on brain-dead consumerism and endless expansion is not sustainable. But something slightly less could be, and actually wouldn't be all that bad.

I don't think the sky is falling by any means-there are so many factors and variables to weigh - like potential growth in green tech, globalization, world sharing of risk. We're talking about stuff that makes heads spin.

I am pretty sure we're not going to go the way of the Roman Empire. And, it's not just blind optimism that drives that thought. As you eluded to, there are many needs this country has that will keep the growh from dwindling. The population is continuing to increase, the green energy is just a MASSIVE cash cow that is just getting its roots. Think how many jobs will be created constructing/designing large wind farms, nuclear power plants, etc. etc. etc. If the gov. is giving away a trillion dollars, it should be to this sector, not Wall Street. The nation's infrastructure needs a ton of work. That will create more jobs. and, those are just the ones that I'm familiar with in my line of work.

Unfortunately, freed, I don't think we'll end up in Hoovervilles.