Financial Crisis of 2007-2008

DC4MS · 09-25-2008, 05:11 PM

I want to open this thread for discussion (hopefully not combative) about the current Paulson Plan to "rescue" the USA free markets. All opinions are welcome and this will become an historic event no matter if you agree or disagree with the plan.

Financial crisis of 2007-2008

Subprime mortgage crisis

----------

Here is an interesting e-mail I received from Motley Fool.

Dear Fools:

We need your help

Treasury Secretary Henry Paulson has put together a plan that is actively under debate and allows the Treasury to invest in assets that are crushing bank balance sheets. We view this plan as being an important step in allowing the global financial system to recapitalize itself. We agree with financial intellectual titans Warren Buffett and Bill Gross, as well as both presidential candidates, that the Paulson Plan needs to be passed and will benefit Main Street.

We believe that if the Paulson Plan is done correctly, American taxpayers will profit not only from the return of lending capacity to our banks, but also from these troubled investments. However, the plan should embrace the tenets of free-market capitalism. The government should demand equity stakes in the banks.

We think taxpayers deserve to benefit from a deal soundly rooted in free-market principles. We, the undersigned, encourage you to call the people who represent you in the House and Senate and demand that the approved deal include provisions for equity ownership. Go to www.house.gov and www.senate.gov to find the phone numbers for your elected representatives.

Finally, even though these are extraordinary times, we stand by our belief that the best way to build long-term wealth is through equity ownership. Just look at who is doing a lot of buying of late -- Warren Buffett.

We encourage you to take a few minutes -- now! -- to call your elected officials and let them know that there needs to be an equity component for taxpayers.

Onward,

Tom Gardner, CEO and Co-Founder, The Motley Fool
Scott Schedler, President, The Motley Fool
Bill Mann, Senior Advisor, Motley Fool Hidden Gems, Pay Dirt, and Global Gains

Let'sGo · 09-25-2008, 06:38 PM

I think its a no-brainer- we have to pass the plan. The alternative is for our financial institutions to collapse.

As far as equity ownership in the banks: I have has the dial on my TV set to CNBC non stop since Sept 14th. I still don't understand all the ramifications of all the deals, discussions etc. I hope someone is able to understand all that is going on. I do know this, if the taxpayer is taking on debt, there should be a payback associated with taking on that risk.

Another hot button- the Executives at the companies that require the governments support, the ones that assisted in getting us into this mess, they should not be walking away with the fat compensation packages they were promised when the companies were considered healthy.

pwrshift · 09-27-2008, 11:32 AM

Received this from a friend:

I'm against the $85,000,000,000.00 bailout of AIG. Instead, I'm in favor of giving $85,000,000,000 to America in a We Deserve It Dividend.

To make the math simple, let's assume there are 200,000,000 bona-fide legal U.S. taxpayers 18+. Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up.

So divide 200 million adults 18+ into $85 billon that equals $425,000.00. My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend. Of course, it would NOT be tax free.

So let's assume a tax rate of 30%. Every individual 18+ has to pay $127,500 in taxes. That sends $25,500,000,000 right back to Uncle Sam. But it means that every adult 18+ has $297,500 in their pocket. A husband and wife has $595,000.

What would you do with $297,500 to $595,000 in your family?
Pay off your mortgage - housing crisis solved.
Repay college loans - what a great boost to new grads
Put away money for college - it'll be there
Save in a bank - create money to loan to entrepreneurs
Buy a new car - create jobs
Invest in the market - capital drives growth
Pay for your parent's medical insurance - health care improves
Enable Deadbeat Dads to come clean - or else

Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back. And of course, for those serving in our Armed Forces. If we're going to re-distribute wealth let's really do it...instead of trickling out a puny $1000 ( "vote buy" ) economic incentive that is being proposed by one of our candidates for President.

If we're going to do an $85 billion bailout, let's bail out every adult U S Citizen 18+!| As for AIG - liquidate it. Sell off its parts.| Let American General go back to being American General. Sell off the real estate. Let the private sector bargain hunters cut it up and clean it up.

Here's my rationale. We deserve it and AIG doesn't. Sure it's a crazy idea that can "never work." But can you imagine the Coast-To-Coast Block Party! How do you spell Economic Boom?

I trust my fellow adult Americans to know how to use the $85 Billion We Deserve It Dividend more than I do the geniuses at AIG or in Washington DC. And remember, The Voliny plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam.

Ahhh...I feel so much better getting that off my chest.

vineyarder · 09-27-2008, 12:01 PM

Quote:

Originally Posted by pwrshift

Received this from a friend:

I'm against the $85,000,000,000.00 bailout of AIG. Instead, I'm in favor of giving $85,000,000,000 to America in a We Deserve It Dividend.

To make the math simple, let's assume there are 200,000,000 bona-fide legal U.S. taxpayers 18+. Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up.

So divide 200 million adults 18+ into $85 billon that equals $425,000.00. My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend. Of course, it would NOT be tax free.

I received that email as well. Just one problem; $85B / 200M = $425, NOT $425,000! Oops...

saluki · 09-27-2008, 02:18 PM

Quote:

Originally Posted by vineyarder

I received that email as well. Just one problem; $85B / 200M = $425, NOT $425,000! Oops...

And the other problem is that it's not a gift being handed over to AIG but actually a loan/equity stake.

Tedpilot · 09-27-2008, 03:55 PM

I don't have a problem w/ the gov't making the loans. Let's not forget the Chrysler, Savings & Loan, and Mexican bailouts. In all of these cases the gov't ended up getting all of it's money back and making a profit. Additionally, every day the gov't is making loans to countries all over the world, giving money away and subsidising products. This is nothing new in my book...yep, we're getting hit in the gut right now repeatedly but we're always in an economic fight it's just not all over CNN, CNBC, & FOX.

pwrshift · 09-27-2008, 05:04 PM

Quote:

Originally Posted by vineyarder

I received that email as well. Just one problem; $85B / 200M = $425, NOT $425,000! Oops...

I figured you'd be the one to figure that out!

DC4MS · 09-27-2008, 07:30 PM

Quote:

Originally Posted by vineyarder

I received that email as well. Just one problem; $85B / 200M = $425, NOT $425,000! Oops...

I got the same exact e-mail from a friend and it just sounded fake, so I did the math and resent the e-mail to my friend calling him a dumbass. I also commented that the real problem we are having in America is that the average citizen doesn't know basic math. It is funny how this is turning viral and 99% of the people never checked the math.

Tedpilot · 09-27-2008, 10:52 PM

Geez, we all think the same...I did the same when I rec'd the email except it was my sister. I commented that the whole bail-out picture looks like $700B and noted $3,500 per person and someone replied I was wrong. Sad, math is such a basic skill and many people are oblivious.

DC4MS · 10-03-2008, 02:16 PM

Interesting information from nymag.com

-------------

On Friday, September 12, the Wall Street Journal reported that Lehman’s former president, Joe Gregory, who was demoted along with former CFO Erin Callan in a management shake-up in June, was listing his Bridgehampton house on Surfside Drive for $32.5 million.

The collapse of Lehman’s stock is a blow to Gregory’s lifestyle. He reportedly used to travel by helicopter to midtown from his $3.5 million mansion in Huntington, which was recently renovated, according to a Sotheby’s broker.

According to one source, Gregory’s financial adviser was in negotiations with Lehman’s attorneys at Simpson Thacher & Bartlett, working to avert his filing for bankruptcy, after he borrowed money against his Lehman stock to pay for the renovation. “He owes a lot of money for it. They called the margin loan” late last week, the source said.

In the days after the fall of Lehman, Craigslist attracted several posts from people who said they were Lehman employees, becoming a kind of clearinghouse for the detritus of the Wall Street male ego. On September 17, one banker put his East 91st Street apartment up for rent and with it, his bachelorhood. (“I can no longer afford my apartment seeing as Lehman Brothers felt the need to steal my money and my soul … I am moving in with my girlfriend.”)

Another headline read, “Should I leave my fiancé? … I guess I already know the answer. My boyfriend … rather fiancé, is/was employed by Lehman Brothers,” the posting stated. “In less than a week we went from being millionaires to just having a couple of 100K … I suppose this means it’s over. I am who I am. I personally blame all this on [Lehman CEO] Dick Fuld. I blame him for ruining my happiness.”

LTTravel · 10-03-2008, 02:22 PM

Quote:

Originally Posted by DC4MS

Another headline read, “Should I leave my fiancé? … I guess I already know the answer. My boyfriend … rather fiancé, is/was employed by Lehman Brothers,” the posting stated. “In less than a week we went from being millionaires to just having a couple of 100K … I suppose this means it’s over. I am who I am. I personally blame all this on [Lehman CEO] Dick Fuld. I blame him for ruining my happiness.”

If she doesn't leave him, he better leave her. What a piece of ......
Just imagine, she no longer loves her fiance and does not want to marry him because he is only worth a couple of 100k vs several million. She was really in love.

Kagehitokiri · 10-03-2008, 10:07 PM

Quote:

Originally Posted by LTTravel

What a piece of ......

indeed. even worse. >

Quote:

There was a time I loved her, but that time has long since passed. I know it and I think she does also, but she is so wrapped up in being the fiancee of a semi-prominent New York businessman/socialite that she's forgotten why we even got together in the first place. What used to be packed lunches on a blanket in Central park has become dinner with a similarly unhappy couple at Tavern on the Green. What used to be romantic nights alone laughing at South Park and making love on the sofa has become nights spent at Denise Rich's charity events or some stupid new art exhibit. We used to cuddle and listen, and now we primp and gossip. She is not the woman I fell in love with.

...

It is nearly three years since that day in January, but I remember it as clearly as if it happened last night. I came in the house and she was getting ready for some event we had later that night. She was in her walk-in closet, deciding on what to wear.

Nick "Lauren, I need to talk to you."
Lauren "Honey, do you think these new Jimmy Choo's go best with the grey Chanel or the black Prada? I can't decide."
Nick "Put that down and look at me. We need to talk."
Lauren "OK...what's wrong."
Nick "I enlisted in the Army today. I leave in 21 days."

...

I don't want to describe the whole conversation I had with her, but it did not go well. Her emotions started off with shock, turned into confusion, and then became angry. She ended up very, very upset. There was a lot of screaming, mostly on her part, things were broken, and two emotional hours later she left to spend the night with a friend.

...

When I got home, by that time it was around 5pm, there were movers going in and out of my townhouse and an attorney waiting for me at the front door.

Snake lawyer "Mr. Sadler? I am [Snake Lawyer], I represent Ms. [Lauren], your ex-fiancee. Please do not try to interfere. I have a temporary restraining order allowing--"

Nick "She can have anything she wants."
Snake lawyer "Excuse me?"
Nick "I said she can have anything she wants. I don't care."
Snake lawyer "What do you mean, 'anything she wants?'"

I really hate lawyers.

Nick "If you see it in or on or around this townhouse, she can have it. I'd like to keep my clothes and my golf clubs, but other than that, all of this is hers if she wants to take it. Is that clear enough?"

...

By the time I got back it was 10pm and my townhome was almost totally empty. She really did want everything. She even took the light fixtures in the guest bathroom. They are expensive and imported, so I guess it makes sense. All that was left was my clothes, my personal effects, a case of beer and a few condiments in the fridge, and my books. That was it. It looked like looters had come in and taken away my life.

http://www.hoo-ah.net/archives/entri...everyone.phtml

GregGH · 10-04-2008, 10:10 AM

Lets have a 'cheer' for the clubs who still think they can grow by 'raising prices' next week --so you better sign up now - type attitude.

The shock of the loss in one's net worth is now more of a numbness. You know it should hurt - but I guess we have come to gripes with situation and somehow we are ... well ... handling it.

This is just like the 2001 era --when you pick yourself up - dust yourself off and start climbing up that hill you just fell off of ...and inside yourself you smile as you know it could have been worse.

Hope you all smile at this time period as a learning experience and we can 'raise a glass' and toast to our good health and 'tested sense of humor'

Greg

susank · 10-04-2008, 12:54 PM

So... does anyone have any intuition as to how this will affect our industry? I know of two clubs whose membership dues will be raised in the net two months. This is such a risky thing to do, especially in this climate. I am curious as to how others think a tactic like this may affect the whole of the industry.

TarheelTraveler · 10-04-2008, 04:48 PM

I am guessing that some of the DCs raising prices have to. It gets people off the fence and improves the financial condition of the club. In this type of financial and real estate market, I'm sure club investors are pushing certain clubs to improve financials as you can't count on getting credit these days or real estate appreciation in the short term.

09-25-2008, 05:11 PM	#1
DC4MS Administrator Join Date: Oct 2007 Location: USA Posts: 1,698 Club: DC4MS.com	Financial Crisis of 2007-2008 I want to open this thread for discussion (hopefully not combative) about the current Paulson Plan to "rescue" the USA free markets. All opinions are welcome and this will become an historic event no matter if you agree or disagree with the plan. Financial crisis of 2007-2008 Subprime mortgage crisis ---------- Here is an interesting e-mail I received from Motley Fool. Dear Fools: We need your help Treasury Secretary Henry Paulson has put together a plan that is actively under debate and allows the Treasury to invest in assets that are crushing bank balance sheets. We view this plan as being an important step in allowing the global financial system to recapitalize itself. We agree with financial intellectual titans Warren Buffett and Bill Gross, as well as both presidential candidates, that the Paulson Plan needs to be passed and will benefit Main Street. We believe that if the Paulson Plan is done correctly, American taxpayers will profit not only from the return of lending capacity to our banks, but also from these troubled investments. However, the plan should embrace the tenets of free-market capitalism. The government should demand equity stakes in the banks. We think taxpayers deserve to benefit from a deal soundly rooted in free-market principles. We, the undersigned, encourage you to call the people who represent you in the House and Senate and demand that the approved deal include provisions for equity ownership. Go to www.house.gov and www.senate.gov to find the phone numbers for your elected representatives. Finally, even though these are extraordinary times, we stand by our belief that the best way to build long-term wealth is through equity ownership. Just look at who is doing a lot of buying of late -- Warren Buffett. We encourage you to take a few minutes -- now! -- to call your elected officials and let them know that there needs to be an equity component for taxpayers. Onward, Tom Gardner, CEO and Co-Founder, The Motley Fool Scott Schedler, President, The Motley Fool Bill Mann, Senior Advisor, Motley Fool Hidden Gems, Pay Dirt, and Global Gains

09-25-2008, 06:38 PM	#2
Let'sGo Junior Member Join Date: Aug 2008 Posts: 7 Club: Equity Estates	Re: Financial Crisis of 2007-2008 I think its a no-brainer- we have to pass the plan. The alternative is for our financial institutions to collapse. As far as equity ownership in the banks: I have has the dial on my TV set to CNBC non stop since Sept 14th. I still don't understand all the ramifications of all the deals, discussions etc. I hope someone is able to understand all that is going on. I do know this, if the taxpayer is taking on debt, there should be a payback associated with taking on that risk. Another hot button- the Executives at the companies that require the governments support, the ones that assisted in getting us into this mess, they should not be walking away with the fat compensation packages they were promised when the companies were considered healthy.

09-27-2008, 11:32 AM	#3
pwrshift Senior Member Join Date: Nov 2007 Posts: 344	Re: Financial Crisis of 2007-2008 Received this from a friend: I'm against the $85,000,000,000.00 bailout of AIG. Instead, I'm in favor of giving $85,000,000,000 to America in a We Deserve It Dividend. To make the math simple, let's assume there are 200,000,000 bona-fide legal U.S. taxpayers 18+. Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up. So divide 200 million adults 18+ into $85 billon that equals $425,000.00. My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend. Of course, it would NOT be tax free. So let's assume a tax rate of 30%. Every individual 18+ has to pay $127,500 in taxes. That sends $25,500,000,000 right back to Uncle Sam. But it means that every adult 18+ has $297,500 in their pocket. A husband and wife has $595,000. What would you do with $297,500 to $595,000 in your family? Pay off your mortgage - housing crisis solved. Repay college loans - what a great boost to new grads Put away money for college - it'll be there Save in a bank - create money to loan to entrepreneurs Buy a new car - create jobs Invest in the market - capital drives growth Pay for your parent's medical insurance - health care improves Enable Deadbeat Dads to come clean - or else Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back. And of course, for those serving in our Armed Forces. If we're going to re-distribute wealth let's really do it...instead of trickling out a puny $1000 ( "vote buy" ) economic incentive that is being proposed by one of our candidates for President. If we're going to do an $85 billion bailout, let's bail out every adult U S Citizen 18+!\| As for AIG - liquidate it. Sell off its parts.\| Let American General go back to being American General. Sell off the real estate. Let the private sector bargain hunters cut it up and clean it up. Here's my rationale. We deserve it and AIG doesn't. Sure it's a crazy idea that can "never work." But can you imagine the Coast-To-Coast Block Party! How do you spell Economic Boom? I trust my fellow adult Americans to know how to use the $85 Billion We Deserve It Dividend more than I do the geniuses at AIG or in Washington DC. And remember, The Voliny plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam. Ahhh...I feel so much better getting that off my chest.

09-27-2008, 03:55 PM	#6
Tedpilot Senior Member Join Date: Nov 2007 Location: Oklahoma Posts: 299 Club: HCC	Re: Financial Crisis of 2007-2008 I don't have a problem w/ the gov't making the loans. Let's not forget the Chrysler, Savings & Loan, and Mexican bailouts. In all of these cases the gov't ended up getting all of it's money back and making a profit. Additionally, every day the gov't is making loans to countries all over the world, giving money away and subsidising products. This is nothing new in my book...yep, we're getting hit in the gut right now repeatedly but we're always in an economic fight it's just not all over CNN, CNBC, & FOX.

09-27-2008, 10:52 PM	#9
Tedpilot Senior Member Join Date: Nov 2007 Location: Oklahoma Posts: 299 Club: HCC	Re: Financial Crisis of 2007-2008 Geez, we all think the same...I did the same when I rec'd the email except it was my sister. I commented that the whole bail-out picture looks like $700B and noted $3,500 per person and someone replied I was wrong. Sad, math is such a basic skill and many people are oblivious.

10-03-2008, 02:16 PM	#10
DC4MS Administrator Join Date: Oct 2007 Location: USA Posts: 1,698 Club: DC4MS.com	Re: Financial Crisis of 2007-2008 Interesting information from nymag.com ------------- On Friday, September 12, the Wall Street Journal reported that Lehman’s former president, Joe Gregory, who was demoted along with former CFO Erin Callan in a management shake-up in June, was listing his Bridgehampton house on Surfside Drive for $32.5 million. The collapse of Lehman’s stock is a blow to Gregory’s lifestyle. He reportedly used to travel by helicopter to midtown from his $3.5 million mansion in Huntington, which was recently renovated, according to a Sotheby’s broker. According to one source, Gregory’s financial adviser was in negotiations with Lehman’s attorneys at Simpson Thacher & Bartlett, working to avert his filing for bankruptcy, after he borrowed money against his Lehman stock to pay for the renovation. “He owes a lot of money for it. They called the margin loan” late last week, the source said. In the days after the fall of Lehman, Craigslist attracted several posts from people who said they were Lehman employees, becoming a kind of clearinghouse for the detritus of the Wall Street male ego. On September 17, one banker put his East 91st Street apartment up for rent and with it, his bachelorhood. (“I can no longer afford my apartment seeing as Lehman Brothers felt the need to steal my money and my soul … I am moving in with my girlfriend.”) Another headline read, “Should I leave my fiancé? … I guess I already know the answer. My boyfriend … rather fiancé, is/was employed by Lehman Brothers,” the posting stated. “In less than a week we went from being millionaires to just having a couple of 100K … I suppose this means it’s over. I am who I am. I personally blame all this on [Lehman CEO] Dick Fuld. I blame him for ruining my happiness.”

10-04-2008, 10:10 AM	#13
GregGH Member Join Date: Feb 2008 Location: Kingsville, ON Posts: 54 Club: FS Aviara - HCC?? - what next	Re: Financial Crisis of 2007-2008 Lets have a 'cheer' for the clubs who still think they can grow by 'raising prices' next week --so you better sign up now - type attitude. The shock of the loss in one's net worth is now more of a numbness. You know it should hurt - but I guess we have come to gripes with situation and somehow we are ... well ... handling it. This is just like the 2001 era --when you pick yourself up - dust yourself off and start climbing up that hill you just fell off of ...and inside yourself you smile as you know it could have been worse. Hope you all smile at this time period as a learning experience and we can 'raise a glass' and toast to our good health and 'tested sense of humor' Greg

10-04-2008, 12:54 PM	#14
susank Junior Member Join Date: Dec 2007 Posts: 23 Club: susankime.com	Re: Financial Crisis of 2007-2008 So... does anyone have any intuition as to how this will affect our industry? I know of two clubs whose membership dues will be raised in the net two months. This is such a risky thing to do, especially in this climate. I am curious as to how others think a tactic like this may affect the whole of the industry.

10-04-2008, 04:48 PM	#15
TarheelTraveler Senior Member Join Date: Nov 2007 Posts: 508 Club: A&K Residence Club	Re: Financial Crisis of 2007-2008 I am guessing that some of the DCs raising prices have to. It gets people off the fence and improves the financial condition of the club. In this type of financial and real estate market, I'm sure club investors are pushing certain clubs to improve financials as you can't count on getting credit these days or real estate appreciation in the short term.