Thoughts on Rescue Plan
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Steve Forbes says, “This bill was the best option we had”. When asked why it failed, he said, “It failed because the constiuents were so overwhelmingly against it”.
So let me get this right: Many top economic advisors and financial guru's (Buffett among others), thought Paulson's plan was the best option we had and should've been passed. But the retards in Congress and Senate would only listen to their retard constiuents, thereby allowing the blind to lead the blind. If half of Congress couldn't understand the plan, most of "Main Street" definitely won't understand the plan. What a bunch of idiots all the way around.The Senate had said they more than had the support for it, I assume they would’ve kicked it through.
Which leads me to the following conclusion: we need smaller class sizes. 430 something congressmen is simply too many people to educate at one time.
Hopefully we’ll see a bigger/better advertisement campaign of the program over the next few days. Something with Bill Gates and Seinfeld would be nice.
I don’t think congressional members give a damn what their constituents think, they only care about making the correct headlines to impress certain classes of voters. This was evidenced today in the most obvious way possible. The speaker of the house could not resist making partisan comments when party affiliations should not be a part of the problem that the nation and the world faces. We have two presidential candidates who don’t care about anything except getting elected, so all they want to do is criticize each other. I think it is time that the congress get off their ass and do what we pay them to do and that is immediately address the problems of the country without trying to impress certain voter classes. Do what is right for the majority without regard for the party.
If Congress will merely follow the will of the people, lets get rid of them and simply do a poll via the Internet whenever any issues come up. That would at least save having to pay those boughtnpaidforpoloiticians salary, health care, etc.! They should show some leadership and make a tough decision that is in the best interest of their constituents....even if their constituents are too uneducated to know what they need.
I'll get off my soap box now......Snags, take the advice that Bondguy gave on another thread where he said that our clients should watch Jeopardy instead of CNBC. However, it is you who needs to be taking this advice.
Am I the only one who promises his clients that there will be times that not only that they lose money, but these losses may be significant? I've spoken to all of my clients and we haven't made a single portfolio change (in terms of asset allocation) as a result of what has been happening. The only change that anyone has made is to put some mutual fund money into VA's. The clients who are far from retirement understand that bad markets are good for their accumulation of wealth. The ones who are in retirement have enough safe stuff that it doesn't matter very much and those in between understand that to a large degree much of what is happening is out of our control and their future goals may or may not come to fruition. Nothing is different. What I mean by that is, like always, we know about yesterday, but we know nothing about tomorrow. Since this is what we know and this is always what we know, shouldn't we be invested in the same manner as always...in accordance with one's tolerance for risk and their time horizon?There was an email sent out at about 10 am from our regulating body asking us to vote for the bailout, so I went on congress.org. You vote with your name, address and you receive an automated email back from your Congressperson in your state. There was nearly 102,000 people who sent a message their Congresspeople to pass or not pass the bill. At the time I looked 91% of people were AGAINST the bailout with 8% for the bailout.
This bill can not be passed in Congress. The public doesn't want it and therefore, someone running for election in November is not going to endorse it. If they vote for the bailout; they are out of a job. It just was not sold to the American public and if we want to get something done, we need to look outside of Congress.the all knowing public did not want the bill passed because they have been told over and over it is a bail out of Wall Street! Nobody, and I mean nobody, has even attempted to sell this bill to the “common man.” They have no idea how this economy will affect them long term. If mom/pop and 2 kids knew EXACTLY what the financial landscape would look like in 2 years without this bailout, which nobody has explained to them, they might view things diiferently. Right now, all they know is very very rich people are being bailed out. There is so much negativity towards Wall Street and corporate cronies that John Q public refuses to willingly bend over and take it for someone else. They don’t see the repurcussions, on a personal level, cause nobody has adequately explained it to them.
And yesterday’s press confeence was a complete fucking joke. Pelosi standing there saying “This HAS to be a bi-partisan bill!” Nobody bothers to ask WHY!?!?! And the answer is because neither party wants to be the party who made the decision, for which they may be held accountable.
How many Republican votes are necessary for this bill to pass? If EITHER party wanted to take some initiative and possibly be the savior, they could take the bull by the horns and run, but they won’t. If this is SO important, the Dems could pass it and take ALL the credit. If the GOP wanted they could all vote yes, let the Dems essentially block it via no vote, and say, "hey, we voted for it and they didn’t…it is heir fault the economy is not recoering."
Right now it is a clusterfuck. Nobody wants to do anything without being certain their ass is covered POLITICALLY.
The Iron Horse,
I may be optimistic here, but I do not think the public is questioning what the ramifications are to them. I understand it, don't buy it and still think this bailout is a disaster rushing to happen. This is a half empty/half full glass scenario, imo. Either way the common taxpayer is screwed. But why give power to the government, the very entity that pushes for a 'healthy' housing market, when they themselves failed to regulate the housing crisis that was going on right underneath their nose for the past decade at the very least? The weight of the consequences of the last decade should fall on the shoulders of these institutions and not the people despite the fact that either way, the common american is screwed. these ****ing institutes deserve to go bankrupt so they can get picked up by someone else who can get the job done. If I run a restaurant and I'm killing it with great business, why should I be concerned and have to pay for another restaurant's failure? the only person that wins is a government that buys illiquid loans for the cheap and profits from them later. Maybe I'm just not getting it. Anyone want to tell me where I'm going wrong?With all due respect to Yeats I for one have not seen an effort to 'Sell" this plan to Main Street. Nor have I seen an effort to inform the public at large. The internet forums are filled with diatribe from the uninformed who do not want the fat cats bailed out. Scanning these forums of well meaning, but uniformed people there is no talk of locked up credit markets, or Main Street consequences if a bail out is not passed. The knowledge of what that future holds lays outside the “you don’t know that you don’t know” realm of thought and inside “what you don’t know can hurt you.” And unfortunately, unlike the Southern Citys that warn unwary visitors to their city parks that Alligators will bite noone is warning Main Street that a big alligator is waiting for them.
I think it was Mark Twain who said "What we've got here is failure to communicate." Ok, it was spoken by "The Captain " played by Strother Martin in Coll hand Luke. I'm still giving to Mark Twain because it perfectly describes what's happening and Twain carries more weight. With due respect for those who will turn a deaf ear to yet another sales pitch, this is a message the masses need to hear and need to hear. Congress needs to get the messege to the people. To let them know what lies in wait just up the road. Yesterday's debacle in Washington brings me to another quote: Be thankfull we're not getting all the government we're paying for. - Will RogersWith all due respect, I would not question whether or not people get that there is an alligator waiting outside their door due to your observations of a few people who blog on message boards. Especially not when there have been hundreds of people lining up tog et their money out of banks. Also look no further than our own clients who are calling, freaking out and cashing out prematurely.
FYI, Bush has come on to address the nation about the crisis and plan and will more than likely speak again soon. There has been some "selling". Regardless, I think the issue at hand is people simply not accepting this plan to rid of the alligator. It's simple really.Ana, with all due respect, when you speak of clients calling, freaking out, and cashing out prematurely, best to limit those comments to your own practice. That’s not happening in my practice and it’s not happening in my office. Sure, we’ve had some calls from concerned clients, but not the panic selling you speak of. And definately no freaking out. Nor have I witnessed any lines to get money out of banks. Ok, people rightfully lined up to get out of Indymac, a failed bank, but where are these lines you speak of?
I wish that the uninformed was limited to a few bloggers. But it's not. The average person on the street can't draw a line from the bailout to themselves. It's not only that they don't see a connection, they are completely unaware of the connection. The don't know there's a gator. Look at LIBOR today. Almost 7%. That's the credit market sending a big messege. The average man on the street not only doesn't know what LIBOR is or what today's trading means, they are unaware that such a market exists. Unfortunately, absent a bailout or some level of intervention they will painfully find out what it is. If six weeks from now the Toyota dealer in your town closes because it couldn't get floor plan financing for its inventory and the dealership's 100 employees find out it's because the bailout didn't pass. Do you think those people will be thanking their congressman for voting against the bill? I think they'll be up in arms saying if you knew this was the outcome why didn't you tell us that? Personally, i don't want to be at that meeting. There is no excuse beyond politics to not inform Main Street. And politics is no excuse.[quote=BondGuy] Nor have I witnessed any lines to get money out of banks.
[/quote] BondGuy, I agreed with your post, so no need to copy the whole thing. Regarding lines at the bank, and while sitting in the middle of this WAMU mess here, an interesting phenomenon may have taken place that could not have possible taken place in the 1920's and 30's: There is no need to line up at the bank when you can electronically run on the banks from the comfort of your home or office. Regarding panicking: We are not seeing clients pull their accounts or call in freaking out. In fact, we've only had a couple calls. We are seeing more concern and general feelings of discomfort, but not panic.BG,
I had this same conversation with Spiff regarding client reaction and I agree. But I was speaking in general terms. Everyone on this site might be geniuses whose clients don't panic or cash out but in general, you can not tell me there isn't panic nor fear nor cashing out when our ******* stock market took a 777.68 hit yesterday. That fact is not limited to our own respective practices and the consequences reach out and affect all our portfolios,; some more than others obviously. You made a good point with the Libor connection. For your toyota scenario, that may help save jobs in short term, but I have read this bailout plan twice (maybe I am illiterate) and I have not seen anywhere in it where it discusses how to avoid this problem again. So to many, including yours truly here, I am in the mindset that this will serve as a band aid, it won't help the cut heal. It is in human nature (not you specifically or I ) to over extend ourselves with selling selling and buying buying. What's going to end financial institutions from having to sell something that their customers don't need all for the sake of...what? More money (wait that can't be it because our banks are broke!)?[quote=anabuhabkuss]I had this same conversation with Spiff regarding client reaction and I agree. But I was speaking in general terms. Everyone on this site might be geniuses whose clients don’t panic or cash out but in general, you can not tell me there isn’t panic nor fear nor cashing out when our ******* stock market took a 777.68 hit yesterday.
That fact is not limited to our own respective practices. You made a good point with the Libor connection.[/quote] Ana, there is concern, but no panic. In our office it is like any other day. The phones are ringing, business is getting done, calmly. There is no reason to panic. Look at the market from a week or two ago. Down almost 1000 points and then back up almost to even. 777 points? You'd think by the negative talk by talking heads on TV that the number was 666! Biggest down day in Wall Street history! My ass, not even in the top ten. Ana, I'm no genius, but I've been around the block a time or two with these market meltdowns and have the scars to prove it. This too shall pass. That's the message to clients. There is nothing to do to react to this. We've already done everything we need to do. Your portfolio has been custom built to weather this storm. Using history as a guide it will do just that. And once the smoke clears a bit, get your checkbook ready because Wall Street is having a sale. The very best companies in the world are on sale and we're going shopping! Yeah, ya gotta love Nick Murray, but that's always been my message. I've beaten in into my clients. I have people calling me wanting to buy, not sell. I think they got the message, dontchathink? I work in downtown Philly surrounded by 6 million people. Take it from me, no panic here. The message has got to get out to the people that the bail out isn't a Wall Street bailout but a save Main Street plan. That pol after pol shows that Main street is happy the plan got voted down just proves the point as to how uninformed those people are. There's a big gator in their future and Alligators will bite. By the way, before the tech bubble blow out i wrote a letter to clients warning them that in the realm of the Niffty Fifty, normal market valutions had't gone the way of the dinosoar. That there had been no paridigm shift. That sooner or later the numbers that always counted would count once again. That was the mandate from history. And it was right. The title of that letter: Alligators Will Bite. taken from a sign my wife and i saw in a Savanah city Park. As much as they didn't mind yankees serving as gator meal, the city fathers thought it wise to inform those who might not know that a 15 foot reptile could be dangerous. Right now there is uncertainty. Markets don't like uncertainty. The mandate from history is, buy, not sell.[quote=anabuhabkuss]BG,
For your toyota scenario, that may help save jobs in short term, but I have read this bailout plan twice (maybe I am illiterate) and I have not seen anywhere in it where it discusses how to avoid this problem again. So to many, including yours truly here, I am in the mindset that this will serve as a band aid, it won't help the cut heal. It is in human nature (not you specifically or I ) to over extend ourselves with selling selling and buying buying. What's going to end financial institutions from having to sell something that their customers don't need all for the sake of...what? More money (wait that can't be it because our banks are broke!)? [/quote] Is it my computer or are you guys changing you posts as i reply? The paragraph quoted above didn't show on my original read. I quoted everything i saw on my last reply. The point isn't reforming the future. Or at least it shouldn't be at this point in time. This is akin to a plane with engine failure. Right now we need to restart the engines or we're in a lot of trouble. Once we get the engines to spool and we return to stabile flight we can implement long term changes on the flight line and maintenance to avoid a do over. At that point we can take action to avert a future problem. Without getting the engines relit there is no future. Well, a short terrifying one at best. The bill relites the engines, nothing more.In agreement with Bond Guys observations. Have been around the block also and trust me and Bond Guy ( or anyone that has and survived ) you have the scars to prove it or maybe some grey hair.
Is doing nothing and hoping ( hoping what ) going to start the adjustment. No but there has to be a direction or sense of addressing the fundamental problem/s that exsist now. Will there be pain and discomfort .....yes and there will be some unhappy situations but that is the reality of fundamental change.A quick thought , for those who recall I am an unabashed Conservative investor. Using a company as an example ie. Procter & Gamble , I like the company. Is this company the same company it was yesterday , last month , last year …ABSOLUTELY. Will it be a good company next week , next month or next year …ABSOLUTELY. Would I personally invest in the company YES and would my clients invest in the company YES. My point here if you see value in Companies and Bonds why would you now roll over and suggest that they are all " gone to hell in a hand basket"? Be prudent with your money and your client’s money. You must exercise responsible stewardship of assets.
Norway, one thing i like to do when buying a company like P&G is to list all the products they make. I show the client the list of everyday items and then ask them: Looking at this list do you see anything people will use less of in a recession? Tide? Charmin? crest? Scope? Ivory soap? Mr. Client this company makes things we need and use regardless of what the economy is doing.
I always like taking it down to that common sense level.