THE Bailout Thread pt 3 (merged)

[UltraViciousBudgie]

Uncle Sugar seems to be intent on bailing out every irresponsible entity and individual from here to there, so why not something for the rest of us who foolishly chose to live within their means? I propose a bailout proposal for myself, then to use the bailout money to buy 40 acres and a nice cabin with everything needed to be off the grid.

Since I failed to sign a toxic mortgage to finance such a spread when I could have, it would have to be a short sale of sorts. Another words I would like to borrow some foolishness to get a bailout. That way in the end I get the spread for free. I just want to do my part and get something for nothing like all those other guys.

Think it would work?

[mefistofeles]

Buy Gold

[MrBill]

You can short the bailout proposal by giving up your passport and leaving the country.

[ReverseEngineer]

You can short the bailout proposal by giving up your passport and leaving the country.

No you cannot. Nobody will pay off on your betting correctly on the failure. You just move from one failing economy to another directly tied to it. Betting short demands that someone takes this bet. Who would take the bet that the USA won't fail? Will you take that bet?

Reverse Engineer

[MrBill]

You can short the bailout proposal by giving up your passport and leaving the country.

No you cannot. Nobody will pay off on your betting correctly on the failure. You just move from one failing economy to another directly tied to it. Betting short demands that someone takes this bet. Who would take the bet that the USA won't fail? Will you take that bet?

Reverse Engineer

Once again you demonstrate in real-time how clueless your uneducated opinions are. If you leave the USA as a resident and a citizen you are 'short' the USA. You are 'long' whatever country you move to. If the USA under-performs your new home, you win. If the USA out-performs your new home, you lose. Got it?

[ReverseEngineer]

Once again you demonstrate in real-time how clueless your uneducated opinions are. If you leave the USA as a resident and a citizen you are 'short' the USA. You are 'long' whatever country you move to. If the USA under-performs your new home, you win. If the USA out-performs your new home, you lose. Got it?

I remain clueless. If I do not think ANY other country will perform well, if I think that no matter WHERE I go I am screwed, how can I bet short on ANY place?
If ALL asset classes are heading downward, where do I put my money to make a profit? If no one will take my bet that one asset class will perform poorly because they ALSO believe it will perform poorly, how can I profit by betting short? It would demand that there was some incredibly stupid person out there who would take such a bet, and have the money to pay off on it in the event he lost.

I realize I am thoroughly clueless in these intricacies of finance, and I bow to your greater knowledge. Edify me please. I do not wish to go into the Great Beyond so hopelessly stupid.

[wisconsin_cur]

Even I know that when you are in a down turn the name of the game is not to make a profit but to preserve capital. If you preserve more capital than those around you, there is a "profit" but of another sort.

Financial capital

Physical capital

Human capital

I think I can do that best where I am.

Someone else might choose differently.

[MrBill]

I remain clueless. If I do not think ANY other country will perform well, if I think that no matter WHERE I go I am screwed, how can I bet short on ANY place? --snip--I realize I am thoroughly clueless in these intricacies of finance, and I bow to your greater knowledge. Edify me please. I do not wish to go into the Great Beyond so hopelessly stupid.

If all economies spiral downwards at the same rate - and by the same magnitude - then you are neither better-off nor worse. You're break-even whether you stayed or went. But you are still short America, and its bailout, if you decide to leave. That was the question, which I answered.

[ReverseEngineer]

If all economies spiral downwards at the same rate - and by the same magnitude - then you are neither better-off nor worse. You're break-even whether you stayed or went. But you are still short America, and its bailout, if you decide to leave. That was the question, which I answered.

What you did NOT answer was how someone would make a PROFIT on betting America short, which I think was the intent of the OP.

[MrBill]

What you did NOT answer was how someone would make a PROFIT on betting America short, which I think was the intent of the OP.

Since when am I obligated to answer ANY question? Much less one that was not asked?

I gave one answer. Not the only answer. First of all you - wrongly - assume someone can make money from shorting the US bailout. That is not a given.

Other ways one can short the bailout - whether or not profitably or not - are:

Sell the shares of those companies being bailed-out. You will have to borrow them first if naked short selling is no longer allowed.
Borrow in US-dollars and invest in non-US assets.
Stop working and stop paying taxes, so you are not personally paying for the bailout.

I am sure there are others, but I have already lavished too much time on you.

[MrBill]

Au contraire mon ami. I have spent my entire career learning how the system works and spreading that knowledge to emerging markets. Along the way I have not only created wealth, but paid my taxes to support whatever country I lived in. You have shorted America by dropping out. I have in good conscious always offered my full talents, hardwork and time. Understanding how a system works is not an endorsement, but you cannot or should not change a system before you understand how it works in the first place. I have not consumed my wealth, but put it back to work in my country of birth. Whether or not you believe that or even understand that is of little concern of mine. The worst outcome is when those who can retreat to their gated homes and spend their days golfing. The modern day equivalent of Who is John Gault?

[MrBill]

Considering the fact I have consistently paid my taxes for every year of my working life which began BEFORE I started college, to say that I "dropped out" would be entirely incorrect. I merely reduced my dependence and obligations to the system. You have a greater obligation to the system, thus you have to pay more taxes than I do, that is fair. The more wealth you have, the more obligated you are, but of course its still hardly a fair distribution.

You really are not the sharpest knife in the drawer are you? My tagline is borrowed from Frederic Bastiat's 1848 essay on the role of government. His point was that everyone could not live at someone else's expense! Someone has to generate the wealth. And benefits do not come from the government, but from taxpayers. I am very sorry if that sarcasm was lost on you!! ; - ))

As for my role as an educator it has been a life-long one starting with my parents - educators - and my grandparents - teaching music and dancing to seniors and others. My involvement in coaching, refereeing and teaching amateur sports. My involvement in the ski patrol as an instructor - first aid, CPR, mountain travel & rescue and ski skills to get injured skiers safely down the mountain. Being the first responder to many medical emergencies. Lecturing at the university on economics and finance. Publishing. Certainly, given my background school teacher was an option. I chose another route.

I am still involved in my community. Rotary Club, Ducks Unlimited, Habitat for Humanity and the Fish & Game Association both as an active volunteer and sometimes just as important raising money for worthy causes such a eradicating polio or buying shelter boxes for use in natural disasters and other emergencies. And I am still young, so I have another second career in front of me. Public service is not out of the question. I come from a long line of public servants, politicians and volunteers. There is no shortage of non-profit organizations that need professional help. There is no shortage of need. So think what you want. I have a feeling your more comfortable in two-dimension and simple assumptions in any case.

[MrBill]

Because I am not the horse in Animal Farm that selflessly works only for the benefit of others only to be sold for glue when I am no longer needed.

Because as much as I believe in community, I also believe in hardwork, self-reliance and personal responsibility.

Because due to a very uncertain social-economic future I have a fiduciary duty to my own family, friends and local community first and foremost. Their needs come first.

Because I am one of 6.7 billion and my own actions are cancelled out many, many times over. So I have to look for solutions closer to home, and realize that my actions alone are like any investment of time and energy. They have to target the best return.

Because like any professional rescuer the number one rule is that you cannot help anyone if you are also injured. I can help others by being in a position to help them.

Because it is a long, long road that spans generations. I am only one point along the curve. And I have read enough of your version of the future to know I want no part of it.

[smallpoxgirl]

If you want to borrow someone elese's reckless behavior, why not just buy shares in GM?

[shortonoil]

What you did NOT answer was how someone would make a PROFIT on betting America short, which I think was the intent of the OP.

Reverse Engineer

The way to do that is to go long on the new owners of the US Treasury Department, Goldman Sachs. They just got the US tax payer to annie up $350 billion for their employee bonus program. It will be interesting to see if Congress is stupid enough to provide them with an other $350 billion of our money. It is also interesting to witness that much money, which was designated for foreclosure relief, going into bank preferred stocks; especially, when you look at whose banks it went into?

Anyone who thinks we are going to survive PO, probably received a frontal lobe lobotomy in the not too distant past!

[dohboi]

Better a bottle in fronta me...

Who's by-line was "Cogito ergo non satis bibivi" ("I think, therefore have have not had enough to drink yet")?

[cube]

...
Nobody ever really agrees with each other, and we all have different life experiences. Yours, are no more valid than anyones elses, regardless of how you see yourself.
...

oh really?
So everybody's opinion is equally valid you say...even Trolls, hypocrites, and Liars?
Now that is an interesting philosophy.

I have a different theory on life. I believe there are two types of people:
1) people who are worth talking to
2) and people who aren't

My time is important. I'd rather share it with people who have an *honest* intention to exchange information and not waste it on Trolls.
Reading several of your posts jasonraymondson *you* obviously do not have much to offer so you can now go on my ignore-list right alongside with RE.

waves goodbye

[UltraViciousBudgie]

Whoa! I was being a smartass in my post to make a point. Short of having a time machine and connections to those dispensing the government cheese I don't think my plan would work.

In all seriousness I do sometimes feel like a fool for not living beyond my means during the party years and crying for a bailout today. That's the message being sent by bailing out these fools. Worst thing is the fools are dragging the rest of us down with them and I didn't even get to party!

[MrBill]

Absolutely. The system is biased against savers in favor of risk takers. Biased against bond holders in favor of equity holders. Biased against prudent investors in favor of the reckless. Mostly biased against taxpayers in favor of failure. This is the result. And the bailouts are more of the same.

UPDATE: A bias egged-on by a Failure is Good mantra

Governments are having a problem arresting this deflationary downward spiral — maybe because this financial crisis combines four chemicals we have never seen combined to this degree before, and we don’t fully grasp how damaging their interactions have been, and may still be.

Those chemicals are: 1) massive leverage — by everyone from consumers who bought houses for nothing down to hedge funds that were betting $30 for every $1 they had in cash; 2) a world economy that is so much more intertwined than people realized, which is exemplified by British police departments that are financially strapped today because they put their savings in online Icelandic banks — to get a little better yield — that have gone bust; 3) globally intertwined financial instruments that are so complex that most of the C.E.O.’s dealing with them did not and do not understand how they work — especially on the downside; 4) a financial crisis that started in America with our toxic mortgages. When a crisis starts in Mexico or Thailand, we can protect ourselves; when it starts in America, no one can.

You put this much leverage together with this much global integration with this much complexity and start the crisis in America and you have a very explosive situation.

If you are going to fight a global financial panic like this, you have to go at it with overwhelming force — an overwhelming stimulus that gets people shopping again and an overwhelming recapitalization of the banking system that gets it lending again. I just hope the U.S. Treasury has enough money to do it. When you look at the way A.I.G. and Fannie Mae and Freddie Mac are eating money, you start to wonder.

And that brings me back to Obama. We need a leader who can look the country in the eye and say clearly: “We have not seen this before. There are only two choices now, folks: doing everything we can to shore up banks and homeowners or risk a systemic meltdown.”

Yes, that may mean rescuing some bankers who don’t deserve rescuing, while also helping prudent bankers who were doing the right things. And, yes, that may mean rescuing reckless home buyers who never should have taken out mortgages and now can’t pay them back, while not aiding people who saved prudently and are still meeting their mortgage payments.

No, it’s not fair. But fairness is not on the menu anymore. We will deal with that later. Right now we need to throw everything we can at this problem to make sure this recession doesn’t spiral down into a depression. This is no time for half-measures.

source: Gonna Need a Bigger Boat

[Denny]

With all the talk about how the president could re-direct funds approved by Congress for a financial bailout to the auto industry, it leaves me wondering - is this not what would be literally termed "misapporpriation"?

Regardless of whether anybody feels the president's motives are justifiable, he is bound by the strings Congress has attached. Else, he would not be a president, he'd be an emperor.

It seems the press and the general public are turning a blind eye to this idea, but who is to say where the next arbitrary application of the bank bailout money could be. Lets say some of the President oil industry friends made some bad investments, he could bail them out too. Where would it end?

Its an odd mindset for a country that was founded on the battlecry, - "No taxation without representation!"