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US Gov't to buy $250 Billion of private banks' stocks

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  • US Gov't to buy $250 Billion of private banks' stocks

    So...I don't want to sound like Chicken Little, but is this the what we want to do? Risk letting our profligate government buy large portions of US private banks?

    Doesn't that mean they could control said banks if enough controlling stock is dumped by the biggest investors? Is there any precedent for this?
    Correct me if I'm all wrong; reassure me, please--but this scares the pee outta me.

    Did we just let Bush and his cronies get away with another Patriot Act, another Iraq War? The bill sure seems to have followed the same pattern--Sign the Bill, pass it on to the Legistative, not pass, after they vote it down, let the media stir up a panic indicating impending doom, then make a few changes without cvhanging the main thrust and send it back, with it passing on the revote because people who used to know better are now folding under pressure--familiar pattern, isn't it? Or am I all wrong?

    Don't placate me. Don't condescend. Don't mock. Don't extemporize. Give me logic, give me reason, give me proof. Like I said, reassure me, Please!
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  • #2
    Re: US Gov't to buy $250 Billion of private banks' stocks

    I don't think anyone wants this, but unfortunately there's no time for choice.

    Frankly I'd rather the U.S. government (on behalf of the taxpayer) buy out the banks than foreign entities like Mitsubishi and Santander. At least that preserves a little bit of self interest.

    This is a sad story made sadder by the fact that we're all bystanders. Even if policymakers and government officials manage to shore up the credit market through mammoth infusions of capital, nothing is going to change the fact that the banking and finance industry has been historically altered. I'm not sure anyone even knows what the new landscape will really end up looking like.

    Strangely enough I think Bush is trying his hardest to deal with this, and did not enter it with any presuppositions or bad advice. In fact for the first time in his Presidency he appears to be completey open and transparent, which is especially surprising on an issue that seems to go against the free-market hands-off philosophy of his party.

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    • #3
      Re: US Gov't to buy $250 Billion of private banks' stocks

      Originally posted by AMosely View Post
      This is a sad story made sadder by the fact that we're all bystanders.
      I don't totally agree with this. I think we have all enjoyed the benefits of this over-leveraging. Not to say that we collectively conspired to cause this, rather we collectively partied hard for 10 years and now for the hangover...

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      • #4
        Re: US Gov't to buy $250 Billion of private banks' stocks

        Axis: The banks will probably issue new stock just to sell to the Feds, but the infusion of capital will give "free money" to the bondholders and allow the stockholders of said companies to be able to down the road possibly use those stocks as something other then toilet paper. It's not a horrible idea if you can get past the fact that we are writing a check basically to the bondholders and stockholders of the company.


        Leejo: agreed 100%

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        • #5
          Re: US Gov't to buy $250 Billion of private banks' stocks

          But didn't Bush and the administration say they weren't going to buy banks, because that is what Japan did, etc, etc

          And now they claim they can buy into banks because of some obscure clause in the bill?

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          • #6
            Re: US Gov't to buy $250 Billion of private banks' stocks

            Originally posted by leejo View Post
            I don't totally agree with this. I think we have all enjoyed the benefits of this over-leveraging. Not to say that we collectively conspired to cause this, rather we collectively partied hard for 10 years and now for the hangover...
            Right, probably a little of both. Some will have hangovers of various sizes, others never had anything to do with the market but will now suffer consequences. A select few drank their fill and walked away.

            I'm still concerned about the consequences and the lessons about the market that may not be learned.

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            • #7
              Re: US Gov't to buy $250 Billion of private banks' stocks

              Originally posted by leejo View Post
              I don't totally agree with this. I think we have all enjoyed the benefits of this over-leveraging. Not to say that we collectively conspired to cause this, rather we collectively partied hard for 10 years and now for the hangover...
              I've always voted against both parties.

              Voting for the lesser of two evils leads exactly to this kind of situation. Just because you get to hell a little later doesn't change your destination.

              Speaking as a controls engineer, it's pretty obvious that when you "force" a system, it's going to eventually force back, often in dangerous ways. And if you don't have intimate knowledge of a system, it's particularly dangerous to mess with it in hopes of making it "better".
              Dude, seriously, WHAT handkerchief?

              snooggums' density principal: "The more dense a population, the more dense a population."

              Iliana: "You're a great friend but if we're ever chased by zombies I'm tripping you."

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