Why is it important to bail out banks?

Discussion in 'Financial Cents' started by Blackjack, Mar 26, 2008.

  1. Blackjack

    Blackjack Monkey+++

    I don't speak financial.....

    Can anyone explain to me in prain engrish why it's important to bail out big financial institutions like Bear Stearns?
  2. groovy mike

    groovy mike Immortal

    If you bought a share of their stock at $100 per share and it is now worth $5 it is too late to bail out. You may as well sit on the stock and hope it goes up again in the future.

    If on the other hand you are in another similar company and bought at $100 and it is now $125 you may want to sell it because it MIGHT drop to $10 tomorrow or next week etc.

    On the other hand it MIGHT go up in value too. It depends on where you are invested and how much risk you are willing to take.

    A good rule of thumb is to never invest more than you can afford to lose.
  3. Jonas Parker

    Jonas Parker Hooligan

    It's not important for the general population. It is important for TPTB...
  4. Tango3

    Tango3 Aimless wanderer

    uh you know unleveraged derivative icpo's!!!!OH YEAH: Double BOOOH YAAAA!!

    [beat][beat][beat][beat]? they just explained it on glenn beck, (why its important); be damned if I can exprain it..10 minutes later![beat]
  5. S&P

    S&P E&E w/AR

    I'd have to disagree Jonas; if Bear were allowed to fail we would likely have had a market selloff of such magnitude that trading would have been halted. What many people do not know is that BSC is a big player in the bond market, that along with the ripple effect from other counterparty exposure.

    I'd say the general population would be affected because a market crash would have been very likely. I'm not defending them for one minute nor do I like the idea that the counterparties get a taxpayer backed bailout. Make no mistake though, Bear is not the one getting bailed out unless you consider having your equity reduced from $58 to $10 in about a week as a bailout.
  6. RouteClearance

    RouteClearance Monkey+++

    If the Bear Sterns buyout did not happen, we would now be in a world wide Depression. What the Fed did was to buy us some time, for when the derevatives bubble finaly pops, well actually explodes, there will be nothing that can be done. When will this happen? Anybody's guess, so use this as a wake up call and put your preps before anything else. Another piece of advice, if you have any IRA,s or 401k's you might want to consider bitting the bullet and get what you can out of them. A police/fireman's pension fund that is tied to Bear Sterns, has lost millions. This is what I belive to be our final warning.
  7. Jonas Parker

    Jonas Parker Hooligan

    Now the coming world-wide depression has been delayed. I'm not at all sure that delaying it won't make it worse.
  8. groovy mike

    groovy mike Immortal

    Draining your IRA will result in a 40% loss due to taxes and penalties. I'm leaving mine in. Even if the fund loses 50% value, that's only a 10% loss compared to taking it out.

    That said, this IS the last warning so make sure that your pantry is full and preps topped off. It is going to get rough the next few years.
  9. CBMS

    CBMS Looking for a safe place

    Is this the real deal then? Are we going to go down into the history books this year?

    I know it sounds like I'm a doubting Thomas but I want to know whether or not TS is going to HTF. I know nothing is for certain, but I would like to hear the science behind whats happening and why we can't fix it

    I need to know beore I get out of hand with my Credit Cards.
  10. RouteClearance

    RouteClearance Monkey+++

    CBMS, last question first, DON'T. The last thing you do not want to do is to put yourself in a position that you do not want to be in.
    Now for the science, which is a human trait called greed. Right now the derevative bubble that now exit is worth an official estimate of 500 to 650 trillion dollars and wall street has no way of being able to cover that amount of money.

    Now for when this will happen? Suffice to say I do not have a crystal ball that can see intothe future. In the mean time prep as much as you can and still have a positive outlook, due to the fact that the American Consumer has so much blind, fanatical faith in the US dollar, that this may keep the dollar afloat, but don't bank on it due to the fact the basic cost of living world wide is going through the roof. People in third world countries are already starting to experince food shortages in large scale, and it will be only a matter of time before those shortages start here on the North American Hemisphere.
    Now for the final science, "Peak Oil". If this planet has expended all available reserves of sweet crude, we are definitly headed for a major crash that this planet has never seen before. What you need to understand is what this planet can sustain in human population numbers without the "Oil" is only around 500 million people. That is the stabilaztion point proven by science.

    All I can recomend is that you expect the best, but prepare for the worst. Concetrate on your education frist and foremost, because in the end there is only so much you can do to prepare, which will still place you well in front of the masses that haven't.
  11. groovy mike

    groovy mike Immortal

    Why didn't you guys call me an idiot?

    I read the original post as "Why is important to bail out OF banks"

    My posts above are meant for individual investors.
    Why bail out the bank industry in general - heck I don't think we should use our tax payer dollars for that at all!
  12. Jonas Parker

    Jonas Parker Hooligan

    I tried to be diplomatic... [lolol]
  13. groovy mike

    groovy mike Immortal

    Very kind of you dude [beer]
  14. Tango3

    Tango3 Aimless wanderer

    Hey keep it up guys ,I learn more everytime you guys post here. Amazing someone(me) can get to my age(48) with so little understanding of this stuff.Thanks
survivalmonkey SSL seal        survivalmonkey.com warrant canary