Financial crisis cost moves toward $20 trillion

re: Financial crisis cost moves toward $20 trillion

Bill G. — Fri, 20 Mar 2009 17:10:15 GMT

Al,

That is the problem, the credit losses and bank profits were mostly on paper. Example: if you bought 10million shares and the cost went up by 5 dollars then you now have 50million dollars. Until you sale those shares and the money is in your account the 50mils is not realized. It is still on the trading board.

Let's say tomorrow you wake up and by some unforeseen disaster that same stock reverses and nose dive to minus 10dollars on the 10million shares you own. Then you now have an account that shows a minus 50million. But if you do not sale thoes shares and waited for them to reverse and say rise 2 dollars above your original 5dollar cost basis (purchase cost) which equals 7dollars you now have 20million dollars in your account on paper (2dollar x 10million shares). If you submit a sales order to your broker then you now have a real 20million plus the original 10million investment dollars. Your account will now show a balance of 30million.

The problem with the banks and the idiots on Wall Street is that they did not sale their stocks. They hung on to them and is showing paper losses through the roof or more like under the floor. They are claiming trillions of dollars lost but it should be more like dollars that are frozen on paper. The only time you really lose is when you put in a sales order for those shares at the reduced cost. Let’s use a house for example that you want to sale for 200k but the market drops and it is worth 150k. You did not lose 50k, the value lost 50k. The market returns and your house is worth 300k now. You sale and profit the 100k. Now, did you lose the 50k? Of course not but you would have if you sold at the 150k mark; but you waited. And so it is with the financial markets. The problem is, they don’t know what is paper-money and what is real money.

It is very difficult to develop an economic plan with so much fake money and unknown real money. Now, you ask how did we get to this point. DEREGULATIONS! The government had regulations in place to prevent this mess we are in but Mr. Phil Gramm and many others that pushed toward getting government out of the affairs of business (banking) said they can run the banking industry better than government. Government never wanted to run the finance industry but only to setup guidelines that they could run by that would prevent this mess we are in today. Obama is working to get America out of this economic hole, restore this regulation guideline and word them in such a way that this never happens again but it is going to take time because the entanglement with the derivatives are very complex.

Hope this helps!

re: Financial crisis cost moves toward $20 trillion

Bill G. — Fri, 20 Mar 2009 16:35:33 GMT

Nobama,

Too bad you don't understand economic 101. Let me explain it to you.

If a worker produces a product for an owner and the product is sold for a profit to cover both salaries (owner and worker) they get paid. Produce more and pay is more. This is based on the sales and people who bought. Top-down economics says the rich take pay at a rate they desire rather than the rate of profit income and pass it down through expansion of more work. But they don’t and instead they keep the money. Because of the growing greed their reaction is to lower the pay to the workforce to get more and to do that, they find a cheaper workforce, ala China. Problem with that is the rich just laid-off the people at home (USA) that bought the products but the rich keep taking higher pay. End result is that the company has large sums of inventory with no one to buy it.

Obama is pushing for Bottom-up economics that says higher the workforce back that bought your products. They buy the products, profits return, and the rich get and the workforce gets paid once again. Limit the amount the rich can take from the company so they don't drive it into bankruptcy again like AIG, CITI, and Bank of Am. Make them pay more taxes (what they paid under Clinton before they were underpaying taxes under Bush) on the greed to get more money to finance the economy they wrecked in the first place.

Obama is not taking from the rich to give to the working class; he is restoring what they stole from society and returning to the economy so the economy can grow once again.

Now you can go and study and return for economics 102.

re: Financial crisis cost moves toward $20 trillion

Nobama — Wed, 29 Oct 2008 21:04:30 GMT

No New Taxes?? I was seriously starting to like Obama until I listened to him on how he's going to finance all of his programs.He said he'll immediately end all the Bush tax cuts and that he's going after big buisnesses with a vengence! I got to thinking,is the American people that stupid to think this FlimFlam man's plan won't put the final bullet into American buisnesses?? We're on the verge of a Worldwide depression and the way this guy talks,he thinks he's the Wallstreet Messiah! Just cutting off the Bush tax cuts could possibly be the proverbial "Nail in the Coffin" for everybody! Wake Up Everybody!!!

re: Financial crisis cost moves toward $20 trillion

Andy Escobar — Wed, 29 Oct 2008 20:09:00 GMT

Wow, Alot of pissed off people out there! I know; why don't we stay home and choose not to vote as a vote of NO Confidence! With nobody except Mickey Mouse and Donald Duck voting and then an impeachment of all parties elected officials with more than two years in Washington, "you're out a here"!

Come on people!!!! Now is the time for revolution!!! Both of the nominees have voted yes to the bailout taking every little bit from "Joe the Taxpayer". No matter your affiliation, more spending is guaranteed unless we stand up and tell them we not going to take it anymore!!!!!

Our voice matters!!!

re: Financial crisis cost moves toward $20 trillion

Jeff — Wed, 29 Oct 2008 19:07:10 GMT

Follow....follow... follow the money trail and see who profited. As of Oct 2007, the markets takes a downward trend. Yes, the last 30 plus days after the President speaks, the market takes a dive. SO!!! Before OCT 2007 WHO MADE MONEY AND GOT OUT OF THE MARKET???!!!! FOLLOW THE BILLIONSARES WHO MADE MONEY and you will find the smoking gun of who made this mess!!!

re: Financial crisis cost moves toward $20 trillion

Al — Wed, 29 Oct 2008 17:48:24 GMT

Mr. McIntyre,

What are the real credit losses which will eventually impact the income statement and equity levels of the banks and financial institutions? That is the simple, straightforward question which still hasn't been answered.

These exagerrated and silly headlines based on unrealized paper losses are right out of a Readers Digest issue (imagine: "$20 Trillion Lost: Each Man, Woman and Child in the World Loses $3,000", or whatever).

re: Financial crisis cost moves toward $20 trillion

Lynn — Wed, 29 Oct 2008 17:37:27 GMT

I've got my knitting needles, wheel out the guillotine!

re: Financial crisis cost moves toward $20 trillion

Really Irritated — Wed, 29 Oct 2008 02:41:52 GMT

This is a real sad time for the US. these IVY League MBA's should go to jail....I wonder what the parents think

re: Financial crisis cost moves toward $20 trillion

GRS — Wed, 29 Oct 2008 02:30:00 GMT

Michael Usry ?

Is he an average american who divides 700 billion by 300 million and comes up with 1 million per person or 300 million.

And you wonder how wall street can steal the average americans tax money.

First learn 2nd grade multiplication then you can whine M.U.

GRS

re: Financial crisis cost moves toward $20 trillion

brentpmed — Wed, 29 Oct 2008 02:18:05 GMT

Sorry, I misplaced the decimal point...the previous post should have read $2291.00 per person. Still not the stimulus which would drive the credit markets.

Misplaced decimal...I should have been on Wall Street!