Schadenfreude toward the MeChans who gloated over the 'failure' of my 'doom and gloom' predictions

Your prediction that the Dow will go below 10,000 still hasn't happened, so it might be a little early to gloat.

Can we keep this crap off of here? There are already a couple threads open on Metafilter where people who don't know a repo agreement from a hole in their head are already screaming their heads off.

Which is exactly why I included reason #2.

...but now the latest efforts to prop up a failing economy don't seem to be working so well.

How are you determining this? What data do you think is relevant? Were you able to glimpse an alternate universe where Bear, the GSEs and AIG were allowed to fail and compare the data in the world to what's happening in this one?

I must say, I thought hearing people (not anyone here or anyone in particular, just people) who know nothing talk about politics was insufferable, and then people who know nothing started talking about finance and the economy. The fear orgy drives me up the wall.

This is why I receive all my investment advice from a markov bot.

current advice: stock I use less than I have shitty back moles the size and take pics?

exactly.

whoa! markov bought changes investment strategy!

invest or anything that burns your bench out quick in those recipes

I'd have preferred an alternate universe where Bear, the GSEs and AIG were NOT allowed to screw up so badly "we" had to clean up after them. I developed much of my economic philosophy while inside a company that was part of the Junk Bond Crisis but didn't have the FSLIC to bail it out. It took years to wash the blood off my hands. I was quite successful at investing extremely conservatively after that, compared to a co-worker who was putting his 401K funds in an assortment of high-flying funds and gloating to me about it - until the DotCom Crash left him with less gains over a 9-year period than I had. Too bad I lost everything in my own personal depression (emotional, plus health and personal crises having nothing to do with investing). But having had zero money to invest for the last 5 years has given me a true "outsider's" viewpoint and a strange sense of serenity.

Terry Gross had a good show about this today on Fresh Air. You can listen online here in about an hour.

I'm not participating in any "fear orgy".

I saw piles of "Junk Bonds" (and the company I'd worked for) bought for pocket change at the Bottom and revive enough to make fortunes for those who already had fortunes (some of whom had gotten out at the previous Top). The Market will overreact and rebound. Trying to keep an artificial floor will make the inevitable fall more extreme and the inevitable rebound less likely to encourage real reforms. But you kids have your fun. I'm on the sidelines now, and when/if I have any money to invest in anything, I'll invest in myself.

Also, this all pisses me off since my 401k is down 20% for the year as of close yesterday. I am fairly conservatively invested in mutual funds through Fidelity, so it's not like I'm out on the edge.

Fucktards.

I developed much of my economic philosophy while inside a company that was part of the Junk Bond Crisis but didn't have the FSLIC to bail it out.

It was an insurance company, right? You've mentioned this before, but I never got a sense of what you were doing there. Were you involved in the liquidation of the company's portfolio after its failure, or the acquisition of investments during its run-up? I don't see how being at a company taken down by its junk bond portfolio gives your opinion about the efficacy of government bailouts any sort of legitimacy unless you were directly involved in the investment operations/liquidations.

But having had zero money to invest for the last 5 years has given me a true "outsider's" viewpoint and a strange sense of serenity.

That's not an "outsider's viewpoint", it's just an uninformed gut reaction. You're right to be angry and concerned, just like every other taxpayer. But your supposed insight on the Fed's "latest efforts" is bullshit unless you can articulate some actual reasons besides vague truisms about moral hazard.

Also, this all pisses me off since my 401k is down 20% for the year as of close yesterday. I am fairly conservatively invested in mutual funds through Fidelity, so it's not like I'm out on the edge.

This kind of behavior in the markets is normal - the trick is to be well diversified and with a long term strategy in mind. It sucks, and it's annoying, but 20-30 years from now, this little dip won't really be on your radar unless you've made many failed investments (like that ask.me where the person bought freddie at 11).

Yeah stynxno, I do the thing every financial adviser says to do with my 401k. I'm diversified, and I'm not ready yet for the fixed fund. What pisses me off about this is that it seems like the irresponsible actions of a relatively few influential people that has gotten us here. Putting so much at risk as they've done is horrific. And, honestly, this kind of behavior doesn't seem normal to me. I do expect the markets to rise and fall, that's normal. I don't expect the financial system to be run like Enron was.

I don't see how being at a company taken down by its junk bond portfolio gives your opinion about the efficacy of government bailouts any sort of legitimacy unless you were directly involved in the investment operations/liquidations.

No, I guess you can't. And I wasn't even opining about bailouts, because it didn't teach me anything about bailouts. But every clerk-level employee of the company felt that the State of California, which took control of the company, sold it off too cheaply, and the massive gains of the foreign-owned company that bought it proved that the clerks knew better than the California Insurance Commissioner (a Democrat now running for Governor who I would never vote for). And I was pressed into duty to answer the flood of incoming phone calls, along with every other home office employee, with orders to tell every caller "no payments are being released at this time and we can make no guarantees or even reassurances when they will" when a majority of the concerned callers were disabled people whose disabling injuries were caused by clear negligence, had to sue to get any compensation and accepted "structured settlements" consisting of lifetime annuities purchased by the negligent parties which they shopped around to get the lowest price and got it from the insurance company that was invested in Junk Bonds. I am happy to say that the annuity holders lost less than 10% of what they were owed (unless they died before it was all resolved) but I still don't accept that they should have lost anything.

You're right to be angry and concerned, just like every other taxpayer.

I'm not angry, and the way the current administration thoroughly unlinked taxation from spending, not particularly concerned. I'm intellectually opposed to the $300 Economic Incentive check they sent me, but I deposited it in my checking account and haven't spent it yet.

vague truisms about moral hazard

Nothing vauge about the truth of moral hazard. It cuts through the BS about "It's Complicated" and the moral superiority that rich people acting irresponsibly have over poor people acting irresponsibly. But you seem to be going to some effort to misunderstand or misinterpret what I have to say.

"Past Performance is Not Necessarily Indicative of Future Results." Why do people assume that does NOT apply to the Entire Economy?

I wrote this original post half-seriously and with a self-effacing acknowledgment of my poor past prediction skills. Obviously another one of my numerous mistakes.

And I wasn't even opining about bailouts...

From your post: "...but now the latest efforts to prop up a failing economy don't seem to be working so well."

Dude, you sound like S&P. It was AAA last month, but it's C now!

And, honestly, this kind of behavior doesn't seem normal to me. I do expect the markets to rise and fall, that's normal. I don't expect the financial system to be run like Enron was.

Honestly, I think the entire freaking US has the memory of a goldfish - this shit happens every decade or so. There's a big crisis, politicians talk about irresponsible Wall Street, etc. etc., they pass a bunch of regulations and form a bunch of regulatory agencies. A few years later everyone forgets, the economy starts humming along, a bunch of businessmen get rich finding loopholes in the regulations, pay off the gov't to loosen regulations further "in the interest of growth", then we start the cycle all over again. My father still has his, "I Survived Black Monday" T-shirt.

Yes, but Muddgirl, isn't this a little bit BIGGER in scope, seeing as the entire BANKING INSTITUTIONS are either belly-up or getting bought out or bailed out?

I know next to nothing about markets and fluctuations,but these daily index drops seem to be a little bit more Shakespearian than the usual round of fluctuations in the markets.

Honestly, I think the entire freaking US has the memory of a goldfish

No kidding. I don't know why, but it seems that all people throughout history have suffered from the delusion that the apocalypse is upon them and the world is coming to an end. A desire to feel as though their lives are being lived in the context of a time which will never be duplicated, perhaps? And the beat goes on.

Dude, I was calling it a C- when everybody else was trying to pass it off as a AAA. I misunderestimated the Fed's and Treasury Dept's willingness to take unprecedented actions to prevent it and am now rather befuddled why the latest extreme bailouts seem to have the opposite effect... 800 points down in three days, and the only up day seemed in response to the decision NOT to bail out Lehman Bros.

muddgirl, I don't recall very well the "bunch of regulations and... bunch of regulatory agencies" that followed Black Monday... or the DotCom Crash. And that's not a snark, that's an honest hole in my knowledge for mullacc to attack me on.

LT - I was a little young for this, but surely the S&L crisis of the late 1980s was on a much, much larger scope that this one is currently. The institutions that failed were much smaller, but the sheer number is staggering. Furthermore, the causes of that crisis bear a striking resemblance to our own problems today.

I can't help but think that the 24-hour-news cycle of the '90s and '00s contributes to the general public's feelings of "this is the best/worst it has ever been in the history of the US".

wendell - it wasn't following Black Monday specifically, but following a bunch of different events that occured in the late 80s. It's been a few years since I took American Government/History (umm...8 or so!) so I can't pull these off the top of my head.

Here's one interesting tidbit from Wikipedia - the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 "both Freddie Mac and Fannie Mae additional responsibility to support mortgages for low- and moderate-income families." Snerk.

TPS, people throughout history have also suffered from the delusion that the social and economic structures built in a rather brief period of time will last forever. The Roman Empire fell. The British Empire broke up and Great Britain the country is still there. The Soviet Union's Evil Empire fell apart. Wall Street is just another Empire which has been looking increasingly vulnerable and self-destructive lately. It won't destroy the world if The Market, however that's defined, collapses. It will inevitably be replaced by something else that the current Dow-obsessed Economists can't even imagine. (The only bad news is that, historically, there's no guarantee that new thing will be better) But the more that is spent to prop up The Market past its ability to support itself will make the fall more painful for more people.

I stand by my statements in the original thread. This is the financial world exposing and ridding itself of cancers in an otherwise healthy body. The richest are not quite as rich and they are balancing their losses against their oil profits.

Dude, I was calling it a C- when everybody else was trying to pass it off as a AAA.

You totally missed my point. I was comparing you to the unreliable rating agencies because you started this thread with a bold opinion (bailouts not working) and then contradicted yourself later on (when you said you weren't opining on the bailouts).

It will inevitably be replaced by something else that the current Dow-obsessed Economists can't even imagine.

What economists? I read commentary from a handful of economists every day, and the Dow is hardly the focus. The US stock market is broadly considered (but never the Dow alone), but there's just as much focus on bond prices, currency prices, inflation, trade deficits, etc, etc.

But, wait...

I misunderestimated the Fed's and Treasury Dept's willingness to take unprecedented actions to prevent it and am now rather befuddled why the latest extreme bailouts seem to have the opposite effect... 800 points down in three days, and the only up day seemed in response to the decision NOT to bail out Lehman Bros.

So maybe you're the one who's "Dow-obsessed" if you think that's the relevant benchmark to use when judging these bailouts.

TPS, people throughout history have also suffered from the delusion that the social and economic structures built in a rather brief period of time will last forever. The Roman Empire fell. The British Empire broke up and Great Britain the country is still there. The Soviet Union's Evil Empire fell apart.

Well, possibly some people have. But most seem to have been very well aware that no state or organization lasts forever.

For instance, Victorian Britain had an entire genre of England Invaded novels, in which (often German) invaders conquered the British isles.

It didn't actually happen. However, the fear that it would happen might well have helped influence Britain into rushing in to a conflict with Germany in the form of WW1... thus hastening the decline of the British Empire.

The Romans were agonizing of the corrupting of the Republic in Cicero's time. But it kept going for another 400 years at least.

And I'm not sure the institutions of either Rome, Britain or America were built up in a short space of time. Rome wasn't built in a day.

States and empires are not like living organisms, with a fixed, natural life-cycle. They expand, contract, expand again, seem doomed, shift their centres.

So while they don't last forever, it's generally a mistake to assume you can predict when and how they're going to cease to exist. The medicine that you think will save the state, may well prove to be the poison that kills it...

I was a little young for this, but surely the S&L crisis of the late 1980s was on a much, much larger scope that this one is currently.

As I understand it from NPR and other places (but I could be wrong, since I really don't grasp how high finance works), Freddie Mac and Fannie Mae involved a lot more money than all those S&Ls combined.

Is that true, mullacc?

The DJIA could go to zero and not destroy the American Economy physically; I agree with you on that, mullacc. But it would destroy the American Economy as we know it psychologically, because there are many who are far more "Dow-centric" than I, which you apparently do not agree with. But that is why I used the DJIA as the basis for my original "Dead Pool" and why I credited the Fed/Treasury's bailouts and other extreme moves for the Dow not dropping below 10,000. Whatever other purpose or effects they had, they kept the Dow pretty level for the last 8 months. But the negative WallStreet/Market/DJIA reaction to this latest round of bailouts suggest that it's just not working on that level anymore. So, I jumped back in the pool, get it?

Aw, forget it. mullacc, seeing as I can't quite figure out all that you're arguing or what you think I'm arguing, I'll just concede everything. You're acting like you need to believe in The Markets as much as a certain other MeFite needs to believe in her God and Sarah Palin and I've already given up on arguing with her.

So let's all assume that my personal experience is far less valid than other people's because I've never made multiple millions of dollars (in fact, it isn't even personal - it's "anecdotal"!) and not being able to correlate my views with those of any Officially Authoritative Economist, they must be worthless and contributing nothing but an atmosphere of fear and loathing. Except, I'm not afraid and I'm not hateful, but I am working on my Passive-Aggressive stance. How am I doing?

You're acting like you need to believe in The Markets as much as a certain other MeFite needs to believe in her God and Sarah Palin and I've already given up on arguing with her.

That was kind of a dick move, Wendell. You should do better than bringing unnamed people involved in totally unrelated threads into this one.

I am working on my Passive-Aggressive stance. How am I doing?

Quite well, actually.

"How am I doing?"

Well, your fundamentals seem rock solid.

Freddie Mac and Fannie Mae involved a lot more money than all those S&Ls combined.

Do you mean the size of the bailout, or the industry itself? Fannie/Freddie were much bigger than all the failed S&Ls combined. According to this FDIC study, over 1,000 thrifts failed with combined assets of more than $500 billion. As of 1999, the total costs of that bailout was $153 billion ($124 billion from taxpayers).

Freddie and Fannie had combined on-balance sheet assets of about $1.6 trillion. But that understates the total amount of mortgages they guarantee--that number is more than $5 trillion. The Treasury has agreed to lend up to $200 billion to recapitalize the two companies.

We won't know for quite sometime what the total taxpayer cost of the Fannie/Freddie bailout will be. It's possible that it could exceed the cost of the S&L bailout. But you still need to add in the potential cost of the Bear Stearns bailout, the AIG bailout and the $300 billion FHA loan guarantee program. Not to mention all the money lost in the private markets--bank write-downs were up to about $500 billion from 2007 through June 2008, and more keep coming.

It's not about your particular personal experience being invalid, wendell. Without strong arguments, supported by some kind of evidence (preferably quantitative), everybody's personal anecdote-based opinions are largely worthless. 'T-values or GTFO'.

You're acting like you need to believe in The Markets...

I don't think I've shared my opinion of these bailouts or the credit crunch in general with you. In fact, I'm pretty pessimistic about the US (and European) economy over the next couple of years. As for the "the Markets" in general, I'm not sure--I'm sympathetic to a Keynesian approach and I don't buy into the free market cult of Milton Friedman. But I'm an investor by profession, so in the long-run, I'm in favor of free enterprise and I'm generally optimistic about economic progress.

I don't necessarily disagree with your conclusions, I just think you're a blowhard who spits out opinions about things you don't understand. The blowhards run rampant over on Metafilter and I can't do much about that, but I feel the urge to resist it here.

So, basically what you're saying, muddgirl, is that I'm stupid?

I was there for the oil embargo, 18% mortgage rates, the savings and loan crisis, the tech stock bubble, and remember them well. What we're talking about here are the failures of some of the largest financial institutions in the world, not some low level institutions. And, it's not just in the USA. Read the news about what's happening in the UK too. With the bailouts, the Fed and the Government are taking on trillions of dollars of exposure because of the incompetence and malfeasance of an industry, and I'm including the regulators here. I can't think of anything in my lifetime that rivals this. It's sickening to see.

I honestly don't think you see this for what it is.

So, basically what you're saying, muddgirl, is that I'm stupid?

What???? I don't think I've addressed you at all in this thread, eekacat. I'm sorry if I've said things that seem dismissive of your situation or your opinions. I don't know what else I can say, other than my opinions. I don't think this is the end of the world. I don't think this is the beginning of the end for the US. I'm pretty young still, so I could be wrong. My 403b is way down, too, so if you're stupid then i'm stupid, too.

The i key is broken on my laptop, so this comment took way more time than it should have.

You quoted me directly, muddgirl. Certainly you do pay attention where you draw your quotes from?

I do not think it's the end of the world either. What it is is really fucked up, and worse than I've seen in my lifetime. Like I've said, we've not seen the end yet. Even worse, it was something that didn't need to happen. This whole thing is based on greed of a few powerful people, and the little shits like me will end up holding the bag. In some ways it's also an indictment of our society where we value profit at any cost over anything else. It's kind of like the doping athlete who has to win at whatever cost. I'm a blue collar grunt, and I'm depending on my 401k plan to be there so I can some day retire, and live on something more than what social security provides. I put a relatively high percentage of my income into it towards that end. I imagine after today I'll probably be down nearly 25%, to make that back I'll have to be up 33%. Funny how that works.

I don't believe anyone has said it's the end of the USA. What it is is a huge crack in the world wide financial system. I think we're in for a tough time for couple of years at least, and a lot of that will depend on what the next elected administration/congress does.

You've said you're pretty young, but you're calling me on having a memory of a goldfish. Perhaps you can explain to me why this is no big deal. Why I shouldn't worry about some of the largest financial institutions failing. Why I shouldn't have to worry about working until I'm 70 instead of the 60 I was hoping for?

Yeah, I guess I did, but I thought I was agreeing with/buildng off your comment. Now that I reread my post, I see how it implies that you have the memory of a goldfish. I meant to target that towards media outlets, politicians, and MBAs, who have a vested interest in having a short attention span. I apologize.

Apologies accepted muddgirl. Now that you explain yourself, I can see where you were coming from. Certainly the media makes it's money off of crises. However, I'll still maintain that this is a pretty serious crisis.

Here's to living a long happy life with as few crises as possible. ;)

(2) Considering my past (pathetic) record, reviving my 'doom and gloom' might just help keep the Dow from falling below 10,000

See? I did it. All of yesterday's losses recovered.

::pats wendell on the back::

And bang. It's gone.