Fed reduces 2009 outlook
Real Estate Investor · Las Vegas, NV · Member since 2008 · 1k+ posts · 447 votes
Federal Reserve reduced its economic outlook for 2009.
I'm shocked! The Fed actually realizes what most of us have known all along. We'll see how that changes the deficit forecast. Remeber first it was oing to be $1 trillion, then it was revised to $1.8 trillion. Next we'll be talking about $2 trillion+. And that was based on the economy recovering this year and also used a very robust assumption of 3.2% GDP growth for 2010. I can't wait to see the spin on this.
http://finance.yahoo.com/news/Stocks-close-lower-after-Fed-apf-15309661.html?sec=topStories&pos=main&asset=&ccode=
:cool:
Individual investors are and always will be at the mercy of the institutions, they (banks, etc) control the largest positions. Individual investors by the way have very limited margin and punitive margin rates so that they do not get into this situation.
Paradoxically, the VAR models, based on history of moves and standard deviations, will now tend to overstate the risk associated with positions while volatility reverts back to its mean, but I would still raise the capital ratios and re-instate Glass.
Fortunately for us, by the time the banks started crying about the unfairness of mark-to-market and pleading for a suspension, the SEC and the FED were under far too much pressure to allow it.
If we have learned anything from this crisis, it is that the "best and brightest" as wall street calls them, will always find ways to circumvent the models and to make undeserved and ill-gotten profits.
The real failure of the SEC has been the absolute lack of any oversight or safeguarding of what was going on.
Example:
The financial institutions would send over a breakdown of a basket (CDO for example) to the ratings agency and ask what they needed to do to get a AAA rating.
The Rating agency would then send back a recommendation, the house made the changes, got a triple A rating and then payed the rating agency a fee.
Lipstick on a Pig, everyone knew it, except the buyers who looked at AAA, but it caused a failure of the VAR models as it caused deviations far outside of the norm.
The SEC, meanwhile, sat there and let it happen, the banks were corrupt, the ratings agency were corrupt, but the economy was going great guns, everyone was happy, credit flowed, but we know what resulted. You can argue it is Congress or the President, but the system failed miserably.
Close the SEC, or fire them all and restart from scratch, they have lost all credibility, they allowed all of us to get raped.
Re-institute controls with teeth.
And you guys keep quoting the media as if one, they knew what the hell they were talking about and two, we could believe anything they said if they did. They're equally as responsible for the mess this country is in as the fed and us fools that voted them in there.
That is precisely why you need individual numbers for specifics. As bond or property or other investment is only as good as the due diligence you do for yourself.
The job of the seller is to make the product as attractive as possible. The job of the buyer is to make sure that they can handle the deal being offered by whatever vehicle that they have at their disposal.
If the seller dupes the buyer it is the buyers responsibility because he did not do enough research. This is exactly why we do not believe what the media tells us, we believe the precise numbers that involves that deal we are looking into.
We do listen to all media and evaluate the information for its validity in our estimation. All forms of media are open to interpretation. Even the spposed scientific facts are based upon assumptions of this or that to start with. And as such are the opinions of the stimulus based upon the starting criteria and not valid outside of the model that you started with.
Dont blame the model just try another model (or system if you prefer). This is why sometimes we rent, sometimes we wholesale, sometimes we buy the notes, or sometimes we sit back and wait.
Process the information you gather from whatever form of media you choose and it tells you what the most likely model to use for this deal as all deals are different.
If I process the information incorrectly the only person to blame is me, not the media, or Congress, or even the President.
This is why we share our information with each other, so that others do not make the mistakes that we (or others) have been known to make and to do our due diligence so that the risks are effectively reduced by learning from others who have been through it.
If you do not want to take the risk, I dont see the need to blame those that have and have reaped the rewards of doing so.
As I said earler, if you dont like the administration, or congress, get involved and change them, It really is simple.
So business is a free-for-all, buyer beware, no safe-guards whatsoever, no need for any oversight.
Why then bother with contract law, truth in lending, or any other
of the safeguards put in place to protect the public?
Why have deposit insurance then? If you do not do your own investigation of the bank, then tough.
The SEC and FDIC are in place to precisely protect the public and their pensions from this behavior, but then is this also useless?
You can't have it both ways, protect me but allow me to do anything to anyone else.
Either all is a free for all, or there must be some safeguards in place. And if the safeguards are put in place, then they must be enforced.
No one said anything about no safe-guards. Everything that is done should always be done within the law and by a code of being responsible, which is in my book a little higher than the law. As my tag line says, Do right by others, its the best policy!
But it has always been buyer beware. That is a fact of life.
We all dress ourselves up the best possible when attracting a prospective mate. But we do not force ourselves upon anyone. There is a big difference.and it is called the law.
Dress up what is legal to make it look good and I will undress it with my due diligence to see if I want it. If you fool me into believing I have a 10 and I wake up next to a 1 that is my problem and I must deal with it.
It's amazing what one person can do to change a situation if they focus on it. That applies to just about anything in the world. You just have to choose your problem to focus on and choose your best solution(s) and work on it.