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If you had $25,000 to invest....

villain_the_foe

By villain_the_foe
in The Jets Lounge

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#27TheDominator

#27TheDominator

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Posted

Ford took loans to pay debt. They received bailout. Simple.

If you think it is simple then I don't understand why anybody would listen to you on ANY topic. Let alone investment advice. Some people are playing with more than $25,000, they might be inclined to discuss things with you if you had an even remotely open mind. You started this thread to tell people how you know more than them and will invest in gold and silver because the dollar will come tumbling down. You didn't want a discussion, you wanted to explain how the current system is screwed up and you know it and will profit while everyone else flounders.

Here is a simple scenario:

A man has a home mortgage. He has the money to pay the loan in full, but he likes having the tax write-off and wants some liquid money just in case. His mortgage was with Washington Mutual at 6%. He refinances his home to pay down some of the principal and get a new mortgage with Chase at 4%. Did Chase "bail him out"?

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villain_the_foe

villain_the_foe

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If you think it is simple then I don't understand why anybody would listen to you on ANY topic. Let alone investment advice. Some people are playing with more than $25,000, they might be inclined to discuss things with you if you had an even remotely open mind. You started this thread to tell people how you know more than them and will invest in gold and silver because the dollar will come tumbling down. You didn't want a discussion, you wanted to explain how the current system is screwed up and you know it and will profit while everyone else flounders.

Here is a simple scenario:

A man has a home mortgage. He has the money to pay the loan in full, but he likes having the tax write-off and wants some liquid money just in case. His mortgage was with Washington Mutual at 6%. He refinances his home to pay down some of the principal and get a new mortgage with Chase at 4%. Did Chase "bail him out"?

My disagreement is getting under your skin I see. I noticed because you're taking "shots" at me. You know what??? Let me feed on it and really grind your gears Peter Griffin style!

Ford accepted a debt to pay off in the future in order to pay off immediate debt because they didnt have the capital to do so without the govt funds. Thats a bailout, its that simple. I'll make sure not to stray away from ford into stupid isolated senarios made up in the head of a man who doesnt know what a bailout is unless someone grabbed him by the shoulders and told him it was a bailout via the "official version".

The DOE gave billions in loan money cleverly titled “Advanced Technology Vehicles Manufacturing Incentive Program.” Ford touts that they didnt get a bailout yet they couldnt pay their debts without this "program" (how convenient). Go dig a whole in the dirt and bury your head in it. If I had a game controller in my hand I'd be pwning you right now! lol.

P.S. Your opinion of my intentions of this thread, which lead to 20 pages of discussion and will continue to be the hottest topic in the lounge throughout the fall (lol) could be viewed any way you want it to. Just dont call it a bailout. Then again, you didnt know much about gold and silver beforehand admittingly so you should appreciate peoples points of view here even if some "other" things you dont agree with. Furthermore, you dont know much on underhanded bailouts with "flashy" names either so you shouldnt hold this conversation also.

Oh, and for the record you dont taunt people about your "investments" no matter what it is when you're up against minions of the state. the 25K amount came from another thread in the lounge and it sparked an idea to see what people would do with it. Quite frankly I think LilBitSpecials idea of "hookers and cocaine" was the best way to go. But im married and my nostrils are too big so I cant participate. Silver and Gold would be my only option...and thats IF I had 25K to spend on it.

I wouldnt. I would blow it on hookers and cocaine.

Then ask Unkie Sam for a bailout.

Whats funny is that even Panda Boy knows what a bailout is.

If you think it is simple then I don't understand why anybody would listen to you on ANY topic.

Thats a statement for YOU to consider now isnt it? Because you're surely about to respond to me now arent you lol. Face it, you love me Dom, and I make this place exciting! Whats worse is that you hate that you love me. I'll be receiving a response from you before the day is over I know it. Dont fight the love...embrace it like the way you embrace corny stories of companies who didnt take the bailout but took the loan lol.

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#27TheDominator

#27TheDominator

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My disagreement is getting under your skin I see. I noticed because you're taking "shots" at me. You know what??? Let me feed on it and really grind your gears Peter Griffin style!

Ford accepted a debt to pay off in the future in order to pay off immediate debt because they didnt have the capital to do so without the govt funds. Thats a bailout, its that simple. I'll make sure not to stray away from ford into stupid isolated senarios made up in the head of a man who doesnt know what a bailout is unless someone grabbed him by the shoulders and told him it was a bailout via the "official version".

The DOE gave billions in loan money cleverly titled “Advanced Technology Vehicles Manufacturing Incentive Program.” Ford touts that they didnt get a bailout yet they couldnt pay their debts without this "program" (how convenient). Go dig a whole in the dirt and bury your head in it. If I had a game controller in my hand I'd be pwning you right now! lol.

P.S. Your opinion of my intentions of this thread, which lead to 20 pages of discussion and will continue to be the hottest topic in the lounge throughout the fall (lol) could be viewed any way you want it to. Just dont call it a bailout. Then again, you didnt know much about gold and silver beforehand admittingly so you should appreciate peoples points of view here even if some "other" things you dont agree with. Furthermore, you dont know much on underhanded bailouts with "flashy" names either so you shouldnt hold this conversation also.

Oh, and for the record you dont taunt people about your "investments" no matter what it is when you're up against minions of the state. the 25K amount came from another thread in the lounge and it sparked an idea to see what people would do with it. Quite frankly I think LilBitSpecials idea of "hookers and cocaine" was the best way to go. But im married and my nostrils are too big so I cant participate. Silver and Gold would be my only option...and thats IF I had 25K to spend on it.

Whats funny is that even Panda Boy knows what a bailout is.

Thats a statement for YOU to consider now isnt it? Because you're surely about to respond to me now arent you lol. Face it, you love me Dom, and I make this place exciting! Whats worse is that you hate that you love me. I'll be receiving a response from you before the day is over I know it. Dont fight the love...embrace it like the way you embrace corny stories of companies who didnt take the bailout but took the loan lol.

You talk tough, but won't answer my questions. Did the DOE bail out Nissan? They received billions from the same loan program. Is somebody refinancing a home loan being bailed out?

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Dude Love

Dude Love

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You're right. And to add, I found this vid...dude brings up very good points.

Exactly--- I didn't even mention inflation in my scenario, never mind go into it in such great detail like that guy in the video. Factor for inflation, and the $59 trillion of wealth that today buys $59 trillion in goods and services, will pay for only say $40 trillion in good in services ten years from now. That's assuming that the inflation rate is a modest 3%, and you know there is fat chance of that happening.

So purchasing power diminishes while future debt increases---

I mean c'mon (not you, you understand) get a pencil and some graph paper, make a Y and X axis and LOOK AT IT.

How do you walk away from the CLEAR AND ACCURATE DATA saying "this economy really isn't that bad, you guys are just alarmists". LMAO

Also, my current and future unpaid liabilities are all low, the unpaid debts are actually much much higher. We don't have enough wealth to pay it off and we can raise the tax rate to 100% and we can't pay it off, yet the government continues to ADD TO IT.

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Dude Love

Dude Love

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why is it so important to be debt free?

You don't have to be debt free, but you do have to keep your debt at a low, MANAGEABLE level.

As per example, US government bonds used to have a triple A rating, but not any more. Cause and effect:

Triple A bonds sell for top dollar and pay a modest yield

Junk bonds sell for crap and the interest rate is loan shark high.

Result: inflation of all dollars in circulation

This isn't hard to understand, Bitonti.

The more your debt increases, the lower the value of your collateral/currency.

And if it goes too high (a critical point) and it is demonstrable that YOU CAN'T PAY IT OFF, then your currency, word, and reputation is rendered worthless and you are bankrupt.

And then what are you going to do with your entire system that relies on borrowing money? How are people going to get paid? Buy food? Pay their bills with worthless paper?

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Dude Love

Dude Love

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Here, let me give you a simple example to help you understand the difference between manageable debt and out of control debt:

July 6 (Bloomberg) -- California’s credit rating was cut for the second time in as many weeks by Fitch Ratings after a stalemate over how to close a $26 billion budget deficit forced the most-populous U.S. state to pay some bills with IOUs.

Fitch lowered its rating of California’s general obligation bonds by two steps to BBB from A-, placing the debt two ranks above so-called high-yield, high-risk junk ratings, and said the state may be cut further. The credit-rating company last lowered its assessment of California on June 25.

California, the largest issuer of municipal bonds, last week began issuing IOUs for the second time since the Great Depression as Governor Arnold Schwarzenegger and lawmakers remained deadlocked over the budget cuts needed to make up for revenue lost because of the recession. California Controller John Chiang said the step was needed to conserve cash.

“The downgrade to ‘BBB’ is based on the state’s continued inability to achieve timely agreement on budgetary and cash flow solutions to its severe fiscal crisis,” Fitch said in a statement.

California, with the world’s eighth-largest economy, was already the lowest-rated U.S. state. Standard & Poor’s gives the state it’s A grade, the sixth-highest of 10 investment levels. The firm reaffirmed that assessment on July 1. Moody’s Investors Service rates the debt A2 and placed it on watch on June 19.

The Fitch action affects $79 billion of debt -- $69.3 billion of general obligation bonds, rated BBB, and $9.7 billion of appropriations credits, rated BBB-.

To contact the reporters on this story: William Selway in Sacramento at wselway@bloomberg.net;

To contact the editor responsible for this story: Michael Weiss at mweiss13@bloomberg.net.

__________

So you see, bitonti, junk bonds are high risk, so very few people are willing to purchase them and the only way to create incentives is to offer a very high yield. Let's put it this way, a person who really needs alot of cash and needs it now and needs it fast, generally is a person who is high risk to acquire a loan. So to compensate for the risk, he's going to have to pay loanshark interest.

This isn't complicated.

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bitonti

bitonti

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lowering credit ratings of securitized debt is not the same as economic collapse and the breadlines. It's a leap of "un-faith" to say lowering the bond rating leads to a terrible awful outcome. The USA could sell B graded debt and still the sun rises every morning.

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villain_the_foe

villain_the_foe

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You talk tough, but won't answer my questions. Did the DOE bail out Nissan? They received billions from the same loan program. Is somebody refinancing a home loan being bailed out?

I talk tough because I know that without the bailout Ford wouldnt have been able to pay of the debts.

Hence, backing up my tough talk. :P

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Dude Love

Dude Love

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Dude Love, on 27 October 2010 - 09:37 PM, said:

You can tax everybody 100% and it still won't come close to paying your debt off.

why is it so important to be debt free?

If debt doesn't matter why does the government tax people? They can just keep borrowing/printing the money forever and ever, right?

:rolleyes:

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Dude Love

Dude Love

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What would you invest in?

US Treasuries!

You can't buy groceries with gold!

LMAO

By Richard Leong

NEW YORK | Mon Oct 25, 2010 3:07pm EDT

NEW YORK Oct 25 (Reuters) - The U.S. Treasury Department on Monday sold securities that fetched a negative yield for the first time, implying investors are willing to pay the government to own its debt.

This is a milestone in the current rock-bottom interest rate environment, as the Federal Reserve is widely expected next week to announce it will buy more Treasuries to jump-start a sluggish economy.

Typically, investors buy a new Treasury bond at "par" or $100. At Monday's $10 billion auction of five-year Treasury Inflation-Protected Securities (TIPS), they paid more than $105 and accepted a bond that yields nothing even after factoring in a 0.50 percent semi-annual interest payment. For more see [iD:nTAR000400].

"This shows negative yields are not a turn-off to investors," said Michael Pond, co-head of U.S. rates strategy with Barclays Capital in New York.

But some analysts cautioned negative yields, if they persist, could hurt TIPS demand.

"If issuing TIPS in a negative real rate environment requires zero coupons and up-front premium, we can see that becoming an issue," said George Goncalves, head of U.S. rates strategies at Nomura Securities International in New York.

While a negative yield clearly benefits the federal government by lowering its borrowing cost, investors bought the five-year TIPS, which was originally issued in April, on expectations that the Fed will succeed with another round of policy accommodation, dubbed 'QE2," analysts said.

If QE2 can raise inflation toward to 2 percent, a level which Fed Chairman Ben Bernanke recently cited, investors will profit from a widening in the yield gaps between TIPS and regular Treasuries. This could happen even if the real yields on TIPS remain negative, analysts said.

The five-year TIPS "breakevens" was last quoted at 1.68 percent on Monday, compared with 1.25 percent in late August.

The Treasury will sell $35 billion in two-year notes on Tuesday, part of this week's $109 billion coupon-bearing supply.

The Treasury has been borrowing cheaply since the Fed brought short-term rates down near zero since December 2008.

It has sold bills at zero percent during episodes of safe-haven stampedes during the global credit crisis.

In the open market, five-year and other short-dated TIPS turned negative in late September on bets that increased bond purchases from the Fed will push down real interest rates, or borrowing costs excluding inflation.

Fed policy-makers have expressed worries over the threat of deflation, where a crippling cycle of falling prices and real interest rates could inflict long-term damage to an economy like Japan in the 1990s.

If it engages in further quantitative easing in the form of buying more bonds, the Fed hopes to wipe out deflation risk and inflate higher asset prices. Rising asset values could in theory encourage investments and spending and in turn bolster economic activity to more desirable level. (Editing by James Dalgleish

http://www.reuters.com/article/idUSN2527792620101025

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Greenranger

Greenranger

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US Treasuries!

You can't buy groceries with gold!

LMAO

By Richard Leong

NEW YORK | Mon Oct 25, 2010 3:07pm EDT

NEW YORK Oct 25 (Reuters) - The U.S. Treasury Department on Monday sold securities that fetched a negative yield for the first time, implying investors are willing to pay the government to own its debt.

This is a milestone in the current rock-bottom interest rate environment, as the Federal Reserve is widely expected next week to announce it will buy more Treasuries to jump-start a sluggish economy.

Typically, investors buy a new Treasury bond at "par" or $100. At Monday's $10 billion auction of five-year Treasury Inflation-Protected Securities (TIPS), they paid more than $105 and accepted a bond that yields nothing even after factoring in a 0.50 percent semi-annual interest payment. For more see [iD:nTAR000400].

"This shows negative yields are not a turn-off to investors," said Michael Pond, co-head of U.S. rates strategy with Barclays Capital in New York.

But some analysts cautioned negative yields, if they persist, could hurt TIPS demand.

"If issuing TIPS in a negative real rate environment requires zero coupons and up-front premium, we can see that becoming an issue," said George Goncalves, head of U.S. rates strategies at Nomura Securities International in New York.

While a negative yield clearly benefits the federal government by lowering its borrowing cost, investors bought the five-year TIPS, which was originally issued in April, on expectations that the Fed will succeed with another round of policy accommodation, dubbed 'QE2," analysts said.

If QE2 can raise inflation toward to 2 percent, a level which Fed Chairman Ben Bernanke recently cited, investors will profit from a widening in the yield gaps between TIPS and regular Treasuries. This could happen even if the real yields on TIPS remain negative, analysts said.

The five-year TIPS "breakevens" was last quoted at 1.68 percent on Monday, compared with 1.25 percent in late August.

The Treasury will sell $35 billion in two-year notes on Tuesday, part of this week's $109 billion coupon-bearing supply.

The Treasury has been borrowing cheaply since the Fed brought short-term rates down near zero since December 2008.

It has sold bills at zero percent during episodes of safe-haven stampedes during the global credit crisis.

In the open market, five-year and other short-dated TIPS turned negative in late September on bets that increased bond purchases from the Fed will push down real interest rates, or borrowing costs excluding inflation.

Fed policy-makers have expressed worries over the threat of deflation, where a crippling cycle of falling prices and real interest rates could inflict long-term damage to an economy like Japan in the 1990s.

If it engages in further quantitative easing in the form of buying more bonds, the Fed hopes to wipe out deflation risk and inflate higher asset prices. Rising asset values could in theory encourage investments and spending and in turn bolster economic activity to more desirable level. (Editing by James Dalgleish

http://www.reuters.com/article/idUSN2527792620101025

Posts: 5,877

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#27TheDominator

#27TheDominator

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I talk tough because I know that without the bailout Ford wouldnt have been able to pay of the debts.

Hence, backing up my tough talk. :P

More bluster and silly faces, but still no answers to my questions.

Did the DOE bail out Nissan? They received billions from the same loan program. Is somebody refinancing a home loan to get a better rate being bailed out?

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Greenranger

Greenranger

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Exactly. Some people define that as bailing out.

I can't say what Ford did with the money, but a bailout wasn't the intent when the Dept. of Energy gave them the money like it was with GM and Chrysler and the Government isn't running Ford like it is GM and Chrysler, which is probably why Ford is in better shape than those two.

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#27TheDominator

#27TheDominator

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I can't say what Ford did with the money, but a bailout wasn't the intent like with GM and Chrysler and the Government isn't running Ford like it is GM and Chrysler.

Right. The government isn't exactly running Chrysler. Fiat has a 20% stake and are handling the management. There are constant US-Italy (Detroit-Torino) trade exchanges going on over it. The unions got a 68% share and the governments (US & Canadian) got the rest. The problem with Chrysler was that the Germans (Mercedes) had gutted them for their own purposes and stopped making small cars (Neon) and fell in love with big cars (300/Magnum/Charger) and trucks. The small cars they made (PT/Caliber/Patriot/Compass) were all little trucklets because Mercedes was obsessed with trucklets (like the crossover Pacifia) and the Toyota Matrix. They stopped making small cars and when the market went bad Mercedes let them rot and then spun them off. The management company that took them over simply cut costs and did not deal with new production at all. Besides, they were still indebted to MB in the form of using parts/powertrains, etc. Ford prepared for the lean times and weathered it fairly well. The bailouts of GM and Chrysler helped Ford because if Ford were the only game in town the suppliers would dry up and they'd be completely isolated. GM is another whole animal. They sell as many cars as anybody, but still lose money.

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