Why does Wall Street always get bailed out?

[falcon_eyes]

I guess the Fed has to make this action in order to protect the US and World economy primarily, leaving behind other roadkills dying on the highway.

http://biz.yahoo.com/hftn/070817/081707_sloan_enablers_fortune.html?.v=2

quoted from the article:
[1]
Here’s the deal: People with crummy credit who took out mortgages are being allowed to fail in record numbers. The mortgage companies that made those loans are being allowed to fail.

[2]
The Street itself? It’s bailout city. Even before the Fed made a symbolic half-point cut in the discount rate, it and other central banks from Switzerland to Singapore were trying to rescue the Street by injecting hundreds of billions of dollars into the financial markets and announcing they will put up more, if needed.

[3]
It’s the “too big to fail” syndrome. In a world in which big players make incredibly large and complex deals with one another – that’s what derivatives are – regulators don’t dare let a big or important institution fail for fear that the collapse of one would lead to “cascading failures,” and other institutions wouldn’t be able to collect what the collapsed institution owed them.

[4]
The Fed’s job, you see, isn’t to protect you and me and our retirement portfolios, or even many of the nation’s largest companies and biggest employers. The Fed’s job is to protect the financial system. That’s why it’s trying to rescue the gigantic subprime enablers while letting borrowers and mortgage companies go under.

[5]
Sure, we know that Ben and the boys will always bail out the biggies. And none of us – I think, anyway – wants the world’s financial system to implode. But I’d feel a lot better if the Street had to pay a serious price to its rescuers–say, having to fork over a big equity stake and pay a loan-shark interest rate. That way taxpayers, who are picking up the tab for the rescue, would get paid bigtime for taking on bigtime risk.

[one_muggle]

falcon,

Seriously!?
You may as well ask why businesses get a better tax deal than individuals and why brokers make more money from the 401k system than the participants. While on that topic, ever wonder why you don’t get to deduct those 401k contributions, or medical spending accounts, or dependent care spending accounts?
And for those of you ready to fire off a reply about how you get to deduct yours, take a minute. Does it contribute to your itemized deduction? Rather than let you take a deduction, which would help non-mortgage holders surpass the standard deduction limit, thus reaping the benefit of itemized deductions, you sign a Salary Reduction agreement, where your employer reduces your salary by whatever amount, and then puts it into your 401k, or gives it to a private company to hold until you file the appropriate dependent-care or medical reimbursement form–all the while earning interest on that money and keeping it if you don’t file acceptable claims in time.

Why not just let you write it off (deduct it)? Wouldn’t that help you more? I suggest you call your lobbyist. =^o

Unfortunately Neo, realizing you are being screwed is the easy part. Red Pill, Blue Pill time my friend.

-one muggle

[one_muggle]

falcon,

Seriously!?
You may as well ask why businesses get a better tax deal than individuals and why brokers make more money from the 401k system than the participants. While on that topic, ever wonder why you don’t get to deduct those 401k contributions, or medical spending accounts, or dependent care spending accounts?
And for those of you ready to fire off a reply about how you get to deduct yours, take a minute. Does it contribute to your itemized deduction? Rather than let you take a deduction, which would help non-mortgage holders surpass the standard deduction limit, thus reaping the benefit of itemized deductions, you sign a Salary Reduction agreement, where your employer reduces your salary by whatever amount, and then puts it into your 401k, or gives it to a private company to hold until you file the appropriate dependent-care or medical reimbursement form–all the while earning interest on that money and keeping it if you don’t file acceptable claims in time.

Why not just let you write it off (deduct it)? Wouldn’t that help you more? I suggest you call your lobbyist. =^o

Unfortunately Neo, realizing you are being screwed is the easy part. Red Pill, Blue Pill time my friend.

-one muggle

[one_muggle]

falcon,

Seriously!?
You may as well ask why businesses get a better tax deal than individuals and why brokers make more money from the 401k system than the participants. While on that topic, ever wonder why you don’t get to deduct those 401k contributions, or medical spending accounts, or dependent care spending accounts?
And for those of you ready to fire off a reply about how you get to deduct yours, take a minute. Does it contribute to your itemized deduction? Rather than let you take a deduction, which would help non-mortgage holders surpass the standard deduction limit, thus reaping the benefit of itemized deductions, you sign a Salary Reduction agreement, where your employer reduces your salary by whatever amount, and then puts it into your 401k, or gives it to a private company to hold until you file the appropriate dependent-care or medical reimbursement form–all the while earning interest on that money and keeping it if you don’t file acceptable claims in time.

Why not just let you write it off (deduct it)? Wouldn’t that help you more? I suggest you call your lobbyist. =^o

Unfortunately Neo, realizing you are being screwed is the easy part. Red Pill, Blue Pill time my friend.

-one muggle

[Chris Scoreboard Johnston]

I have tip toed around this for long enough. You are a complete idiot if you think a financial system failure is going to make you rich. Even if you were short the world, the brokerage firm your account is at will be shut down, the government will not have any money to make you whole, and you will be broke and unemployed just like everyone else.

However, you will be able to say you were right if there ever is enough money anywhere for a cocktail party to be thrown. The Fed did this not to bail out the market or the big players, they are doing it to prevent a complete shutdown. Why is that so hard for so many to understand?

So many people are too busy trying to have their end of the world predictions proven correct, that you fail to realize why the odds are so heavily against it. Do you really expect the Federal Reserve to sit back and watch financial armageddon happen without doing anything? You may want poor individual people to get screwed to make yourself feel better about your own situation, but collectively we all suffer if this happens. I personally do not want to see people’s lives ruined who were tricked by dishonest people into the situations they are in. I do not feel any elevated status when bad things happen to others that I avoid. Let’s face it, some people that do not deserve to be saved will be, it has always been that way and always will be.

Accept the way the system works and use it to your advantage. Quit trying to force it to meet your requirements. We are far from out of the woods, this is only one little step, which if it does work, will be one of the most brilliant moves of all time by a Fed Chairman. Please read in detail what happened, the discount rate did not get lowered yet, what occurred was something different than that.

[Chris Scoreboard Johnston]

I have tip toed around this for long enough. You are a complete idiot if you think a financial system failure is going to make you rich. Even if you were short the world, the brokerage firm your account is at will be shut down, the government will not have any money to make you whole, and you will be broke and unemployed just like everyone else.

However, you will be able to say you were right if there ever is enough money anywhere for a cocktail party to be thrown. The Fed did this not to bail out the market or the big players, they are doing it to prevent a complete shutdown. Why is that so hard for so many to understand?

So many people are too busy trying to have their end of the world predictions proven correct, that you fail to realize why the odds are so heavily against it. Do you really expect the Federal Reserve to sit back and watch financial armageddon happen without doing anything? You may want poor individual people to get screwed to make yourself feel better about your own situation, but collectively we all suffer if this happens. I personally do not want to see people’s lives ruined who were tricked by dishonest people into the situations they are in. I do not feel any elevated status when bad things happen to others that I avoid. Let’s face it, some people that do not deserve to be saved will be, it has always been that way and always will be.

Accept the way the system works and use it to your advantage. Quit trying to force it to meet your requirements. We are far from out of the woods, this is only one little step, which if it does work, will be one of the most brilliant moves of all time by a Fed Chairman. Please read in detail what happened, the discount rate did not get lowered yet, what occurred was something different than that.

[Chris Scoreboard Johnston]

I have tip toed around this for long enough. You are a complete idiot if you think a financial system failure is going to make you rich. Even if you were short the world, the brokerage firm your account is at will be shut down, the government will not have any money to make you whole, and you will be broke and unemployed just like everyone else.

However, you will be able to say you were right if there ever is enough money anywhere for a cocktail party to be thrown. The Fed did this not to bail out the market or the big players, they are doing it to prevent a complete shutdown. Why is that so hard for so many to understand?

So many people are too busy trying to have their end of the world predictions proven correct, that you fail to realize why the odds are so heavily against it. Do you really expect the Federal Reserve to sit back and watch financial armageddon happen without doing anything? You may want poor individual people to get screwed to make yourself feel better about your own situation, but collectively we all suffer if this happens. I personally do not want to see people’s lives ruined who were tricked by dishonest people into the situations they are in. I do not feel any elevated status when bad things happen to others that I avoid. Let’s face it, some people that do not deserve to be saved will be, it has always been that way and always will be.

Accept the way the system works and use it to your advantage. Quit trying to force it to meet your requirements. We are far from out of the woods, this is only one little step, which if it does work, will be one of the most brilliant moves of all time by a Fed Chairman. Please read in detail what happened, the discount rate did not get lowered yet, what occurred was something different than that.

[(former)FormerSanDiegan]

one_muggle –

I must disagree on most of your examples

Re 401K –
Taking 401K contributions it off the top of income helps actually those who don’t itemize. This includes the vast majority of those fortunate enough not to have a mortgage tax deduction.

This would actually hurt those whose itemized deductions do not exceed the standard deduction.

Re Medical spending account claims –
They pay medical when you submit a claim and do not wait for all the deductions. If you use your entire election by February for example, they reimburse you the whole enchilada BEFORE they deduct from your paycheck. Only the dependent care claims are subject to waiting until they have actually been deducted from your check.

Re: Dependent Care account claims –
Yes, the dependent car portion reimbursements are held up until after deducted from your check. However, these are typically regular predicatble amounts that you have to spend for day care. These are for the most part predictable up-front. The maximum amount is $5000. If your monthly care expenses exceed $416.67 per month (most would) then it’s pretty easy to get ahead on the claims, so you only lose about 1 months worth of interest for each months worth of deduction (due to claims processing time). This adds up to about $1.74 per month at 5%.
I’ll give up that $20.88 in interest income ( $12.53 after tax), in order to save about $2000 on my taxes.

[(former)FormerSanDiegan]

one_muggle –

I must disagree on most of your examples

Re 401K –
Taking 401K contributions it off the top of income helps actually those who don’t itemize. This includes the vast majority of those fortunate enough not to have a mortgage tax deduction.

This would actually hurt those whose itemized deductions do not exceed the standard deduction.

Re Medical spending account claims –
They pay medical when you submit a claim and do not wait for all the deductions. If you use your entire election by February for example, they reimburse you the whole enchilada BEFORE they deduct from your paycheck. Only the dependent care claims are subject to waiting until they have actually been deducted from your check.

Re: Dependent Care account claims –
Yes, the dependent car portion reimbursements are held up until after deducted from your check. However, these are typically regular predicatble amounts that you have to spend for day care. These are for the most part predictable up-front. The maximum amount is $5000. If your monthly care expenses exceed $416.67 per month (most would) then it’s pretty easy to get ahead on the claims, so you only lose about 1 months worth of interest for each months worth of deduction (due to claims processing time). This adds up to about $1.74 per month at 5%.
I’ll give up that $20.88 in interest income ( $12.53 after tax), in order to save about $2000 on my taxes.

[(former)FormerSanDiegan]

one_muggle –

I must disagree on most of your examples

Re 401K –
Taking 401K contributions it off the top of income helps actually those who don’t itemize. This includes the vast majority of those fortunate enough not to have a mortgage tax deduction.

This would actually hurt those whose itemized deductions do not exceed the standard deduction.

Re Medical spending account claims –
They pay medical when you submit a claim and do not wait for all the deductions. If you use your entire election by February for example, they reimburse you the whole enchilada BEFORE they deduct from your paycheck. Only the dependent care claims are subject to waiting until they have actually been deducted from your check.

Re: Dependent Care account claims –
Yes, the dependent car portion reimbursements are held up until after deducted from your check. However, these are typically regular predicatble amounts that you have to spend for day care. These are for the most part predictable up-front. The maximum amount is $5000. If your monthly care expenses exceed $416.67 per month (most would) then it’s pretty easy to get ahead on the claims, so you only lose about 1 months worth of interest for each months worth of deduction (due to claims processing time). This adds up to about $1.74 per month at 5%.
I’ll give up that $20.88 in interest income ( $12.53 after tax), in order to save about $2000 on my taxes.

[Anonymous]

Why does Wall Street always get bailed out?

Why does a dog lick his balls?

Because it can.

[Anonymous]

Why does Wall Street always get bailed out?

Why does a dog lick his balls?

Because it can.

[Anonymous]

Why does Wall Street always get bailed out?

Why does a dog lick his balls?

Because it can.

[ucodegen]

@One_Muggle

401Ks
I have to agree with FormerSanDiegan. It is much better to have the money taken out pre-tax. It drops your taxable income. It removes the income from AGI calculations entirely. This means that if your deductions are being limited for any reason, you still get the tax reduction/effective deduction.

Medical spending account:
This allows you to pay pre-tax and is not subject to the 7% of AGI minimum threshold on schedule A of the 1040.

[drunkle]

how is a bailout contributing to stability? gaming the system means more and more people who play by the rules becoming discontent. stability is only achieved by making the masses content, tilting things against the masses only results in political upheaval.

a meltdown in the *current* financial system means there will be chaos. people will get hurt. but as it is, people are still getting hurt anyway, it’s just a matter of who you consider are “people”.

things are apparently quite fubar. saving the current system in order to perpetuate a fubar system is a farce. seriously, what is the long term plan? what is the remediation? there is none, only day to day hand to mouth. keep things going until i get mine, then off to the caymans.

the op is merely having a revelation about How Things Work. he certainly wasn’t plotting to get rich on the situation. but, there are plenty of examples in the past of people who did indeed get rich off the misery of others. it’s a fundamental strategy, buy low sell high. be prepared and take your opportunities as they come. in the end, if the system fails, it wont matter either way. but in the face of adversity, do you damn best. lemonade, glass half full, etc.

hell, the only potential solution to the crisis is indeed betting against the house. inflation will kill your mattress backed securities, stock/bond markets around the globe are in distress, commodities are just as vulnerable not to mention, nobody actually buys physical gold…

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