Congratulations Taxpayers, you now own an insurance company

[trish]

It's bank failure Friday and The FDIC needs a bailout. (http://news.yahoo.com/s/afp/20090305/pl_afp/financeeconomyusbankinggovernment)

[SurfaceUnits]

It's bank failure Friday and The FDIC needs a bailout. (http://news.yahoo.com/s/afp/20090305/pl_afp/financeeconomyusbankinggovernment)

Some people worry too much. Your country's non-existant revenue surplus/tax revenue to the rescue:

Bill Seeks to Let FDIC Borrow up to $500 Billion
Senate Banking Committee Chairman Christopher Dodd is moving to allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department.
http://online.wsj.com/article/SB123630125365247061.html

ummmm...who is the treasury department going to borrow it from

[chop456]

They own the mint. Duh. :rolleyes:

[SurfaceUnits]

They own the mint. Duh. :rolleyes:

they don't have the funds, my monopoly game comes with money too

[chop456]

Citi is now a penny stock. The taxpayers will soon own billions of shares of worthless **** (GM, AIG, Citi, etc.....). Outstanding job by all involved :thumbup:

Dow’s Blue Chips Akin To Penny Stocks (http://www.cnbc.com/id/29546316)

[chop456]

they don't have the funds, my monopoly game comes with money too

:sarcasm:

[FTG]

I don't think we will ever know the real story. :shakehead

It's actually really simple. Imagine if I sold you car insurance and spent all of your premiums, then you have an accident.

Some people think I committed a crime. Some people think you're a moron for buying insurance from me. The latter were in charge of the entire US financial system.

[Methanolandbrats]

It's actually really simple. Imagine if I sold you car insurance and spent all of your premiums, then you have an accident.

Some people think I committed a crime. Some people think you're a moron for buying insurance from me. The latter were in charge of the entire US financial system. There is some possibility of prosecuting the AIG folks since selling insurance without even planning for reserves to cover potential losses looks a bit like fraud. Barney Frank was talking about it yesterday on CNBC.

[chop456]

The same Barney Frank that wanted Fannie and Freddie to keep shoveling money out to people that shouldn't be getting it?

[SurfaceUnits]

The same Barney Frank that wanted Fannie and Freddie to keep shoveling money out to people that shouldn't be getting it?

the same Barney that said congress had no say over how the Treasury and the fed spent the 800 billion congress appropriated for mortgage rescue

[Methanolandbrats]

Ya, same guy, but this time I hope he's right :D

[FTG]

There is some possibility of prosecuting the AIG folks since selling insurance without even planning for reserves to cover potential losses looks a bit like fraud.

Maybe to Barney, but the people writing the laws thought the free market could determine reserve levels "more efficiently" than Barney.

[Methanolandbrats]

Maybe to Barney, but the people writing the laws thought the free market could determine reserve levels "more efficiently" than Barney.
I don't have the link to the article, but the AIG reserves were set at zero. AIG modeled the situation and determined there was no possiblity of default.
Has nothing to do with Barney setting reserve levels. I think the article was in the NYT.

[SurfaceUnits]

AIG modeled the situation and determined there was no possiblity of default.


that's what happens when you have credit default swaps and derivatives out the wahzu

[FTG]

I don't have the link to the article, but the AIG reserves were set at zero. AIG modeled the situation and determined there was no possiblity of default.
Has nothing to do with Barney setting reserve levels. I think the article was in the NYT.

Must've been an honest mistake. The free market would've punished AIG if AIG were wrong.;)

[oddlycalm]

Looks like Geithner is getting a "no confidence" vote from those he wants to hire.

Geithner gets turned down (http://news.yahoo.com/s/nm/20090306/pl_nm/us_financial_treasury_deputy;_ylt=AjoOwhHadZ_mCWto i9BDLQF34T0D)

oc

[SurfaceUnits]

Must be some illegal nannies in the woodwork


The guy who was being talked up to be Surgeon General withdrew also

[SurfaceUnits]

Joe the Plumber getting his stimulus package:

'Joe the Plumber' sues over Ohio records probe

1 day ago

COLUMBUS, Ohio (AP) — "Joe the Plumber" is suing three former state officials in Ohio, saying they violated his privacy when they gathered his personal information in a records search.

Samuel J. Wurzelbacher says in the federal lawsuit filed Thursday that he suffered emotional distress, harassment, humiliation and embarrassment as a result of their actions. He's seeking unspecified punitive damages.

The lawsuit names Helen Jones-Kelley, who resigned in December as director of the Ohio Department of Job and Family Services, and two assistants.

Ohio's inspector general found that Jones-Kelley improperly used state computers to find personal information on Wurzelbacher, a Toledo-area man who rose to fame during the presidential campaign after asking Barack Obama about his tax plan.

why-o why-o did I leave Ohio

[trish]

Rick Santelli of CNBC goes OFF on the $7B+ "stimulus" package:

http://www.cnbc.com/id/15840232?video=1039849853

Chicago Tea Party. :laugh:

-Kevin

http://blogs.moneycentral.msn.com/topstocks/archive/2009/03/05/jon-stewart-disses-really-disses-cnbc.aspx

[SurfaceUnits]

The crux of the problem:

“Unless and until you give borrowers an incentive to stick around … to ride out the tough times … by reducing their principal balances to levels that actually reflect some semblance of reality, you’re going to see many of these loan modifications fail.”

Obama’s Mortgage Plan Does Not Attack Housing Problem Head On

http://www.moneyandmarkets.com/upside-down-and-out-of-luck-3-30026

[cameraman]

He views houses as a short term investment which is what exactly caused much of this. The cure to being $40K upside down on a house?

Don't move.

People didn't used to move every three years, they stayed in their homes for decades. It does not matter if you are upside down today if you won't be selling for another decade or two.

[JLMannin]

He views houses as a short term investment which is what exactly caused much of this. The cure to being $40K upside down on a house?

Don't move.

People didn't used to move every three years, they stayed in their homes for decades. It does not matter if you are upside down today if you won't be selling for another decade or two.

Exactly. And you can use the current housing downturn to your advantage by paying to have an appraisal, then using this data to lower your property tax assessment and save some property tax $$. Also, if replacement costs are down due to low construction demand, then theoretically, homeowners insurance rates should go down as well, but I do not expect that to happen.

[SurfaceUnits]

fveEU8NAhcc

[oddlycalm]

He views houses as a short term investment which is what exactly caused much of this. The cure to being $40K upside down on a house?

Don't move.

People didn't used to move every three years, they stayed in their homes for decades. It does not matter if you are upside down today if you won't be selling for another decade or two.

That's true, we rode out the downturn in the 80's, which was quite severe in this area, and didn't get back to even for 8yrs. We did get back though, something I'm not sure we can say in the current situation.

Anyone think we will ever see home prices in SE Michigan return to where they were in 2005? Some of the better properties in Arizona, Nevada, California & Florida may come back from being 35%+ down, but average tracts in the exburbs probably won't in my lifetime.

I'm not advocating forcing the entities holding the paper to take a haircut, but as long as the buyer has little incentive to ride it out and the paper holder would rather take the foreclosure price than a haircut on the principal we are stuck in the foreclosure loop. The guv program may find success with people in less hard hit areas facing a rate index, but in those areas where speculators held a high percentage of the real estate it's going to be as effective as peeing onto a burning building.

oc

[SurfaceUnits]

funny that all those speculators have their own family that constantly needs to be moved out when their investments don't pan out.

[cameraman]

TThe guv program may find success with people in less hard hit areas facing a rate index, but in those areas where speculators held a high percentage of the real estate it's going to be as effective as peeing onto a burning building.

oc

They can't fix everything. The people who bought into the extreme bubble areas are screwed, simple as that. The gov't is trying to contain the damage, it can't stop all of it.

[SurfaceUnits]

Speculators, Politicians, and Financial Disasters

Who's to blame for our current financial mess? It's not the people to whom the media has assigned responsibility.

http://www.commentarymagazine.com/viewarticle.cfm/speculators--politicians--and-financial-disasters-13180

[SurfaceUnits]

Fact #1. As in the early 1930s, the essence of this crisis is a debt collapse.

Fact #2. The debts today are far greater; and their collapse, more impactful. Specifically, in 1929, for every dollar of GDP, the U.S. had $1.70 in debt; today, it has $3.50, or nearly twice as much. In 1929, there were virtually no derivatives; today, among U.S. commercial banks alone, there are $176 trillion. In 1929, the U.S. was a creditor nation with no debts to foreign countries; now it’s the world’s largest debtor nation, owing more than $2 trillion abroad.

Fact #3. Between its peak in 1929 and its ultimate bottom in 1932, the Dow Jones Industrial Average fell 89 percent, the equivalent of a decline to Dow 1500 in today’s market.

Thus, even if this depression is not more severe than the 1930s, a devastating, long-term bear market still lies ahead.

http://www.moneyandmarkets.com/emergency-briefing-transcript-30062

[oddlycalm]

They can't fix everything. The people who bought into the extreme bubble areas are screwed, simple as that. The gov't is trying to contain the damage, it can't stop all of it.

Agreed. In a way the exercise is similar to adding a crush zone to a car that is already out of control and and heading off the road.

BTW, Sheila Bair at FDIC got big air time last night on 60 Minutes. She's been the lone voice of sanity throughout and deserves to be heard.

oc

[Insomniac]

Some interesting stuff in the NYT this weekend. First about where some of the AIG money is going (http://www.nytimes.com/2009/03/08/business/08gret.html).

I'm wondering one thing. On one hand I read that writing these derivative and swap contracts are so easy (like 3 pages and boom) and that's how a couple hundred Lehman employees in London destroyed the firm and then read how they are so incredibly complex. Can these really be both?

The other is an op-ed on Europe's looming problems (http://www.nytimes.com/2009/03/08/opinion/08Ahamed.html).

They had some crazy lending going on not involving real estate.

[oddlycalm]

The other is an op-ed on Europe's looming problems (http://www.nytimes.com/2009/03/08/opinion/08Ahamed.html).

They had some crazy lending going on not involving real estate.

Good article. Hits all the high points. Nouriel Roubini has been writing about Central Europe for months indicating this is the region that is going to get the worst pasting. Since it's also the least stable politically and socially it's a really ugly situation.

The big threat is that any serious collapse or unrest will spread quickly. The rating downgrade of Ukraine a few days ago really shook up the financial markets in Central Europe and even in the EU. Latvia is not able to meet it's IMF obligations is is technically bankrupt as of now. If any of these countries falls into chaos the effects will be felt well beyond Europe, which makes it all the more alarming the the EU leadership doesn't seem to have the will to act.

oc

[SurfaceUnits]

Don't worry be happy: S&P 500 at 500, the Dow at 5000.

Dr. Doom's latest http://www.cnbc.com/id/29598949

[Insomniac]

Good article. Hits all the high points. Nouriel Roubini has been writing about Central Europe for months indicating this is the region that is going to get the worst pasting. Since it's also the least stable politically and socially it's a really ugly situation.

The big threat is that any serious collapse or unrest will spread quickly. The rating downgrade of Ukraine a few days ago really shook up the financial markets in Central Europe and even in the EU. Latvia is not able to meet it's IMF obligations is is technically bankrupt as of now. If any of these countries falls into chaos the effects will be felt well beyond Europe, which makes it all the more alarming the the EU leadership doesn't seem to have the will to act.

oc

I'm not surprised they're having a tough time acting. Just like here, there surely is a debate over what is the best way to act. So you have multiple heads of state with different ideas and constituents in different situations. It will likely take a cascading effect of trouble for a lot of people for a sense of urgency to develop just like it did here.

[Insomniac]

Don't worry be happy: S&P 500 at 500, the Dow at 5000.

Dr. Doom's latest http://www.cnbc.com/id/29598949

For today, they have different plans. :)

I'd also like to thank E*Trade for forcing me to liquidate their S&P 500 fund and wait 3 days for the trade to settle before I can reinvest. Sell low, may have to buy high! My retirement account appreciates it after being hammered for 6 months. Who knew it was so hard to manage a fund that follows an index?

[SurfaceUnits]

Wall Street: Experts at taking their experience and your money and turning it into their money and your experience :shakehead

[oddlycalm]

Dr. Doom's latest http://www.cnbc.com/id/29598949

So why does the mainstream media continue to label one of the few people to accurately predict the events of the last year Dr. Doom? Shouldn't it be Dr. Right....? :irked:

I don't see them labeling any of the happy talk crackpots on TV all last year that were dead wrong Dr. Wrong, Dr. HappyTalk or Dr. Clueless.

CNBC's credibility has been zero with me for years and nothing I have seen in the last year has changed anything. Aside from an endless barage of misinformation I have no idea what their function is supposed to be. Gossip? Entertainment?

oc

[FTG]

CNBC's credibility has been zero with me for years
oc


Yep. Yesterday the problem was the market had lost all faith in Obama. Today, it's up 7% in one day.

[oddlycalm]

Yep. Yesterday the problem was the market had lost all faith in Obama. Today, it's up 7% in one day.

Exactly :D

[SurfaceUnits]

a man drowning always pops up for one last gasp

[Methanolandbrats]

a man drowning always pops up for one last gasp:laugh:

[Indy]

I have no idea what their function is supposed to be.

Ummmm, that would be to keep the checks flowing in the direction of Wall Street. The financial networks are nothing but advertising, with only the occasional token grasp for credibility. You would be better off with a monkey than those guys.

[FTG]

Jon Stewart has figured it out.

http://www.cnn.com/video/#/video/business/2009/03/10/moos.stewart.rips.cnbc.cnn

[Methanolandbrats]

CNBC's morning show anchored by Mark Haines is good. Once he goes off the air, it's a wasteland and the mute button is mandatory, especially for the screeeeeeching Wall Street apologists like Melissa Francis, Maria (I get damp when the Dow is up) Bartiromo and the endless parade of other mindless di*****s.

[oddlycalm]

CNBC's morning show anchored by Mark Haines is good. Once he goes off the air, it's a wasteland and the mute button is mandatory, especially for the screeeeeeching Wall Street apologists like Melissa Francis, Maria (I get damp when the Dow is up) Bartiromo and the endless parade of other mindless di*****s.

If all they were is mindless di*****s I wouldn't mind. Bartiromo is married to a big hedge fund manager and Cramer has admitted to stock manipulation (http://www.google.com/search?source=ig&hl=en&rlz=&=&q=Jim+Cramer+stock+manipulation&btnG=Google+Search&aq=f) when he ran a fund. Both are in a position to influence markets. Cramer may act like a clown, but some people are saying there may be a lot more too it than that.

oc

[RusH]

I :heart: Maria :gomer:
vbJxMd3Pls8

[SurfaceUnits]

U.S. home foreclosure activity resumed its upturn in February after a brief dip, despite numerous programs meant to quell the record pace of failing mortgages, RealtyTrac reported on Thursday.

Filings, which include notice of default, auction sale or bank repossession, rose 6 percent in February after slipping 10 percent in January, and leaped 30 percent from a year ago, the Irvine, California-based real estate data firm said.

Nearly 291,000 properties in the U.S. got a foreclosure filing in February, the third highest monthly total since RealtyTrac began tracking the data in January 2005.

"The rate of foreclosure activity is increasing beyond the ability of even these types of moratoria to slow down," Rick Sharga, senior vice president at RealtyTrac, said in an interview, referring to major state and corporate moratoriums on foreclosures.

President Barack Obama late last month unveiled a $275 billion housing stimulus plan, but the housing market is still contending with dire employment conditions and falling house prices.

The administration's housing rescue won't be enough to fix the rapid rate of foreclosure, though it is by far the best-constructed program to date, he contended. Many borrowers in the hardest hit states have mortgages far exceeding the value of their homes, and thus don't meet the criteria to refinance under the new federal program.

http://www.reuters.com/article/topNews/idUSTRE52442X20090312

[oddlycalm]

Not much of a surprise that the TARP Oversight Panel can't get any details about how the money was spent (http://www.nationaljournal.com/congressdaily/cdp_20090311_7050.php).

Here's an interesting little tidbit. They were too big to fail before yet we've succeeded in making them bigger. :gomer:


the crisis has led to a consolidation of banks that means that half of all bank deposits in the U.S. are concentrated in just four federally insured banks: JPMorgan Chase, Citibank, Wells Fargo and Bank of America.

oc

[FTG]

The market is up about 15% in the three days after I heard Kramer say he saw "no reason for optimism."

[JLMannin]

The market is up about 15% in the three days after I heard Kramer say he saw "no reason for optimism."

Proof that contrarian investing has become the norm. :D

[extramundane]

A.I.G. to Pay $100 Million in Bonuses (http://www.nytimes.com/2009/03/15/business/15AIG.html?_r=1&hp)


“We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. businesses — which are now being operated principally on behalf of American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” [A.I.G.’s government-appointed chairman, Edward M. Liddy] wrote Mr. Geithner.

Contractual obligations my ass. Let 'em quit. We can see where the "best and brightest talent" got us. :irked: :flame:

[chop456]

I :heart: Maria :gomer:

Becky Quick is the new Maria. Mmmm......

[oddlycalm]

Contractual obligations my ass. Let 'em quit. We can see where the "best and brightest talent" got us. :irked: :flame:
Yup, and when there have been 10's of thousands of layoffs in the financial sector, where exactly are they gonna go...?

Bernanke has said quite clearly that AIG is going to be broken up and sold off to pay the government back, so why do we care what happens with their derivatives trading group? Sounds like the plans are to shut it down regardless.

oc

[Methanolandbrats]

Becky Quick is the new Maria. Mmmm......:thumbup:

[Gnam]

Hey, it could be worse.

At least AIG isn't run quite as badly as the Russian Defense Industry (http://www.weeklystandard.com/Content/Public/Articles/000/000/016/286uzncs.asp). :shakehead

[extramundane]

Iowa Sen. Charles Grassley (http://news.yahoo.com/s/ap/20090317/ap_on_go_co/grassley_aig_7) on AIG execs:


"I suggest, you know, obviously, maybe they ought to be removed," Grassley said. "But I would suggest the first thing that would make me feel a little bit better toward them if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide.

"And in the case of the Japanese, they usually commit suicide before they make any apology."

[chop456]

I bet they’d have a long line of applicants for the Seppuku assistant jobs, too. I can’t remember the proper name. My Japanese is a little rusty. :gomer:

[Methanolandbrats]

I bet they’d have a long line of applicants for the Seppuku assistant jobs, too. I can’t remember the proper name. My Japanese is a little rusty. :gomer:
Shogun? :gomer:

[Indy]

If the line is forming for harikari, may I suggest we allow our elected federal officials go first. I will be happy to sharpen some swords for them.

[Methanolandbrats]

When this all started I thought the best solution was a long line of guillotines on Wall Street. Immediate problem....solved. Deterrent for future stupid, greedy behavior.......you betcha. Think of it as the anti-bonus. :thumbup:

[trish]

The Federal Reserve will now buy government bonds and more fannie and freddie bad mortgages. http://news.yahoo.com/s/ap/20090319/ap_on_bi_ge/fed_interest_rates_32 What does this mean?

[oddlycalm]

The Federal Reserve will now buy government bonds and more fannie and freddie bad mortgages. http://news.yahoo.com/s/ap/20090319/ap_on_bi_ge/fed_interest_rates_32 What does this mean?

The Fed is trying to boost confidence and lower the 30yr mortgage rate. It's not clear to me how far they can push rates down. Based on historical data, the Fed would have to push the Ten Year yield (which mortgage rates are based on) down to around 2.3% for the 30 year mortgage rate to fall to 4.5%.

If they succeed I'm sure 4.5% will be interesting to those with 6+% mortgages as the difference is noticeable in the average person's budget.

$250K @ 6.0% over 30yrs = $1499/mo & $289,593 total interest
$250K @ 4.5% over 30yrs = $1267/mo & $206,018 total interest

Almost makes me want to strap on a 30yr mortgage and start pulling... almost. :gomer:

oc

[Methanolandbrats]

The Fed is trying to boost confidence and lower the 30yr mortgage rate. It's not clear to me how far they can push rates down. Based on historical data, the Fed would have to push the Ten Year yield (which mortgage rates are based on) down to around 2.3% for the 30 year mortgage rate to fall to 4.5%.

If they succeed I'm sure 4.5% will be interesting to those with 6+% mortgages as the difference is noticeable in the average person's budget.

$250K @ 6.0% over 30yrs = $1499/mo & $289,593 total interest
$250K @ 4.5% over 30yrs = $1267/mo & $206,018 total interest

Almost makes me want to strap on a 30yr mortgage and start pulling... almost. :gomer:

oc Not yet. Keep your powder dry. When this things runs it's course the government will give you a free house. It might be a Soviet Style Concrete Bunker without heat, but it will be free. :gomer:

[oddlycalm]

Not yet. Keep your powder dry. When this things runs it's course the government will give you a free house. It might be a Soviet Style Concrete Bunker without heat, but it will be free. :gomer:

Don't worry, even if mortgages went to 1% I never want another one. And I'd sooner take a beating than have to move again. :\

oc

[Gnam]

And I'd sooner take a beating with a modified Sawsall than have to move again. :\

oc
fixxered.
Can we merge this thread with the other one now? :p

[Insomniac]

Don't worry, even if mortgages went to 1% I never want another one. And I'd sooner take a beating than have to move again. :\

oc

1%? I'd take a mortgage out as big as I can for a 30-year fixed 1%! If you have the full loan amount, the interest @ 4% would meet the monthly payment.

[oddlycalm]

fixxered.
Can we merge this thread with the other one now? :p

Yup, and we should probably roll the noise canceling headphone thread as well...:gomer:

oc

[Ankf00]

http://justoneminute.typepad.com/main/2009/03/with-defenders-like-this.html


AIG Financial Products group has many risk books and lines of business that are not credit derivatives and which do require care and tending. In addition to overlooking the possibility that many of the AIGFP people were not employed in credit derivatives, he ignores the fact that this was a retention bonus pool, not an incentive bonus pool. Joe Cassano had led the charge into credit derivatives; AIG management had pushed him to one side and tried to persuade the underlings to stay on and help pick up the pieces. If AIGFP was like any other organization of that size, some (not all) of the survivors were former rivals of Cassano who were delighted to see him go and eager to try and right the ship. Yet now they are the villains?

[oddlycalm]

http://justoneminute.typepad.com/main/2009/03/with-defenders-like-this.html

Good blog. The somewhat misplaced populist frenzy over the less than 1% of the funding given to AIG is giving cover to state insurance regulators who woke up too late to unwind the damage to the insurance units in time. All we heard last fall from Treasury, congress and the talking heads was that AIG's fundamental insurance businesses were sound and that's' what made the guv buying in OK. Not so.

What he doesn't discuss is that not a single CDO payout was triggered by a derivative going sour. The collateral payouts were contractually triggered when AIG's credit rating was cut. They couldn't make good and that's why they literally went down overnight.

Instead of breaking up AIG's insurance businesses and selling them off in an awful market to repay the government the smart play would be to grow the business in order to get the payback.

oc

[Insomniac]

Good blog. The somewhat misplaced populist frenzy over the less than 1% of the funding given to AIG is giving cover to state insurance regulators who woke up too late to unwind the damage to the insurance units in time. All we heard last fall from Treasury, congress and the talking heads was that AIG's fundamental insurance businesses were sound and that's' what made the guv buying in OK. Not so.

What he doesn't discuss is that not a single CDO payout was triggered by a derivative going sour. The collateral payouts were contractually triggered when AIG's credit rating was cut. They couldn't make good and that's why they literally went down overnight.

Instead of breaking up AIG's insurance businesses and selling them off in an awful market to repay the government the smart play would be to grow the business in order to get the payback.

oc

Or take over the credit rating company and fix AIG's credit rating. What's a couple more years of way wrong ratings? :gomer:

[Ankf00]

FDIC to be the newest tool to bail out banks.

The Federal DEPOSIT Insurance Corp. is for protecting depositors, not bank debt.

[FTG]

Told you when the Dow went back up, it would go back up quick.

[oddlycalm]

Told you when the Dow went back up, it would go back up quick.
Yep, the short term indicators are positive but it'll be until the monthly indicators turn positive we won't no if it's' a dead cat bounce or a bottom.

oc

[Ankf00]

http://www.theatlantic.com/doc/200905/imf-advice

http://www.rollingstone.com/politics/story/26793903/the_big_takeover/print

Banana Republic, holla!

[trish]

I like this quote
Quite the contrary: at the outset of the crisis, the oligarchs are usually among the first to get extra help from the government, such as preferential access to foreign currency, or maybe a nice tax break, or—here’s a classic Kremlin bailout technique—the assumption of private debt obligations by the government.

[oddlycalm]

Banana Republic, holla!

It's true, but this is just the most recent chapter. The only reason the mainstream media and average person are starting to pay attention is because it is finally impacting their lives. It's been quietly impacting communities across the US one by one since the 1970's with increasing regularity.

I've watched for years while US companies have been bought up through LBO's, and more recently private equity firms, squeezed to repay the crushing debt it's new masters incurred in buying it, then discarded when there was no more profit to be had. Some were sold multiple times. In the end most were so weakened that the brand was either outsourced to a foreign plant or they just quietly died. Those few that still survive often face a very competitive world with equipment that is decades old. The corporate raiders and investment bankers got wealthy while communities around the country lost jobs and revenue.

The same oligarchs kept up the free trade pressure on the executive branch and congress. Problem is, what they call free trade isn't free at all. When we allow free access to our markets to countries that do not allow similar access to theirs (Japan) or unfairly manipulate their currency (China) we lose big. If that happens for long enough we lose everything.

We learned this week that any regulatory framework, however pusillanimous, will be opposed ferociously. Because it is their divine right to wreck companies, communities, or the economy at large with impunity and the only purpose the rest of us serve is the bail them out when they screw things up.

oc

[eiregosod]

I've watched for years while US companies have been bought up through LBO's, and more recently private equity firms, squeezed to repay the crushing debt it's new masters incurred in buying it, then discarded when there was no more profit to be had. Some were sold multiple times. In the end most were so weakened that the brand was either outsourced to a foreign plant or they just quietly died.

sounds a lot like what is happening at f1/cvc/foa. The inability to pay back the massive loans is causing the honchos to make very stupid decisions.

[oddlycalm]

sounds a lot like what is happening at f1/cvc/foa. The inability to pay back the massive loans is causing the honchos to make very stupid decisions.

Yup, Bernie certainly fits the definition of oligarch in every way I can think of. By selling the majority of the commercial rights Bernie put F1 at risk and if it fails Bernie will have been the only party that gained while dozens of businesses will go under and thousands of people will get hammered. For the bankers that bought the debt it's just more paper that isn't worth face value which is why it got factored to a third party for half that amount

oc

[Ankf00]

AIG Delays, Cuts Funding on Several Land Ventures
Article

By CARRICK MOLLENKAMP, SERENA NG and LIAM PLEVEN

American International Group Inc., whose spending is being monitored by the Federal Reserve, has cut or delayed payments to some AIG real-estate ventures, potentially leaving shopping centers and apartment complexes across the U.S. short on cash to pay lenders and fund repairs and renovations, according to court documents and people familiar with the matter.

Affiliates of one real-estate firm, which teamed with AIG in a $2 billion purchase of a low-income apartment portfolio in 2007, have sued AIG for missed and delayed payments. Affiliates of the developer, Mitchell L. Morgan Management Inc., claimed in their lawsuit that they were told by AIG's top real-estate executive that "the current Federal Reserve funding arrangement with AIG does not provide for funding of AIG Global's commitments to its joint venture partners."

AIG also ceased payments to a partnership with an Alabama shopping-center developer, leaving the developer's bank lenders with potential losses, according to people familiar with the situation. Some 15 banks could end up with souring loans at a time when commercial-property losses already are increasing.

The disputes show how unpredictable the government's role at AIG has become for the insurer's business partners. While big U.S. and European banks received payouts via a government bailout to settle contracts, some U.S. property developers have been left in the lurch. The government's involvement in the company has also roiled the insurance industry, where AIG has at times undercut competitors to win business.

...

At the center of the dispute is AIG Global Real Estate, an arm of the insurance company. AIG has received $173.3 billion in government bailout funds. Over the past two decades, the AIG real-estate business, using its insurance premiums and working with third-party investors, acquired property on its own or via developers. Today, the unit has interests totaling more than $23 billion, across 53 million square feet of real estate.

When the unit has joined with developers in the past, its stature and access to lenders made closing deals a snap. Once the partnership had acquired a portfolio, AIG provided money for renovations and to cover cash shortfalls needed to pay for operating costs. But late last year and early this year, payments were delayed, making it difficult for Morgan to make its own payments, according to the lawsuit filed in February by Morgan affiliates in a Pennsylvania state court. Ms. Pretto said AIG is in full compliance with its pact with Morgan and its affiliates, and all funding has been provided.

...

But late last year, AIG's payments stopped flowing around the time the Fed on Nov. 9 boosted its bailout to $150 billion.



...
The Fed has a direct role in certain of AIG's major cash disbursements. That includes real-estate investments. Government officials track 13-week rolling forecasts of AIG cash flow and meet daily with AIG officials.

Write to Carrick Mollenkamp at carrick.mollenkamp@wsj.com, Serena Ng at serena.ng@wsj.com and Liam Pleven at liam.pleven@wsj.com

http://online.wsj.com/article/SB123837695953168223.html#mod=testMod


cash infusions via AIG for the US's big 4 and another 4 of europe's largest banks only, everyone else to the back of the line. oh and we'll give the banks direct infusions as well...

the collusion is sickening.

[oddlycalm]

cash infusions via AIG for the US's big 4 and another 4 of europe's largest banks only, everyone else to the back of the line. oh and we'll give the banks direct infusions as well...

the collusion is sickening.

It's also interesting to contrast the treatment of the large banks and the auto industry.

oc

[Ankf00]

talks for nationalized bankruptcy now.

say bye-bye, UAW.

[Insomniac]

talks for nationalized bankruptcy now.

say bye-bye, UAW.

Everyone has been given an opportunity to avoid letting a judge decide how to redo contracts. If this happens, it's their own fault. Congratulations, you stood your ground and now you get a whole lot less.

[dando]

:shakehead :saywhat:

http://online.wsj.com/article/SB123879833094588163.html


I must be naive. I really thought the administration would welcome the return of bank bailout money. Some $340 million in TARP cash flowed back this week from four small banks in Louisiana, New York, Indiana and California. This isn't much when we routinely talk in trillions, but clearly that money has not been wasted or otherwise sunk down Wall Street's black hole. So why no cheering as the cash comes back?

My answer: The government wants to control the banks, just as it now controls GM and Chrysler, and will surely control the health industry in the not-too-distant future. Keeping them TARP-stuffed is the key to control. And for this intensely political president, mere influence is not enough. The White House wants to tell 'em what to do. Control. Direct. Command.

Great. Our very own Hugo Chavez. :mad: :irked:

-Kevin

[Insomniac]

:shakehead :saywhat:

http://online.wsj.com/article/SB123879833094588163.html



Great. Our very own Hugo Chavez. :mad: :irked:

-Kevin

I think they are sticking with the way Paulson did it. He forced all the banks to take the money so that some weren't singled out (possibly causing a run) as being worse off than others. I also think they do want to be able to partially control all of the banks so some can't run amok with the same old rules and also out-compete the others. The biggest problem is still all the CDS. Those are looming and bank failures could likely still cause a cascading effect.

[oddlycalm]

It's clear that they are committed to recapitalization of the same institutions that got us into the mess, an approach not widely embraced on either side of the aisle. In the absence of any comprehensive regulatory reform, and considering how badly these companies blew it, that's a pretty tall gamble. It's clear they want to retain a substantial level of control, the open question is for how long.

Inside the bank CEO meeting (http://www.politico.com/news/stories/0409/20871.html)

Back CEO's put on notice (http://www.sfexaminer.com/business/Treasury-chief-puts-bank-CEOs-on-notice-42500282.html)

We've been talking about the contrast between how the auto companies are being treated and how the banks are being treated. Clearly that was either a misinterpretation or something changed.

On the same day Rick Wagoner was at the White House losing his job the bank CEO's were also there getting some very pointed comments as well as a refusal to accept back TARP money from JP Morgan. Also interesting is that Summers did not speak at all, which most be some kind of record for him. That's been followed up with more pointed comments by Geithner.

oc

[FTG]

Funny how when the market goes stupidly upward, no one comments.

[cameraman]

Hard to talk when you are holding your breath.

[oddlycalm]

Funny how when the market goes stupidly upward, no one comments.

Great trading opportunity, but for a lot of people it feels like being offered a glass of great champagne on the deck of the Titanic post impact. One can appreciate the vintage but it's overwhelmed by the enormity of the situation.

oc

[Ankf00]

oil up to ~$60 despite record surpluses, tankers being used as floating storage units the world 'round, and demand still decreasing

but hey, the rate of increase in surplus wasn't as high as expected, yay! ... that makes sense :saywhat:



and Pravda with the timely irony, first couple paragraphs full of propaganda, the rest pretty spot on: http://english.pravda.ru/opinion/columnists/107459-0/



*snip*

These past two weeks have been the most breath taking of all. First came the announcement of a planned redesign of the American Byzantine tax system, by the very thieves who used it to bankroll their thefts, loses and swindles of hundreds of billions of dollars. These make our Russian oligarchs look little more then ordinary street thugs, in comparison. Yes, the Americans have beat our own thieves in the shear volumes. Should we congratulate them?

These men, of course, are not an elected panel but made up of appointees picked from the very financial oligarchs and their henchmen who are now gorging themselves on trillions of American dollars, in one bailout after another. They are also usurping the rights, duties and powers of the American congress (parliament). Again, congress has put up little more then a whimper to their masters.

Then came Barack Obama's command that GM's (General Motor) president step down from leadership of his company. That is correct, dear reader, in the land of "pure" free markets, the American president now has the power, the self given power, to fire CEOs and we can assume other employees of private companies, at will. Come hither, go dither, the centurion commands his minions.

So it should be no surprise, that the American president has followed this up with a "bold" move of declaring that he and another group of unelected, chosen stooges will now redesign the entire automotive industry and will even be the guarantee of automobile policies.

*snip*


:laugh:

[Gnam]

They only criticise because they care. :p