Congratulations Taxpayers, you now own an insurance company

[SurfaceUnits]

To go along with the investment bank you own

Fed in AIG rescue - $85B loan
Government response reaches dramatic new level: U.S. will take 80% stake in nation's largest insurer to prevent global financial chaos.


By Tami Luhby, CNNMoney.com senior writer
Last Updated: September 16, 2008: 10:35 PM EDT

NEW YORK (CNNMoney.com) -- In an unprecedented move, the Federal Reserve Board is lending as much as $85 billion to rescue crumbling insurer American International Group, officials announced Tuesday evening.

The Fed authorized the Federal Reserve Bank of New York to lend AIG (AIG, Fortune 500) the funds. In return, the federal government will receive a 79.9% stake in the company.

Officials decided they had to act lest the nation's largest insurer file bankruptcy. Such a move would roil world markets since AIG (AIG, Fortune 500) has $1.1 trillion in assets and 74 million clients in 130 countries.

An eventual liquidation of the company is most likely, senior Fed officials said. But with the government loan, the company won't have to go through a tumultuous fire sale.

[Methanolandbrats]

AIG will sell off assets and pay it back, it's not a gift. In this case, for the sake of stability and cleaning up what insurance companies are allowed to do with their money, it's a good thing.

[eiregosod]

The Fed authorized the Federal Reserve Bank of New York to lend AIG (AIG, Fortune 500) the funds. In return, the federal government will receive a 79.9% stake in the company.

wealth confiscation

[eiregosod]

another arm of the US federal govt, JPM-chase-sterns gave lehman $138bn after bankruptcy.

[SurfaceUnits]

and the elected pigs in DC are scrambling to find others to blame while they figure out how they can get richer in the turmoil

[Insomniac]

This is like already having more bills than you can afford to pay and then buying a new car, except as stupid as banks are, they wouldn't even loan you the money for that.

We seriously need to fire everyone in elected office in Washington. Clear them all out. Add term and maximum age limits. No position in Washington should be a lifetime appointment and in all practicality, for most of these congresspeople it is even though they must be re-elected.

[Ankf00]

AIG will sell off assets and pay it back, it's not a gift. In this case, for the sake of stability and cleaning up what insurance companies are allowed to do with their money, it's a good thing.

this is the goal. the interest rate according to the terms is supposedly 2.8 + 8.5 on top

[SurfaceUnits]

Another must see:

http://www.charlierose.com/shows/2008/9/15/1/a-discussion-about-the-crisis-on-wall-street

[oddlycalm]

The issue not clear to me is how the investment banks could issue 10-Q's quarter after quarter and claim all was well when they were leveraged to the gills with these toxic assets. We may not regulate derivatives trade but we most certainly make it a crime to misreport a company's financials. :irked: There has been zero transparency and the CEO's of these companies have been telling the world that they have adequate capitalization.

The real irony is that the people Paulson and Bernanke are huddling with the solve this are the very people responsible for creating it....:tony:

The biggest insult to me was that the stockholders were saved in the Fanny / Freddie bailout. The taxpayers shoulder the burden yet the stockholders are made whole? :thumdown:

oc

[Methanolandbrats]

The whole mess from local bank lending to the big investment houses was caused by gunslinger loan officers and portfolio managers chasing short term return and ignoring risk. This is far from over. The big guys get hit first when the house of cards collapses, next will come local bank failures. The market will shake out the cowboys and the financial system will be better off, but the government has to take a look at regulating the explosion of derivative products available since many of them serve no purpose but to fuel greed and stupidity.

[SurfaceUnits]

The real irony is that the people Paulson and Bernanke are huddling with the solve this are the very people responsible for creating it....:tony:

The biggest insult to me was that the stockholders were saved in the Fanny / Freddie bailout. The taxpayers shoulder the burden yet the stockholders are made whole? :thumdown:

ocfanny/freddie stockholders lost as much as 80% of their value

[Insomniac]

The whole mess from local bank lending to the big investment houses was caused by gunslinger loan officers and portfolio managers chasing short term return and ignoring risk. This is far from over. The big guys get hit first when the house of cards collapses, next will come local bank failures. The market will shake out the cowboys and the financial system will be better off, but the government has to take a look at regulating the explosion of derivative products available since many of them serve no purpose but to fuel greed and stupidity.

Throw-away news line last week.


Circling the Wagons? Warren Buffet has told his Berkshire (BRK.A) to stop writing insurance for bank deposits over the FDIC's $100k limit.

[SurfaceUnits]

WaMu Morgan Stanley Goldman Sachs are up at bat next

Morgan and Goldman plummet,

U.S. regulators try to find WaMu buyer.

the Brits are getting in on the action HBOS in talks


http://static.reuters.com/resources/r/?m=02&d=20080917&t=2&i=6023297&w=148

[Methanolandbrats]

Lehman was leveraged at over 30:1. MS and what's left are in the mid 20s.

[cameraman]

The biggest insult to me was that the stockholders were saved in the Fanny / Freddie bailout. The taxpayers shoulder the burden yet the stockholders are made whole? :thumdown:

oc

You do realize that you are referring to your TIAA/CREF retirement account when you say "stockholders".

[eiregosod]

The issue not clear to me is how the investment banks could issue 10-Q's quarter after quarter and claim all was well when they were leveraged to the gills with these toxic assets. We may not regulate derivatives trade but we most certainly make it a crime to misreport a company's financials. :irked: There has been zero transparency and the CEO's of these companies have been telling the world that they have adequate capitalization.

The real irony is that the people Paulson and Bernanke are huddling with the solve this are the very people responsible for creating it....:tony:

The biggest insult to me was that the stockholders were saved in the Fanny / Freddie bailout. The taxpayers shoulder the burden yet the stockholders are made whole? :thumdown:

oc

oh no, the FEd or US taxpayer was guarenteeing that the holders of the fannie and freddie mortgages (the russians and chinese) that they WILL get paid, damn the shareholders.

I'd like to know when the US federal reserve had the right to confiscate an insurance company , when their role was to be lender of last resort to banks.

[Insomniac]

I'd like to know when the US federal reserve had the right to confiscate an insurance company , when their role was to be lender of last resort to banks.

They aren't confiscating AIG. In exchange for an $84B loan, they get a 79.9% equity stake in the company. That was the cost to AIG to get a loan. This time, the gov't actually got something more than interest. Hopefully it ends up being worth something in the future.

[SurfaceUnits]

Money market funds turning upside down

Reserve's money fund 'breaks the buck'

The world's first money-market fund's $62B in assets fall below a safety benchmark due to soured investments in Lehman.
Last Updated: September 17, 2008: 2:55 PM EDT

The assets of a money-market fund that held $62 billion three months ago have fallen below a safety benchmark intended to ensure investors who put money in can get it all back - just the second unsettling instance in which a fund has exposed investors to potential losses in the nearly four-decade history of money-market funds.

Reserve Management Co.'s announcement that its Reserve Primary Fund had "broken the buck" after its assets fell sharply because of soured investments in Lehman Brothers Holdings Inc. marked the first such investor exposure to money-market losses since 1994.

New York-based Reserve said the value of $785 million in debt securities issued by Lehman and held by the Primary Fund were written down to zero as of Tuesday afternoon - a consequence of Lehman's collapse and bankruptcy after the federal government failed to bail out the investment bank over the weekend.

Money-market funds normally maintain assets of at least $1 for every dollar invested in funds, and are supposed to return interest to investors in the form of dividends.

Reserve said Tuesday night that "unprecedented market events of the past several days" had reduced the value of the fund's holdings to 97 cents for each $1 put in by investors -- an event known as "breaking the buck."

In the past 14 months, the managers of 21 money funds have stepped in to supply additional cash to avoid breaking the buck. Crane said he was aware of three such "support events" this week alone, involving the money-market funds of Wachovia Corp (WB, Fortune 500).'s Evergreen Investments unit; Ameriprise Financial Services Inc (AMP, Fortune 500).'s RiverSource Funds; and the money fund of Northwestern Mutual's Russell Investments.

[oddlycalm]

This is far from over.

Exactly, and the longer the toxin remains in the system the longer this will go one.

Since the problem is the inability to price the paper, rather than the paper actually being worthless, it seems like the fastest and least expensive workout would be a temporary agency like Resolution Trust that would buy up the paper and then either sell it post-crisis or receive the payout from the actual mortgages. It certainly beats having to bail out a lot more financial companies and it gets the process over with quickly.

oc

[FTG]

The tax payers are getting what they voted for. The Canadian government made subprime mortgage illegal but you didn't want to like Canada. Still don't.

Oh well, at least you still have the best healthcare system in the world.

[FTG]

it seems like the fastest and least expensive workout would be a temporary agency like Resolution Trust that would buy up the paper and then either sell it post-crisis or receive the payout from the actual mortgages. It certainly beats having to bail out a lot more financial companies and it gets the process over with quickly.

oc

No one is dumb enough to actually pay the ridiculous mortgage rates, which makes the mortgages pretty much worthless.

[Gnam]

Fed in AIG rescue - $85B loan
Government response reaches dramatic new level: U.S. will take 80% stake in nation's largest insurer to prevent global financial chaos.
Do I get a toaster or a football phone? :gomer:

[Methanolandbrats]

Do I get a toaster or a football phone? :gomer:

Every citizen will get several of these samples from FEMA
http://www.americanlifestyle.com/products/astroglide.jpg We're gonna need it.

[oddlycalm]

No one is dumb enough to actually pay the ridiculous mortgage rates, which makes the mortgages pretty much worthless.

Not following you. Only a small percentage of the mortgages are adjustable rate and only a small percentage are delinquent or abandoned, the problem is that nobody knows what that percentage is for each security so they can't be traded.

That's why it will take time to unwind. Some entity is going to have spend the time to actually evaluate every security and determine which of the underlying mortgages are a problem and which are not. The good paper will be sold off that the rest written down or written off and the real estate sold off at whatever price can be gotten. That back end is unlikely to be that horrible, it's just going to take time to get there. Since there is inevitably going to be some kind of workout we'd just as soon get started.

Until that happens the financial markets will continue to experience constipation. The real problem is if this spreads to other areas. Seeing money market funds under pressure is not going to make anyone feel real good. :(

oc

[dando]

Until that happens the financial markets will continue to experience constipation.

Based on what we've seen this week, the exact opposite has occurred. :( :cry:

-Kevin

[Methanolandbrats]

The solvent investment houses will have to liquidate profitable positions to cover leveraged and losing positions as margin calls come in. That's just getting going. That's why oil and energy went down so much. That will put more pressure on equity prices. Next up, credit card defaults and local bank failures..................

[eiregosod]

Come back Ken Lay, all is forgiven.

list of bank confiscations
http://www.cnbc.com/id/26673834

note, one in ten Indymac deposits was >$100k , yoink!

[FTG]

Only a small percentage of the mortgages are adjustable rate

oc

That's like saying "only a small percentage of the cells in your body are malignant."

[Methanolandbrats]

That's like saying "only a small percentage of the cells in your body are malignant." Correct. And it depends on the region. In some areas banks are responsible for a huge percentage of the real estate sales...not exactly their specialty. :D

The real tragedy is that savers and responsible people will have to pay for this disaster for years if not decades.

[eiregosod]

Correct. And it depends on the region. In some areas banks are responsible for a huge percentage of the real estate sales...not exactly their specialty. :D

The real tragedy is that savers and responsible people will have to pay for this disaster for years if not decades.


mantra from my favourite financial eggspurts on the innertubes is:

"savers versus speculators"

[Ankf00]

The tax payers are getting what they voted for. The Canadian government made subprime mortgage illegal but you didn't want to like Canada. Still don't.

Oh well, at least you still have the best healthcare system in the world.

and you guys did such a bang up job of reforming the system that your asset-backed commercial paper market is still closed

[Ankf00]

RTC is back.

[oddlycalm]

RTC is back.

Good, getting the toxic paper out of the system ASAP is the first step in resolving the underlying problem. Until then it's gonna be more fire drills.

oc

[Methanolandbrats]

Thou shalt not sucker for a short covering rally.

[FTG]

and you guys did such a bang up job of reforming the system that your asset-backed commercial paper market is still closed

Told ya. Stop complaining when you get exactly what you vote for.

[SurfaceUnits]

do the guys at the top get to keep the hundreds of millions of dollars they were raking in while creating this mess? I guess that all depends on how much your elected officials make out of it.

[grungex]

do the guys at the top get to keep the hundreds of millions of dollars they were raking in while creating this mess? I guess that all depends on how much your elected officials make out of it.

I think they should get the death penalty. Whack a few of these a-holes and the others would get their act together in a hurry. :flame:

[TrueBrit]

Never mind all of that bollocks do we (as AIG shareholders) now get discounted Man U tickets and merchandise...??

There is no guarantee that after the 85B we all just got stuck with ponying up there will be anything of any value left...

Hey, how's that "put your SS in the hand of Wall Street Money Managers" thing going on?

Still think it's a good idea?

Nah, I didn't think so either...

[SurfaceUnits]

hahaha everybody is F'd in this mess except your politicians and the mutha****ers who got rich causing it

Forget that portfolio of dodgy debt. Don't fret the lack of liquidity. If you really want to know who's in for a dusting amid the global downturn, check out the jerseys on show in English football's Premier League.

Consider the line up: local bank and Newcastle United sponsor Northern Rock had to be nationalized in February after it was caught short of cash when the money markets seized; on Sep. 12, Britain's third largest tour operator XL went bust leaving London club West Ham United without a shirt sponsor; and now insurance giant AIG, shirt sponsor at English and European club champions Manchester United, is teetering on the brink of collapse.

http://img.timeinc.net/time/daily/2008/0809/manchester_u_0916.jpg

[Methanolandbrats]

do the guys at the top get to keep the hundreds of millions of dollars they were raking in while creating this mess? I guess that all depends on how much your elected officials make out of it.
Sure they get to keep it, they were pursuing high yield for the sake of their sheep.......err.........shareholders.........not their fault they had a bad year, I'll bet over the long term many of them show positive returns :D

[Stu]

Never mind all of that bollocks do we (as AIG shareholders) now get discounted Man U tickets and merchandise...??

There is no guarantee that after the 85B we all just got stuck with ponying up there will be anything of any value left...

Hey, how's that "put your SS in the hand of Wall Street Money Managers" thing going on?

Still think it's a good idea?

Nah, I didn't think so either...

sure its a good idea. making people responsible for their own money? what a concept! :rolleyes:

plus a down market is still better than the ponzi scheme they call Social Security. over the long haul, it'll bounce back. but if people diversified wisely in stocks, bonds, foreign currencies, and precious metals, they should still be ok.

[Methanolandbrats]

sure its a good idea. making people responsible for their own money? what a concept! :rolleyes:

plus a down market is still better than the ponzi scheme they call Social Security. over the long haul, it'll bounce back. but if people diversified wisely in stocks, bonds, foreign currencies, and precious metals, they should still be ok.
The Wall Street Journal and Investors Business Daily should offer discounted subscriptions to all the WalMart Workers so they can make a wise choice between bonds, equities or commodities with the $6 they have left each week. :D I don't know what the solution is to SS, but it sure ain't giving it those greedy scumbags on Wall Street.

[Methanolandbrats]

I never saw this coming. It's business as usual and WE are getting screwed. The taxpayers now have to bail out greedy local bank managers, greedy investment bankers, individuals who bought McMansions they could'nt afford, etc....nothing will change because the gunslingers are still in business and the savers and little guys take it up the ass once again. Maybe we can hit Dow 15,000 by next friday because things are so much better now.

Edit after the open...the parade of giddy people on CNBC is heartwarming. They all have their jobs and they can just smell that fat Christmas Bonus.

Edit after Paulson speaks.........100s of billions to get at heart of problem......the heart of the problem is still employed....it's the money managers and loan officers who caused this by lending into the housing pyramid scheme. Every single one them knew when the supply of housing buyers dried up it was over, but they were content to line their pockets and hope they were'nt the last ones in. They should be purged from the system and the responsible managers who paid attention to risk should survive.

[Stu]

The Wall Street Journal and Investors Business Daily should offer discounted subscriptions to all the WalMart Workers so they can make a wise choice between bonds, equities or commodities with the $6 they have left each week. :D I don't know what the solution is to SS, but it sure ain't giving it those greedy scumbags on Wall Street.

i'd rather give it to the greedy scumbags on wall street than the greedy scumbags in washington.

[Methanolandbrats]

i'd rather give it to the greedy scumbags on wall street than the greedy scumbags in washington. With the regulation that's coming after the housing mess, giving it to Washington just cuts out the middleman.

[KLang]

SOX for the mortgage industry. That won't be pretty.

[Insomniac]

do the guys at the top get to keep the hundreds of millions of dollars they were raking in while creating this mess? I guess that all depends on how much your elected officials make out of it.

Of course they do. They had to work so hard to cause this mess, it's the least we can do is let them keep all that.

[grungex]

They should be purged from the system and the responsible managers who paid attention to risk should survive.

They should be hung by the neck until dead. These people harm far more innocents than any murderers ever do. I'm tellin' ya, it would be a real wakeup call, instead of a slap on the wrist and a 40-million dollar golden parachute.

[Insomniac]

SOX for the mortgage industry. That won't be pretty.

They better do a whole lot more than that. All the money they're giving away (no one in the WORLD would loan them money) they better regulate the crap out of them and make everything transparent. They clearly need babysitters.

[STD]

i'd rather give it to the greedy scumbags on wall street than the greedy scumbags in washington.

:rofl: Who do you think helped line the back pockets of those in Washington? :rofl:


:shakehead

[Stu]

They better do a whole lot more than that. All the money they're giving away (no one in the WORLD would loan them money) they better regulate the crap out of them and make everything transparent. They clearly need babysitters.

as long as the regulations are tied to the money being injected into the market.

i mean, if you were smart, responsible, and dont need to take the money, you shouldnt be forced to comply with excessive regulations.

with that said, i cant name a major financial corp right now that would qualify as that, but im sure there are.

[SurfaceUnits]

everyone should stop paying any bills they have and let paulson and bernanke take of them

[Ankf00]

everyone should stop paying any bills they have and let paulson and bernanke take of them

sorry, bankruptcy reform act says you owe no matter what.

[Insomniac]

as long as the regulations are tied to the money being injected into the market.

i mean, if you were smart, responsible, and dont need to take the money, you shouldnt be forced to comply with excessive regulations.

with that said, i cant name a major financial corp right now that would qualify as that, but im sure there are.

I wouldn't want to see it get to a point where it restricted the markets, but there needs to be some rules. They were operating so far out of the purview of regulators it's obviously scary. Leveraged many, many times without the cash to back it up. Creating large new markets that no one really knew much about. This new stuff should be registered with people who are looking after the larger markets. People who know what they're doing and can set proper restirctions to prevent things from getting so out of control. Outsiders should understand these markets and should be able to monitor them.

Close the hedge fund manager loop holes in the tax code as well. It's ridiculous these guys can take other people's money, take their cut and pay 15% taxes on $billions. If they want to pay long term capital gains, put your own money in the fund. Otherwise, it's salary, pay up in the top bracket. Maybe you won't be so quick to risk it all with no personal risk and little taxes on profits.

[Insomniac]

everyone should stop paying any bills they have and let paulson and bernanke take of them

Just like this mess, the majority would still get screwed.

[Methanolandbrats]

sorry, bankruptcy reform act says you owe no matter what. Yes, quite a different thing. If an individual peasant screws up, it's off to the rack. Seems there is a different set of rules for wall street managers. The first thing I thought of this morning was what a really, really good idea the guillotine was.

[Methanolandbrats]

I wouldn't want to see it get to a point where it restricted the markets, but there needs to be some rules. They were operating so far out of the purview of regulators it's obviously scary. Leveraged many, many times without the cash to back it up. Creating large new markets that no one really knew much about. This new stuff should be registered with people who are looking after the larger markets. People who know what they're doing and can set proper restirctions to prevent things from getting so out of control. Outsiders should understand these markets and should be able to monitor them.

Close the hedge fund manager loop holes in the tax code as well. It's ridiculous these guys can take other people's money, take their cut and pay 15% taxes on $billions. If they want to pay long term capital gains, put your own money in the fund. Otherwise, it's salary, pay up in the top bracket. Maybe you won't be so quick to risk it all with no personal risk and little taxes on profits. There are no open markets. Ask the short sellers who had the financial thing figured out and got slapped for it. Easy solution to mortgage problem, ban selling mortgages, the risk stays with the loan originator.

[SurfaceUnits]

sorry, bankruptcy reform act says you owe no matter what.paulson bernanke act says you owe no matter what

[Insomniac]

There are no open markets. Ask the short sellers who had the financial thing figured out and got slapped for it. Easy solution to mortgage problem, ban selling mortgages, the risk stays with the loan originator.

That's lobbying though. Just like the new ban on shorting financial stocks. They cried to the SEC and begged them to put a ban on it and got their way. That's no solution to the problem. It doesn't fix a balance sheet, it just reduces liquidity in a downward moving security.

One would think there would be no need to ban the selling of mortgages. That maybe someone would make sure that the loan could be paid off before buying the mortgage or that the land is actually worth it if the owner defaults. Problem is, the bigger this snowball got, the more hooked in it came to the entire market. Way too many people shrugged their shoulders and said screw it. And once again, with no real consequence, it's just a matter of time before they find a new way to make insane money and take huge risks.

[Methanolandbrats]

CNBC yackers were talking about how "scary" it was for Morgan Stanley to almost go under. Can someone explain to me why it's so "scary"? MS did not manage risk, they deserve to go under and be replaced by a more conservative firm. MS shareholders would be left with worthless paper, that is what a market is all about. Under the announced plan, MS is still in business, the shareholders assume no risk and the taxpayers who fund the government assume the risk and debt. :saywhat:

[Ankf00]

That's lobbying though. Just like the new ban on shorting financial stocks. They cried to the SEC and begged them to put a ban on it and got their way. That's no solution to the problem. It doesn't fix a balance sheet, it just reduces liquidity in a downward moving security.

china has forbidden any and all short-selling, yet their economy's still tanking

[oddlycalm]

Yes, quite a different thing. If an individual peasant screws up, it's off to the rack. Seems there is a different set of rules for wall street managers. The first thing I thought of this morning was what a really, really good idea the guillotine was.

Ironic that the highest profile enforcement in recent years was protecting us from Martha Stewart....:laugh:

oc

[Insomniac]

CNBC yackers were talking about how "scary" it was for Morgan Stanley to almost go under. Can someone explain to me why it's so "scary"? MS did not manage risk, they deserve to go under and be replaced by a more conservative firm. MS shareholders would be left with worthless paper, that is what a market is all about. Under the announced plan, MS is still in business, the shareholders assume no risk and the taxpayers who fund the government assume the risk and debt. :saywhat:

I think it it only affected Morgan Stanley or any of these investment banks, they would've just let them file for bankruptcy. The problem is all the leverage/debt. They will default on all that leaving someone else holding the bag and so on up the chain. A good bit of the chain probably ends up at the government's feet. (Especially in the case of Freddie/Fannie.) So the "best" solution is to prop them up so they can continue to pay their bills and not default. So now the gov't is going to eat some really bad paper for half a billion versus seeing a bunch of firms default on trillions in debt.

If it was a simple relationship like a local bank, I can see taking a tough crap stance. Accounts are FDIC insured, and the bank can go and sell their debts at a discount and close up shop. People would buy that debt at a steep discount. Even if it was a horrible, like a sub-prime mortgage that would soon be defaulted, you'd get such a discount you could renegotiate it to a much rate the owner could afford and still make money.

Unfortunately, all this stuff was sold off up the chain and then people created a whole market to trade it that was heavily leveraged.

[Insomniac]

china has forbidden any and all short-selling, yet their economy's still tanking

I was pointing out that wasn't a solution, just good lobbying by the banks to help shareholders by slowing the downward pressure on price. I didn't think it would do anything tangible for the economy.

[Methanolandbrats]

I think it it only affected Morgan Stanley or any of these investment banks, they would've just let them file for bankruptcy. The problem is all the leverage/debt. They will default on all that leaving someone else holding the bag and so on up the chain. A good bit of the chain probably ends up at the government's feet. (Especially in the case of Freddie/Fannie.) So the "best" solution is to prop them up so they can continue to pay their bills and not default. So now the gov't is going to eat some really bad paper for half a billion versus seeing a bunch of firms default on trillions in debt.

If it was a simple relationship like a local bank, I can see taking a tough crap stance. Accounts are FDIC insured, and the bank can go and sell their debts at a discount and close up shop. People would buy that debt at a steep discount. Even if it was a horrible, like a sub-prime mortgage that would soon be defaulted, you'd get such a discount you could renegotiate it to a much rate the owner could afford and still make money.

Unfortunately, all this stuff was sold off up the chain and then people created a whole market to trade it that was heavily leveraged. I still have a problem with this because the guys at the top made huge amounts of money and are for the most part still in business. The problem is they KNEW it was a pyramid scheme and when the supply of buyers for houses dried up, it was over, but they still did it. Not illegal, but seems a bit unethical and they should be punished somehow.

[SurfaceUnits]

your government is unable to pay its current obligations, or its future obligations, or its trillions in debt. and they're going to pay for this mess? yeah right. This is like throwing a grenade into Nagasaki after the A-bomb went off. Just another nail in the country's coffin.

[Gnam]

Good, getting the toxic paper out of the system ASAP is the first step in resolving the underlying problem. Until then it's gonna be more fire drills.

oc
Have they tried a Woot! Off?
http://www.woot.com/App_Themes/Woot/images/gold-light.gif
"Bag of Crap" can sell anything. :p

[Insomniac]

I still have a problem with this because the guys at the top made huge amounts of money and are for the most part still in business. The problem is they KNEW it was a pyramid scheme and when the supply of buyers for houses dried up, it was over, but they still did it. Not illegal, but seems a bit unethical and they should be punished somehow.

I'm in complete agreement with you. I'd like to see a very large % of their earnings and bonuses during this time paid back in fines. They should also be banned from working at such a high level in the financial industry. They should be investigated for any type of fraud and the book should be thrown at them if found guilty. I'd prefer the companies be gone because they dug their own graves, but as the laws are the executives can walk away and leave everyone else to clean up the mess since it isn't just limited to withing their firm. There should be house cleaning at the top of all these places and divisions committed to this mess should be closed. Some true accounting needs to be done as well.

[Insomniac]

your government is unable to pay its current obligations, or its future obligations, or its trillions in debt. and they're going to pay for this mess? yeah right. This is like throwing a grenade into Nagasaki after the A-bomb went off. Just another nail in the country's coffin.

Getting the money is easy. Foreign governments will line up to lend. Just not directly to those companies. They want virtually guaranteed bonds instead.

[Methanolandbrats]

Getting the money is easy. Foreign governments will line up to lend. Just not directly to those companies. They want virtually guaranteed bonds instead. For now it's easy, sure hope the Russians and Chinese don't dump our paper at some point :eek:

[SurfaceUnits]

a trillion dollars to start. i hear the hammering

[Ankf00]

I was pointing out that wasn't a solution, just good lobbying by the banks to help shareholders by slowing the downward pressure on price. I didn't think it would do anything tangible for the economy.

I was agreeing. :)

[Gnam]

For now it's easy, sure hope the Russians and Chinese don't dump our paper at some point :eek:
If they're selling, who would be buying?

The nucular option would be for the US to default on the debt and wreck all three economies.

[oddlycalm]

If they're selling, who would be buying?

The nucular option would be for the US to default on the debt and wreck all three economies.

Lets seen how the $55 billion in new special issue T bills sell next week. Nobody is saying it out loud, but if the auction isn't fully subscribed it's game over.

That's when they go for the Woot!Off.

oc

[SurfaceUnits]

one guy said the rate of return on gov bonds had reached 0% at one point today. how much you gonna pay to get 0%

[TrueBrit]

Yes, quite a different thing. If an individual peasant screws up, it's off to the rack. Seems there is a different set of rules for wall street managers. The first thing I thought of this morning was what a really, really good idea the guillotine was.

Yup..socialism for the rich, capitalism for the rest of us...

One TRILLION dollars is the latest estimated cost for this bullcrap bailout shoved down the taxpayers throats....pretty soon you're talking about real money....:yuck:

[TrueBrit]

For now it's easy, sure hope the Russians and Chinese don't dump our paper at some point :eek:

Which is one freaking HUGE reason why the Fed didn't lower the rates this week...the street ho's were trying to get Uncle Ben to give them 50 bps without factoring in that the real owners of the US of A, (China Inc) would not be likely to a) buy more or b) hold onto their paper if it kept paying them less and less every time the kid came home with a busted taillight or dinged fender...

This is not the beginning of the end of the pain/bailouts, but merely the end of the beginning...

[Michaelhatesfans]

One TRILLION dollars is the latest estimated cost for this bullcrap bailout shoved down the taxpayers throats....pretty soon you're talking about real money....:yuck:

Nah, don't you know that the really big ticket items don't go on the budget anyway?

I'm going to start doing my own finances that way. I'll put the mortgage "outside the budget." That way I won't go overdrawn.:thumbup:

[Indy]

Hope you all have lots of fixed interest debt. Inflation is good for that.

[Insomniac]

For now it's easy, sure hope the Russians and Chinese don't dump our paper at some point :eek:

If they do this right, this should be the end of it. Time will tell, but it's going to be years before the budget gets balanced, let alone have a surplus and pay down debt. This could never be fixed by one administration. I fear that will pretty much ensure it never gets fixed. Just lip service every 4 years.

The government needs to have a long term plan to shrink over time that carries over through administrations. When people leave/retire, they shouldn't be replaced unless absolutely necessary. (No one can pick up the work or it can't be contracted out (you can let a private contractor go anytime vs. a lifetime job once you hire someone.)) They need people who are good at cleaning up organizations involved heavily.

[Insomniac]

I was agreeing. :)

I should read more carefully. :)

[SurfaceUnits]

why is it your Gov always waits until something is a crisis before they do anything. when is the last time they all got together and did something that wasn't a crisis. worthless just worthless

'Sobering moment'
Warnings of an economic calamity led lawmakers to tackle a giant bailout.

[Insomniac]

why is it your Gov always waits until something is a crisis before they do anything. when is the last time they all got together and did something that wasn't a crisis. worthless just worthless

'Sobering moment'
Warnings of an economic calamity led lawmakers to tackle a giant bailout.

Because we prefer to pretend everything is going great until we are forced to deal with it. Even when things are bad, they aren't really bad, just temporary. It's how we roll.

[coolhand]

Close the hedge fund manager loop holes in the tax code as well. It's ridiculous these guys can take other people's money, take their cut and pay 15% taxes on $billions. If they want to pay long term capital gains, put your own money in the fund. Otherwise, it's salary, pay up in the top bracket. Maybe you won't be so quick to risk it all with no personal risk and little taxes on profits.


except that it is a demonstrated fact that lower the capital gains tax increased government revenue from that said tax.

[SurfaceUnits]

12th bank failure of the year announced

[Insomniac]

except that it is a demonstrated fact that lower the capital gains tax increased government revenue from that said tax.

Tax rates and revenue is a pretty complex relationship. Cutting capital gains does bring in more revenue, and if you start talking about raising it, it will bring in more revenue (in the short term). If you talk about cutting it, it will bring in less revenue until the cut takes effect. Is it a demonstrated fact that investment increased as a result of capital gains tax cuts? That's the only true test. Taxes aren't paid until gains are realized and people are more likely to realize them when rates are favorable. But regardless of the rate, at some point they must realize the gains and pay taxes.

Also, I have no problem with a low capital gains tax rate. I don't like a loophole where someone can claim that their salary is a long term capital gain. When someone gives you $1B to invest and you take 2% of it plus 20% of the profit, that is not a long term capital gain, that is salary. If you put your own money in the fund, then that is a capital gain and should be treated accordingly.

[STD]

why is it your Gov always waits until something is a crisis before they do anything. when is the last time they all got together and did something that wasn't a crisis. worthless just worthless

'Sobering moment'
Warnings of an economic calamity led lawmakers to tackle a giant bailout.

Squeezing till the last drop has been pocketed by friends?

[eiregosod]

except that it is a demonstrated fact that lower the capital gains tax increased government revenue from that said tax.

These masters of the universe have been shown up for what they are, they deserve no special tax breaks.

[grungex]

Why doesn't the government go after the ill-gotten gains of these cretins? Take away everything they own, give them back just enough for a three-bedroom ranch and a two-year-old SUV. It would make a nice down payment on the bailout...

[Methanolandbrats]

Why doesn't the government go after the ill-gotten gains of these cretins? Take away everything they own, give them back just enough for a three-bedroom ranch and a two-year-old SUV. It would make a nice down payment on the bailout...
Because most of them did'nt do anything illegal. Stupid, greedy, yes....crime, probably not. The big problem is everyone chasing yield because long term is at most the period of time until the next quarterly earnings statement. That's a ripe environment for gunslingers who ignore risk and take big chances.

[SurfaceUnits]

the debt ceiling (what a crock) has been set at a tad over 11 trillion, give or take a few hundred billion. It's going to take more than a few more illegals to pay that off.

[eiregosod]

It's like the Berlin Wall coming down.

[Methanolandbrats]

It's like the Berlin Wall coming down. It's the American standard of living coming down.

[oddlycalm]

As recently as 11yrs ago none of this could have happened. People knew exactly what the problem is back in 1931. The real crime is that we were stupid enough to let it happen again.

Here's the legislation that opened the mortgage market to investment banks and also facilitated the MCI/Worldcom fraud. Even China keeps commercial banks and investment banks and brokerages separate. :gomer:
Repeal of Glass-Steagall Act (http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act)

Here we have the trifecta, the legislation that in one fell swoop prevented government regulation of derivative securities as well as energy trading and enabled credit swaps. This enabled derivatives, pulled the insurance industry in to insure them with credit swaps, and made it possible for Enron to game the system with false demand using fraudulent "round trip" trades.
Commodity Futures Modernization Act (http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000)

oc

[SurfaceUnits]

dubya is confident everything will be ok, i know i will be sleeping better tonight :tony:

[cameraman]

As recently as 11yrs ago none of this could have happened. People knew exactly what the problem is back in 1931. The real crime is that we were stupid enough to let it happen again.

Here's the legislation that opened the mortgage market to investment banks and also facilitated the MCI/Worldcom fraud. Even China keeps commercial banks and investment banks and brokerages separate. :gomer:
Repeal of Glass-Steagall Act (http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act)

Here we have the trifecta, the legislation that in one fell swoop prevented government regulation of derivative securities as well as energy trading and enabled credit swaps. This enabled derivatives, pulled the insurance industry in to insure them with credit swaps, and made it possible for Enron to game the system with false demand using fraudulent "round trip" trades.
Commodity Futures Modernization Act (http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000)

oc

And it generated tens of thousands of McMansions in the process.
Too bad it hosed the other 99.9% of us:flame:

[JLMannin]

No one is dumb enough to actually pay the ridiculous mortgage rates, which makes the mortgages pretty much worthless.

I could follow your arguement if they signed the documents with a gun pointed at them. I am sure that was not the case. Can you explain what you mean? :confused:

[SurfaceUnits]

You had better hope the executive branch doesn't get the power it is pushing for in your bailout: http://www.charlierose.com/shows/2008/09/22/1/a-discussion-about-the-economy-with-steven-pearlstein-alan-blinder

[Ankf00]

http://afp.google.com/media/ALeqM5iLwO6hogahbhW5sO18xTPg4zeVaQ?size=m

[cameraman]

WaMu goes poof and takes a chunk of many a 401K with it:flame: