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The economy - oops
#1
Ok, so far this week, One investment bank has gone bust, another one thinks it will go bust so puts itself up for sale. And the biggest insurance company in the world, with about 125,000 employees, has 'a day' to save itslef.

Despite this, the real economy (in the US) outside financial markets has showed signs of improvment in the last couple of months. But how long will this last?
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#2
Don't forget the Dow dropping 500 points.
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#3
Yeah, but you think Barack Osama is going to be able to fix it for you?!?! Idiot.

Sorry, my disdain grows by the hour.
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#4
Quote:

Originally Posted by Doc Happenin
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Yeah, but you think Barack Osama is going to be able to fix it for you?!?! Idiot.

Sorry, my disdain grows by the hour.

High Five for originality. Also the fundamentals of the economy are strong. And by that I mean the American workers or something.
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#5
...as long as the average American has a bag of Cheetos resting on its belly and 'America's Got Talent' on the tube, I don't predict much change.
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#6
I know a lot of people who aren't concerned about any of this and claim the economy will be "better for it" which is disturbing.

I've got an email into someone I know that works at AIG here in town (works pretty high up in New Business Developments or some such) because I'm worried about him and I haven't gottten a response back yet....which is scary. The scuttlebutt here in Nashville (which has a 15 billion a year Financial Services industry) is like it's the fall of Rome.
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#7
Quote:

Originally Posted by Bancroft Agee
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I know a lot of people who aren't concerned about any of this and claim the economy will be "better for it" which is disturbing.

I've got an email into someone I know that works at AIG here in town (works pretty high up in New Business Developments or some such) because I'm worried about him and I haven't gotten a response back yet....which is scary. The scuttlebutt here in Nashville (which has a 15 billion a year Financial Services industry) is like it's the fall of Rome.

Maybe. Or maybe it's end of the howling jackasses who made a living shuffling crap. Yes they made a ton of dough, but they also Created a house of cards that's now collapsing. This is just like the Internet Bubble. Except this time the assholes behind it are getting caught.

It's instructive that the Fed refused to rescue Lehman while saving Bear (sort of) and Freddie and Fannie. Of course in the case of the later two they pretty much had to if the US Gov't was to retain credibility. If effect Lehman is sending a message that yes the US will pull out the stops to maintain stability in the financial markets but no, there will not be free passes issued to investment bankers who made pathalogically bad decisions.
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#8
Lehman's was in debt 615 Billion dollars. The Fed wasn't going to bail them out because they couldn't. No one could.

I'm a little worried about the AIG bailout the Fed just made, if they weren't willing to show their balance sheet to Buffet, (that isn't good)... I doubt the Fed got a look at it and we just sunk 85 Billion into them. The plus side is, my ROP Term Life insurance policy with AIG may yet survive this whole ordeal.
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#9
Quote:

Originally Posted by Snaieke
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Lehman's was in debt 615 Billion dollars. The Fed wasn't going to bail them out because they couldn't. No one could.

I'm a little worried about the AIG bailout the Fed just made, if they weren't willing to show their balance sheet to Buffet, (that isn't good)... I doubt the Fed got a look at it and we just sunk 85 Billion into them. The plus side is, my ROP Term Life insurance policy with AIG may yet survive this whole ordeal.

I'd be curious to see the terms the Fed laid down for that bailout. I hope it involves AIG execs getting fucked up the ass by AIDs infested Baboons
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#10
Quote:

Originally Posted by Cylon Baby
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I'd be curious to see the terms the Fed laid down for that bailout. I hope it involves AIG execs getting fucked up the ass by AIDs infested Baboons

I wouldn't count on it. The inverse law of Republican economics is that those who cynically torch the zeppelin are the ones that get the golden parachutes.
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#11
The gov't now has an 80% stake in AIG. So they've nationalised it, just about. They couldn't let it fail.
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#12
You know, for a party that rails against socialism it seems that the GOP is really starting to bury their claws into our financial sector.
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#13
The past few years have been so full of irony, to the point of overload.

Maybe we should give irony a rest. I'm afraid we'll wear it out.
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#14
9/11 killed irony.. it is a thing of the past.
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#15
Don´t worry too much. We got very clever people working at our public banks for sure:
Quote:

FRANKFURT -(Dow Jones)- The German government Wednesday called a EUR300 million payment by KfW Bankengruppe made to insolvent U.S. bank Lehman Brothers Holdings Inc. (LEH) after the latter filed for Chapter 11 bankruptcy protection in the U.S. "questionable" and "irritating," and called for an explanation of the transaction.

KfW confirmed Wednesday a report by German daily Frankfurter Allgemeine earlier in the day that the bank had completed a EUR300 million payment to Lehman Brothers, which filed for bankruptcy Monday.

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#16
Quote:

Originally Posted by Cylon Baby
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I'd be curious to see the terms the Fed laid down for that bailout. I hope it involves AIG execs getting fucked up the ass by AIDs infested Baboons

Terms

I have to say, from a taxpayer standpoint... the terms are acceptable.

Quote:

Here is the full text of the Federal Reserve's statement on Tuesday announcing an 85 billion dollar rescue loan for insurance giant American International Group, an unprecedented move designed to save the firm from bankruptcy amid fears of a meltdown on financial markets.
"The Federal Reserve Board on Tuesday, with the full support of the Treasury Department, authorized the Federal Reserve Bank of New York to lend up to 85 billion dollars to the American International Group (AIG) under Section 13(3) of the Federal Reserve Act. The secured loan has terms and conditions designed to protect the interests of the U.S. government and taxpayers.

"The Board determined that, in current circumstances, a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance.

"The purpose of this liquidity facility is to assist AIG in meeting its obligations as they come due. This loan will facilitate a process under which AIG will sell certain of its businesses in an orderly manner, with the least possible disruption to the overall economy.

"The AIG facility has a 24-month term. Interest will accrue on the outstanding balance at a rate of three-month Libor plus 850 basis points. AIG will be permitted to draw up to 85 billion dollars under the facility.

"The interests of taxpayers are protected by key terms of the loan. The loan is collateralized by all the assets of AIG, and of its primary non-regulated subsidiaries. These assets include the stock of substantially all of the regulated subsidiaries. The loan is expected to be repaid from the proceeds of the sale of the firm's assets. The US government will receive a 79.9 percent equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders.

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#17
8.5% above Libor! I'd take that.

But....the market is now worried about Morgan Stanley and Goldman Sachs.

And most worryingly, the Fed has run out of money. Great.
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#18
It seems to me that this is akin to the little boy trying to plug holes in the dyke with his fingers.

Eventually you run out of fingers, the holes widen and the water comes rushing in-destroying everything in its path.
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#19
Exactly.

http://www.ft.com/cms/s/0/8058d308-8...0779fd18c.html

"The panic in world credit markets reached historic intensity on Wednesday prompting a flight to safety of the kind not seen since the second world war.

Barometers of financial stress hit record peaks across the world. Yields on short-term US Treasuries hit their lowest level since the London Blitz. Lending between banks in effect halted and investors scrambled to pull their funding from any institution or sector whose future had been called into doubt."
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#20
When is somebody going to lay this disaster at the Republicans' feet, where it belongs? If the situation were reversed, and Democrats had stripped the regulatory laws resulting in a global financial meltdown, Republican mouthpieces would be screaming it from the rooftops. It would be the end of any kind of Democratic party power for a long, long time.
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#21
Quote:

Originally Posted by yt
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When is somebody going to lay this disaster at the Republicans' feet, where it belongs? If the situation were reversed, and Democrats had stripped the regulatory laws resulting in a global financial meltdown, Republican mouthpieces would be screaming it from the rooftops. It would be the end of any kind of Democratic party power for a long, long time.

Isn't it amazing (and ironic) that the Treasury of Republican George W Bush just nationalised a major insurance company? I really hope Obma nails the Republicans on this

EDITED TO ADD: Just heard on NPR how the past 8 years have seen an "Anti-Regulatory" enviornment pervailed and even now Sec Paulson still doesn't think regulation is needed!
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#22
Quote:

Originally Posted by Cylon Baby
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Isn't it amazing (and ironic) that the Treasury of Republican George W Bush just nationalised a major insurance company? I really hope Obma nails the Republicans on this

Unfortunately, Obama came out with an ambiguous statement on the AIG bailout (not for or against) as opposed to McCain and even Biden who are against it.
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#23
In Bush's America we taxpayers share in all the losses, socialist-style, but don't share in the profits, socialist-style.

In terms of AIG, the elephant in the room seems to be China and the integrity of the US as a business partner in general. I would think losing a bank is one thing -- losing a guarantor of monetary transactions is a much more complex concept. So maybe Obama needs time to take in what this is and come up with a constructive and realistic solution. But I haven't had enough time to research this situation, whereas the downward spiral of these big banks has been on the horizon for a while.
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#24
couldn't congress have jumped in when this was all going to shit and do something?
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#25
Quote:

Originally Posted by MoonBaseNick
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couldn't congress have jumped in when this was all going to shit and do something?

Congress....do something? HAHAHAHAHAHAHHAHAHA
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#26
It has been a Republican dominated congress until two years ago and even now the Dems don't have a veto-proof majority in the senate (60 votes - there are 51 dems).

ps. Larisa Alexandrovna has a funny and sadly true post today:

Quote:

1. And bailouts for all...

Looks like AIG and its fraudulent business practices have gotten themselves a nice big bailout to the tune of $85 billion. So Conservative economics works like this:

-step 1: deregulate (let the looting begin)
-step 2: hide profits to avoid taxes (preferably in a Swiss bank)
-step 3: deny taxpayers any right to bankruptcy protection or legal protection from corporate thugs (think big tobacco), citing bootstraps and the American dream.
-step 4: demand that taxpayers bail you out once you have stolen everything
-step 5: make profits, don't pay taxpayers back

In response to this, the very first step that should be taken by Congress (assuming we ever get one) is to strip corporations of their "person-hood" and put behind bars every white collar crook anywhere near this fiasco - including those taking bribes in government.

Source.
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#27
In 2003 ...

New Agency Proposed to Oversee Freddie Mac and Fannie Mae
http://query.nytimes.com/gst/fullpag...gewanted=print

Quote:

The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.


Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.


The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.


....


Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.


''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''
Representative Melvin L. Watt, Democrat of North Carolina, agreed.

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.

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#28
Quote:

Originally Posted by JudgeSmails
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Congress....do something? HAHAHAHAHAHAHHAHAHA

I know, stupid question huh...
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#29
McCain 2005

Quote:

Mr. President, this week Fannie Mae’s regulator reported that the company’s quarterly reports of profit growth over the past few years were “illusions deliberately and systematically created” by the company’s senior management, which resulted in a $10.6 billion accounting scandal.


The Office of Federal Housing Enterprise Oversight’s report goes on to say that Fannie Mae employees deliberately and intentionally manipulated financial reports to hit earnings targets in order to trigger bonuses for senior executives. In the case of Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets. The report of financial misconduct at Fannie Mae echoes the deeply troubling $5 billion profit restatement at Freddie Mac.


The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems. This report comes some weeks after Freddie Mac paid a record $3.8 million fine in a settlement with the Federal Election Commission and restated lobbying disclosure reports from 2004 to 2005. These are entities that have demonstrated over and over again that they are deeply in need of reform.


For years I have been concerned about the regulatory structure that governs Fannie Mae and Freddie Mac–known as Government-sponsored entities or GSEs–and the sheer magnitude of these companies and the role they play in the housing market. OFHEO’s report this week does nothing to ease these concerns. In fact, the report does quite the contrary. OFHEO’s report solidifies my view that the GSEs need to be reformed without delay.

I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole.
I urge my colleagues to support swift action on this GSE reform legislation.

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#30
Broken clocks, twice a day, etc.

Too bad he decided to go balls out for that neo-con Kool-Aid, eh?
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#31
Quote:

Originally Posted by yt
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It has been a Republican dominated congress until two years ago and even now the Dems don't have a veto-proof majority in the senate (60 votes - there are 51 dems).

ps. Larisa Alexandrovna has a funny and sadly true post today:



Source.

jesus quoting a far left site like that as a source is like someone using Fox News as a source for the right wingers.
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#32
Congress doesn't give a crap.

Democratic Congress May Adjourn, Leave Crisis to Fed, Treasury
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#33
Neither does the Republican President.

Of course, God knows we always look to the Congress to lead the way.
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#34
Just because these guys were waving their arms around about Fannie Mae and Freddie Mac doesn't necessarily mean they were onto what ultimately befell these two institutions. I think it's presumptuous to assume that Bush and McCain had the good of the people in mind when they made these overtures. We know that McCain is a committed "deregulator" and Bush isn't exactly FDR either, so whatever was up their sleeve may not have been what you think it was. I'm going to look into this and if Bush and McCain were purely honorable, then good for them, but don't forget that McCain's campaign chairman, Rick Davis, was a lobbyist for Fannie Mae and Freddie Mac.
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#35
Quote:

Originally Posted by yt
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Just because these guys were waving their arms around about Fannie Mae and Freddie Mac doesn't necessarily mean they were onto what ultimately befell these two institutions. I think it's presumptuous to assume that Bush and McCain had the good of the people in mind when they made these overtures. We know that McCain is a committed "deregulator" and Bush isn't exactly FDR either, so whatever was up their sleeve may not have been what you think it was. I'm going to look into this and if Bush and McCain were purely honorable, then good for them, but don't forget that McCain's campaign chairman, Rick Davis, was a lobbyist for Fannie Mae and Freddie Mac.

This. The lip-service thing is nothing less than apologist bullshit for a cabal of people who have done nothing to curb the shameless money-grubbing, and it's especially hypocritical coming from Keatin...oops, I mean McCain.
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