Forbidden Donut

Uh, I'm gonna hope that you were being sarcastic about Jim Cramer. Considering he's a total idiot and averages 98% on the "let's see how wrong I can be" scale.

AIG MAINLY served America. Fir example, 7/10 houses in California. The ripple effect from them failling would have been catastrphic.

Please please please educate yourself. You spew a lot of intelligent garb on these forums, and every now and then what you say is horribly false. The problem for many of those who listen to you is that it's hard to detect when you're wrong. You're equally as passionate about everything you utter.

If I remember correctly, wasn't it Jim Cramer that yelled on his show three days before fannie may's collapse that there was no chance that they'd go bankrupt and that anyone that was considering selling their stocks was an idiot?

And Cramer said Lehman was a "screaming buy" the Friday before it slipped 90% in a week.

What did Ron Paul have to say? Well, this.

He references this speech from five years ago in the video.

yes, I was being facetious about Jim Cramer. (the guy had a much better track record before the latest wackiness, and to be honest nobody's even making predictions anymore except him.) But AIG might mainly serve america, but AIGEUROPE serves exclusively Europe, with such services as "ransom insurance" and "political insurance". It's just as tied to the stock as it's american counterpart and was rescued by this bailout.

Want our government to pay out a claim to some German CEO who gets in the hotseat with the British parliament? How's $750,000 in extended legal fees sound? What's the exchange rate on the Euro again? Good thing our money is worth something.

What do you think would happen to those 7/10 houses/families? Why do you think it's the responsibility of the American people to bail out poor decisions on the part of both the lender and the borrower? What "ripple effects" do you speculate this would have? (or are you just repeating what you heard yesterday? that's the justification I hear over and over but I didn't hear it when we let Lehman fail...) What makes AIG more important than Lehman or Merrill Lynch?

But MOST fundamentally, what message does this send to our faultering market? This doesn't assure a damned thing. All it accomplishes is fostering more uncertainty about the future.

So what's happened is we've encouraged an environment of fear on wall street while turning on the recording that tells regular folks not to worry as the Fed plans to cut rates again to try and keep this from happening again, increasing inflation, while Americans (who AIG claims now have a voice in their company, as if...) whose money is worth less and less are going to be expected to foot the bill for European contract holders.

So where am I wrong? If I am, please please please educate me.

/as a complete aside, while his specific company forecasts are completely idiotic, Jim Cramer's environmental assessments are usually spot on. He was screaming 2 years ago about how deregulation and faulty lending practices along with hedge market leveraging were going to lead to a melt down on wall street.
//Still hate that obnoxious man though.

One more thing.
Privatize Profits. Nationalize Losses. It's the American way.

Damn Straight. Why should it be any different? What are you a Commie?

Are you still being sarcastic? If 7/10 Americans lost their homes right now, the US during the great depression would look like a Utopian society. One of the drawbacks to the ridiculous idea that every American family should own their home is that America has shifted its sitting wealth from their banks to their homes. The "guarantee" of a complete return on their investment, if not a far greater return, and the availability of low-interest, long-term mortgages has led even well-off Americans to invest in their real estate. Those 7/10 Americans didn't just buy houses, they've borrowed against their houses with the expectation that their worth wouldn't depreciate. It has allowed most Americans to live far beyond their means for a long time. When they lose that house, they default on all of their credit and will have to file for bankruptcy. Doing that means all of the credit agencies -- the credit card companies, the car dealership, the colleges, the states themselves, and even the local furniture store -- get no return on their loans. If you want to talk about a ripple effect, think about the impact that would have on all of the businesses I just mentioned. If they all didn't go bankrupt, they would suffer severe hits to their bottom line and millions of people will be laid off nation-wide. With more people getting laid off, more houses will have to be sold, the housing market will get even more flooded, home prices will drop further, and suddenly the lower income of the remaining 3/10 would see their wealth plummet (you see, they invest their money in real estate as well).

I hate the idea that we had to buy up an 80% stake in AIG. I blame the federal government for all of their well-intentioned, but reckless policy-making over the past sixty years. I blame the democrats for their over-zealous pursuit of the notion that every American should own a home, and I blame republicans for their bastardization of "conservative" economic principles that paved the way for the market to take advantage (at the expense of everyone else) of the democrats' policies. But I'm not irrational about it. If nothing was done, this "crisis" that we're seeing now would actually be disastrous.

What percentage of homes owned in that 7/10 number (have poked around and not found any numbers at all actually) are people's second homes? Speculated homes? Rental Properties?

And that's just California. Any numbers elsewhere in the country?

Even if it's all people's only homes, maybe it's time to hit the reset button instead of prolonging this ridiculous notion.

What I'm hearing is there's a bunch of imaginary wealth out there in people's real estate. If the real estate market implodes wouldn't that reduce people to their REAL wealth?

/facepalm

No one here, including you, understands the situation well enough to just ignore what someone is saying, no matter how much like Ron Paul you try to think.

Aside from that, capitalism is a system in which you have to balance risk versus reward... These companies did so poorly... I really don't understand why my tax money, me of the uninsured and houseless, am paying for it. Yes, yes, ripple effect, etc... I'm sure that's something you all understand and not just something you're parroting from somewhere else. Again, no word of the ripple effect when lehman went down, but AIG, whoa... they're going to fuck shit up if they go down, better throw $80b at the problem instead of actually fixing the economic situation that allowed for it.

You also never hear about the ripple effect of dumping 85 billion dollars out of the fed. Just the ripple effect of doing nothing. Can't wait to see the end of the year numbers on how much money went to saving failing companies in total. The number will be staggering and we'll all bitch about what a waste it was.

/I'm just ahead of the curve. /tongue.gif" style="vertical-align:middle" emoid=":P" border="0" alt="tongue.gif" />
//we've been scared shitless by all this ripple effect shit and I refused to be frightened into accepting a policy decision. I don't want to hear a bunch of people who stand to lose millions if the company goes under tell me what will happen to ME if they go under. That's just stupid.

Look, it's not like we are trying to bail out the entire world. Every country is having problems, and everyone is scrambling to get their house in order. We are just doing what needs to be done. Maybe someday we can look back and figure out what happened so we can prevent future incidents, but right now no one is sure how it got started or who to blame. And when worst comes to worst, we can always count on China for more help.

Really what is the worse that could happen? It's not like the CEO's and higher-ups that drove these companies into the ground are getting rewarded.

.

Why do you have to seperate America from the rest of the world.

We are in a global financial crisis, It's also largely though probably not entirely Americas fault.

Much like Fannie Mae and Freddie Mac, AIG is way too intertwined with everyone in the world, way too international and too big to fail.

The price of not intervening with these three companies would have been far far worse.

Why shouldn't they share the burden in the other affected countries? We're in debt. Do you go to your poor friends to ask for money to help you get out of some unexpected shit?

Global problems affect more than one person. To quote Professor Trelawney, "BROADEN YOUR MIND." Yes, that's right; I just quoted Harry Potter.

SO from what I understand the majority opinion here is that if another global insurance company were about to go under you'd support bailing them out as well? What about two of them? What about 2 more banks too (very likely in the next 4 months)? And a couple of car manufacturers?

I'd like to see a little foresight about where what we're actually doing will lead, rather than speculation on what might happen if we don't take this path. That would foster a discussion of merit rather than one of justification.

Everyones central banks are injecting money into the economy bank of England & European central bank included. Northern Rock were nationalised in the UK and Halifax Bank of Scotland was forced to merge with Lloyds TSB creating a bank of 30 million customers and a bank that owns 30% of the UK housing market. It's completely against competition rules and now we have a banking giant in the UK we simply can never undo.

Banks in Asia, Korea, Japan & China have lost billions and billions.

We can't just pick up the pieces of American banks, we have to pick up the pieces of our own banks.

The bottom line is American mortgage companies were giving home loans to people that can't aford them. Then Fannie Mae and Freddie Mac buy those mortgages and trade them on the international market. Then everyone around the world started to realise that what they were trading wasn't worth shit. Now banks all over the world are suffering through the likes of Fannie Mac, Freddie Mac and every mortgage lender in America stupid enough to sell mortgages to people they knew couldn't aford them.

I don't know about everyone else, but I think we shouldn't bail out any company at all. In a free market, the company's rise and failure are its own.

Foreign markets were heavily invested in American interests because, surprise, we kick ass on the free market most of the time. We lead the bubbles rise and fall. When it's rising your more than happy across the pond to capitalize on it and use our markets to your advantage. When it falters partially because nobody knows exactly how a globalized market works, you're more than willing to let us pick up the bill.

"Why do we fall Master Bruce?"
"So we can learn to pick ourselves up."

Morgan Stanley is talking to CIC atm. How do you feel about an American bank being owned by a Chinese investment firm.

/time to start learning mandarin...
//hyperbole, but still this is not a good trend to set IMO.

American firms invest heavily in foreign markets. Its a two way street. It's why we call it International banking. Once again you are not picking up the bill we are all picking up the bill.

I saw that earlier. If we are going to reach for a world market, it'd be a step in the right direction. I don't know enough of the facts to have a well-formulated opinion yet.

/I was going to learn Japanese first, but maybe Mandarin would be better...
//I want to travel.

Found some new information. Came across this bit of information from the great oracle (emphasis added).



So while reading the first paragraph above, I used my HyperWords FireFox add-on to wikipedia Community Reinvestment Act. And found out that he's right. Our government created a system so that banks had to give out sub-prime loans. I've been blaming banks for being stupid this entire time. I should have been angry at the government for forcing the banks to make these decisions.

Im hoping that somebody can explain to me what exactly derivatives are. I was doing some research with a friend and we came across a few sites that really only offered a broad definition, if that. It seems to me that they dont really have any value, yet some of these banks have spent billions of dollars on them.

I dont mean to push this thread in another direction, but I think It would be better than starting another thread. Any insight is appreciated.



-John

So... the latest bailouts can not be reviewed by the courts.



That is constitutional... not like our government cares...

Which is a dandy argument if we were simply paying in the sense you're using for yourself, which is to say, European investors, due to the market taking a dump. We're paying for that AND our tax money is going towards bailing out the companies in question. We're paying for it twice.

I don't quite follow.

The way I see it is banks are collapsing world wide. American tax payers are bailing out American banks, British tax payers bailing out the British banks and so forth.

Seems like you are bailing out a lot of financial instituitons. While its not the everyday americans fault it is the ceo, boards, managers fault. Most financial institutions in the UK, at least the big ones all have banking branches so they have hard currency coming into them to prop them up. We've only had one collapse in the UK so far Northern Rock costing the UK tax payer more than $200 billion.

I think congress is doing a great job investing my tax dollars. What? I'm going to get nothing on my investment? I'm not voting for any incumbent of this congress.

edit: save Ron Paul.

That is one of the best ideas I ever heard. You know, I haven't met a single person that doesn't agree that the CEO's from failing companies shouldn't get fired, but you usually don't hear the same about politicians.

The president failed. Congress failed. Fire them, and let's get on with business.

Anybody got the digs on Secy Paulson? He's been saying that the bailouts are going to end up costing less than the alternative, and the talking heads on all the stations are saying that he's financially hyper-conservative, so if that's what he says, it's either true, or he's getting paid a lot to say it. I just don't know enough about the guy.

Lehman bros. executives to walk away with 2.5 billion dollars.

And a responsible perspective on the matter comes from none other than Newt fucking Gengrich...

On NR-I Can't believe it's not Free Republic-O no less

You smell that? It's bullshit. What is the alternative? I mean the one where the tax payers aren't supporting these companies, and the Fed isn't printing tons of bills. When is this going to cost less? This is a short-term solution! The best long-term plan is to let the banks fail. It's happened in America plenty of times. I don't see how this is going to "end up costing less".

Anyone want to protest in DC? I'm free next weekend.

You oppose this, why? Most of the 10,000 people who worked for LEH, and now BarCap had nothing to do with subprimes or the financial crisis. In fact, most of FID and EQ desks have been more profitable than ever.

And the 5,000 people who were fired got severance AND a bonus. The only people not eligible to receive a bonus are those a) who have worked at the firm for less than 6 months and /cool.gif" style="vertical-align:middle" emoid="B)" border="0" alt="cool.gif" /> if their specific sector filed for chapter 7.

First of all, 10k employees getting 2.5 bn dollars. That's 250,000 per employee. Do you see this going evenly to all employees in the pool or being distributed according to "contribution". I expect it goes primarily to the upper 1-5% of the leadership as they are jumping to another company/industry. Maybe they'll become lobbyists... /sleep.gif" style="vertical-align:middle" emoid="-_-" border="0" alt="sleep.gif" /> I don't know of course, but I never said I was outraged or anything, the article referred to outrage expressed by Lehman staff in London over their getting the shaft in this deal.

Mostly I can't get too pissed cause this isn't my money going to them, but how many employees of Lehman NY did I watch walk out of that high rise with nothing but their cubicle in a box and a growing understanding of how hard it will be to find a job with all their fellow employees looking as well? Right before christmas, too. (Did they get their jobs back in this Barclay buyout? I never heard anything about that, actually.)

As for the division of said bonuses, I cannot begin to guess where it is. But the compensation paid is pretty much aligned with the rest of the street. Upper management will make more, but the really high up people (CEO, COO, etc) have already declined to receive a bonus.

I packed away most of my stuff, as did almost everybody here -- just as an "in case" scenario. If LBHI filed chapter 7 and the building was included, it was possible the government would essentially lock the doors and turn the lights off.

People who lost their jobs, or left, to my understanding from what I've read in publicly disseminated information are not getting offers from Barclays. However, Barclays is offering some 12,000 jobs until December 31st, which will cover bonuses for those retained.

I like having an inside dewd here. Makes things simple. As long as the decision making body of the company doesn't get shit out of that 2.5 i'll be a happy camper.

Congress has til Friday to decide whether to cough of that 700 bn bucks. If Friday comes and we're all still fine can we agree that letting banks fail isn't the friggin apocalypse?