Economic News/Discussion

[falcon_view]

Bernanke says global markets under "extraordinary stress"

Sure they are, people have slowed their spending and borrowing. This is what has clogged the system. If you have good credit not a problem to get a loan.

http://news.yahoo.com/s/nm/20080923/...ss_bernanke2_1

[jimzinsocal]

Open Letter To Congress:

Since you have singled out "Wall Street Executives" in a symbolic move to demonstrate who the "rats" are by limiting any salaries paid to any company receiving aid via "The Plan"? Perhaps you will...in an effort in "transparency"
kindly list the following:

The name and Wall St address of the firms to which this suggested rule might apply.

The amount and rating of any mortgages as well as a complete list of those assets held by the above firms.

The names of the specific executives involved.

Obviously these no longer apply
Freddie Mac
Fannie Mae
Investment Banks

Is this guy on the "list"?

http://frum.nationalreview.com/post/...gyOTFlNjAyYmQ=

This guy?

http://frum.nationalreview.com/post/...gyOTFlNjAyYmQ=

Maybe this weasel?

http://frum.nationalreview.com/post/...NmZmJmNGNlNzM=

[jimzinsocal]

Some elements of this sound so familiar

http://www.cnn.com/2008/POLITICS/09/...out/index.html

In this case, this manifested itself in overbuilding in real estate.

Government-sponsored enterprises Fannie Mae and Freddie Mac were able to obtain a monopoly position in the mortgage market, especially the mortgage-backed securities market, because of the advantages bestowed upon them by the federal government.

Laws passed by Congress such as the Community Reinvestment Act required banks to make loans to previously underserved segments of their communities, thus forcing banks to lend to people who normally would be rejected as bad credit risks.

[falcon_view]

What I have found banks that don't come under the laws/rules of the Community Reinvestment Act wrote most of the sub-prime notes. From your links a few pages back.

[AeroSim]

I'm well aware of the important roll the capitalist system has. Unfortunately it has turned into Las Vegas due to short sightedness and greed. Short selling alone is little better that roulette.

Then we, in principle, agree and I apologized for the lecture- though it will help explain some things to others. "Craps" in general, should be illegalized on Wall Street- hence I'm NOT an advocate of dereg.

Then they develop an enormous circle jerk market in trading bad debt & huge companies like AIG make it look legit. It's unbelievable.

I didn't reply right away because I'm in the middle of research on this. What you have to understand is that AIG is a financial. You can't begin to go by its market capitalization...or even its management. It mostly manages money- not produces it. There are insurance policies, retirement acounts, etc. which are "assets"... approaching a trillion dollars. This is a great quantity of earned money of value that people are counting on being there when they need it. Should the managers fail, then things go "to hell in a handbasket" very quickly across the entire board as a trillion dollars is now in limbo. I bought into it thinking to help out and avoid an even graver crisis- and even look at a long term possibility.

I'm digging into the management. It is a lot of "legit" money that was caught up in some bad management. The current CEO, Liddy, is an Allstate alumni who unfortunately comes from the school of selling only low/no risk policies with stubborn payouts. This is almost completely contrary to its previous charter to cover a broad spectrum of areas. For a very short term, he may work to protect their first priority: The assets. But my thought is- if they don't fire him as soon as this period is over...get out as soon as you can and don't screw yourself by buying this policy.

[falcon_view]

A little perspective on how much this bailout of $700 Billion is compared to the Iraq war from 2003 to now is $550 Billion.

There is one problem I have with the bailout if this is the way it comes down.

Say we buy the loans at 60-80 cents on the dollar then Paulson will turn around and sell the loans for 40-50 cents on the dollar. What a sweet deal for the banks. No matter what Paulson says about the taxpayer might come out even or a little under. That is not going to happen. What ever the final cost of the bailout to buy the loans is and most likely Pualson will be back for more and the taxpayer is going to get stuck with at least 20%.

This bailout is going to happen, just how much vaseline is the taxpayer going to get?

[jimzinsocal]

The big talk today will be this

http://money.cnn.com/quote/quote.html?symb=GS

+ 5 Billion

http://www.foxnews.com/story/0,2933,426847,00.html

[Orangutan]

Breaking News

John McCain suspends campaigning to work on economy, requests postponing Friday debate; asks Obama do the same.

[jimzinsocal]

^^just saw and posted in the other thread

What a move.

[jimzinsocal]

However a senior Obama campaign official said Obama "intends to debate."
"The debate is on," a senior Obama campaign official told ABC News.
Obama supporter and chief debate negotiator Rep. Rahm Emanuel, D-Ill., told MSNBC that "we can handle both," when asked about his reaction to McCain's call to postpone the first debate because of the administration's bailout plan.
He believes they are making good progress on Capitol Hill on the bailout and his initial reaction is that the work on the Hill should not preclude the debate from taking place.

[jimzinsocal]

^^not going to play well in the press

[BlackDragon24]

For who? Obama or McCain?

Word on the street is Obama contacted the McCain campaign this morning and said they should issue a joint statement about the financial crisis....McCain I guess decide to go for the one-up. At least that's the way it seems so far....waiting for the story to develop....

[jimzinsocal]

Rightly or wrongly? Who will the public perceive as the problem solver Vs the campaigner?
I suspect if Obama doesnt agree to a debate postponement?
He may be perceived as "politics first" vs the "peoples work" first.

[BlackDragon24]

^^^If I'm Obama I come out and say that the debate goes on, but the topic should be changed to economics.

But I get the angle.

[Chiles4]

John McCain suspends campaigning to work on economy, requests postponing Friday debate; asks Obama do the same.

Yes, the country needs McCain's economic expertise during this time of crisis. Maybe he can bring his buddy Phil Gramm along!