Thanks a lot. Just what we do not want.
Will the world financial market really collapse if they were to go down the tubes?
I heard someone speculate yesterday the reason BOA is buying Merrill Lynch is so that when their number is called the Fed will bail them out as well.
As someone over on DailyKos pointed out:
This is a very good question–what the fuck am I gonna get for my money here? Are we committed to continue paying the outrageous salaries of the CEOs and upper management of these companies? Personally, I think we ought to bump them down to about ten bucks an hour since they’ve shown us how very competent they are at managing these businesses. If they don’t like it, they’re free to go work somewhere else.
Bottom-line is that we are getting bilked by the CEO’s and the Pols who write the legislation that allows them to bilk the American citizenry. These are mostly Repub legislators and Repub Presidents who worm their way into office and calmly set about loosening the grip on these Cooperations because their buddies and lobbyists run them. They go into office telling us how they will cut X, and cut Y, how they will make sure “Government stays out of your way” and not in your way, except that by the end of their term we see exactly why they worked so hard to get into office - to bilk the American populace.
George senior was in office, and by the time he left we were in a massive hole. Bill Clinton came into office and calmly worked to dig us out.
George Jr. has been in office the last 8 years and well, here we are again - right back in the dumps. Banks failing all over, Insurance companies going defunct, bailouts by citizens who had nothing to do with the bilking, home prices in the tank, very high un-employment rates, those working in the middle class are actually earning less and their dollar is worth diddly squat.
Yet we have the folks that caused the mess, looking to be re-elected back into office, promising us all the same royal screwing they gave us all the last time.
It’s America the beautiful alright.
When I do I get my stock certificate?
I gotta tell you, I am genuinely tired of hearing about Clinton’s alleged surplus. It was nothing more than a paper surplus, and it was predicted on everything continuing exactly as it was when it was calculated. Well, what happened after this supposed surplus was calculated? The dot.com bubble burst, Enron, WorldCom and Rite Aid all essentially collapsed due to accounting fraud, and the market went into a serious state of flux that it has never quite recovered from (not helped at all by President Bush, admittedly).
The surplus did not exist, except through rose-colored glasses. A prediction based upon future events is subject to change, yet this one never changes, and is in fact held up to be God’s own truth. It’s enough to make my head hurt.
Even if we accept that the “surplus” is fictitious, is it thereby less desirable than the very real shit hole we are in?
A point of clarification:
No, the Feds do not take on a majority stake, just the option to obtain one.
What is being given for the loan, in addition to the promise to pay it back plus a loanshark’s interest rate, is a type of warrant called an Equity Participation Note. The details of this are not released but warrants generally promise that an entity can, at a future date for some defined period of time, buy a stock at a set price, no matter how much the stock has gone up in the meantime. I believe the warrant itself is salable. An EPN promises to pay some percent of stock appreciation to the entity instead.
What are the actual details? I don’t know. But it is not an actual current ownership of the company.
Cite please? :dubious:
I guess I don’t understand your objection here. If you are talking about the projected surpluses that Bush inherited you are exactly right in that they were only projections. However, it is clear that there were real and true surpluses during 1998, 1999, and 2000 using the accepted budgetary practices at the time. I have heard arguments that since the debt still increased during those years there was no surplus, but that was due entirely to automatic intergovernmental debt related to the Social Security surpluses.
Isn’t this then the Federal government entering into “business”? Can the Federal Government own stock? Sell the warrant? This seems kind of insane to me.
Back to the other issue, it seems there’s fear if AIG fails it’ll trigger some super financial disaster. Will it really?
Perhaps, yes. Apparently many money-market accounts are loaded down with AIG debt. These are generally considered “safe” investment vehicles and I imagine that large losses here would send tremors far and wide. Also, they insure large amounts of credit risk for other banks - defaulting on this insurance could lead to a wave of bank failures.
From here: Wall Street Journal
You have to think that it’ll be a long time if ever before confidence in AIG is back. I bet it’ll be gone as a brand and what’s left will be operating under a new name.
Poor Man United.
No. So? One has nothing to do with the other.
My objection is that from a general standpoint, if you’re going to repeat something as if it’s true, it probably should be. If you recall, I had to learn that lesson back in 2003, and I sure as hell learned it.
Eh, this chart from whitehouse.gov, and produced in '07 shows surpluses running from 1998 to 2001. I doubt Bush’s whitehouse is producing charts that view the budget of the Clinton years through rose colored glasses.
You mean as an investment or as an insurer?
As an investment they may turn out to be a reasonable buy after they equilibrate at a new price point which will only happen as all the details of the deal are fleshed out and it is clear what gets liquidated and for how much.
As an insurer … why? Really, they had no problem with their traditional lines. They made a bad choice to insure financial derivitaves without being able to properly model the risks. I’m still confident that my family will get the money on my life insurance from them if I suddenly croak and have no hesitation about keeping that policy.
That article is a bit of a stretch. Counting the gov’t buying bonds from itself as an outlay, but then not counting the bonds that it bought as income is pretty non-sensical. In any case, in the years in question, gov’t incomes were larger then gov’t outlays, which I’m fairly confident is what most people (and according to my previous link, the current Whitehouse) mean when they talk about federal deficits and surpluses.
You hit the nail right on the head.
Take a look at what The Reserve fund had to do today.
We could have been looking at an absolute panic if AIG would have announced bankruptcy this morning. By panic, I mean far more closer to a 4000 point drop in the Dow than a 400 point drop.
It is a stinking pile of a shit sandwich we’re being forced to eat. But, it was far better than the alternative.
Theoretical question: What would be the pros and cons of a 4000 point drop?
The cons are obvious, but, to me, the pros would be that people (the average taxpayer, and also finance professionals) would get to see the real “worth” of the financial system that is currently in place.
If we are hiding the real performance then, the system will proceed as is, until the next disaster.
Didn’t industry and/or the government try to prevent stock market meltdowns before the 1929 crash, only to have it all snowball into a massive crash in 1929 that caused the Depression?
Is the government delaying the inevitable, and also making the inevitable worse?
So now we know what has to happen to the state of health care before it too can become nationalized.