Quote:/font1h,121b,121/font1Quote:/font1h,121b,121/font1Quote:/font1h,121b,121I think the culpability is enough to go around but it's like when companies target people with deceptive pitches on credit cards and then, lo and behold, people get in trouble with credit. Sure, the end user owes responsibility but when you're specifically trying to pitch at low financial literacy targets, promising the moon, I think your level of responsibility is rather greater. That's why we (used to) have regulation on this sort of thing; for the safety of the greater system. b,121b,121h,121
font class="post"1b,121b,121I agree with most of this, except for the ratio of responsibility. Predatory lenders deserve a large portion, but no more than the borrowers. b,121b,121h,121font class="post"1b,121b,121Look: we can go back and forth on the "ratio of responsibility" and disagree on where that marker should be set. b,121b,121h,121font class="post"1b,121b,121I think the real lesson here is that there is only one truly safe investment going forward: blame pie futures.b,121b,121I'm actually thinking of getting in to the game myself. Let me know how this tickles your collective fancy:b,121b,121[color:red1b]DB'S PASTRYTORIUM AND BLAME PIE EMPORIUM [/b]!--color--1/font1 b,121b,121USING ONLY THE FRESHEST MORAL OUTRAGE AND DOLEFUL BRAND CURDLED HOPES SINCE 2008!
Quote:/font1h,121b,121b,121[color:red1b]DB'S PASTRYTORIUM AND BLAME PIE EMPORIUM [/b]!--color--1/font1 b,121b,121USING ONLY THE FRESHEST MORAL OUTRAGE AND DOLEFUL BRAND CURDLED HOPES SINCE 2008! b,121b,121h,121
font class="post"1b,121b,121 img src="/ubbthreads/images/graemlins/funnypost.gif" alt="" 21b,121b,121By the time we finish blaming peer pressure, consumerism, cultural stereotypes, predatory lending practices, language barriers, public education shortcomings, time constraints and corpoate greed there is nary a crumb of personal accountability to be found.b,121b,121That way we can all sleep soundly at night knowing we just can't avoid being helpless victims and it's not our fault as Stuart Smalley reads us a bedtime story.
Quote:/font1h,121b,121 The Federal Reserve isn't even a government institution. It's a bunch of consultants who always seem to know exactly how to keep their own pockets fat at the expense of others.b,121b,121b,121h,121
Quote:/font1h,121b,121Don't fret. In the post-governmental future present, no one will own homes. The nomadic bands of marauders large corporations will set up camp around the local oases, sucking the land dry and preying upon those unfortunate enough to cross their paths. b,121b,121h,121
Quote:/font1h,121b,121By the time we finish blaming peer pressure, consumerism, cultural stereotypes, predatory lending practices, language barriers, public education shortcomings, time constraints and corpoate greed there is nary a crumb of personal accountability to be found.b,121b,121That way we can all sleep soundly at night knowing we just can't avoid being helpless victims and it's not our fault as Stuart Smalley reads us a bedtime story. b,121b,121h,121
font class="post"1b,121b,121So Rock,b,121b,121Are you saying that it???s the bottom (see individual borrowers) of the financial food chain that is ultimately responsible for the meltdown of our economy? b,121b,121By personal responsibility you mean that individuals like Sen. Lindsey Graham and his ilk who helped usher in this golden age deregulation or corporations like Washington Mutual, Lehman Brothers (which due to a Supreme Court Ruling are considered people) are responsible? Or are they too impersonal to blame?b,121b,121Your smug little statement that ???we just can't avoid being helpless victims and it's not our fault,??? is basically ???buyer beware, you are on your own.??? Well that is fine my good financial decisions weren???t impacted by my neighbors bad ones.b,121b,121My wife and I bought a house at a great price, have a fixed mortgage rate lower than the current rate today, and we live within our means. The value of our property doubled in the last 6 years. However, if my neighbors made bad loans and suddenly 1/3 of the block is in foreclosure and that drags down the value of my house, makes it hard to get a new loan because the markets are tighter than a virgin???s butt hole, and banks I am using are suddenly looking shaky. Is that my ???personal responsibility????b,121b,121Actually Rock, those factors are beyond my control and no amount of smug Libertarian rhetoric is gonna make this mess completely the fault of individual consumers. It???s a mess that has so many fathers that no one is without blame or a stake in its outcome.b,121b,121So, you can either stick with the amoral, Darwinistic forces of the ???free market??? or you can look at the public good and start putting common sense regulation on capitalism so that all of us don???t get dragged down by ???personal responsibility???
Quote:/font1h,121b,121/font1Quote:/font1h,121b,121By the time we finish blaming peer pressure, consumerism, cultural stereotypes, predatory lending practices, language barriers, public education shortcomings, time constraints and corpoate greed there is nary a crumb of personal accountability to be found.b,121b,121That way we can all sleep soundly at night knowing we just can't avoid being helpless victims and it's not our fault as Stuart Smalley reads us a bedtime story. b,121b,121h,121
font class="post"1b,121b,121So Rock,b,121b,121Are you saying that it???s the bottom (see individual borrowers) of the financial food chain that is ultimately responsible for the meltdown of our economy? b,121b,121By personal responsibility you mean that individuals like Sen. Lindsey Graham and his ilk who helped usher in this golden age deregulation or corporations like Washington Mutual, Lehman Brothers (which due to a Supreme Court Ruling are considered people) are responsible? Or are they too impersonal to blame?b,121b,121Your smug little statement that ???we just can't avoid being helpless victims and it's not our fault,??? is basically ???buyer beware, you are on your own.??? Well that is fine my good financial decisions weren???t impacted by my neighbors bad ones.b,121b,121My wife and I bought a house at a great price, have a fixed mortgage rate lower than the current rate today, and we live within our means. The value of our property doubled in the last 6 years. However, if my neighbors made bad loans and suddenly 1/3 of the block is in foreclosure and that drags down the value of my house, makes it hard to get a new loan because the markets are tighter than a virgin???s butt hole, and banks I am using are suddenly looking shaky. Is that my ???personal responsibility????b,121b,121Actually Rock, those factors are beyond my control and no amount of smug Libertarian rhetoric is gonna make this mess completely the fault of individual consumers. It???s a mess that has so many fathers that no one is without blame or a stake in its outcome.b,121b,121So, you can either stick with the amoral, Darwinistic forces of the ???free market??? or you can look at the public good and start putting common sense regulation on capitalism so that all of us don???t get dragged down by ???personal responsibility??? b,121b,121h,121font class="post"1b,121b,121If you've read this whole thread you would have seen me post the following not once, but twice...I'm not making excuses for ANY of them.b,121b,121/font1
Quote:/font1h,121b,121GREEDY MOFO'sb,121b,121Homebuyers who bet on 5 year low interest ARM'sb,121b,121Bankers who approved loans they knew they couldn't guarantee.b,121b,121Lending Institutions who allowed it to happen.b,121b,121Bail your own asses out.b,121b,121(And please spare us the "Big bad predatory lenders that took advantage of the poor ignorant homebuyers" sob stories....it was GREED all the way around....pure and simple)b,121b,121That is all. b,121b,121h,121
AIG: ANOTHER ONE BITES THE DUST (or at least, gets a fed bailout)b,121b,121Fed takes over AIG - $85B loanb,121Federal officials will take 80% stake in the nation's largest insurer in an $85 billion rescue plan to prevent financial chaos worldwide.b,121b,121b,121b,121NEW YORK (CNNMoney.com) -- In a stunning turn, the Federal Reserve Board is taking over crumbling insurer American International Group in an $85 billion rescue plan, officials announced Tuesday evening.b,121b,121The Fed authorized the Federal Reserve Bank of New York to lend AIG (AIG, Fortune 500) up to $85 billion. In return, the federal government will receive a 79.9% stake in the company.b,121b,121Officials decided they must 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.b,121b,121"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 Fed said in a statement.b,121b,121A bailout of AIG would mark the most dramatic turn yet in an expanding crisis that started more than a year ago in the mortgage meltdown. The resulting credit crunch is now toppling not only mainstay Wall Street players, but others in the wider financial industry .b,121b,121The line of credit, which is available for two years, is designed to help AIG meet its obligations, the Fed said. Interest will accrue at a steep rate of 3-month Libor plus 8.5%, which totals 11.31% at today's rates. AIG will sell certain of its businesses with "the least possible disruption to the overall economy."b,121b,121Taxpayers will be protected, the Fed said, because the loan is backed by the assets of AIG and its subsidiaries. The loan is expected to be repaid from the proceeds of the asset sales.b,121b,121The government had resisted throwing a lifeline to AIG, hoping to entice investment firms to set up a $75 billion rescue fund. Officials opted not to bail out Lehman Brothers, which filed for bankruptcy on Monday. But by Tuesday night, it became clearer that the private sector would not step in to help AIG, which has a greater reach into other financial companies and markets than Lehman does.b,121b,121"We are working closely with the Federal Reserve, the SEC and other regulators to enhance the stability and orderliness of our financial markets and minimize the disruption to our economy," said Treasury Secretary Henry Paulson. "I support the steps taken by the Federal Reserve tonight to assist AIG in continuing to meet its obligations, mitigate broader disruptions and at the same time protect the taxpayers."b,121b,121Without word from the government, the company's options grew more limited as the day wore on. Its already-battered share price fell another 21% Tuesday with more than 1 billion shares trading hands, and plummeted another 46% in after-hours trading.b,121b,121AIG did not immediately return calls for comment. The company issued a statement late Tuesday afternoon saying it "continues to pursue alternatives."b,121b,121The statement also told policyholders that its general and life insurance businesses, as well as its retirement services division, were adequately capitalized and operating normally. b,121b,121The company was scrambling to raise capital to stay afloat after being hit with credit rating agencies downgrades that is forcing it to come up with billions of dollars in additional collateral fast.b,121b,121New York State officials, who regulate the insurance titan, had urged the federal government to rescue AIG. b,121b,121"I don't think this country, with all we've been through right now, where our economy is, can afford it," New York Gov. David Paterson told CNN.b,121b,121New York State tried to helpb,121The state attempted to help AIG on Monday by allowing it to tap into $20 billion in assets from its subsidiaries if the company could comes up with a comprehensive plan to get the much-needed capital, said a state Insurance Department spokesman.b,121b,121"It has to be part of the solution to the problem," said spokesman David Neustadt.b,121b,121Paterson said AIG could transfer $20 billion in assets from its subsidiaries to use as collateral for daily operations. In exchange, the parent company would give the subsidiaries less-liquid assets of the same value. He stressed the company is financially sound and that no taxpayer dollars are involved.b,121b,121Also Tuesday, former Chief Executive Maurice "Hank" Greenberg said in a regulatory filing that he is monitoring the situation. Among the moves he is considering: purchasing AIG assets, lending to the company, investing more in it, seeking board seats, acquiring the company or offering advice to management.b,121b,121The funding became ever more crucial as the insurer was hit Monday night by a series of credit rating downgrades. The cuts could prove deadly to AIG (AIG, Fortune 500) and force it to post more than $13 billion in additional collateral. Shares were down 35% in mid-day trading after falling more than 70% in early morning trading and losing 61% of their value the day before.b,121b,121Late Monday night, Moody's Investors Service and Standard & Poor's Ratings Services each said they had lowered their ratings. A few hours earlier, Fitch Rating had also downgraded AIG, saying the company's ability to raise cash is "extremely limited" because of its plummeting stock price, widening yields on its debt, and difficult capital market conditions.b,121b,121The downgrade could force AIG to post $13.3 billion of collateral, Fitch said in a statement, citing AIG's July 31 estimates. Also, the moves will make it more expensive for AIG to issue debt and harder for it to regain the confidence of investors.b,121b,121Analysts urged the company to unveil its restructuring plan.b,121b,121"Management needs to address investor concerns now before the market sell-off becomes a self-fulfilling prophecy," said Rob Haines, analyst at CreditSights. b,121b,121Global ripples if firm were to failb,121If AIG were to fail, the global ripple effects would be unprecedented, said Robert Bolton, managing director at Mendon Capital Advisors Corp. AIG is a major player in the credit default swaps market, an insurance-like contracts that guarantee against a company defaulting on its debt. Also, it is a huge provider of life insurance, property and casualty insurance and annuities.b,121b,121"If AIG fails and can't make good on its obligations, forget it," Bolton said. "It's as big a wave as you're going to see."b,121b,121AIG has had a very tough year. b,121b,121Rocked by the subprime crisis, the company has lost more than $18 billion in the past nine months and has seen its stock price fall more than 91% so far this year. It already raised $20 billion in fresh capital earlier this year.b,121b,121Its troubles stem from its sales of credit default swaps and from its subprime mortgage-backed securities holdings. b,121b,121AIG has written down the value of the credit default swaps by $14.7 billion, pretax, in the first two quarters of this year, and has had to write down the value of its mortgage-backed securities as the housing market soured.b,121b,121The insurer could be forced to immediately come up with $18 billion to support its credit swap business if its ratings fall by as little as one notch, wrote John Hall, an analyst at Wachovia, on Monday.b,121b,121This year's results have also included $12.2 billion in pretax writedowns, primarily because of "severe, rapid declines" in certain mortgage-backed securities and other investments.b,121b,121The company brought in new management to try to turn the company around. In June, the company tossed out its chief executive, Martin Sullivan and named AIG chairman Robert Willumstad, who joined AIG in 2006 after serving as president and chief operating officer of Citigroup (C, Fortune 500), in his p
lace.
I had to laugh, on the way to work there were a bunch of socialist protestors in the banking end of town waving placards saying "TOLD YOU SO!" handing out socialist propaganda.b,121b,121If you're a follower of any -ism, your time will come if you wait long enough.
wow. so what does it actually mean that the federales are taking over 79% of AIG? is it just a loan or are they basically nationalized or are they still privately owned? so between lehman, freddie, fannie and aig...how much have we put out for bailouts?
It's a loan, not a takeover but it's more or less a bailout of sorts. b,121b,121And we didn't bailout Lehmann Bros - they went bankrupt, remember? b,121b,121Keep an eye on Washington Mutual.
head spinning.b,121ive only been following along peripheraly.b,121this shit all seems to be happening on an unprecedented scale. does this compare/dwarf the s&l bailouts?b,121sorry if im dumbing down the conversation...economics is a little over my head
Quote:/font1h,121b,121head spinning.b,121ive only been following along peripheraly.b,121this shit all seems to be happening on an unprecedented scale. does this compare/dwarf the s&l bailouts?b,121sorry if im dumbing down the conversation...economics is a little over my head b,121b,121h,121
font class="post"1b,121b,121It's all good. It's a lot for most to follow. b,121b,121I'm not sure if it is worse than the S&L bailouts. The main difference is that those happened over the course of many years whereas we've seen a much more concentrated set of failed institutions in really less than a year, beginning with Bear Sterns, then Fannie Mae and Freddie Mac and now AIG. From my recollection, the S&L crisis was worse just given the number of affected companies and customers BUT again, it's impossible to know if we're at the end of our current woes or still in the middle. My sense is that we have not seen the last of this, especially since, from most indications, the housing market hasn't stabilized yet and as long as prices are in freefall, that's going to create more problems with the mortgage-backed securities that's partially the reason why many of these institutions are imploding (and the tightening of credit, related to all this, isn't helping either). b,121b,121It's very hard to know how much this will end up costing the gov't. It really depends on the size of the company. They were willing to let Lehmann slip to its doom so it's easier to see the gov't making similar decisions for other companies, even very large ones. But things like AIG and Freddie Mac simply cannot be allowed to fail according to their current logic and I assume there's other companies like that out there.
Quote:/font1h,121b,121so what would have happened if AIG was allowed to go bankrupt? b,121b,121h,121
font class="post"1b,121b,121Hard to say but presumably, it could have generated a complete global financial meltdown. I mean, AIG is the biggest insurance company in the world...think about the number of policies they have, including many whose purpose is to insure against corporate financial loss! If they went bankrupt and had to default on those policies? Holy. fusking. Shit.
Quote:/font1h,121b,121jeeeeeeeeezusb,121b,121all this government intervention smacks of socialism to me.b,121where all the free market motherfuckers at right now? b,121b,121h,121
font class="post"1b,121b,121Ha. It's not socialism. Not yet, at least. b,121b,121And what's happening is, in some part, an attempt to protect the free market...b,121b,121...from itself.b,121b,121(Oh yes, it is ironic). b,121b,121Phil Gramm can eat one.
Quote:/font1h,121b,121so what would have happened if AIG was allowed to go bankrupt? b,121b,121h,121
font class="post"1b,121b,121Truth be told, no on really knows what would happen if AIG went under, but almost everyone agrees it would be bad. I heard a guy explain on NPR why the Fed could not let AIG fail because they are so large and involved in so much it would send the global economy into a nose dive. Harsh.b,121b,121This link to Time has the best explanation I have seen so far:b,121a href="http://www.time.com/time/business/article/0,8599,1841699,00.html?xid=site-cnn-partner" target="_blank"1Why the Government Wouldn't Let AIG Failb,121b,121As for the socialism crack from another poster...b,121b,121Dude wake up! We have socialism in America right now before the Wall Street bail outs. What to you think Social Security, public education, and medicare are? b,121b,121These are acceptable forms of socialism to a vast majority of Americans (at least enough that even the most rabid free market Republican would rather chew his own arm off than actually gut them because they would be out of a job). We have a social compact that we will provide guaranteed retirement, education K-12, and basic medical services to the disabled, children, and elderly.b,121b,121Socialism is the bogyman that conservatives drag out every time we start talking about the public good (I am talking the economics definition, which means you cannot exclude someone from the benefit/harm of something). The problem is if everything can be a private good (something excluded) then a, people are left in the cold when they retire, don't get educated, and die if we don't have some basic concept of the public good.b,121b,121Don't get me wrong, some things are done very well by the private sector, I don't want the government making iPods for me. But do I want private, for profit companies in charge of my health care, hell no. I want a balance of private and public goods and I am willing to pay for it.b,121b,121 img src="/ubbthreads/images/graemlins/headz.gif" alt="" 21
Quote:/font1h,121b,121so what would have happened if AIG was allowed to go bankrupt? b,121b,121h,121
font class="post"1b,121b,121Well, if the largest insurance company in the world went down, it would be as one commentator said "an extinction level event."b,121b,121"Its collapse would be as close to an extinction-level event as the financial markets have seen since the Great Depression," wrote money manager Michael Lewitt in Tuesday morning's New York Times. There's also the fact that through its insurance policies AIG touches far more regular Americans (and consumers around the world) than Lehman Bros. did. Plus, AIG's insurance businesses make so much money that they could conceivably pay off the cost of the bailout within a few years. b,121b,121a href="http://www.time.com/time/business/article/0" target="_blank"1http://www.time.com/time/business/article/0,8599,1841699,00.html
Quote:/font1h,121b,121can Wa Mu be too far behind? b,121b,121h,121
font class="post"1b,121b,121Just saw a report. Feds are asking if anyone would want to buy Wamu but Wamu is saying no thanks and claim they have enough savings to weather the storm.
font class="post"1b,121b,121Scariest part of this article:b,121b,121 In a worrisome sign of widening fallout, a big money-market fund, the Reserve Primary Fund, announced late Tuesday that it lost money as its net asset value fell below the hallowed $1-per-share level. Money-market funds are regarded as super-safe vehicles for ordinary investors looking for a place to harbor their cash. A money fund hasn't "broken the buck" in 14 years.
Yeah - when I suggested before that this current crisis isn't as bad as the S&L failures of the '80s, I may have been overly optimistic. Some economic pundits are calling this the worst crisis since the Great Depression!
Quote:/font1h,121b,121b,121As for the socialism crack from another poster...b,121b,121Dude wake up! We have socialism in America right now before the Wall Street bail outs. What to you think Social Security, public education, and medicare are? b,121b,121These are acceptable forms of socialism to a vast majority of Americans (at least enough that even the most rabid free market Republican would rather chew his own arm off than actually gut them because they would be out of a job). We have a social compact that we will provide guaranteed retirement, education K-12, and basic medical services to the disabled, children, and elderly.b,121b,121Socialism is the bogyman that conservatives drag out every time we start talking about the public good (I am talking the economics definition, which means you cannot exclude someone from the benefit/harm of something). The problem is if everything can be a private good (something excluded) then a, people are left in the cold when they retire, don't get educated, and die if we don't have some basic concept of the public good.b,121b,121Don't get me wrong, some things are done very well by the private sector, I don't want the government making iPods for me. But do I want private, for profit companies in charge of my health care, hell no. I want a balance of private and public goods and I am willing to pay for it.b,121b,121 img src="/ubbthreads/images/graemlins/headz.gif" alt="" 21 b,121b,121h,121
font class="post"1b,121b,121i was being sarcastic. i'm for much more regulation, more of a safety net, and more of a social democracy, even at the expense of higher taxes.b,121b,121once youre on the board longer youll have a better idea of where people are at and when they are joking around. that being said, ive been appreciating your poli/economic posting contributions.b,121b,121peace,t
This professor that use to sit on one the commodoties exchange commission got interviewed on Fresh Air today. He says the financial troubles go much MUCH deeper. He said the main reason why the government is giving1loans to certain companies instead of letting them go bankrupt is because the Treasury Secretary doesn't want people going through the books of these big companies because they'll find out that they're sitting on a house of cards. They've been taking part in a whole number of risky practices that have boosted their books, but really aren't worth the paper they're printed on. If people were able to go through them and determined the real prices for their holdings1they and many others would have huge losses that would lead to more and more failing businesses. b,121b,121a href="http://www.npr.org/templates/story/story.php?storyId=94686428"1target="_blank"1http://www.npr.org/templates/story/story.php?storyId=94686428
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