U.s. Banking Crisis: Capitalism "gone Wild"?

[PeaceBlondie]

Indeed, is the entire financial system of the world at risk, and to what extent?

It started out so simple, that even I could understand it. Mortgages issued to high-risk home buyers, secured by the titles to their real estate. We knew some folks with bad credit ratings were buying houses. We knew folks with fairly decent credit, who were taking out ARM's when mortgage rates were very low, but subject to increase. We knew of anecdotes of times and places where real estate values on single family homes had declined, but the real estate industry always denied it, although it was true (Massachusetts. Texas). We knew employees who invested all their 401(k) stock in their failing companies, such as Enron. We still know day traders, speculators, commodity traders, etc., who take huge risks.

But single-family homes were considered golden, and their prices allegedly never declined, regardless of the anecdotes.

Another major housing lender in the USA is the VA, which does not charge for mortgage insurance. Are they taking some hits?

Formerly, pension systems did not dabble in futures or derivatives. Do they now? And what world wide industry can shrug off or pay off tens of trillions of dollars of losses? To paraphase a dead American politician "ten trillion dollars here, ten trillion dollars more, and beofore you know it, you're talking about a lot of money."

[Kf6vci]

It's not Capitalism gone wild but a worrysome trend to disregard the power of free markets. Politicians in their unlimited hybris think they can intervene and do better than the old supply and demand curve finding an equilibrium.

Take housing. At some point, the short supply will lead to rising prices.

And don't forget, the whole credit crisis is about Americans not paying their bills. Be it auto, houseing or student loans. Prime and Subprime, it's the whole width of the spectrum! Read the American Express statement, it's not just the normal customers but also the Gold Card holders who struggle.

Say the national debt will increase by $ 1 trillion to $ 10 T. At a higher rate of interest, this bail out is likely to cost hundreds of billions just in higher interest to the USA!

[Jingthing]

The power of the free markets brought us the Great Depression in the 1930s. Even anti-regulator Bush has turned his leaf and is scrambling to avoid a current great depression with a radical socialized capitalism that may make Beijing blush. That is what this bailout is about: an attempt to prevent a complete worldwide finance meltdown. Lets hope it works. There is plenty of blame to go all around, but I think the bulk of it goes to the American people who have for far too long believed they can live on bubbles of all kinds (myself included) and their politicians lacked the guts to tell them the truth and change policies early enough to prevent this disaster. This is only the beginning of this saga. Fasten your seatbelts.

[meom]

It's not Capitalism gone wild but a worrysome trend to disregard the power of free markets. Politicians in their unlimited hybris think they can intervene and do better than the old supply and demand curve finding an equilibrium.

Maybe not so much a disregard to the power of free markets but more a case of cheating on the free markets in the absence of proper regulations.

Interesting article here: www.globalresearch.ca/index.php?context=va&aid=8634

[Naam]

What's interesting to me is, with all the printing of money, everywhere, that need be done, the US national deficit could double, but it could just as easily be paid off.

please define "deficit" and "paid off" LRB. do you mean "debt" and "redeemed" (as deficits can be reduced but not paid off) or interest paid and debt rolled over (as is the case now) till kingdom come because the ratio debt:GDP is still bearable?

[lannarebirth]

What's interesting to me is, with all the printing of money, everywhere, that need be done, the US national deficit could double, but it could just as easily be paid off.

please define "deficit" and "paid off" LRB. do you mean "debt" and "redeemed" (as deficits can be reduced but not paid off) or interest paid and debt rolled over (as is the case now) till kingdom come because the ratio debt:GDP is still bearable?

Yes, I did mean nation debt. Sorry to confuse.

[lannarebirth]

<H1 _extended="true">

<H1 _extended="true">The Real Reason Behind the Global Financial Crisis, Part II</H1>by: Money Morning posted on: September 22, 2008 By Shah Gilani

[Part II of a three-story investigation of the credit crisis, showing how American International Group (AIG), a perfectly sound company that's survived for 89 years, was destroyed by some errant bets on a derivative security called a "credit default swap," or CDS.]

http://seekingalpha.com/article/96606-the-real-reason-behind-the-global-financial-crisis-part-ii?source=side_bar_editors_picks

"The Real Reason Behind the Global Financial Crisis"

by: Money Morning posted on: September 19, 2008 | about stocks: AIG

By Shah Gilani

[Part I of a three-part series looking at how so-called "credit default swap" derivatives could ignite a worldwide capital markets meltdown]

Are you shell-shocked? Are you wondering what's really going on in the market? The truth is probably more frightening than even your worst fears. And yet, you won't hear about it anywhere else because "they" can't tell you. "They" are the U.S. Federal Reserve and the U.S. Treasury Department, and they can't tell you what's really going on because there's nothing they can do about it, except what they've been trying to do - add liquidity.

At the exchange rate Wednesday, 35 trillion British Pounds was equivalent to U.S. $62 trillion (hence, the 35 trillion pound gorilla). According to the International Swaps and Derivatives Association, $62 trillion is the notional value of credit default swaps [CDS] out there, somewhere, in the market.

This isn't the first time Money Morning has warned readers about the dangers of credit default swaps. And it won't be the last.

The Genesis of a Derivative Boom

In the mid-1980s, upon arriving in New York from Chicago with an extensive background in trading options and futures (the original derivatives), I was offered a job at what was then Citicorp [today's Citigroup Inc. ©]. The offer was for an entry-level post in the bank's brand new OTC (over-the-counter, meaning not exchange traded) swaps and derivatives group. When I asked what the economic purpose of swaps was, the answer came back: "To make money for the bank."

I declined the position.

It used to be that regulators and legislators demanded theoretical, empirical, and quantitative measures of the efficacy of new tradable instruments being proposed by exchanges. What is their purpose? How will they benefit the capital markets and the economy? And, what safeguards will accompany their introduction?

Not any more. In the early 1990s, in order to hedge their loan risks, J. P. Morgan & Co. [now JPMorgan Chase & Co. (JPM)] bankers devised credit default swaps.

A credit default swap is, essentially, an insurance contract between a protection buyer and a protection seller covering a corporation's, or sovereign's (the "referenced entity"), specific bond or loan. A protection buyer pays an upfront amount and yearly premiums to the protection seller to cover any loss on the face amount of the referenced bond or loan.

Typically, the insurance is for five years.

Credit default swaps are bilateral contracts, meaning they are private contracts between two parties. CDSs are subject only to the collateral and margin agreed to by contract. They are traded over-the-counter, usually by telephone. They are subject to re-sale to another party willing to enter into another contract. Most frighteningly, credit default swaps are subject to "counterparty risk."

If the party providing the insurance protection - once it has collected its upfront payment and premiums - doesn't have the money to pay the insured buyer in the case of a default event affecting the referenced bond or loan (think hedge funds), or if the "insurer" goes bankrupt (Bear Stearns was almost there, and American International Group Inc. (AIG) was almost there) the buyer is not covered - period. The premium payments are gone, as is the insurance against default.

Credit default swaps are not standardized instruments. In fact, they technically aren't true securities in the classic sense of the word in that they're not transparent, aren't traded on any exchange, aren't subject to present securities laws, and aren't regulated. They are, however, at risk - all $62 trillion (the best guess by the ISDA) of them.

Fundamentally, this kind of derivative serves a real purpose - as a hedging device. The actual holders, or creditors, of outstanding corporate or sovereign loans and bonds might seek insurance to guarantee that the debts they are owed are repaid. That's the economic purpose of insurance.

What happened, however, is that risk speculators who wanted exposure to certain asset classes, various bonds and loans, or security pools such as residential and commercial mortgage-backed securities (yes, those same subprime mortgage-backed securities that you've been reading about), but didn't actually own the underlying credits, now had a means by which to speculate on them.

If you think XYZ Corp. is in trouble, and won't be able to pay back its bondholders, you can speculate by buying, and paying premiums for, credit default swaps on their bonds, which will pay you the full face amount of the bonds if they do actually default. If, on the other hand, you think that XYZ Corp. is doing just fine, and its bonds are as good as gold, you can offer insurance to a fellow speculator, who holds the opinion opposite yours. That means you'd essentially be speculating that the bonds would not default. You're hoping that you'll collect, and keep, all the premiums, and never have to pay off on the insurance. It's pure speculation.

Credit default swaps are not unlike me being able to insure your house, not with you, but with someone else entirely not connected to your house, so that if your house is washed away in the next hurricane I get paid its value. I'm speculating on an event. I'm making a bet.

The bad news is that there are even worse bets out there. There are credit default swaps written on subprime mortgage securities. It's bad enough that these subprime mortgage pools that banks, investment banks, insurance companies, hedge funds and others bought were over-rated and ended up falling precipitously in value as foreclosures mounted on the underlying mortgages in the pools.

What's even worse, however, is that speculators sold and bought trillions of dollars of insurance that these pools would, or wouldn't, default! The sellers of this insurance (AIG is one example) are getting killed as defaults continue to rise with no end in sight.

And this is only where the story begins.

The Ticking Time Bomb

What is happening in both the stock and credit markets is a direct result of what's playing out in the CDS market. The Fed could not let Bear Stearns enter bankruptcy because - and only because - the trillions of dollars of credit default swaps on its books would be wiped out. All the banks and institutions that had insurance written by Bear would not be able to say that they were insured or hedged anymore and they would have to write-down billions and billions of dollars in losses that they've been carrying at higher values because they could say that they were insured for those losses.

The counterparty risk that all Bear's trading partners were exposed to was so far and wide, and so deep, that if Bear was to enter bankruptcy it would take years to sort out the risk and losses. That was an untenable option.

The Fed had to bail out Bear Stearns.

The same thing has just happened to AIG. Make no mistake about it, there's nothing wrong with AIG's insurance subsidiaries - absolutely nothing. In fact, the Fed just made the best trade in its history by bailing AIG out and getting equity, warrants and charging the insurance giant seven points over the benchmark London Interbank Offered Rate [LIBOR] on that $85 billion loan!

What happened to AIG is simple: AIG got greedy. AIG, as of June 30, had written $441 billion worth of swaps on corporate bonds, and worse, mortgage-backed securities. As the value of these insured-referenced entities fell, AIG had massive write-downs and additionally had to post more collateral. And when its ratings were downgraded on Monday evening, the company had to post even more collateral, which it didn't have.

In short, what happened in one small AIG corporate subsidiary blew apart the largest insurance company in the world.

But there's more - a lot more. These instruments are causing many of the massive write-downs at banks, investment banks and insurance companies. Knowing what all this means for hedge funds, the credit markets and the stock market is the key to understanding where this might end and how.

The rest of the story will be illuminated in the next two installments. Next up: An examination of the AIG collapse, followed by a look at how bad things could get, and what we can do to fix the problem at hand. So stay tuned.

http://seekingalpha.com/article/96290-the-...inancial-crisis

</H1>

[lannarebirth]

You know, I'm no rocket scientist, but I'm not that stupid either. Just the few people I know were prepared to spend about 30 million dollars down (equating to maybe 150-200 million dollars asset value) on repoed properties. Most of'em were looking for another 10%-25% downside, which is about what the properties might have sold for 5-6 years ago. Now the government wants to give present value +++. Doesn't smell right.

Edited September 22, 2008 by lannarebirth

[LaoPo]

you have an alternative in your country LaoPo and that is (if it has not changed) 1% tax on your total assets in lieu of tax on your income. for some not a bad deal.

1. You mean the so called fortune tax. Yes, we have a sort of fortune-yield/return-tax, also called wealth tax, installed on Jan 1 -2001 (Germany banned the wealth/fortune tax already in 1997).

Someones fortune (all assets together) is measured on Jan 1 and Dec. 31; the two sums are added together, and divided by two. The taxman assumes you are able to make 'at least' a return of 4% over that sum.

This 4% is taxed with 30%, so in the end the 30% of the return of 4% is a total of 1,2% to be paid over the total fortune.

However, don't forget that BEFORE one has ''made'' a fortune...a fortune in taxes have already been paid with an enormous variation of taxes.

2. So; it is NOT 'in lieu' of taxes on income. Taxes on income always need to be paid although income from rentals in real estate are free of income taxes.

LaoPo

1. our fortune tax was parallel on top of the annual income tax.

2. i had no idea. now i know why you favour real estate.

1. we had the same until it was undone in 2001; but your country was ahead some 4 years (since '97)

2.

LaoPo

[lannarebirth]

Personally. I'm apolitical. But when Halliburton, one of the chief benificiaries of the current war moved to Dubai, I had to laugh. Not a happy laugh , but a knowing one. A company reaping huge benefits from the "war on terror", moving to a locale where many of the main sponsors earn their money.

As I said before, you have to look at who have been the winners and who have been the losers of this past 10-15 years.

[IAmMarchHare]

It's not Capitalism gone wild but a worrysome trend to disregard the power of free markets. Politicians in their unlimited hybris think they can intervene and do better than the old supply and demand curve finding an equilibrium.

Take housing. At some point, the short supply will lead to rising prices.

And don't forget, the whole credit crisis is about Americans not paying their bills. Be it auto, houseing or student loans. Prime and Subprime, it's the whole width of the spectrum! Read the American Express statement, it's not just the normal customers but also the Gold Card holders who struggle.

Say the national debt will increase by $ 1 trillion to $ 10 T. At a higher rate of interest, this bail out is likely to cost hundreds of billions just in higher interest to the USA!

I agree! Not only is this not about Capitalism gone wild, but it is in part a fiasco fed by ignorant bureaucrats. At a critical juncture, it is amazing that the HUD was actually pushing for riskier "more affordable" loans.

http://www.washingtonpost.com/wp-dyn/conte...8060902626.html

Also, the above article shows that it isn't just the Republicans who created the mess. Much of this push for "affordable" loans started during the Clinton years with agreements with Freddie and Fannie, but this was then accelerated during the past eight years.

When will the US learn that a two-party system only gives you a choice between dumb and dumber?

[Naam]

i don't believe too much in copying and pasting and i am not a follower of guru Walter Molano. however, i read whatever he writes; sometimes i agree and sometimes i disagree. anyway, his latest is worthwhile to read:

Incompetent and Arrogant

The ad-hoc policy responses issued by Washington demonstrate a level of

incompetence that only rivals the pronouncements made in Buenos Aires and

Harare. The last minute improvisations, arbitrary decisions and

self-righteous grandstanding underscore the type of intellectual arrogance

that drove so many Americans into the arms of Sarah Palin. Last week's

so-called rescue plan was another example of financial 'shock and awe' that

had no substance or depth. The creation of a new Resolution Trust

Corporation (RTC) entity will be fraught with political infighting, and

certain to be derailed. The $200 billion price tag that was initially

floated for the credit crisis was suddenly eclipsed by the estimated $1

trillion cost of the new RTC program. Even this may fall by the wayside,

given the $500 trillion in Over-the-Counter (OTC) derivatives that are

crashing around the globe. Already, the headlines across the heartland were

balking at the cost of the Wall Street bailout, and several political

leaders expressed their opposition to the plan. Well-shod Wall Street

bankers and their latte-totting wives do no engender sympathy from Middle

Americans, even though a collapse of the financial system will have

cataclysmic implications for Main Street. The continued use of ad-hoc

improvisations to the collapsing financial system is an affirmation that

Washington does not recognize that the U.S. economy and financial system is

broken beyond repair. Unfortunately, the arrogance of obfuscating the

obvious produces anger, confusion and doubt that will only exacerbate the

confidence crisis and drive the global economy deeper into the ground.

Latin America experienced a similar set of circumstances during the 1980s

when a combination of external financial shocks, high energy prices and

over-leverage triggered the collapse of the banking system, a wave of

defaults and a severe recession. Endless band-aid responses, improvisations

and temporary patches only complicated the situation, eventually leading to

hyperinflation, impoverishment and social/political unrest. Policymakers and

economists called for the implementation of a comprehensive plan to deal

with the various fiscal, trade and monetary imbalances. This became the

so-called Washington Consensus that provided a rough blueprint for

governments to restructure their economies. The U.S. needs a similar format.

The attempt to introduce patches for each problem as it comes up does

nothing to restore equilibrium. The U.S. needs to come clean with its

balance sheet. It must recognize and account for all of the liabilities that

exist in the private and public sector, in order to fully recognize the

extent of the leverage. It must abandon once and for all the rating system.

Most of the current problems in the financial system stem from the

overwhelming use of credit ratings, which only served to underestimate and

cloak risk. Last of all, the U.S. needs to deleverage. The reduction of

household and public debt will reduce the external imbalances and put the

U.S. economy on a sustainable path.

Of course, this requires a painful adjustment, and one that U.S.

policymakers and economists refuse to contemplate. There is a sense that the

tough-love measures espoused for Argentina by Treasury Secretary Paul

O'Neill have no application north of the Rio Grande. The SEC's decision to

halt short selling of financial instruments and provide blanket guarantees

for all money market mutual funds demonstrate an unfathomable level of

arrogance. While the U.S. may be the first society to benefit from the

prosperity of market-based economics, it refuses to contemplate the costs

from incompetent decisions and mistakes. Unfortunately, the mechanisms of

the market are such that denial will only lead to further punishment. The

financial crisis is far from over, and the problems are mounting. By the end

of last week, many investors and portfolio managers were putting on new

short positions. People who think that the so-called rescue plan will be the

panacea to restore the U.S. consumer to the feed trough of the global

financial system are sorely mistaken. The unwinding of leverage will

continue. Hedge funds will fall. Banks will fail and households will

increase their savings rates. All of this implies that global demand will

shrink, spreading the credit malaise to the four corners of the planet.

[LaoPo]

Is it time to buy Morgan Stanley and Goldman?

Mon Sep 22, 2008 5:31pm EDT

NEW YORK (Reuters) - Goldman Sachs Group Inc and Morgan Stanley are not the companies they used to be.

Both became bank holding companies on Sunday evening and both will be able to sell assets into a new $700 billion government fund for distressed debt.

Early Monday, Morgan Stanley agreed to sell up to 20 percent of itself to Japan's Mitsubishi UFJ Financial Group Inc (8306.T: Quote, Profile, Research, Stock Buzz).

Investors are unsure about what all this means. The companies' shares have oscillated wildly in recent weeks.

So should investors buy these shares or sell them? Below are two perspectives.

COMPETITORS ARE GONE

James McGlynn, portfolio manager, Summit Investment Partners, South Lake, Texas, which manages about $6 billion:

"As long as the government won't allow a run on these banks, and they have some time to get liquid, there aren't too many players in the field left. So when they come out of it, they should be in a better competitive position than before. It's hard to determine the right valuation now, but it's really a question of, do you want to own the only two banks large enough for the government to be worried about them? They have the ear of the government in a way that Lehman didn't, or at least, they're large enough to really matter."

BUMPY ROAD

Marshall Front, chairman, Front Barnett Associates, Chicago, which manages about $600 million:

"There are too many uncertainties for the brokers at this point. The news we've had over the last few days has been positive and negative. The brokers can gather deposits now and they can access the discount window the way banks can. That's positive. But on the negative side, there will be a severe reduction in their leverage, which reduces potential profit. There will be a great deal more regulation for them than in the past, which means that some of the strategies they pursued in the past, particularly for Goldman Sachs, may be subject to more scrutiny. Proprietary trading is going to be a much tougher business.

"Do their valuations reflect the changed landscape? Goldman is trading at about 1.25 times its book value and Morgan Stanley is trading at less than their book value last week. But how do you know what book value is now? What are assets worth now? If we could determine book value with some clarity, it might be a starting point.

"I don't see what the prospects are for these banks and it will be a bumpy road."

==Reuters

NOTE:

What puzzles me is that those two Giants were transferred into, in fact, totally different companies on Sunday Evening (although I was under the impression that they APPLIED for banking licenses...)

Anyway, how on earth are their quotes still the same on the Stock Exchange if they became, de facto, completely different companies ?

Anybody an explanation ?

LaoPo

[IAmMarchHare]

Is it time to buy Morgan Stanley and Goldman?

Mon Sep 22, 2008 5:31pm EDT

NEW YORK (Reuters) - Goldman Sachs Group Inc and Morgan Stanley are not the companies they used to be.

Both became bank holding companies on Sunday evening and both will be able to sell assets into a new $700 billion government fund for distressed debt.

[snip, snip]

NOTE:

What puzzles me is that those two Giants were transferred into, in fact, totally different companies on Sunday Evening (although I was under the impression that they APPLIED for banking licenses...)

Anyway, how on earth are their quotes still the same on the Stock Exchange if they became, de facto, completely different companies ?

Anybody an explanation ?

LaoPo

To say they "are not the companies they used to be" is an American expression, similar to if I were to say, "I'm no longer the man I used to be" (implying that I am older and unable to do things I used to be able to do). They literally still have the same name, occupy the same buildings, have the same stock symbol, etc., but now the nature of their business has changed.

In theory, the nature of it has changed so much that if it were possible to suddenly pull someone from a few years ago into the present, that someone would not recognize the company, although they would still recognize the name. They are no longer just investment firms, but they are now also in the banking business (something along the lines of a "super-bank" it sounds like, seeing as they "hold" other banks).

I hope that's clear. I'm tired and ready for bed soon.

[Naam]

i don't like "wiki" but here's a good description:

http://en.wikipedia.org/wiki/Bank_holding_company

[teatree]

It's a shame that Congressman Ron Paul has been ignored or written off as a kook. He has warned against what is unravelling now for many years.

http://www.youtube.com/watch?v=sZwPkTmqfpg

[pkrv]

Hmm a good thread. Perhaps some definitions may help

The best example I can give of a security is a mortgage. Basically in exchange for receiving a large amount of money you agree to hand the title deeds to the bank and also pay a monthly fee. Once the contract has been fulfilled you own your home. This is how UK building societies such as Nationwide work.

The original term for a derivative was a ‘synthetic instrument’. (‘Instruments’ in market terms are simply mechanisms for conducting trade for example USDGBP= to buy and sell US dollars in exchange for Great British pounds - FX trading). A good example of a derivative was when JAL (JPY) contracted to buy a fleet of 747’s from Boeing (USD). In order to try to limit the risk of foreign exchange movement they placed a bet and ‘hedged’, signing a contract to do so. Things went badly wrong and they wrote off the aircraft over some ludicrously long period (please accountancy bores me to tears). Essentially a synthetic instrument binds a number of market instruments together (but usually also involves FX).

The key point here is something called TRANSPARENCY. Again for example for many years’ people did not understand the term cable which is the short term used to trade USD and GBP. When you don’t understand something it basically means you are open to abuse and the FX market was deeply abused most notably by Warburgs.

Who hand on heart can tell me how their pension actually works and the day to day mechanism by which it is managed?

There is an insider comment in the market, “It’s not exactly transparent is it”. Note this is not a question, it is an understanding this is the next gravy train.

[LaoPo]

To say they "are not the companies they used to be" is an American expression, similar to if I were to say, "I'm no longer the man I used to be" (implying that I am older and unable to do things I used to be able to do). They literally still have the same name, occupy the same buildings, have the same stock symbol, etc., but now the nature of their business has changed.

In theory, the nature of it has changed so much that if it were possible to suddenly pull someone from a few years ago into the present, that someone would not recognize the company, although they would still recognize the name. They are no longer just investment firms, but they are now also in the banking business (something along the lines of a "super-bank" it sounds like, seeing as they "hold" other banks).

I hope that's clear. I'm tired and ready for bed soon.

Thank you and yes, I realized that, but.....the fact that they were allowed to CHANGE their original nature on a SUNDAY EVENING, without the authorities knowing about their financial status (debts or not and how much) is unreal.It shows also how much power these companies (the CEO's that is) have...

It's like an overnight change from a large car manufacturer into a large dishwasher company; they're still making machines.

A 'Super Bank' you said ? Well if they were super banks they wouldn't be in trouble, would they; Super Con Banks....yes.

Morgan Stanley, Goldman Search for Deposits

http://www.bloomberg.com/apps/news?pid=206...&refer=home

LaoPo

[lannarebirth]

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to [email protected] so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully Minister of Treasury Paulson

http://blogs.wsj.com/economics/2008/09/23/...f-the-treasury/

[cmsally]

:D

Excellent!

Is this place called Republic of America somewhere between Ivory Coast and Nigeria ?

[highdiver]

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to [email protected] so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully Minister of Treasury Paulson

http://blogs.wsj.com/economics/2008/09/23/...f-the-treasury/

the best post in a long time!!!!

Well done

[Naam]

Personally. I'm apolitical. But when Halliburton, one of the chief benificiaries of the current war moved to Dubai, I had to laugh. Not a happy laugh , but a knowing one. A company reaping huge benefits from the "war on terror", moving to a locale where many of the main sponsors earn their money.

As I said before, you have to look at who have been the winners and who have been the losers of this past 10-15 years.

LRB, my [not so] humble opinion is:

unwarranted statement. no evidence -not even circumstantial- but 100% in line with the "informative" style of Bill O'Reilly, FAUX News and most who are on the payroll of Godfather Rupert Murdoch.

[lannarebirth]

Personally. I'm apolitical. But when Halliburton, one of the chief benificiaries of the current war moved to Dubai, I had to laugh. Not a happy laugh , but a knowing one. A company reaping huge benefits from the "war on terror", moving to a locale where many of the main sponsors earn their money.

As I said before, you have to look at who have been the winners and who have been the losers of this past 10-15 years.

LRB, my [not so] humble opinion is:

unwarranted statement. no evidence -not even circumstantial- but 100% in line with the "informative" style of Bill O'Reilly, FAUX News and most who are on the payroll of Godfather Rupert Murdoch.

As yoy know herr naam. I don't get any input from any of those sources.

It reminds me of when astronomers proclaimed a 10th planet beyond Pluto. They couldn't see it, but said it must exist because the actions of the other heavenly bodies nearby could only be explained by it's presence.

For my part, I'm not curious enough to need to know every detail. But like a fish served at dinner, if it stinks, I'm not going to eat it.

[Wrong Turn]

Since I read the article cut and pasted by lannarebirth, I've been learning about Credit Default Swaps.

Here's a youtube on it, for neophytes (like me). After 3 minutes is when the CDSs are discussed:

Here's part two. You can start watching right away. It's only 7 minutes long:

Edited September 24, 2008 by Wrong Turn

[Lost in LOS]

Not understanding much of this, [much of my education in the school of hard knocks] how does a simple, retired in Thailand, American protect his money that is presently in American banks. Is this in jeopardy in some way. if so, what can be done?

comfortable but confused..........

[philstone]

I have to admit I was wrong America started all the mess in the world. For that the America passport should be denied for entry in all countries. Europe and Asia doesn't need Americans any more.

Americans take you credit cards and go home

[philstone]

Excellent!

Is this place called Republic of America somewhere between Ivory Coast and Nigeria ?

I have to admit I was wrong America started all the mess in the world. For that the America passport should be denied for entry in all countries. Europe and Asia doesn't need Americans any more.

Americans take you credit cards and go home

[Wrong Turn]

Not understanding much of this, [much of my education in the school of hard knocks] how does a simple, retired in Thailand, American protect his money that is presently in American banks. Is this in jeopardy in some way. if so, what can be done?

comfortable but confused..........

As for money banks, getting the interest rate in banks, I can only assume that you have the amount of funds that are FDIC insured. Also, if inflation does rise to a certain level you can consider putting your money somewhere else. I don't think most people know where to put money at the moment, or whether to keep it in equities, cash, bonds, or other places.

Waiting....and watching.

[Naam]

Not understanding much of this, [much of my education in the school of hard knocks] how does a simple, retired in Thailand, American protect his money that is presently in American banks. Is this in jeopardy in some way. if so, what can be done?

comfortable but confused..........

Jimmy, if you hold cash nowadays you worry. if you hold big cash your worries are big. reason: your cash is all or partly gone if the bank goes belly-up and no FDIC or other fire brigade exists in the jurisdiction where your cash "resides".

[Naam]

Personally. I'm apolitical. But when Halliburton, one of the chief benificiaries of the current war moved to Dubai, I had to laugh. Not a happy laugh , but a knowing one. A company reaping huge benefits from the "war on terror", moving to a locale where many of the main sponsors earn their money.

As I said before, you have to look at who have been the winners and who have been the losers of this past 10-15 years.

LRB, my [not so] humble opinion is:

unwarranted statement. no evidence -not even circumstantial- but 100% in line with the "informative" style of Bill O'Reilly, FAUX News and most who are on the payroll of Godfather Rupert Murdoch.

As yoy know herr naam. I don't get any input from any of those sources.

It reminds me of when astronomers proclaimed a 10th planet beyond Pluto. They couldn't see it, but said it must exist because the actions of the other heavenly bodies nearby could only be explained by it's presence.

For my part, I'm not curious enough to need to know every detail. But like a fish served at dinner, if it stinks, I'm not going to eat it.

i apologise Honourable LRB. of course i had no idea had your sense of smell reaches from Thailand to Dubai