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

[lannarebirth]

Sensible Media:

http://www.pbs.org/moyers/journal/09192008/watch.html

[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.

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

I wasn't speaking about Dubai per se, Or Arabs, muslims or anything specific. Just following the money and making note of whose interests are being served. Broadly speaking, I would say "not mine".

You know, herr Naam, I've had a few finance courses, read Mssrs. Eliot. Graham and Dodd , but these days the money turns over so fast, I find just following the money trail works best. What i see isn't particularly encouraging for the majority of the populace.

Edited September 24, 2008 by lannarebirth

[Jingthing]

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..........

Don't keep more than 100K USD in a bank account in any one bank. Those amounts are FDIC insured. Under the emergency bailout plan which will be passed, money market funds will also be insured for an emergency period, perhaps one year. Brokerage accounts are already covered up to 250K USD. Pay attention to banks that are most likely to fail next, for example Washington Mutual and Wachovia. For those banks, you might want to take proactive action and move the money, although if too many people do that, their demise is accelerated. I think bank ratings can be viewed at bankrate.com. What we really have to worry about is if the emergency bailout measures don't work. Then its back to the drawing board. Another question I have is that if there was a total meltdown a la 1929, can FDIC really cover everyone?

Edited September 24, 2008 by Jingthing

[lannarebirth]

Why not go after bondholders? they're risktakers too. Why should the citizenry bail out bondholders?

[pkrv]

Sensible Media:

http://www.pbs.org/moyers/journal/09192008/watch.html

Interesting article I particularly liked

BILL MOYERS: Should they be required to return the loot?

GRETCHEN MORGENSON: Yes. Why not? Claw that back. But does anybody ask for that? No.

Given that some of the directors of Freddie and Fannie were appointed by the US president I can't see that happening at all - Perhaps corporate governance should extend to the 'public sector' - Given these guys love power perhaps this should now be considered 'vocational work' and be paid in accordance - the salary of a nurse or primary school teacher comes to mind. From my perspective Bush should be working for free.

Edited September 24, 2008 by pkrv

[lannarebirth]

Why not make pension funds sell down their "commodities portfolios" and then have their finacial advisers arrested and charged with misfeasance?

[LaoPo]

Sensible Media:

http://www.pbs.org/moyers/journal/09192008/watch.html

Thanks so much LR; this is a MUST watch and/or MUST read.

Why don't you copy-and-paste it as many members don't have ADSL and can't watch the video and thus also can't hear the voices of the three people involved ?

It's unbelievable that this was already aired on Thursday evening the 18th September (if I'm correct) BEFORE the infamous weekend of 20/21 Sept.

LaoPo

[lannarebirth]

Why not stop trading in all ETF's? The mother of all derivatives. They've been the tail wagging the dog in equity markets for too long now.

Edited September 24, 2008 by lannarebirth

[lannarebirth]

Why isn't a freeze of insider sales and a revocation of all nonvested options a part of the deal?

Edited September 24, 2008 by lannarebirth

[meom]

Another question I have is that if there was a total meltdown a la 1929, can FDIC really cover everyone?

The FDIC has about USD. 42 billion to address bank failures (runs) and any shortages they might encounter are supposed to be filled by the Treasury.

The Treasury get their money by issuing bonds which might be a problem in case nobody (Chinese, Sovereign Wealth Funds etc) want to buy their bonds.

A lot of depositors have reason to be worried specially when there is the possibility that banks start to use depositor money to backstop investment banking operations.

[lannarebirth]

There is a lot of paper in this bailout plan that would provide someoutstanding returns for risktakers, which there are plenty. There is also a lot of bad paper that no one should buy. least of all the public. This stuff has been marked down sufficiently IMO to start auctioning it off.

[midas]

Another question I have is that if there was a total meltdown a la 1929, can FDIC really cover everyone?

The FDIC has about USD. 42 billion to address bank failures (runs) and any shortages they might encounter are supposed to be filled by the Treasury.

The Treasury get their money by issuing bonds which might be a problem in case nobody (Chinese, Sovereign Wealth Funds etc) want to buy their bonds.

A lot of depositors have reason to be worried specially when there is the possibility that banks start to use depositor money to backstop investment banking operations.

I certainly hope not !!!

[midas]

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..........

Don't keep more than 100K USD in a bank account in any one bank. Those amounts are FDIC insured. Under the emergency bailout plan which will be passed, money market funds will also be insured for an emergency period, perhaps one year. Brokerage accounts are already covered up to 250K USD. Pay attention to banks that are most likely to fail next, for example Washington Mutual and Wachovia. For those banks, you might want to take proactive action and move the money, although if too many people do that, their demise is accelerated. I think bank ratings can be viewed at bankrate.com. What we really have to worry about is if the emergency bailout measures don't work. Then its back to the drawing board. Another question I have is that if there was a total meltdown a la 1929, can FDIC really cover everyone?

have your heard anything about Citigroup ? They are meant to be one of the biggest

but I am hearing many different things..

Is it risky to keep ones money with them ...........?

[IAmMarchHare]

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".

Herr Naam, I am confused by this. The FDIC insures up to $100,000 at a given bank (more under certain circumstances). I see nothing about residency or even being a US citizen on the fdic.gov site. All it says is "depositors".

[jts-khorat]

Another question I have is that if there was a total meltdown a la 1929, can FDIC really cover everyone?

At least that is one of the easier things, just put a zero more on each bill and everybody will be just fine. From time to time, like in Zimbabwe, take away a few of those zeroes. Works like magic.

[LaoPo]

FBI investigates four Wall Street firms over sub-prime meltdown

The FBI is investigating four Wall Street institutions at the heart of the financial crisis over their role in the sub-prime mortgage meltdown, it emerged today.

Reports said preliminary investigations into potential corporate fraud at the US mortgage finance giants Fannie Mae and Freddie Mac, the insurer American International Group (AIG - lp) and the investment bank Lehman Brothers had been opened.

They are among 26 companies being scrutinised by the FBI. Freddie Mac, Fannie Mae and AIG were bailed out by the government in the last fortnight, while Lehman Brothers filed for bankruptcy.

Senior executives at the companies are also believed to be in the FBI's sights, while the securities and exchange commission is also reportedly assessing possible civil fraud claims against the four firms.

"The FBI continues to investigate a number of companies for sub-prime lending practices, but the department brings criminal prosecutions based solely on the facts and the law," Brian Roehrkasse, a Justice Department spokesman, said.

"Where we find evidence of criminal wrongdoing, we will prosecute."

Several California institutions, including IndyMac Bank of Pasadena, which collapsed in July at a cost of $8.9bn (£4.7bn), are reported to be under investigation.

Countrywide, formerly the largest mortgage lender in the US and now owned by Bank of America, is also under scrutiny.

The investigations come as Congress considers a $700bn bailout package for the financial industry.

The Bush administration's plan would allow the Treasury to buy toxic bad debts from troubled financial institutions.

Congressmen yesterday demanded safeguards, additional details and more time to scrutinise the way in which the Treasury intends to spend the money.

In the past two weeks, the government has taken over Fannie Mae and Freddie Mac to prevent their collapse.

Last week, the Federal Reserve provided an emergency $85bn loan to AIG to save it from bankruptcy, but refused to bail out Lehman Brothers.

Eight months ago, the FBI began an investigation into the sub-prime mortgage market, in which loans were given to people who were not in a position to repay them.

This prompted the credit crunch as bad debts were bundled together with higher quality assets and sold on by banks.

The FBI is known to have demanded information from Goldman Sachs, Morgan Stanley and - prior to its collapse - Bear Stearns.

In June, two Bear Stearns executives were arrested over charges that they misled investors as the subprime market began to disintegrate.

http://www.guardian.co.uk/business/2008/se...fanniemae/print

LaoPo

[IAmMarchHare]

FBI investigates four Wall Street firms over sub-prime meltdown

Countrywide, formerly the largest mortgage lender in the US and now owned by Bank of America, is also under scrutiny.

Bank of America is no shining angel, either. They should be investigated already, let alone now that they own Countrywide!

[LaoPo]

FBI investigates four Wall Street firms over sub-prime meltdown

Countrywide, formerly the largest mortgage lender in the US and now owned by Bank of America, is also under scrutiny.

Bank of America is no shining angel, either. They should be investigated already, let alone now that they own Countrywide!

From message above: "They are among 26 companies being scrutinised by the FBI."

and:

"People familiar with the matter have said earlier that other companies under FBI investigation include IndyMac Bancorp Inc. and Countrywide Financial Corp., which has since been bought by Bank of America Corp. "

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

LaoPo

[LaoPo]

FBI Investigations - addition:

"Earlier this month, FBI director Robert Mueller told Congress that 1,400 individual real estate lenders, brokers and appraisers were now under investigation in addition to two dozen corporations.

"The FBI currently has 26 pending corporate fraud investigations involving subprime lenders," Kolko said. "As we have seen, this number can fluctuate over time, however we do not discuss which companies may or may not be the subject of an investigation."

Previously, CNN has reported that Countrywide is part of the investigation."

From: http://money.cnn.com/2008/09/23/news/compa...sion=2008092408

Finally.....finally the US/FBI is doing something; the outcome remains uncertain of course but if found guilty...put them in jail.

If YOU steal -substantial- money from someone else, you may expect to be put behind bars also.

LaoPo

[lannarebirth]

Not a single satang.

http://www.slate.com/id/2143018/

[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..........

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".

Hi Naam, all money in gold or cd's [fdic insured ] but can teh government keep bailing out?

I'm ready for more great sandwiches and sherry maybe a loan if America goes belly up too : )

[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".

1. Hi Naam, all money in gold or cd's [fdic insured ] but can teh government keep bailing out?

2. I'm ready for more great sandwiches and sherry

3. maybe a loan if America goes belly up too : )

1. gold is gold and in certain cases quite valuable Jimmy... provided you keep it under your mattress or in your safe and can lay your hands on it whenever you please. otherwise it's nothing but a promissory paper. and that promissory paper can be worthless was proven by the recent events. a fact that some gold lovers do not seem to understand.

2. i'm bloody busy. nothing doing before middle of next week or perhaps the 'obligatory' monday when we use to have our get together.

3. for you my friend there's always enough [baht] in my house to provide you with a loan to buy a bowl of noodles or rice and a (not too expensive) hooker from beach road "hired" after 23.00 hrs (11 p.m. in your language). my wife's driver will drive a hard bargain for you.

p.s. the banker in Singapore called me day before yesterday and asked whether you feel fine and whether he can be of any assistance. i told him that you are fine, your pond is fine, your kois are fine and you are not in dire need to kiss an arrogant swiss banker's àss in order to accept your money to waste it on high fees and achieving low yields

Edited September 25, 2008 by Naam

[BEENTHEREDONETHAT]

Do you think the US$ will catch up with the Zimabawean $ a hamburger cost Z$15,000,000 The magazine I read that in is three or four weeks old so hard telling what it would be today with a inflation rate of 25,000-150,000 %, depending on who's quoting it.

[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..........

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".

1. Hi Naam, all money in gold or cd's [fdic insured ] but can teh government keep bailing out?

2. I'm ready for more great sandwiches and sherry

3. maybe a loan if America goes belly up too : )

1. gold is gold and in certain cases quite valuable Jimmy... provided you keep it under your mattress or in your safe and can lay your hands on it whenever you please. otherwise it's nothing but a promissory paper. and that promissory paper can be worthless was proven by the recent events. a fact that some gold lovers do not seem to understand. ALL in actual metal, and no, not in thailand so please dont search my house

2. i'm bloody busy. nothing doing before middle of next week or perhaps the 'obligatory' monday when we use to have our get together. next week hongkong but the next monday

3. for you my friend there's always enough [baht] in my house to provide you with a loan to buy a bowl of noodles or rice and a (not too expensive) hooker from beach road "hired" after 23.00 hrs (11 p.m. in your language). my wife's driver will drive a hard bargain for you. who picks her?

p.s. the banker in Singapore called me day before yesterday and asked whether you feel fine and whether he can be of any assistance. i told him that you are fine, your pond is fine, your kois are fine and you are not in dire need to kiss an arrogant swiss banker's àss in order to accept your money to waste it on high fees and achieving low yields here here.... although i may still have it if its in Switzerland but in the US they may confiscate it to pay down the debt

[LaoPo]

Not a single satang.

http://www.slate.com/id/2143018/

What do you mean with "not a single satang" ?

From this article in June 6, 2006

"Paulson owns some 4.58 million shares in Goldman Sachs (including restricted stock) worth about $700 million at today's price and surely has millions more in other instruments."

The stock was around $ 150/share in June 2006 and now $ 133/share.

So: what happened with his stock ? Did he 'park' it in a trust or what ?***

*** interesting links:

http://blogs.ft.com/gapperblog/2008/09/han...by-wall-street/

and this

http://www.nytimes.com/2006/07/04/business...amp;oref=slogin

From which:

"Goldman filed with regulators last Thursday (June/July 2006; lp) for a sale of Mr. Paulson's 3.23 million common shares, worth $491.6 million based on that day's closing price.

It said Mr. Paulson also owned restricted stock worth $75.2 million, plus options to buy 680,474 shares. His holdings were equal to 1.02 percent of Goldman's common shares, the investment bank said.

Goldman awarded Mr. Paulson about $38.8 million of compensation for its 2005 fiscal year, mainly in restricted stock, making him Wall Street's highest-paid chief executive."

LaoPo

[lannarebirth]

Not a single satang.

http://www.slate.com/id/2143018/

What do you mean with "not a single satang" ?

Will I knowingly contribute towards whatever bailout is crafted

From this article in June 6, 2006

"Paulson owns some 4.58 million shares in Goldman Sachs (including restricted stock) worth about $700 million at today's price and surely has millions more in other instruments."

The stock was around $ 150/share in June 2006 and now $ 133/share.

So: what happened with his stock ? Did he 'park' it in a trust or what ?***

*** interesting links:

http://blogs.ft.com/gapperblog/2008/09/han...by-wall-street/

and this

http://www.nytimes.com/2006/07/04/business...amp;oref=slogin

From which:

"Goldman filed with regulators last Thursday (June/July 2006; lp) for a sale of Mr. Paulson's 3.23 million common shares, worth $491.6 million based on that day's closing price.

It said Mr. Paulson also owned restricted stock worth $75.2 million, plus options to buy 680,474 shares. His holdings were equal to 1.02 percent of Goldman's common shares, the investment bank said.

Goldman awarded Mr. Paulson about $38.8 million of compensation for its 2005 fiscal year, mainly in restricted stock, making him Wall Street's highest-paid chief executive."

LaoPo

Actually, I read later King Paulson was required to divest himself near the GS highs when he became lord of all he surveyed at treasury, and a nice kicker of having to pay no capital gains tax. Lest I only pick on Lord Paulson, there's this to chew on:

http://www.bloomberg.com/apps/news?pid=%20...id=aSKSoiNbnQY0

[LaoPo]

I's a bit easy written that -just- the democrats are to be blamed for the financial crisis...(by Mr. Kevin Hassett).

The ROOTS of the crisis goes way back to October 15 - 2002 when George W. Bush initiated the lending and thus the BASIS for the subprime crisis:

http://www.thaivisa.com/forum/World-Leader...61#entry2235161

LaoPo

[brahmburgers]

I haven't read all the posts on this thread, but I have no doubt the 700 billion taxpayer bail-out is mainly designed to bail out Wall St big shots. Secondarily, it's designed to try to shore up pension payment obligations and near term ability for loaning. Nearly everyone (and every business) believes that you have to get mega-extended on loans in order to survive. Wall Street takes that junkie loan concept to extremes.

A US House of Representatives member from Ohio, Rep. Marcy Kaptur, articulates it passionately in this clip:

http://www.youtube.com/watch?v=mbD62gNi9WE...feature=related

A few hundred billion recently, 700 billion today, how many more hundreds of billions tomorrow?

There's nothing a politician hates more than to see some of his super rich buddies having to face some grim reality for their mega greed. Granted, American consumers are having to take some bitter medicine for their super greed also. But there are other Americans who have lived their lives responsibly, and they shouldn't have to go in to decades of debt to make up for the extreme greed of others.

[IAmMarchHare]

I's a bit easy written that -just- the democrats are to be blamed for the financial crisis...(by Mr. Kevin Hassett).

The ROOTS of the crisis goes way back to October 15 - 2002 when George W. Bush initiated the lending and thus the BASIS for the subprime crisis:

http://www.thaivisa.com/forum/World-Leader...61#entry2235161

LaoPo

I agree -- somewhat. However, as I have posted previously, the push for "more affordable" loans took place started during the Clinton era. That's the real reason you didn't see a lot of Democrats opposing this monstrosity. Bush had inherited a foundation of quicksand, but instead of draining it, he decided to build a skyscraper on the top of it.

It really seems like Bush took the worst from previous presidents and added more than his own share of mistakes to boot.

Edited September 25, 2008 by IAmMarchHare

[flying]

I agree -- somewhat. However, as I have posted previously, the push for "more affordable" loans took place started during the Clinton era. That's the real reason you didn't see a lot of Democrats opposing this monstrosity. Bush had inherited a foundation of quicksand, but instead of draining it, he decided to build a skyscraper on the top of it.

It really seems like Bush took the worst from previous presidents and added more than his own share of mistakes to boot.

President Bill Clinton left office in 2001 with a federal budget surplus of $127 billion. President George Bush ran a deficit of $319 billion in 2005

And that was just till 2005 What is it now in 2008? 9.5 Trillion?

http://www.federalbudget.com/

I am no expert but I wonder