Big Three Bailout?

[MarkP]

I think we're at the precipice of what I'll call "Unsustainable Federalism". It is simply not possible for this level of Federal spending to continue, good intentions or not.. . .

Agreed. The only way to attract manufacturing and investment is to reduce tax rates. The only way to reduce tax rates and not send deficits through the roof is to reduce spending. Either we overtly select the path or world economics will painfully select that path.

 

[SGaynor]

Did you see where WaMu is offering CD's at 5%? They are desperate for cash, methinks the FDIC is watching them very, very closely.

Looks like the end is 'ear for WaMu as it's shares have dropped 20% today.

 

[ptschram]

I have seen first hand what happens when big companies fail.

In 1982, I was dating the daughter of the executive Vice-President for Engineering for International Harvester, my mother had the contract to deliver every repair part and every heavy-duty truck that International Harvester made, and my father owned the Manpower franchise that supplied temporary workers to not only International Harvester, but all of the suppliers and other vendors to IH in Fort Wayne. Curiously, from 1963 to 1982, the Fort Wayne Manpower franchise was the most profitable franchise and had the highest sales worldwide for Manpower.

When International Harvester went under, my girlfriend's father pretty much had to leave town due to the death threat. My mother closed the doors for her truck driver leasing business and declared bankruptcy. My father said that it was as though someone had turned the lights out in his office. Had it not been for careful investing during times of plenty, we certainly would have lost our home(s), farm, etc. As it was, the austerity was not pretty. I never knew my parents were wealthy until they weren't.

While my personal experiences were bad enough, property values in Fort Wayne plummeted, population instantly declined, crime increased, etc. People who had been making $60K/year were working for minimum wage to feed themselves and their families.

While I think that shareholders should bear the risk (it IS why we have corporations!) I do not necessarily think that it is a function of government to support businesses that failed to evolve to suit current economic/social/political climates. Think buggy whip manufacturers.

 

[noee]

Looks like the end is 'ear for WaMu as it's shares have dropped 20% today.

Look for the announcement from the FDIC Fri after trading stops, just like the last 12 bank failures this year. Unless, of course, they find a "buyer".

Who's next? Wachovia?

 

[Sam C.]

Look for the announcement from the FDIC Fri after trading stops, just like the last 12 bank failures this year. Unless, of course, they find a "buyer".

Who's next? Wachovia?

Doubtful, but as federal regulations on banking stand today, no one bank can hold more than 10% of the nations deposits. Some may disappear but not all.

 

[noee]

Doubtful, but as federal regulations on banking stand today, no one bank can hold more than 10% of the nations deposits. Some may disappear but not all.

Yeah, but the GSEs can hold more than 50% of the nation's mortgage notes? Sweet deal if you can get, heh?

This contraction/deflation will hopefully clean out much of the banksters, but the big guys will absorb the assets and push off the liability somewhere else (witness the BofA/CountryWide arrangement). The Fed/Treasury have already gained more power from our spineless political leadership. My guess is that they will go for more when the deflationary cycle bottoms.

Wachovia is in world of hurt because of their commercial exposure, nevermind their crap residential exposure. The Commercial stuff is getting ready to hit and it's gonna be just as nasty, if not worse. While they probably won't fail, they will have to shed assets to raise capital as it does not appear they have the same type of friends at the Fed that JPM/Chase have. They will be a shell of what they are now, same with CitiGroup and probably Merrill as well. Looks like Lehman probably won't even survive as a shell.

 

[noee]

A little more on WaMu. How will this bank survive?

Denninger on WaMu

WaMu is a particularly outrageous example because last April, in 2007, they were paying out more in dividends than they were earning in cash income, which was what raised my ire originally about their bank.

Anyone who didn't recognize in April of 2007 that these OptionARM loans in California were underwater then and would only go FURTHER underwater, and as such this "capitalized interest" would never be paid, is absolutely unqualified to run a frapping lemonade stand, say much less a Federal Regulatory Agency.​

 

[Roverlady]

So, those of us who made smart mortgage decisions (buying what we could afford and financing for a fixed rate over 30 years) are going to pay for the rest of the country who decided they needed a 5000sq ft house on a half acre lot at a 2.9% arm!!

 

[SGaynor]

A little more on WaMu. How will this bank survive?

Yep, I'm just wondering who will end up controlling my mortgage/be my next "loan shark."?

 

[noee]

Like IndyMac is now "IndyMac Federal", run by the FDIC, it will be seemless, WaMu Federal, most likely, after the FDIC takes over.

This whole thing makes for some interesting situations. I wish I knew more about the "bankers", I just started reading about a year ago and there is so much out there, it's hard to know where go next. Theory, practice, history, economics, currency theory....the list goes on and on and on.

There are so many layers from top to bottom and then, it moves sideways into other areas, like insurance, law, politics.

If these large orgs keep failing, who will have the capital to purchase the "good stuff" as they fail? US taxpayer? Too early to say, but it appears that the Fed shareholder institutions (JPM/Chase, GS, BofA, etc.) will have consolidated almost all of the assets from the leftover failures with backing from the US taxpayer and foreign debt purchasers.

I'm starting to wonder about that quote from Thomas Webster in 1850:

"Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money”

 

[Blue]

So, those of us who made smart mortgage decisions (buying what we could afford and financing for a fixed rate over 30 years) are going to pay for the rest of the country who decided they needed a 5000sq ft house on a half acre lot at a 2.9% arm!!

Just doesn't seem right, does it? My wife & I both have low, fixed, 30-year interest rates on our modest homes. If I didn't know better, I'd be tempted to get in line for all the free shit the government seems to be promising to hand out.

 

[Rusty Shackelford]

hi

 

[Rusty Shackelford]

hi

 

[noee]

...Everyone needs to wise-up, take their place at the bottom of the financial food chain and let the "big boys" play their games, and try not to question or complain, it's soooo unslave like.

Hey man, me and some buddies are getting our torches and pitchforks together and we're heading to Washington. You in?

 

[Rusty Shackelford]

hi

 

[garrett]

Hey man, me and some buddies are getting our torches and pitchforks together and we're heading to Washington. You in?

As long as we can stop off at Maggie Moo's in Alexandria I'm game.

 

[J. Toronado]

That is some damn good ice cream...

 

[Roverlady]

You are a long-time Dwebber, and I am not. I am therefore saying this as sheepishly as possible, as a friend and with a HUGE smile on my face:

I would like to sit down with the person who told you that life was fair.





Everyone needs to wise-up, take their place at the bottom of the financial food chain and let the "big boys" play their games, and try not to question or complain, it's soooo unslave like.

Never said it was fair. Just said I was mad!

 

[galen216]

As long as we can stop off at Maggie Moo's in Alexandria I'm game.

I want to Maggie Moo's once and it was crap. But after the creamery nothing is good!

 

[SGaynor]

Gov't is helping shop Lehman, but isn't backing any of its debt (for now):

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/11/AR2008091102580.html?hpid=topnews