Interesting article from almost 10 years ago.
http://query.nytimes.com/gst/fullpa...933A0575AC0A96F958260&sec=&spon=&pagewanted=1
http://query.nytimes.com/gst/fullpa...933A0575AC0A96F958260&sec=&spon=&pagewanted=1
Financial Armageddon
- Thread starter SGaynor
- Start date
SCSL said:
Chump change!
How about another $634B!
Obama seeks $634B over 10 years for health care
Associated Press ^ | 02/25/09 | RICARDO ALONSO-ZALDIVAR
WASHINGTON – President Barack Obama wants a significant "down payment" for overhauling the health care system: $634 billion over 10 years. . . .
A $600B "downpayment"? :ack:
One day Obama promises to cut the deficit in half. (Note the missing data though) The next he is adding another Trillion+ in spending.
Another psychological evaluation data point.
Why bid on something that eventually the US government will buy at a higher price? No motivation from seller to properly price the assets.
AIG's Auction of Asian Arm Failing: Report [No Bidders]
The Street.com ^ | 2/25/09
So will the taxpayer pay 50%+ more than the assets are worth?
AIG's Auction of Asian Arm Failing: Report [No Bidders]
The Street.com ^ | 2/25/09
Bids for American International Group's(AIG Quote - Cramer on AIG - Stock Picks) Asian arm are due Friday and a number of prospective bidders, including HSBC Holdings(HBC Quote - Cramer on HBC - Stock Picks) and AXA SA have abandoned the process and no further bids may be forthcoming, the Wall Street Journal reports. . . .
. . . People close to potential bidders say AIG has been slow to market the business, and bidders have griped about AIG's price expectations of $20 billion to $40 billion on the unit. . . .
A number of the potential bidders value AIA in the $15 billion range, . . .
. . . People close to potential bidders say AIG has been slow to market the business, and bidders have griped about AIG's price expectations of $20 billion to $40 billion on the unit. . . .
A number of the potential bidders value AIA in the $15 billion range, . . .
So will the taxpayer pay 50%+ more than the assets are worth?
No nationalization. We have worse: fiscal nationalization without the oversight or conrol -- same guys running the show as we pump billions and billions in. Why?
Credit Default Swaps.
How many are owned by GM , by AIG , by Citi , et. al? How many contracts owned by others insure these firms' debt?
Overt nationalization would be a triggering event. How to unwind the swaps?
So instead, we have all the costs of nationalization without any of the (marginal) benefits. Worse of both worlds.
So why no bankruptcy? Why not wipe out equity holders and sell remaining assets to satisfy creditors? Let the solvent banks swallow the remaining liquid pieces of the insolvent? Sounds logical, right?
Same problem. How to unwind CDS in bk court without triggering collapse. The fed is throwing everything against the wall to prevent a CDS melt-down.
So expect more pump-and-dump in the DJIA. All bad news headlines this morning,,, and futures indicated a press. DJIA up 90 pts last time I checked. Go figure.
If you haven't figured out who the sucker is yet... that's because it's you. Me. Us. The taxpayer.
Credit Default Swaps.
How many are owned by GM , by AIG , by Citi , et. al? How many contracts owned by others insure these firms' debt?
Overt nationalization would be a triggering event. How to unwind the swaps?
So instead, we have all the costs of nationalization without any of the (marginal) benefits. Worse of both worlds.
So why no bankruptcy? Why not wipe out equity holders and sell remaining assets to satisfy creditors? Let the solvent banks swallow the remaining liquid pieces of the insolvent? Sounds logical, right?
Same problem. How to unwind CDS in bk court without triggering collapse. The fed is throwing everything against the wall to prevent a CDS melt-down.
So expect more pump-and-dump in the DJIA. All bad news headlines this morning,,, and futures indicated a press. DJIA up 90 pts last time I checked. Go figure.
If you haven't figured out who the sucker is yet... that's because it's you. Me. Us. The taxpayer.
I've come to the conclusion that the "stress test" is just a way of providing political cover for the government to funnel more money to the insolvent financial institutions.
Obama's deficit proposal? $1.75T
At this pace cutting the deficit in half will still be 2X of previous budget deficits.
Obama's deficit proposal? $1.75T
At this pace cutting the deficit in half will still be 2X of previous budget deficits.
MarkP said:I've come to the conclusion that the "stress test" is just a way of providing political cover for the government to funnel more money to the insolvent financial institutions.
Obama's deficit proposal? $1.75T
It's the same concept that gets all of our wives excited to spend the weekend shopping at the mall.....silently mark everything up 50% then advertise a huge 25% off blowout sale!
Obama proposes a budget of $4T, deficits of ~2T, . . . . .
and then says he is going to cut the deficit to $533 billion by 2013.
While making everything 'Universal' ("I don't believe in big government")
Another day, another number, different than yesterday.
and then says he is going to cut the deficit to $533 billion by 2013.
While making everything 'Universal' ("I don't believe in big government")
Another day, another number, different than yesterday.
In the mean time . . .
Obama's bank bailouts = 1/2 of TARP I ($350B) + TARP II ($250B) = $600B
Waiting in the wings is TARP III
Historians will have a lot to write about - how a political party spent Billions and Trillions per week.
US seeks new $250 bln bank bailout
AFP on Yahoo ^ | 2/26/09 | AFP
AFP on Yahoo ^ | 2/26/09 | AFP
Obama's bank bailouts = 1/2 of TARP I ($350B) + TARP II ($250B) = $600B
Waiting in the wings is TARP III
Historians will have a lot to write about - how a political party spent Billions and Trillions per week.
MarkP said:
It's true, but those retards messed up and I got a Magellan 1412 for my wife for $59 less than their "sale" price on the 1400. I used their own display computers to price check at Amazon and pricegrabber.com to see if it was worth it.
Parsing the bullshit.
According to the CBO, the Iraq war cost $9B/month, $108B/yr. Remember when this was a HUGE number?
Policy shift will avert $9 trillion deficit-Orszag
The Obama administration is trying to use bringing the Iraq war expenditures ($109B/yr) on-book as cover for justifying $9T deficits?
"Policy shift"? Tax the rich? Sorry, taxing 5% of taxpayers isn't going to pay for $8.9T deficits.
Wow, they are just throwing numbers around.
According to the CBO, the Iraq war cost $9B/month, $108B/yr. Remember when this was a HUGE number?
Policy shift will avert $9 trillion deficit-Orszag
WASHINGTON, Feb 26 (Reuters) - President Barack Obama's budget director said on Thursday that without a shift in policies the U.S. deficit would reach $9 trillion over the next decade.
White House budget chief Peter Orszag said the Obama administration's budget outline reflects costs for the war in Iraq and other items that were previously not included in the budget. . . .
White House budget chief Peter Orszag said the Obama administration's budget outline reflects costs for the war in Iraq and other items that were previously not included in the budget. . . .
The Obama administration is trying to use bringing the Iraq war expenditures ($109B/yr) on-book as cover for justifying $9T deficits?
"Policy shift"? Tax the rich? Sorry, taxing 5% of taxpayers isn't going to pay for $8.9T deficits.
Wow, they are just throwing numbers around.
This just in:
"President Barack Obama penciled into his budget on Thursday the possibility that he may request an additional $250 billion to help fix the troubled U.S. financial system.
Any additional request to Congress would come on top of the $700 billion financial bailout program enacted last year to deal with the overhang of toxic mortgage debt that is hindering banks' ability to lend and worsening the recession."
http://www.cnbc.com/id/29409819
"President Barack Obama penciled into his budget on Thursday the possibility that he may request an additional $250 billion to help fix the troubled U.S. financial system.
Any additional request to Congress would come on top of the $700 billion financial bailout program enacted last year to deal with the overhang of toxic mortgage debt that is hindering banks' ability to lend and worsening the recession."
http://www.cnbc.com/id/29409819
SCSL said:
It's actually another $750B. They weasel worded it such that the LSM picked up on the $250B number as an asset deflation number. From Bloomberg:
Feb. 26 (Bloomberg) -- President Barack Obama’s first budget request includes a contingency for as much as $750 billion in new aid to the financial industry this year . . .
Contingency? Already spent since no one is bidding on AIG. Why should they? The US taxpayer will make them whole.
SCSL said:
Good observation.
U.S. May Backstop AIG CDS
Calculated Risk
2/26/2009
There you have it.
Calculated Risk
2/26/2009
American International Group Inc. may get a backstop from the U.S. to protect against further losses on credit-default swaps, according to a person familiar with the matter.
The federal guarantees may be included in New York-based AIG’s restructured bailout ...
The federal guarantees may be included in New York-based AIG’s restructured bailout ...
There you have it.
AIG. Since the Asian sale failed the only lender is the US taxpayer. Yes, we are now restructuring bailouts.
It?s Obama spreading panic
By Dick Morris
Ultimately, all recessions and depressions resolve themselves into crises of confidence. The instant, global, 24/7 communications of today make them ever more so. President Obama, in his pursuit of liberal big-government spending, has totally neglected the role of the president of the United States in reversing global panic. To the contrary, his every remark and the constant preoccupation of his Cabinet is to heighten the sense of crisis and to escalate the predictions of doom if we do not do as they tell us and raise spending now and taxes later.
Instead of being a firewall, reassuring Main Street even as Wall Street crashed, he has become a conduit of panic, spreading the mood of desperation from the stock exchange floor to kitchen tables across the world.
There are bad loans, which became bad assets, that lie at the root of the crisis. Through deregulation by the government and the greed of financial institutions, they spread to every portfolio in the world. But these basic facts have metastasized out of all proportion to their real harm into job and financial insecurity for every family on Earth. It is President Obama, not the markets themselves, who has spread this fear. A global Paul Revere, he has not only aroused us, but incited fear and trepidation in his wake.
Previous panics have been global in impact, but local in focus. The world panicked because of developments in Mexico or Argentina or Thailand or South Korea. Now, with Collateralized Debt Obligations spreading the poison of a bunch of bad loans all over the world, infecting every portfolio, the panic is not only global in impact but in focus as well. Modern communications have hastened the spread of the virus of panic throughout the global bloodstream.
In addressing this panic, the president of the United States must truly be the leader of the world ? showing the way back to confidence.
Instead, Obama has been instrumental in purveying fear and spreading doubt. It is his pronouncements, reinforced by the developments they kindle and catalyze, that are destroying good businesses, bankrupting responsible people and wiping out even conservative financial institutions. Every time he speaks, he sends the markets down and stocks crashing. He doesn?t seem to realize that the rest of the world takes its cue from him. He forgets that he stands at the epicenter of power, not on the fringes campaigning for office. This ain?t Iowa.
Why does Obama preach gloom and doom? Because he is so anxious to cram through every last spending bill, tax increase on the so-called rich, new government regulation, and expansion of healthcare entitlement that he must preserve the atmosphere of crisis as a political necessity. Only by keeping us in a state of panic can he induce us to vote for trillion-dollar deficits and spending packages that send our national debt soaring.
And then there is the matter of blame. The deeper the mess goes ? and the further down his rhetoric drives it ? the more imperative it becomes to lay off the blame on Bush. He must perpetually ?discover? ? to his shock ? how deep the crisis that he inherited runs, stoking global fears in the process.
So, having inherited a recession, his words are creating a depression. He entered office amid a disaster and he is transforming it into a catastrophe, all to pass every last bit of government spending and move us a bit further to the left before his political capital dwindles.
But the jig will be up soon. The crash of the stock market in the days since he took power (indeed, from the moment he won the election) can increasingly be attributed to his own failure to lead us in the right direction, his failed policies in addressing the recession and his own spreading of panic and fear. The market collapse makes it evident that it is Obama who is the problem, where he should, instead, be the solution.
By Dick Morris
Ultimately, all recessions and depressions resolve themselves into crises of confidence. The instant, global, 24/7 communications of today make them ever more so. President Obama, in his pursuit of liberal big-government spending, has totally neglected the role of the president of the United States in reversing global panic. To the contrary, his every remark and the constant preoccupation of his Cabinet is to heighten the sense of crisis and to escalate the predictions of doom if we do not do as they tell us and raise spending now and taxes later.
Instead of being a firewall, reassuring Main Street even as Wall Street crashed, he has become a conduit of panic, spreading the mood of desperation from the stock exchange floor to kitchen tables across the world.
There are bad loans, which became bad assets, that lie at the root of the crisis. Through deregulation by the government and the greed of financial institutions, they spread to every portfolio in the world. But these basic facts have metastasized out of all proportion to their real harm into job and financial insecurity for every family on Earth. It is President Obama, not the markets themselves, who has spread this fear. A global Paul Revere, he has not only aroused us, but incited fear and trepidation in his wake.
Previous panics have been global in impact, but local in focus. The world panicked because of developments in Mexico or Argentina or Thailand or South Korea. Now, with Collateralized Debt Obligations spreading the poison of a bunch of bad loans all over the world, infecting every portfolio, the panic is not only global in impact but in focus as well. Modern communications have hastened the spread of the virus of panic throughout the global bloodstream.
In addressing this panic, the president of the United States must truly be the leader of the world ? showing the way back to confidence.
Instead, Obama has been instrumental in purveying fear and spreading doubt. It is his pronouncements, reinforced by the developments they kindle and catalyze, that are destroying good businesses, bankrupting responsible people and wiping out even conservative financial institutions. Every time he speaks, he sends the markets down and stocks crashing. He doesn?t seem to realize that the rest of the world takes its cue from him. He forgets that he stands at the epicenter of power, not on the fringes campaigning for office. This ain?t Iowa.
Why does Obama preach gloom and doom? Because he is so anxious to cram through every last spending bill, tax increase on the so-called rich, new government regulation, and expansion of healthcare entitlement that he must preserve the atmosphere of crisis as a political necessity. Only by keeping us in a state of panic can he induce us to vote for trillion-dollar deficits and spending packages that send our national debt soaring.
And then there is the matter of blame. The deeper the mess goes ? and the further down his rhetoric drives it ? the more imperative it becomes to lay off the blame on Bush. He must perpetually ?discover? ? to his shock ? how deep the crisis that he inherited runs, stoking global fears in the process.
So, having inherited a recession, his words are creating a depression. He entered office amid a disaster and he is transforming it into a catastrophe, all to pass every last bit of government spending and move us a bit further to the left before his political capital dwindles.
But the jig will be up soon. The crash of the stock market in the days since he took power (indeed, from the moment he won the election) can increasingly be attributed to his own failure to lead us in the right direction, his failed policies in addressing the recession and his own spreading of panic and fear. The market collapse makes it evident that it is Obama who is the problem, where he should, instead, be the solution.
Since we are now headed below 7000 on the dow, appears some are waking up to our leadership, or lack thereof. As one analyst put it:
Yes, read that again.
Found posted on a financial discussion . . .
President Bush Tried to Rein In Fan and Fred
Democrats and the media have the housing story wrong.
WSJ
The clowns in charge are the ones that contributed to the problem to begin with. They are also the ones that block reform and new regulations that would have reigned in the GSE's. The market is voting "no confidence".
I feel that the environment we're heading into will, at best, make the 1970s look like the 1990s -- and maybe worse.
Yes, read that again.
Found posted on a financial discussion . . .
President Bush Tried to Rein In Fan and Fred
Democrats and the media have the housing story wrong.
WSJ
Snippet: “Fannie and Freddie are "government-sponsored enterprises" (GSEs), chartered by Congress. As such, they had an implicit promise of taxpayer backing and could borrow money at rates well below competitors.
“Because of this, the Bush administration warned in the budget it issued in April 2001 that Fannie and Freddie were too large and overleveraged. Their failure "could cause strong repercussions in financial markets, affecting federally insured entities and economic activity" well beyond housing.
“Mr. Bush wanted to limit systemic risk by raising the GSEs' capital requirements, compelling preapproval of new activities, and limiting the size of their portfolios. Why should government regulate banks, credit unions and savings and loans, but not GSEs? Mr. Bush wanted the GSEs to be treated just like their private-sector competitors.
“But the GSEs fought back. They didn't want to see the Bush reforms enacted, because that would level the playing field for their competitors. Congress finally did pass the Bush reforms, but in 2008, after Fannie and Freddie collapsed.
“The largely unreported story is that to fend off regulation, the GSEs engaged in a lobbying frenzy. They hired high-profile Democrats and Republicans and spent $170 million on lobbying over the past decade. They also constructed an elaborate network of state and local lobbyists to pressure members of Congress.
“When Republican Richard Shelby of Alabama, then chairman of the Senate Banking Committee, pushed for comprehensive GSE reform in 2005, Democrat Sen. Chris Dodd of Connecticut successfully threatened a filibuster. Later, after Fannie and Freddie collapsed, Mr. Dodd asked, "Why weren't we doing more?" He then voted for the Bush reforms that he once called "ill-advised."
“But Mr. Dodd wasn't the only Democrat to heap abuse on the Bush reforms. Rep. Barney Frank of Massachusetts defended Fannie and Freddie as "fundamentally sound" and labeled the president's proposals as "inane." He later voted for the reforms. Sen. Charles Schumer of New York dismissed Mr. Bush's "safety and soundness concerns" as "a straw man." "If it ain't broke, don't fix it," was the helpful advice of both Sen. Thomas Carper of Delaware and Rep. Maxine Waters of California. Rep. Gregory Meeks of New York berated a Bush official at a hearing, saying, "I am just pissed off" at the administration for raising the issue.
“Democrats had ready allies among lenders accustomed to GSEs buying their risky mortgages. For example, Angelo Mozilo, CEO of Countrywide Financial, complained that "an overly cumbersome regulatory process" would "reduce, or even eliminate, the incentives for the GSEs and their primary market partners.
“It took Fannie and Freddie over three decades to acquire $2 trillion in mortgages and mortgage-backed securities. Together, they held $2.1 trillion in 2000. By 2005, the two GSEs held $4 trillion, up 92% in just five years. By 2008, they'd grown another 24%, to nearly $5 trillion. They held almost half of all American mortgages.
“The more the president pushed for reform, the more they bought. Peter Wallison of the American Enterprise Institute and Charles Calomiris of the Columbia Business School suggest $1 trillion of this debt was subprime and "liar loans," almost all bought between 2005 and 2007. This bulk-up in risky paper made it possible for banks to lend imprudently on a massive scale...”
“Because of this, the Bush administration warned in the budget it issued in April 2001 that Fannie and Freddie were too large and overleveraged. Their failure "could cause strong repercussions in financial markets, affecting federally insured entities and economic activity" well beyond housing.
“Mr. Bush wanted to limit systemic risk by raising the GSEs' capital requirements, compelling preapproval of new activities, and limiting the size of their portfolios. Why should government regulate banks, credit unions and savings and loans, but not GSEs? Mr. Bush wanted the GSEs to be treated just like their private-sector competitors.
“But the GSEs fought back. They didn't want to see the Bush reforms enacted, because that would level the playing field for their competitors. Congress finally did pass the Bush reforms, but in 2008, after Fannie and Freddie collapsed.
“The largely unreported story is that to fend off regulation, the GSEs engaged in a lobbying frenzy. They hired high-profile Democrats and Republicans and spent $170 million on lobbying over the past decade. They also constructed an elaborate network of state and local lobbyists to pressure members of Congress.
“When Republican Richard Shelby of Alabama, then chairman of the Senate Banking Committee, pushed for comprehensive GSE reform in 2005, Democrat Sen. Chris Dodd of Connecticut successfully threatened a filibuster. Later, after Fannie and Freddie collapsed, Mr. Dodd asked, "Why weren't we doing more?" He then voted for the Bush reforms that he once called "ill-advised."
“But Mr. Dodd wasn't the only Democrat to heap abuse on the Bush reforms. Rep. Barney Frank of Massachusetts defended Fannie and Freddie as "fundamentally sound" and labeled the president's proposals as "inane." He later voted for the reforms. Sen. Charles Schumer of New York dismissed Mr. Bush's "safety and soundness concerns" as "a straw man." "If it ain't broke, don't fix it," was the helpful advice of both Sen. Thomas Carper of Delaware and Rep. Maxine Waters of California. Rep. Gregory Meeks of New York berated a Bush official at a hearing, saying, "I am just pissed off" at the administration for raising the issue.
“Democrats had ready allies among lenders accustomed to GSEs buying their risky mortgages. For example, Angelo Mozilo, CEO of Countrywide Financial, complained that "an overly cumbersome regulatory process" would "reduce, or even eliminate, the incentives for the GSEs and their primary market partners.
“It took Fannie and Freddie over three decades to acquire $2 trillion in mortgages and mortgage-backed securities. Together, they held $2.1 trillion in 2000. By 2005, the two GSEs held $4 trillion, up 92% in just five years. By 2008, they'd grown another 24%, to nearly $5 trillion. They held almost half of all American mortgages.
“The more the president pushed for reform, the more they bought. Peter Wallison of the American Enterprise Institute and Charles Calomiris of the Columbia Business School suggest $1 trillion of this debt was subprime and "liar loans," almost all bought between 2005 and 2007. This bulk-up in risky paper made it possible for banks to lend imprudently on a massive scale...”
The clowns in charge are the ones that contributed to the problem to begin with. They are also the ones that block reform and new regulations that would have reigned in the GSE's. The market is voting "no confidence".