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Post by socal on Sept 14, 2008 14:53:38 GMT -6
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Post by NOTTHOR on Sept 14, 2008 16:38:02 GMT -6
Again, neither the GOP nor the Dems control monetary policy, and what we've seen is largely a result of our nation's monetary policy. The second link you posted is pretty good, everyone should read it.
I've followed the markets my whole life, I never, ever in a million years would have thought Bear and Lehman would disappear and Merrill would lose its status as an independent. At the end of this year, there is a very good chance Morgan Stanley and Goldman will be the last two major independent investment banks standing, but that second blogger guesses we'll see even those two disappear. AIG is on the ropes too.
This is crazy. These companies are really the stalwarts of international commerce and are the bright spot of US trade in foreign countries. When alarmists talk about balance of goods and cite some ungodly imbalance, I never thought too much of it because I know our economic superiority has recently come from companies like Bear Stearns, Lehman Brothers, AIG and Citibank making money off of transactions in foreign countries - those don't show up on trade reports. I wonder where our next source of global economic strength will come from.
It will be interesting to see just how much federal tax revenues are down this year, too. Those companies pay a lot in taxes, the budget deficit's gonna be a lot bigger than anyone could have guessed.
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Post by socal on Sept 14, 2008 19:12:15 GMT -6
Again, neither the GOP nor the Dems control monetary policy, and what we've seen is largely a result of our nation's monetary policy. The second link you posted is pretty good, everyone should read it. I've followed the markets my whole life, I never, ever in a million years would have thought Bear and Lehman would disappear and Merrill would lose its status as an independent. At the end of this year, there is a very good chance Morgan Stanley and Goldman will be the last two major independent investment banks standing, but that second blogger guesses we'll see even those two disappear. AIG is on the ropes too. This is crazy. These companies are really the stalwarts of international commerce and are the bright spot of US trade in foreign countries. When alarmists talk about balance of goods and cite some ungodly imbalance, I never thought too much of it because I know our economic superiority has recently come from companies like Bear Stearns, Lehman Brothers, AIG and Citibank making money off of transactions in foreign countries - those don't show up on trade reports. I wonder where our next source of global economic strength will come from. It will be interesting to see just how much federal tax revenues are down this year, too. Those companies pay a lot in taxes, the budget deficit's gonna be a lot bigger than anyone could have guessed. First, a related tidbit: www.boston.com/news/politics/politicalintelligence/2007/12/mccain_its_abou.htmlwww.bloomberg.com/apps/news?pid=20601070&sid=aKZG._gG2NVI&refer=politics________ Second... less directly related... As the 9/11 anniversary just passed, and there were multiple photo ops at the still gaping holes at ground zero... it got me thinking in the abstract about the topic. It's a god-damned shame that nothing has been built on those sites yet, but that raises a few secondary questions. 1. Besides the moral & "national" obligations to do so, is there a physical need (at the moment) for millions of square feet of office space in lower Manhattan? 2. One of the stated goals by Bin Laden was to bankrupt America ( www.cnn.com/2004/WORLD/meast/11/01/binladen.tape/)... and whether or not he is the catalyst (or it's one brick in a road that includes gross mistakes like Iraq, no oversight, etc... ). His scenario is seeming prescient ---- and IMO, will come true should the GOP retain power of the Executive. |
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Post by NOTTHOR on Sept 14, 2008 20:02:08 GMT -6
It's a god-damned shame that nothing has been built on those sites yet, but that raises a few secondary questions. 1. Besides the moral & "national" obligations to do so, is there a physical need (at the moment) for millions of square feet of office space in lower Manhattan? 2. One of the stated goals by Bin Laden was to bankrupt America ( www.cnn.com/2004/WORLD/meast/11/01/binladen.tape/)... and whether or not he is the catalyst (or it's one brick in a road that includes gross mistakes like Iraq, no oversight, etc... ). His scenario is seeming prescient ---- and IMO, will come true should the GOP retain power of the Executive. With respect to the Executive's role in any situation like we've seen the past 4 days, I absolutely do not want them involved in any way. There is a level of information and understanding of finance that most windbags running for president will never possess. As sad as it is for American finance to see these blowups, it is important to note that a driving force of the United States in global finance, whether it was Mr. Morgan or the modern iterations of investment banks, our supremacy has come from the government giving i-banks, their investors and creditors leeway to do as they see fit. There is a reason the big swinging dicks have been almost all American or British firms, their governments understand the virtues of classical liberal economic policies. New independents will emerge, but they'll all be from the Caymans or London. The clerk of court's stamp on Lehman's bankruptcy tomorrow morning will be a nail in the coffin of America's days as a global leader in finance, at least for the next decade. The pendulum of government regulation will swing and kill these banks, along with the high paying white collar jobs and huge tax base they provide. And we'll be no safer from financial contagion -- when the blowup in 10 years is a Cayman bank, who's to say our Fed will even be at the table discussing the containment of the problem? As to your points, first, the death of these banks will harm the NY economy tremendously, but I'm pretty optimistic about America's ability to overcome crises. The commercial RE market in NY is very tight, if there isn't demand today, there will be soon. Second, Mr. bin Laden didn't need to do anything to bankrupt us. Big government liberal plans that sprung from Democratic policies will take care of the job for us. |
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Post by socal on Sept 15, 2008 7:22:20 GMT -6
With respect to the Executive's role in any situation like we've seen the past 4 days, I absolutely do not want them involved in any way. There is a level of information and understanding of finance that most windbags running for president will never possess. As sad as it is for American finance to see these blowups, it is important to note that a driving force of the United States in global finance, whether it was Mr. Morgan or the modern iterations of investment banks, our supremacy has come from the government giving i-banks, their investors and creditors leeway to do as they see fit. There is a reason the big swinging dicks have been almost all American or British firms, their governments understand the virtues of classical liberal economic policies. New independents will emerge, but they'll all be from the Caymans or London. The clerk of court's stamp on Lehman's bankruptcy tomorrow morning will be a nail in the coffin of America's days as a global leader in finance, at least for the next decade. The pendulum of government regulation will swing and kill these banks, along with the high paying white collar jobs and huge tax base they provide. And we'll be no safer from financial contagion -- when the blowup in 10 years is a Cayman bank, who's to say our Fed will even be at the table discussing the containment of the problem? It's a good thing those windbags decided to back the theory that nothing can go wrong in a deregulated "free market"... dealbook.blogs.nytimes.com/2008/09/14/aig-seeks-fed-aid-to-survive/index.html?hp---That's good news, isn't it? I mean, CNBC (and others) said the $50 Billion bailout of Bear Stearns would prevent the next two "dominoes"... Lehman & Merrill. Another thought: Just think about it... If we hadn't gone on this adventure to Iraq - not only would over 4,100 soldiers likely still be alive - but we could have funded this corporate welfare without a problem, AND still paid for every infrastructure earmark request in the country -- while still saving money. |
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Post by NOTTHOR on Sept 15, 2008 7:40:21 GMT -6
FWIW, AIG is one of the most heavily regulated businesses in the US, but if a regulated business can go under then your storyline doesn't sell as well, so we better paint AIG as a free market business, right? If they go under this week, we'll see a spike in unemployment as counterparty insurance companies become insolvent.
If the government is smart, it will run a quick cost-benefit analysis and get a credit facility opened ASAP - the risk to the taxpayer is offset many times over by the revenue Uncle Sam collects from AIG and its employees, not to mention the fact that AIG is on the hook for a bunch of reinsurance in hurricane ravaged areas - If they go into BK, you know which contracts they'll terminate first.
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Post by socal on Sept 15, 2008 9:25:11 GMT -6
FWIW, AIG is one of the most heavily regulated businesses in the US, but if a regulated business can go under then your storyline doesn't sell as well, so we better paint AIG as a free market business, right? If they go under this week, we'll see a spike in unemployment as counterparty insurance companies become insolvent. If the government is smart, it will run a quick cost-benefit analysis and get a credit facility opened ASAP - the risk to the taxpayer is offset many times over by the revenue Uncle Sam collects from AIG and its employees, not to mention the fact that AIG is on the hook for a bunch of reinsurance in hurricane ravaged areas - If they go into BK, you know which contracts they'll terminate first. If only AIG's downfall were the result of their regulation - and not due to their investments in non-regulated entities... you might be onto something. As it is, the past 14 years of my career (and everyone else I've worked with) has been backed by AIG paper. So I'm aware of the massive shitstorm that will erupt (in my segment of the world anyway). To cite the words of another "Pickens... WAAAAAAAAAHOOOOOOOOOO!!!!!!!!  |
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Post by socal on Sept 16, 2008 20:00:05 GMT -6
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Post by Iowafan1 on Sept 16, 2008 23:42:56 GMT -6
The bailouts of Fannie and Freddie and now AIG is sickening......just one more reason why we need to blow up Congress (REP's and DEM's) and start from scratch. I'm not sure what the answer is as it pertains to Fannie, Freddie or AIG, but it seems to me that the consensus by both parties is that these companies are too big to be allowed to fail. Evidently, the cost of these companies failing equates to the next depression.....that there is not sufficient competition to pick up the slack. I'm not sure that I buy it. If we are going to buy that argument, do we not also have to buy the argument that Fannie, Freddie and AIG are all monopolies? Isn't minimal regulation supposed to be in place to prevent monopolies? Haven't we spent the past three years just waiting for the XM and Sirius satellite radio merger to be approved? The past two years waiting for Delta and Northwest Airlines merger to be approved? Yet I've never heard a word about Fannie, Freddie or AIG being anywhere close to be considered a monopoly. I believe XM, Sirius, Delta and Northwest all pale in comparison to Fannie, Freddie and AIG. My bottom line is if they are not monopolies....thereby not in a position to negatively affect the economy of the entire nation, they should be allowed to fail....like any other business (see Lehman Brothers, Pan Am, Eastern, every TV manufacturer in America, TWA, etc.). If, on the other hand, Fannie, Freddie and AIG are all deemed "too large to fail"....to the point of American taxpayers having to bail them out, they at some point in the very near future, need to be broken up into many pieces and many companies.....totally unrelated to each other (similar to what happened to Ma Bell way back when). I'm just sick of politicians from every corner of Washington looking to get in my pockets to bail out a corporation that has been deemed by some as "too large to fail", while their senior officers rake in millions for the effort...or lack thereof.
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Post by socal on Sept 17, 2008 7:20:15 GMT -6
The bailouts of Fannie and Freddie and now AIG is sickening......just one more reason why we need to blow up Congress (REP's and DEM's) and start from scratch. I'm not sure what the answer is as it pertains to Fannie, Freddie or AIG, but it seems to me that the consensus by both parties is that these companies are too big to be allowed to fail. Evidently, the cost of these companies failing equates to the next depression.....that there is not sufficient competition to pick up the slack. I'm not sure that I buy it. If we are going to buy that argument, do we not also have to buy the argument that Fannie, Freddie and AIG are all monopolies? Isn't minimal regulation supposed to be in place to prevent monopolies? Haven't we spent the past three years just waiting for the XM and Sirius satellite radio merger to be approved? The past two years waiting for Delta and Northwest Airlines merger to be approved? Yet I've never heard a word about Fannie, Freddie or AIG being anywhere close to be considered a monopoly. I believe XM, Sirius, Delta and Northwest all pale in comparison to Fannie, Freddie and AIG. My bottom line is if they are not monopolies....thereby not in a position to negatively affect the economy of the entire nation, they should be allowed to fail....like any other business (see Lehman Brothers, Pan Am, Eastern, every TV manufacturer in America, TWA, etc.). If, on the other hand, Fannie, Freddie and AIG are all deemed "too large to fail"....to the point of American taxpayers having to bail them out, they at some point in the very near future, need to be broken up into many pieces and many companies.....totally unrelated to each other (similar to what happened to Ma Bell way back when). I'm just sick of politicians from every corner of Washington looking to get in my pockets to bail out a corporation that has been deemed by some as "too large to fail", while their senior officers rake in millions for the effort...or lack thereof. I don't disagree with you. But I must make a few points... After reading the vague outline of the agreement, the AIG deal- while still bad, doesn't sound as bad as first blush: calculatedrisk.blogspot.com/2008/09/fed-aig-deal-done.htmlPoint 2: Unless I missed something... the Senate Commerce Committee has been headed by none other than John McCain for 8 of the last 12 years. commerce.senate.gov/public/index.cfm?FuseAction=About.PastChairmenPoint 3: Again, unless I missed something... McCain's most vocal spokesperson about this situation - herself received a $21 Million severance package from her corporation. (That just announced they were laying off 24,600 people) www.npr.org/templates/story/story.php?storyId=4499647www.computerworld.com/action/article.do?command=viewArticleBasic&taxonomyName=outsourcing&articleId=9114741&taxonomyId=60&intsrc=kc_feat |
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Post by NOTTHOR on Sept 17, 2008 7:22:55 GMT -6
Fannie and Freddie were GSEs, their triggering government backstops wasn't earth shattering, the AIG deal was.
Frankly, whoever negotiated that deal on behalf of the Fed ought to be in charge of a helluva lot of government operations. The guy got a deal that would make your average loan shark in the 'hood blush. It's 850 bps above LIBOR, plus all assets pledged as collateral and warrants on 79.9% of the company, that's fucking insane. The guy who negotiated that is a ball buster, imagine him staring down the union slugs when their contract was up.
As I noted above, opening a facility in and of itself is accretive to the tax base of the US, add this equity kicker in, and I think the taxpayer ends up better off with this deal than without it. The problem is, when we see shit hit the fan like this, everybody is more worried about protecting their ideology over looking out for their self-interest. Proles have all kinds of safety nets that are not accretive to taxpayers, but when the Fed uses its lender of last resort power to enter into a potentially very lucrative deal for taxpayers, everyone wants to scream bloody murder.
I talked to my brother yesterday, he was praying for AIG to go down, he spent most of the day putting together an Excel sheet with new prices for reinsurance with AIG's captive reinsurers out of the market, he was gonna ball like Joel Osteen on the backs of policyholders, he ain't happy about this transaction.
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Post by socal on Sept 17, 2008 7:25:20 GMT -6
I talked to my brother yesterday, he was praying for AIG to go down, he spent most of the day putting together an Excel sheet with new prices for reinsurance with AIG's captive reinsurers out of the market, he was gonna ball like Joel Osteen on the backs of policyholders, he ain't happy about this transaction. So it WAS a parenting / genetic thing then.... |
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Post by NOTTHOR on Sept 17, 2008 7:25:35 GMT -6
Oh yeah, don't fight it Iowafan, when Barry wins the election, you'll be able to buy or receive free of charge, taxpayer subsidized health insurance from the United States Bureau of Insurance, formerly known as American International Group.
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Post by NOTTHOR on Sept 17, 2008 7:29:45 GMT -6
I talked to my brother yesterday, he was praying for AIG to go down, he spent most of the day putting together an Excel sheet with new prices for reinsurance with AIG's captive reinsurers out of the market, he was gonna ball like Joel Osteen on the backs of policyholders, he ain't happy about this transaction. So it WAS a parenting / genetic thing then.... Isn't acting in one's self-interest more of a human nature thing? Or should my brother sell reinsurance out of the goodness of his heart? |
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Post by Norm "racerhawk" Parker on Sept 17, 2008 7:57:41 GMT -6
Again, neither the GOP nor the Dems control monetary policy, and what we've seen is largely a result of our nation's monetary policy. The second link you posted is pretty good, everyone should read it. I've followed the markets my whole life, I never, ever in a million years would have thought Bear and Lehman would disappear and Merrill would lose its status as an independent. At the end of this year, there is a very good chance Morgan Stanley and Goldman will be the last two major independent investment banks standing, but that second blogger guesses we'll see even those two disappear. AIG is on the ropes too. This is crazy. These companies are really the stalwarts of international commerce and are the bright spot of US trade in foreign countries. When alarmists talk about balance of goods and cite some ungodly imbalance, I never thought too much of it because I know our economic superiority has recently come from companies like Bear Stearns, Lehman Brothers, AIG and Citibank making money off of transactions in foreign countries - those don't show up on trade reports. I wonder where our next source of global economic strength will come from. It will be interesting to see just how much federal tax revenues are down this year, too. Those companies pay a lot in taxes, the budget deficit's gonna be a lot bigger than anyone could have guessed. For what it's worth, I have found your threads regarding monetary policy helpful to read over time, and I have to say after reading a few of these, I've learned a few things! Now, back to slandering you. |
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Post by socal on Sept 17, 2008 8:08:13 GMT -6
So it WAS a parenting / genetic thing then.... Isn't acting in one's self-interest more of a human nature thing? Or should my brother sell reinsurance out of the goodness of his heart? Yes, it's human nature to act in one's self-interest. But it's not normal human nature to pray for the misfortune of thousands and thousands (and possibly millions or billions due to the domino action) of other humans - to forward that self-interest. Heck, even Bill Gates & Warren Buffett had their come to Jesus moments where something bigger than themselves trumped their natural self-interest. |
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