Rolling US Economy Into The Shitbin Thread

So how does this bailout work, like, legally? Does the Fed have some sort of emergency powers? Does there need to be eventual Congressional approval?

Listen Martin, our role in this is just to give the rich people our money and not ask questions, okay?

i just read a doomsday "aig is toast" column by felix simon in conde nast (http://www.portfolio.com/views/blogs/market-movers/2008/09/16/aig-is-toast?tid=true) and was struck by this reader comment:

"Hopefully part of this deal will be to put Hank Greenberg back in charge. That crook Spitzer cost people more money than may ever be realized."

is there any plausibility to the charge that spitzker's treatment of wall street was a big deal in this mess? not at all a rhetorical question -- if someone knows something about this, i'm curious to hear

uh, "spitzer," sorry

This is all about JP Morgan Chase.
JPMC's holdings in Bear Stearns were pretty heavy. JPMC execs were involved in the talks tonight leading to the loan. I wonder what sort of shit they have, and on who?

this is America -- we can't be blunt about nationalizing anything (even if that IS what we are doing in fact). we're not sensible like Europeans, you know.

it's going to be mighty tough to justify bailing out investment banks and insurance companies while letting folks get kicked outta there homes, though.

This is a lot better deal than the freddie/fannie bailout, or the bear stearns safety net, btw. This is a loan to AIG - presumably, they will be required to pay it back.

That is usually what is meant by loan.

So when this all bottoms out, what kind of damage are we gonna be looking at? A stagnating economy because investors don't have any money left to put into new businesses? Or something scarier?

Do I need to start putting my savings into a credit union or should I start spending it on non-perishables while my dollar still buys me something?

I wonder what sort of shit they have, and on who?

i think they bought a 30 percent stake in the federal government in 1907.

since we're all thinking is there going to be another great depression anyway, paul krugman makes a funny:

"KRUGMAN: Ben Bernanke and I think Hank Paulson understand that we could manage to have another Great Depression if we work at it hard enough. I think Phil Gramm might be just the guy to do it."

I'm mostly joking about the non-perishables, prone as I am to apocalypse fears. You gotta forgive me, I was raised believing the antichrist would rise in my lifetime. He'd be a remarkably charismatic young man, of humble origins and perhaps Indonesian descent, who would benefit from a meteoric rise. Lots of people would wonder about who he really was and where he really came from, but his numerically superior faithful would have faith that he'd be able to help solve the problems we'd gotten ourselves into in the Middle East.

I see no reason not to be using a credit union anyway.

This is the beginning of a long and wacky period of american history where our parents and grandparents laugh at us while we adjust to a lifestyle considerably less rich than theirs. Later, when modern science has kept them alive far longer than necessary, we will grimace angrily as they ask for help, then set them on fire and sell their property to german holding companies to pay off debt.

is it too early to try to enlist bono for a debt forgiveness campaign?

maybe at least a benefit concert.

dude, the government just fired most of U2's fan base, stop trying to dig it deeper.

i kinda wish that my depression-era surviving grandparents were still around -- esp. my paternal grandfather, who remembered the Great Depression so well that he did everything in his power to avoid debt till the day that he died (he never even had a credit card!) then again, i am prone to overreact -- it would still be interesting to have their perspective on all of this madness.

TOMBOT: aren't you being optimistic about the Germans?

So...maybe this will answer Ned's question re: what that closed-door meeting was about:

SEPTEMBER 18, 2008
Resolution Trust Plan Is Floated
By MICHAEL R. CRITTENDEN and PATRICK YOEST

WASHINGTON -- Staring down the worst financial crisis in decades, U.S. lawmakers are strongly considering whether they need to dust off a 1980s-era plan to help save the banking industry and stabilize the economy more broadly.

Both Democrats and Republicans have shown interest over the past two days in the idea of creating a government corporation to help deal with the toxic assets that have already brought down financial behemoths Bear Stearns Cos. and Lehman Bros., and forced the government to take over Fannie Mae and Freddie Mac.

"I think we need to create an institution or a mechanism of a super-trustee to handle incredibly large institutions which may be allowed to fail and how those assets get managed and handled in an expeditious way so that it doesn't further exacerbate the economic ramifications of failure," said Rep. Paul Kanjorski (D., Pa.). "If we don't do that, we'll just go from one failure to another, and keep blossoming."

Mr. Kanjorski's comments came the day after House Financial Services Chairman Barney Frank (D., Mass.) suggested that lawmakers need to consider creating a government entity akin to the Resolution Trust Corporation, which was formed amid the savings and loan crisis in the 1980s. The RTC, as it was known, resolved and liquidated the assets of 747 thrifts with total assets of $394 billion.

"The question is, going forward, has the accumulation of bad paper reached the point where nothing can happen unless you deal with it?" Mr. Frank said Monday evening. "That's a question that's got to be explored."

With 11 banks having already failed this year, and questions surrounding major financial institutions such as American International Group Inc. and Washington Mutual Inc., members of Congress sounded eager to find some solution to stanch the turmoil. House Speaker Nancy Pelosi (D., Calif.) said she had discussed the idea of an RTC-like entity with Treasury Secretary Henry Paulson in the past, and Republicans also seemed open to the idea.

Sen. Judd Gregg of New Hampshire, a fiscal hawk who serves as the top Republican on the Senate Budget Committee, called an RTC-like entity a "legitimate" idea that merits consideration.

His colleague, Sen. Richard Shelby (R., Ala.) likewise expressed a level of interest.

"It certainly worked," said Mr. Shelby, who is the ranking member of the Senate Banking Committee. He noted that there could be a cost to taxpayers, but said it "might be an option."

Sen. Charles Schumer (D., N.Y.), chairman of Congress's Joint Economic Committee, said the key to any such plan should be to stop the collapse of the housing market. "RTC is something to look at because you need a floor on housing," Mr. Schumer said.

Despite the groundswell of interest in the idea of a government entity buying up billions of dollars of tainted assets, an immediate fix is unlikely. Though Rep. Kanjorski said lawmakers should stay in Washington beyond their scheduled Sept. 26 adjournment to finalize a plan, House Majority Leader Steny Hoyer (D., Md.) said that is unlikely. "I don't think it's going to happen in the next 14 days," Mr. Hoyer said at a news conference. "Speaker Pelosi and I are both focused on the Sept. 26 adjournment."

Mr. Frank himself said enacting legislation this year is "unlikely," a reflection of the political landscape of an election year as well as the practical problem of designing such a program.

The original RTC was used from 1989 to 1995 to resolve and liquidate failed thrifts caught up in the savings and loan crisis.

—Corey Boles and Jessica Holzer contributed to this article
Write to Michael R. Crittenden at mich✧✧✧.critten✧✧✧@dowjo✧✧✧.c✧✧
Source: http://online.wsj.com/article/SB1221...-box#printMode

we're too busy to fix the economy, don't you know there's an election on

if it gets out that we agreed about something, it might reflect badly on our candidates trying to "differentiate" their "brand"

at this point we all deserve what we get

a naked lunch at the end of that long newspaper spoon

There's a big difference between the RTC and this new proposal: the RTC took over assets from S&L's that had been liquidated - this new proposal would take bad assets off the hands of institutions that are still going concerns. Obviously there's a huge difference in moral hazard here - private gains, public losses writ large.

so...what happens if ALL the investment banks fail?

WON'T SOMEBODY THINK OF THE TROPHY WIVES?

It's instructive to watch my piddling IRA Roth investments crumble -- I though I was buying to the sound of guns but it looks like I was only buying to the sound of guns getting cleaned and loaded.

Russia's not exactly either these days. Need to dig up a couple of recent articles I was reading about that.

Not exactly HAPPY etc.

yeah i have not looked at mine on purpose. this year has been brutal. you will earn it back though.

xpost to hurting

You only lose the money if you withdraw now

http://consumerist.com/5050310/dont-start-yanking-your-wamu-accounts

^ This appeal in this article seems logically flawed.

I think Phil Gramm might be just the guy to do it.

haha! He's the fucking architect of the disaster we are in now.

no, that article is completely right, unless you have more than 100k in there

i think, anyway

well whatever you do, dont move it to citibank
http://finance.google.com/finance?q=NYSE%3AC

ouch, and I thought they were doing alright.

i work for an agency and wamu is our primary (in some respects, ONLY) client; they completely pay the overhead here. well their credit card division does. oddly their credit card division is still profitable. doesn't mean half the office isn't sending out their resumes anyway.

Xpost, yeah I know, which is why I haven't checked the actual value of my portfolio. But no matter what, there's always that creeping fear of "What if this is the big one? What if every company I own goes bankrupt?"

That's why you're not supposed to look, I guess.

aren't the remaining two big banks relatively free of mortgage stuff, so only getting hit by temporary, shallow all-ibanks-are-in-trouble losses? and isn't retail-bank-equipped Citi fairly safe, even if it's got some problems to deal with?

it's hard to say gabbneb, since it doesn't seem like this is just a morgage crisis anymore. earlier someone was saying goldman and morgan stanley were in merger talks.

citi is getting hit b/c they have $138k in lehman bonds

see how much i'm learning in school guys ^_^

138bn

or because people think they have $138 billion, xp

http://money.cnn.com/news/newsfeeds/articles/apwire/09235743f9eb618fcbc1e721444cd77b.htm

actually guys I'm responsible because my comment yesterday set off a flurry of mean-spirited unamerican shorting

not that i have anything invested in this question or anything

x-post -- You horrible man.

Forget shorting, I say it's time we start pantsing these motherfuckers

douchebags require swirlies

http://www.nytimes.com/interactive/2008/09/15/business/20080916-treemap-graphic.html

mouse-over fun!!

aren't the remaining two big banks relatively free of mortgage stuff, so only getting hit by temporary, shallow all-ibanks-are-in-trouble losses?

The problems have spread beyond mortgage stuff. Liquidation of Lehman assets and ensuing fallout will depress prices of a wide range of assets of the types held by Morgan Stanley and Goldman. Combine that with the very high leverage ratios that these institutions still have, and you have a recipe for trouble.

lol "mortgage stuff"

I would like to point out that I have been otm in this thread