Lehman Brothers, the fourth-largest American investment bank, filed for bankruptcy today. Last month they tried and failed "to sell up to a 50 percent stake to China's biggest brokerage CITIC Securities or the state-owned Korea Development Bank". Last week they failed again trying to sell themselves to Barclays or to Bank of America.
Merrill Lynch was absorbed into Bank of America over the weekend too, so that's two household names gone. Freddie Mac and Fannie Mae have been given unlimited access to US tax revenue to stay solvent: every time someone walks out on their mortgage, any shortfall in the subsequent sale price of the house compared to the mortgage debt now comes straight out of the US taxpayer's pocket. Mere banks don't qualify for a bail-out.
Who's next?
Here's Robert Peston's take this morning.
Chickens coming home to roost
Chickens coming home to roost
Nullius in verba ... ☎||||||||||| ... To Fate I sue, of other means bereft, the only refuge for the wretched left.
When flower power came along I stood for Human Rights, marched around for peace and freedom, had some nooky every night - we took it serious.
Who has a spare two minutes to play in this month's FG Trivia game! ... My other OS is Slackware.
When flower power came along I stood for Human Rights, marched around for peace and freedom, had some nooky every night - we took it serious.
Who has a spare two minutes to play in this month's FG Trivia game! ... My other OS is Slackware.
Chickens coming home to roost
Yes, this is it, the big one, we are all about to get a lot poorer, very quickly. Well spot, I know that you are a committed socialist so you can look back on this day as probably the one on which modern globalized liberal capitalism was rocked to its foundations, and maybe about to totter over the brink. Its going to get very interesting from here on in, where the next bombshell is going to hit is anyone's business. But if I was the UK prime minister, the fact that the City of London accounts for about 33 percent of my nations economy, and is about to get wiped out along with the National Currency, I would find it very hard to sleep. In fact if I was the Irish Prime Minister I wouldn't be too chipper either, though our set of problems is slightly different.
"We are never so happy, never so unhappy, as we imagine"
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Chickens coming home to roost
the Bush administration just announced a few hours ago that the tax paying people will not be bailing out anymore private owned banks..personally i dont believe the government should have bailed out the other two.:-3
Chickens coming home to roost
guppy;984807 wrote: the Bush administration just announced a few hours ago that the tax paying people will not be bailing out anymore private owned banks..personally i dont believe the government should have bailed out the other two.:-3
Then what on earth were they doing bailing out Fannie May, Freddie Mac and Bear Stearns with tax payers' money over the six months?On 2008-03-14, JPMorgan Chase, in conjunction with the Federal Reserve Bank of New York, provided a 28-day emergency loan to Bear Stearns in order to prevent the potential market crash that would result from Bear Stearns becoming insolvent. Two days later, Bear Stearns signed a merger agreement with JP Morgan Chase in a stock swap worth $2 a share. In addition, the Federal Reserve agreed to issue a non-recourse loan to JP Morgan Chase, thereby assuming the risk of Bear Stearns's less liquid assets. Bear Stearns was one of the largest global investment banks and securities trading and brokerage firms prior to its collapse.Every cent of that tax revenue loan guaranteed the book value of those assets, and those assets are guaranteed to fall way short of the book value when they're realized. Nobody has a clue yet how much the promise will cost by the time it's all over. What on earth was the point of doing that three times in a row if "the tax paying people will not be bailing out anymore private owned banks"? Who did those first three tax-financed bail-outs help?
Then what on earth were they doing bailing out Fannie May, Freddie Mac and Bear Stearns with tax payers' money over the six months?On 2008-03-14, JPMorgan Chase, in conjunction with the Federal Reserve Bank of New York, provided a 28-day emergency loan to Bear Stearns in order to prevent the potential market crash that would result from Bear Stearns becoming insolvent. Two days later, Bear Stearns signed a merger agreement with JP Morgan Chase in a stock swap worth $2 a share. In addition, the Federal Reserve agreed to issue a non-recourse loan to JP Morgan Chase, thereby assuming the risk of Bear Stearns's less liquid assets. Bear Stearns was one of the largest global investment banks and securities trading and brokerage firms prior to its collapse.Every cent of that tax revenue loan guaranteed the book value of those assets, and those assets are guaranteed to fall way short of the book value when they're realized. Nobody has a clue yet how much the promise will cost by the time it's all over. What on earth was the point of doing that three times in a row if "the tax paying people will not be bailing out anymore private owned banks"? Who did those first three tax-financed bail-outs help?
Nullius in verba ... ☎||||||||||| ... To Fate I sue, of other means bereft, the only refuge for the wretched left.
When flower power came along I stood for Human Rights, marched around for peace and freedom, had some nooky every night - we took it serious.
Who has a spare two minutes to play in this month's FG Trivia game! ... My other OS is Slackware.
When flower power came along I stood for Human Rights, marched around for peace and freedom, had some nooky every night - we took it serious.
Who has a spare two minutes to play in this month's FG Trivia game! ... My other OS is Slackware.
Chickens coming home to roost
spot;984813 wrote: Then what on earth were they doing bailing out Fannie May, Freddie Mac and Bear Stearns with tax payers' money over the six months?
On 2008-03-14, JPMorgan Chase, in conjunction with the Federal Reserve Bank of New York, provided a 28-day emergency loan to Bear Stearns in order to prevent the potential market crash that would result from Bear Stearns becoming insolvent. Two days later, Bear Stearns signed a merger agreement with JP Morgan Chase in a stock swap worth $2 a share. In addition, the Federal Reserve agreed to issue a non-recourse loan to JP Morgan Chase, thereby assuming the risk of Bear Stearns's less liquid assets. Bear Stearns was one of the largest global investment banks and securities trading and brokerage firms prior to its collapse.
Every cent of that tax revenue loan guaranteed the book value of those assets, and those assets are guaranteed to fall way short of the book value when they're realized. Nobody has a clue yet how much the promise will cost by the time it's all over. What on earth was the point of doing that three times in a row if "the tax paying people will not be bailing out anymore private owned banks"? Who did those first three tax-financed bail-outs help?
have not a clue Spot..like i said , i dont think the government had the right to bail the others out..they seem to have reacted immaturely to fix a gaping problem with a little bandaide..if i was guessing..i would say that someone in the government had a stake in one or more of those banks. but who knows..
i dont understand the stock market, or how this is going to affect the rest of the world or anything else..but what i do see from my little spot is that the banking institutes loaned out money irrationally..to build houses that are simply not worth the amount borrowed..wtf they were thinking is beyond me. here is the next crisis coming..the credit cards issued by banks..they are aquiring small loans as fast as they can at zero or small interest for a limited amount of time..people that are not making it financially now are jumping on this..eventually these interest rates are gonna skyrocket..just another example of the banks trying to save their assess but not looking at the outcome later down the road. people barely making ends meet now are gonna go into bankrupcy later..if they havent already from their house mortgages..
On 2008-03-14, JPMorgan Chase, in conjunction with the Federal Reserve Bank of New York, provided a 28-day emergency loan to Bear Stearns in order to prevent the potential market crash that would result from Bear Stearns becoming insolvent. Two days later, Bear Stearns signed a merger agreement with JP Morgan Chase in a stock swap worth $2 a share. In addition, the Federal Reserve agreed to issue a non-recourse loan to JP Morgan Chase, thereby assuming the risk of Bear Stearns's less liquid assets. Bear Stearns was one of the largest global investment banks and securities trading and brokerage firms prior to its collapse.
Every cent of that tax revenue loan guaranteed the book value of those assets, and those assets are guaranteed to fall way short of the book value when they're realized. Nobody has a clue yet how much the promise will cost by the time it's all over. What on earth was the point of doing that three times in a row if "the tax paying people will not be bailing out anymore private owned banks"? Who did those first three tax-financed bail-outs help?
have not a clue Spot..like i said , i dont think the government had the right to bail the others out..they seem to have reacted immaturely to fix a gaping problem with a little bandaide..if i was guessing..i would say that someone in the government had a stake in one or more of those banks. but who knows..
i dont understand the stock market, or how this is going to affect the rest of the world or anything else..but what i do see from my little spot is that the banking institutes loaned out money irrationally..to build houses that are simply not worth the amount borrowed..wtf they were thinking is beyond me. here is the next crisis coming..the credit cards issued by banks..they are aquiring small loans as fast as they can at zero or small interest for a limited amount of time..people that are not making it financially now are jumping on this..eventually these interest rates are gonna skyrocket..just another example of the banks trying to save their assess but not looking at the outcome later down the road. people barely making ends meet now are gonna go into bankrupcy later..if they havent already from their house mortgages..Chickens coming home to roost
I think the damn seems to be bursting very rapidly now, with this enormous financial companies basically failing, the latest being AIG. Where all of this is leading is hard to know right now as there is no real disclosure about the real positions of these major companies in terms of their exposure to bad debt. For ordinary people the reality is that the credit and property boom time economics we have gotten accustomed to are ending abruptly and there are going to be some very difficult times ahead for many ordinary people.
"We are never so happy, never so unhappy, as we imagine"
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Chickens coming home to roost
Galbally;985803 wrote: I think the damn seems to be bursting very rapidly now, with this enormous financial companies basically failing, the latest being AIG.
No no, dear lad, for the American Superhero of the White House spent the night taking $650 from the purse of every US taxpayer and putting it into the coffers of this appropriately named American International Group. Tax the poor to subsidize the rich, that's the American way. I keep pointing that out and nobody wants to listen.
What'll you spend your tax rebate on mommie? Oh, I think I'll prop up a collapsing insurance company which played the sub-prime mortgage market out of greed, that should hot-wire the economy back into overdrive.
What was it guppy said yesterday? "the Bush administration just announced a few hours ago that the tax paying people will not be bailing out anymore private owned banks"? I expect if you ask they'll grin and say it's not a bank so it doesn't count. Is that the level of politics these days?
No no, dear lad, for the American Superhero of the White House spent the night taking $650 from the purse of every US taxpayer and putting it into the coffers of this appropriately named American International Group. Tax the poor to subsidize the rich, that's the American way. I keep pointing that out and nobody wants to listen.
What'll you spend your tax rebate on mommie? Oh, I think I'll prop up a collapsing insurance company which played the sub-prime mortgage market out of greed, that should hot-wire the economy back into overdrive.
What was it guppy said yesterday? "the Bush administration just announced a few hours ago that the tax paying people will not be bailing out anymore private owned banks"? I expect if you ask they'll grin and say it's not a bank so it doesn't count. Is that the level of politics these days?
Nullius in verba ... ☎||||||||||| ... To Fate I sue, of other means bereft, the only refuge for the wretched left.
When flower power came along I stood for Human Rights, marched around for peace and freedom, had some nooky every night - we took it serious.
Who has a spare two minutes to play in this month's FG Trivia game! ... My other OS is Slackware.
When flower power came along I stood for Human Rights, marched around for peace and freedom, had some nooky every night - we took it serious.
Who has a spare two minutes to play in this month's FG Trivia game! ... My other OS is Slackware.
Chickens coming home to roost
posted by galbally
Yes, this is it, the big one, we are all about to get a lot poorer, very quickly. Well spot, I know that you are a committed socialist so you can look back on this day as probably the one on which modern globalized liberal capitalism was rocked to its foundations, and maybe about to totter over the brink. Its going to get very interesting from here on in, where the next bombshell is going to hit is anyone's business
This is what happens when you change the rules so that a few can get rich at the expense of the many. Adam Smith was probably birling in his grave when greenspan and brown went to visit. Liberal capitalism doesn't mean you throw out fiscal responsibility as well or don't have some kind of controls in place. De-regulation shouldn't have meant a free for all without consequences but that is what we got and the idea that you could trust bankers to be sensible is a ludicrous one only a banker would believe. It was greed pure and simple.
This is not just happening out the blue- There were plenty of warning signs and people waving red flags about what was going to happen if you keep lending on assets more than the asset was worth in the demented notion that value would keep on rising. It's a 21st century south sea bubble. Arguable the seniror bank executives have shown a criminal irresponsibility even if they did nothing illegal.
In the olden days priests would cut open amimals look at their entrails and predict the future sensible people didn't believe in it. Nowadays we have economists that look at patterns in spreadsheets and kid on they can see the future sensible people don't take them seriously either.
posted by spot
What was it guppy said yesterday? "the Bush administration just announced a few hours ago that the tax paying people will not be bailing out anymore private owned banks"? I expect if you ask they'll grin and say it's not a bank so it doesn't count. Is that the level of politics these days?
Who would have thought, bush the secret socialist, never mind taking over the means of production nationalise the bank.
Yes, this is it, the big one, we are all about to get a lot poorer, very quickly. Well spot, I know that you are a committed socialist so you can look back on this day as probably the one on which modern globalized liberal capitalism was rocked to its foundations, and maybe about to totter over the brink. Its going to get very interesting from here on in, where the next bombshell is going to hit is anyone's business
This is what happens when you change the rules so that a few can get rich at the expense of the many. Adam Smith was probably birling in his grave when greenspan and brown went to visit. Liberal capitalism doesn't mean you throw out fiscal responsibility as well or don't have some kind of controls in place. De-regulation shouldn't have meant a free for all without consequences but that is what we got and the idea that you could trust bankers to be sensible is a ludicrous one only a banker would believe. It was greed pure and simple.
This is not just happening out the blue- There were plenty of warning signs and people waving red flags about what was going to happen if you keep lending on assets more than the asset was worth in the demented notion that value would keep on rising. It's a 21st century south sea bubble. Arguable the seniror bank executives have shown a criminal irresponsibility even if they did nothing illegal.
In the olden days priests would cut open amimals look at their entrails and predict the future sensible people didn't believe in it. Nowadays we have economists that look at patterns in spreadsheets and kid on they can see the future sensible people don't take them seriously either.
posted by spot
What was it guppy said yesterday? "the Bush administration just announced a few hours ago that the tax paying people will not be bailing out anymore private owned banks"? I expect if you ask they'll grin and say it's not a bank so it doesn't count. Is that the level of politics these days?
Who would have thought, bush the secret socialist, never mind taking over the means of production nationalise the bank.
Chickens coming home to roost
The latest news is that the very large British Bank HBOS is in talks with Lloyds Bank, in preperation of a takeover of HBOS by Lloyds, as the former is now also in severe difficulty because of its exposure to bad British Mortgage debt. I have a feeling that a major Irish bank (and several other European Banks) may follow suit shortly. Its my guess that we are going to see massive property price falls now, probably in the order of 50-70 percent across the board in all the countries that have had housing booms, mortgages are going to something only quite well off people can afford, unemployment will increase significantly, and its likely that Sterling will come under severe pressure because of the over-reliance of the UK economy on Banking and Insurance services. Its also likely that there will be a gobal recession lasting several years. The worst case would be a global depression, caused by the contraction of capital available to industry and investment in new companies. Its a pretty grim situation to be honest.
"We are never so happy, never so unhappy, as we imagine"
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Chickens coming home to roost
Galbally;986338 wrote: The latest news is that the very large British Bank HBOS is in talks with Lloyds Bank, in preperation of a takeover of HBOS by Lloyds, as the former is now also in severe difficulty because of its exposure to bad British Mortgage debt. I have a feeling that a major Irish bank (and several other European Banks) may follow suit shortly. Its my guess that we are going to see massive property price falls now, probably in the order of 50-70 percent across the board in all the countries that have had housing booms, mortgages are going to something only quite well off people can afford, unemployment will increase significantly, and its likely that Sterling will come under severe pressure because of the over-reliance of the UK economy on Banking and Insurance services. Its also likely that there will be a gobal recession lasting several years. The worst case would be a global depression, caused by the contraction of capital available to industry and investment in new companies. Its a pretty grim situation to be honest.
Be even worse if countries start putting up trade barriers to protect their industry from foreign competition.
Be even worse if countries start putting up trade barriers to protect their industry from foreign competition.
Chickens coming home to roost
gmc;986541 wrote: Be even worse if countries start putting up trade barriers to protect their industry from foreign competition.
Thats a conversation for another day, one crisis at a time eh? :rolleyes:
Thats a conversation for another day, one crisis at a time eh? :rolleyes:
"We are never so happy, never so unhappy, as we imagine"
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Chickens coming home to roost
Galbally;986598 wrote: Thats a conversation for another day, one crisis at a time eh? :rolleyes:
No they're related but you're probably right. Never mind,
No they're related but you're probably right. Never mind,
Chickens coming home to roost
gmc;986632 wrote: No they're related but you're probably right. Never mind,
I know they are related, but lets wait to see if we will have to go back to a barter economy before we worry about the issues of trade.
I know they are related, but lets wait to see if we will have to go back to a barter economy before we worry about the issues of trade.
"We are never so happy, never so unhappy, as we imagine"
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.
Le Rochefoucauld.
"A smack in the face settles all arguments, then you can move on kid."
My dad 1986.