Start with the bottom line. America's net worth has been so distorted with excessively low interest rates, tax cuts (that are really nothing more than future tax increases because spending cuts were not also implemented), and welfare to the rich. Economic forces are now taking revenge. Net worth of America must drop maybe somewhere between 20% and 40% so that the dollar numbers are corrected. So who takes the most pain?

Whether the government does a bailout or bankruptcy threats result in same corrections; is irrelevant in the big picture. We all pay either way. Americans must now pay for this stupidity for the next ten plus years by enriching the Chinese, Japanese, Europeans, etc. Time to avoid this stuff was obvious four and more years ago when the rich increased their wealth by (I no longer know this number) 100 times more while the average man's income dropped 2%. This had only happened once previously - just before the great depression. I am only reposting an obvious fact from history.

This we do know. With every pound more pain applied to top management, only then will future managers learn from history. Washington Mutual executives will get no golden parachute (hopefully). But people such as O'Neil (of Merrill Lynch) must be hounded in the courts, the press, and on the street for being the alpha example of bad people.

We have the economy we deserve because we got the "deregulation" we wanted of those who historically are among the least responsible - the financial industry. Stock brokers, bean counters, etc making a strong economy is always the myth. Now everyone must be hurt big time. No way around it. Americans must now pay for the party hangover whether part of the party or not. Question is only about which Americans *should* suffer most. 85% of all problems are directly traceable to top management. That says where pain should be greatest.

Did you invest in the people who make America great (companies that innovate and actually produce something), or did you invest in those who made big profits by lying? America’s product oriented companies are not suffering losses as large. Why are stock broker companies and mortgage hawkers in so much trouble? They are not experts. They are only salesman who successfully lie about being smart. NINJA – these experts even issued mortgages without asking the obvious, “No Job No Income Apparent”. Those who blindly listened to finance thinkers are now suffering most – and rightly so. Learn why bean counter types (spread sheet experts) are the least responsible thinkers.

However, quietly being heard is American automakers got $25billion from the government. Bankruptcy that would have fixed auto industry problems by removing bean counters (the worst being GMs) is being averted – a bad thing.

Washington Mutual has been seized
 

My mortgage is now owned by J.P. Morgan Chase & Co.

http://online.wsj.com/article/SB1222...googlenews_wsj

I'm getting anxious.

Economists say bailout plan is flawed and isn't needed
 

Our mortgage has been sold twice so far.

My shitty mortgage is with Chase, and Jackie works there. Company is solid. I hope to remortgage soon, if somebody will let me.

Your mortgage, from your perspective, is completely irrelevant. Your mortgage is now something like a bond - traded like any equity. If Washington Mutual went down, does your mortgage disappear? Of course not. Either the government buys WaMu, or makes a special deal for other company (JP Morgan) to take over your mortgage, or it is sold to another bank, or it is bought by foreigners. Yes, then is where the real rescue is coming from. Even if the government takes over a bank, the money to do so comes (in part or whole) from Treasury Bonds sold to foreign nations.

Remember, economic forces are taking revenge. The bills are coming due. We must pay the rest of the world OR borrow more for assets that were mostly fictions. Bean counter types making money without even looking at the underlying product. That does not affect anyone's existing mortgage. Bankruptcies are so good because the assets (ie mortgages) are sold to others who will be more responsible.

From Big Shot Bob
Makes sense to me. :thumb:

Which commercial banks are accepting taxpayer money? Washington Mutual was driven into bankruptcy while WaMu executives were on a plane - unaware they had been removed. Investments banks are on the dole. But the big commercial banks - JP Morgan, Citigroup, Chase, Bank of America, Wachovia, etc - I don't believe any are taking taxpayer bailouts. But then they also had to conform to restrictions such as limited debt to equity ratios.

Hedge Funds. Are we still to see hedge funds come running for rescue? Auto loan companies might be struggling soon?

Commercial banks can be sold to foreigners who did not have financial people playing money games by purchasing deregulation and would be happy to own banks in America. After all, America that needs cash must sell assets to foreigners - government bonds, mortgage backed securities, companies, real estate - to pay for the eight year party.

Did you have a good time at the party?

Those were the days my friend.
We thought they'd never end.
... a song describing the roaring twenties. We did not have flappers. But we did have Britney Spears without underware and Paris Hilton taping sex. "This is the craziest party there would ever be ... Mama told me not to come...."

The news tonight is predicting Wachovia may be the next to topple. :(

I love that email. I got it yesterday. Almost moved me to tears. Sad no one in power (or soon to be in power) have the brains, audacity, or balls to do something like this. Honestly, I'd be hesitant too. I don't trust the public to make the right choice. Hence, part of the mortgage problems we have. When >25% of homes in my neighborhood are empty because of foreclosures, I believe individuals and banks made a big mistake.

A friend of mine in an investment firm informed me most mortgages given were done because they were "forced" into it because they could not discriminate. That shaffs my ass. Whay can't a bank say no? It's a sad state of affairs when the liberals force businesses to do their bidding by threatening discrimination, then turn and blame the conservatives running the businesses who honestly do want to make a dollar for their effort. Now everyone is suffering. Thanks for nothing. Now where's my $297,500? :p

Jeez, really? That's not good. The economy is going to take both parties to work together to fix it, else we will pass recession into a depression and a possible crash. :thepain:

Read it again but this time do the math yourself. ;)
I don't believe that. Either a person is qualified for a mortgage or not. I see the problem as;
1- greedy people trying to make money by turning houses in the bubble, and
2- Greedy lenders talking people into predatory mortgages they didn't understand.

When we bought our house 11 years ago, our lender kept telling us (maybe 2-3 times) that with our credit, we really could borrow more money than we were asking for and that we could have more house. My wife and I both worked at the time. We were DINKs. But we knew that kids would probably be in the future and we wanted to be able to afford a house on just one income. So we politely declined the extra money on the table each time it was offered. Looking back, I realize the guy writing up the loan probably got a fee based on the size of the loan and he wanted to make the largest fee possible. He was supposedly working for us, but probably got paid more if he could talk us into a bigger loan. Stupid system.

But isn't a lot of this the result of Bush's (not a liberal) plan to increase minority home ownership? I mean, ARM's have been around forever, why is it that suddenly no one understands them and they are predatory? What changed?

But they didn't do that.
Yes, ARMs have been around forever, but in order to judge the risk, you have to understand how they work and what the probably of risk is, to you.

[Devil's Advocate] Well then, these people shouldn't even be considering buying a home. if they aren't smart(educated) enough to understand what they are signing. [/DA]

Yes, but this was the target audience.
The people whose job it was the hustle these sales, on commission, cajoled, and often lied through their teeth, to people that couldn't fathom anything beyond, how much down/how much a month, RFN.
I'm sure LJ sees these people all the time. People that don't fully realize what they are getting into, and slick salespeople that take advantage of that.

Off track... these are the same people that, if Social Security were removed in favor of Personal Retirement Investments, would invest in AMWAY.

From Forbes magazine; Wait a minute... companies would refuse the bail-out because of limited executive compensation? They would let their companies go belly up, so they could walk away with bulging pockets? This tells me, if a firm dies, the executives should too... shoot every last one of them. :mad2:

That's the whole point of my thread.

I DO have a Guillotine idea and, yes, I DID steal it from the Frech.

Stealing good ideas is how progress works.

Stealing and cribbing, stealing and cribbing. It's how I get thru my classes.

Numbers from Frannie and Freddie demonstrate the problem. Whereas most mortgages qualified for the traditional agreements, in the past seven years, even these applicants were rechanneled for ARMs. Whereas sub-prime loans were issued to a single digit percent of applicants, suddenly these mortgages were being pushed to so many who did not need them. Something like 21% of those who qualified for traditional mortgages were instead only offered sub-prime mortgages. Why? From the highest levels, the economy *must* be fixed by pushing more mortgages; sell more homes; stimulate the economy.

Stimulating the economy rather than addressing its problems was promoted by the George Jr administration. Create a robust economy by throwing money at it. Cheney said, "Reagan proved that deficits don't matter". Fannie and Freddie were only doing what their 'bosses' wanted. As a result, home priced were inflated by 20% to 40%.

Need to promote sub-prime loans was so encouraged that NINJA became a new and acceptable standard. Nobody cared whether the applicant qualified. From the highest levels of government, we wanted more people buying homes.

Yes, each sub-prime homeowner who could not afford his mortgage only has himself to blame. That does not, for one minute, exonerate anyone else of guilt. Irrelevant how dumb the mortgage applicants were. Those who were promoting mortgages to people who could not qualify are now seeking to blame anyone else. Those who pushed mortgages without first qualifying those applicants are also just as guilty of creating this national problem.

Again, sub-prime mortgages were encouraged at the highest levels of the Federal government mostly in the past seven years. Sub-prime was even pushed on people who qualified for traditional mortgages. That is where this problem originated.

At my previous employer who went spectacularly bankrupt (this was over four years ago, and the bankruptcy case is still going through the court system) there were a half-dozen banks willing to give the company plenty of financing, with the only condition being that the CEO step down from the board. He refused, and chose to take the whole company down instead.

The reason for problems is not accidental. Lessons were learned long ago. 85% of all problems are directly traceable to top management.

Where were the Board of Directors or stockholders? Or was this a private company where the CEO would rather lose everything rather than be fired?

The stockholders were among the many people who sued. That's one of the reasons the bankruptcy case is still ongoing. Maybe in another four years I'll get the paychecks they owe me.

And the Board of Directors? Their job is to avert such problems - to represent the stockholder's interests. Where were the BoDs - or are they also properly being sued?

I think the board was technically only 3 or 4 people, and at least one of them was an immediate family member of the CEO. It was a public company, but he was the company's founder and had maintained pretty significant control over the years.

Got this from a friend this am.

What Caused Our Economic Crisis?

It gets rather interesting at the 4:40 mark. Just some food for thought.

I am looking at the losses only for today. A snapshot of what happens when a wacko administration fixes an economy by through money at the rich.
Agilent Technology - down 5%
Apple - down 18%
Arch Coal - down 21%
Adobe - down 8%
AIG - down 13%
Applied Materials - down 6%

Most of these have no operations in the financial industry. But again, Deja vue. When the income of the richest was increasing massively AND the average man's income dropped (ie 2% under George Jr), then four years after a stock market meltdown, massive numbers of jobs are lost.

Remember when one was warning of the dangers in what is now called "Mission Accomplished". How many years later did the warning come true? At least four. When another was warning about the massive housing crisis, how many years later did the warning come true? Three years. When the stock market crashed in 1929, how many years later were jobs lost? Four years.

What other warnings were pooh-poohed four years ago by wacko extremist propaganda. This is what happens when a political agenda replaces 'working for America'. The spread sheets are again reporting what actually existed four and more years ago.

Who will prosper? Who do you think will step in to provide an "economy saving" capital? Europeans, Chinese, Japanese, etc. Even if the government bails out Wall Street, well, where does government get that cash? Saudis, Israelis, Russians, French, etc.
The party is over. And what was George Jr back in college? The social chairman - a party planner.

Today, Wachovia, that was once considered a savior of Morgan Stanley, no longer exists. A stock that was selling for $15 a share last week dropped massively every days; is now worth only dimes. In one day, Wachovia Bank dropped 80%. How many others have been lying on their spread sheets? Enron was the warning about how our finance people. Did your stock broker warn you last year? Why not? Those warning to prepare were posted in The Cellar.

Is your broker still saying to hang in there? Was he saying what goes down will rise back up? Is he worried about losing you as a customer - or representing your interests?

Wacko administration????

This is a problem of Congress. If all the demoncrats voted yes it would have passed. Bush already said he would sing it. There is enough of this shit sandwhich that everyone gets a bite, righty tighty and lefty loosey.

Professor of mine today mentioned today that we should watch to see what the hedge funds do tomorrow as a serious indicator of further trouble.

Liberals want to pay my mortgage!!!

Interesting times.

Obama “Deregulation Caused This Crisis” - An Ignorant Claim Or Political Spin?
Posted on September 22, 2008 by mcauleysworld
Obama continues to blame the current financial crisis on “deregulation”. Either Obama knows that claim to be false or he is ignorant of how this crisis evolved:

The path to our current cirisis started with these steps;

http://mcauleysworld.wordpress.com/2...olitical-spin/

Economic disaster averted during the Long Term Capital Management fiasco may have scared commercial banks sufficiently to demand honest fiscal practices from the hedge funds. Bank of America, JP Morgan, and Citigroup were three suspected at risk if hedge funds default. These three currently appear to be the most stable.

Almost one year ago, riskiest equities were identified. Take a gander at eight pages of posts in Sub-prime Bail Out in the first week of November 2007. Listed as problems were companies even in the last (109th) post. What is ongoing today was an obvious and serious problem almost one year ago.

Or again in March 2008 Housing Crisis in Australia .

In Sept 2006, a "Family Income" chart demonstrated one symptom that predicted today's financial meltdown: Has the Bush Doctrine failed?

What is next likely to be harmed by credit market seizures? Hedge funds must be under pressure since the funds are unlikely to have hedged for losses this large and are very dependent on access to credit.

Crash of Wachovia and Washington Mutual occurred so quick without warning. Therefore others are probably as unstable. Furthermore, foreigners are not marching in mass numbers to buy up so many 'discounted' American firms. That implies equity markets must fall further.

Too much accounting has been in the tradition of Enron and Arthur Andersen. Anyone can only assume that other unstable WaMus and Wachovias are out there. Commerce Bank has also been on my suspect list. Major regional banks may next be in line for collapse.

How serious is the problem? If credit markets seize only because the government does not provide $700billion, then capital losses are probably even worse.

What happens next? World financial markets are suddenly surprised by how much America must buy from the world. Therefore America must sell debt at even higher costs to America. Where does the US government get $700billion? If none from Americans, then where? We have yet to see shock when America sells an additional $700billion debt onto world financial markets that will then demand even higher interest rates on a riskier American economy. After all, who wants to buy debt in dollars that will only fall in value?

Why the bailout? Because the only remaining American institution with sufficient credibility to borrow that much from foreigners is the US government.

Who kept saying, "The fundamentals of our economy are sound"? Even the spread sheets are now exposing how 'sound' this economy has been.

There is no Commerce Bank. It's just a brand name now. It was bought by Canadian TD Bank last year.

Oh yes, and today might be a really good time for E-Trade to stop running that stupid "I'm a baby and you just saw me buy stock" ad.

If people don't panic and the stock values decline and you continue to invest at the same rate you should make a killing when the market recovers, which it will.

But babies should not be subject to this level of risk! They should be in funds.

No way, babies can tolerate the highest risk, because they have decades to recover.

I had an epiphany when I heard the bail out failed.

Instead of fear I had disticnt feeling of relief. That sinking feeling wasn't fear of failure. It was the fear of the governments failure to manage our money.

I like the house Republicans insurance idea. I like the idea of more oversight. I like the idea that the mucky mucks at the top will feel what broke is. :) I like that feeling.

So I am wondering if my epiphany is that I am really a die-hard republican (old school )dressed up in Democratic rags.

All the democrats were for years when it was time for some foresighted leadership. This administration certainly didn't make things better,not by a long shot, but to lay this at the foot of this idiot is unfair and untrue. This whole mess started when Clinton was in office and the lenders had quotas to reach on "affordable" housing.

You misunderstand, tw is the good conservative on this one. The shit sandwich has to be eaten. Congress did the right thing.

Well pass me a friggin beer then - I need something to wash it down!

All I know is I just got an email from Bank of America increasing my credit limit.

I heard rumors about Wachovia months ago and pulled my client's money out. I don't think it was exactly without warning....

But I do agree, there are other banking institutions in trouble. And things will get worse, before they get better.

Stormie

Shrewd move, Stormie, but you do realise it was YOU that started the run on Wachovia that brought it down. I hope you're proud of yourself.
;) ;) ;)

I heard 114 banks. :(

I just skimmed all 7 pages of this, so forgive me if I'm repeating anything that was written previously. Maybe the government does have to step in and bail the bastards out, but I soooo agree with Brianna's "off with their heads" policy. The CEO's of these outfits are criminals and should be treated as such. Supposedly, they are paid the big bucks because they have the intelligence and knowledge to run a major corporation. They've run them alright, straight into the ground. I'm wary of government meddling, but this fiasco shows me that someone needs to start importing pit bulls into the offices of the presidents and CEO's of our financial institutions.

My small town used to have two banks. Then overnight, one of the two flapped its wings and vanished off into the darkness. Suddenly, every third or fourth house around here is for sale. The local pharmacy went out of business along with several shops on Main Street. I think we're in for a long, hard winter. :mad:

America's #1 export = DEBT.:(

I'd like to think my letters and emails to my elected officials helped derail the bailout, but that scumbag Maxine Waters voted for the bailout anyway. She's never met a welfare she didn't like.

Shouldn't it be a rule that you have to live in the district you want to be elected to run?

That is one thread. There is also deregulation without transparency, enormous deficit spending, desperation, and criminality. Some hedge fund numbers come out today supposedly the same smarties who created a lot of these bullshit portfolios moved to hedge funds when things started getting shakey.

:blush: Actually, I just moved the excess funds (over $100k) and spread it around a bit. Don't want all the eggs in one basket.

Also, I don't think giving MORE money to the financial institutions who have mismanaged what they already had is the answer. That seems like throwing good money after bad...as the saying goes.

Stopped at the club last night and they had Faux News on. I had to go outside after they found a way to try to blame the whole mess on Obama.

Wh-wh-wh-WHAT? :headshake

Did generations of old feel like their world was ruled by evil and greed, that we were going to hell in a handbasket, and that the end of the world must be nigh? :o

Yes, but that was only because the Pope told 'em so.

Wow thats a new one on me. I hears that there were some people well connected with some lenders who were working with or advising (whatever) Obama. I heard the same of McCain though. I think once you reach a certain point in politics there is so much money and power and and and coming at you that it corrupts even the most well intentioned.

Weeeellll, back in the, in the, uhh, depression, we called it then, not like the depression you get today which is just some kid with no guts in a sulky mood wantin' medicine for free, good for nothing freeloaders, anyway, we knew that we were all just pawns bein' moved about on some giant chessboard, ya see, it was all run by the foreign banks that were run by certain groups which we ain't supposed to say nowadays, and there was an international conspiracy and stuff, and you didn't know who was who or what was what, except that you knew if someone was wearin' pants then they was a man, not like nowadays, and I tell you, the DOW was minus ten thousand, and then it went further down, I remember one time it was minus twelve thousand or so, no twelve million it was, yes thats right, twelve thousand, and all I had to eat for a week was an onion (which I had tied to my belt)...

Some of this feels a bit familiar.

McCain was around for that one too. And was not one of the good guys.

I miss the old onion-belt days. [/SteveBsjb]

Grandpa Simpson! You're home!

thats exactly what I was thinking - and how was that treated thru the media? Boy it sure seems different this time - no?