Billions of Bailouts: What's it all For??

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Billions of Bailouts: What's it all For??

Postby Ult_Sm86 » Thu Mar 19, 2009 6:02 pm

Okay so the first few links I'm throwing up here are all from the New York Times. I used the NYT because of all the available readymade American journalism, this seems to be the most credible and respectable... and yes even they make mistakes, but I take their word better than the constantly rattling off on missing Babies news sites like Fox/CNN or the seven Tickers going at once networks like MSN or CNBC.

That said:

Here is a sort of timeline of some of the events unfolding recently with the Bailouts that Obama's administration is dealing with along with some of the ass hats who are abusing it.
I realize it's all coming from one source so it appears bias, but I assure you more links with more credible information will be posted in due time.

Until then, I ask that everyone who posts please *read* the discussions before theirs and read the at least the leads of each article (reading's not hard people) before barking at someone else for not agreeing with your idea. You should always have credible information before engaging someone in a friendly debate. Especially money/political related.

Here's an interesting article on the Bank of Japan. Strange happenings all over the world but it's always important to focus on the ones that directly relate to your country. Being Japan and China are huge suppliers of ... well shit everything, it's pretty important to know what they're up to.

Interesting article on Prepaid Credit Cards. These look intriguing.

AIG Is in Deep shit. Find out why here.

How nice of them to only give back half. Asshats.

The first couple Billion didn't work? Here... Have 1 Trillion.

There's more out there and I assure you I will be building--when I have more free time people--the best timeline I can from all available news sources about what has happened here for anyone who still can't wrap their brains around it. Aside from helping other people, I think it'll help me.

It will be up by the end of the week. I think. Until then, feel free to discuss the ludicrous heap of trash that is the leftover of the Bush Administration, Clinton Administration, and Bush Administration.
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Billions of Bailouts: What's it all For??

Postby Ult_Sm86 » Fri Mar 20, 2009 3:15 am

So more on AIG happened.


Here's what's up.

Apparently people in the U.S. Government knew this was coming though if you ask me that's rather irrelevant. The politics shouldn't be so heavily involved in business that's what got us here in the first place, so it's sort of a moot point.

Oh and apparently, when you fuck up, you're expected to Sue to clear your name. Watch AIG writhe in pain.

Sooo...

The House responds with making it hard for Corporate Pirates from giving themselves more booty. They can do it... but at price.
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Billions of Bailouts: What's it all For??

Postby Ult_Sm86 » Mon Mar 30, 2009 6:09 am

Okay so some people are asking why Obama is "shoveling cash at these big CEO's".

Now don't get me wrong I'm not very happy with it either. We only have so much left. I get that. Hell they're changing the price of iTunes!!

WTH!

But at the same time....
we've been digging this hole since ronald reagan! And here's these people, trying to tell us obama is shoveling the money in like he's a) no good at math and b) is just working off guesswork and conjectures as to the likelihood that this will happen! The amount he's lending to them to save their companies to save their economy is a miniscule amount compared to the amount of horse shit that was shoveled for years before by Reagan, Bush Sr., Bush Jr., and Clinton.

The economy has been a rampaging, crack-induced, W.A.S.P. since the mid eighties and we're letting people block President Obama and persecute him at every turn.
Whether you like it or not, he won the damn vote, he beat the God damn opponent, he has the country in his best interest because he WON, so let him do his freakin' job!

However, as much as I love this man, I have always thought government as a whole should stay out of American Economics unless there is an emergency (as we are seeing.) I'm sorry Mr. President, I trust you, but I think this is Too much. I hate him too... but that's a helluva reach.
Keeping in mind that I wish not to contradict myself, I respectfully request the president (who will never read this) keep his sighs on what is important, which is the distribution and use of money, as well as regulation of corporate spendings until we got a system that works.

That and some better gun control in the U.S. cities. :toothy

[Edited on 30/3/09 by Ult_Sm86]
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Billions of Bailouts: What's it all For??

Postby Ult_Sm86 » Sat Apr 04, 2009 2:49 am

An e-Mail I got from Michael Moore!

Michael Moore wrote:


> Friends,
>
> Nothing like it has ever happened. The President of the United States,
the elected representative of the people, has just told the head of
General Motors -- a company that's spent more years at #1 on the
Fortune 500 list than anyone else -- "You're fired!"
>
> I simply can't believe it. This stunning, unprecedented action has left
me speechless for the past two days. I keep saying, "Did Obama REALLY
fire the chairman of General Motors? The wealthiest and most powerful
corporation of the 20th century? Can he do that? Really? Well, damn!
What ELSE can he do?!"
>
> This bold move has sent the heads of corporate America spinning and
spewing pea soup. Obama has issued this edict: The government of, by,
and for the people is in charge here, not big business. John McCain got
it. On the floor of the Senate he asked, "What does this signal send to
other corporations and financial institutions about whether the federal
government will fire them as well?" Senator Bob Corker said it "should
send a chill through all Americans who believe in free enterprise." The
stock market plunged as the masters of the universe asked themselves,
"Am I next?" And they whispered to each other, "What are we going to do
about this Obama?"
>
> Not much, fellows. He has the massive will of the American people
behind him -- and he has been granted permission by us to do what he
sees fit. If you liked this week's all-net 3-pointer, stay tuned.
>
> I write this letter to you in memory of the hundreds of thousands of
workers over the past 25+ years who have been tossed into the trash
heap by General Motors. Many saw their lives ruined for good. They
turned to alcohol or drugs, their marriages fell apart, some took their
own lives. Most moved on, moved out, moved over, moved away. They ended
up working two jobs for half the pay they were getting at GM. And they
cursed the CEO of GM for bringing ruin to their lives.
>
> Not one of them ever thought that one day they would witness the CEO
receive the same treatment. Of course Chairman Wagoner will not have to
sign up for food stamps or be evicted from his home or tell his kids
they'll be going to the community college, not the university. Instead,
he will get a $23 million golden parachute. But the slip in his hands
is still pink, just like the hundreds of thousands that others received
-- except his was issued by US, via the Obama-man. Here's the door,
buster. See ya. Don't wanna be ya.
>
> I began my day today in Washington, D.C. I went to the U.S. Senate and
got into their Finance Committee's hearing on the Wall Street bailout.
The overseers wanted to know how the banks spent the money. And many of
these banks won't tell them. They've taken trillions and nobody knows
where the money went. It certainly didn't go to create jobs, relieve
mortgage holders, or free up loans that people need. It was so shocking
to listen to this, I had to leave before it was over. But it gave me an
idea for the movie I was shooting.
>
> Later, I stopped by the National Archives to stand in line to see the
original copy of our Constitution. I thought about how twenty years ago
this month I was just down the street finishing my first film, a
personal plea to warn the nation about GM and the deadly economy it
ruled. On that March day in 1989 I was broke, having collected the last
of my unemployment checks, relying on help from my friends (Bob and
Siri would take me out to dinner and always pick up the check, the
assistant manager at the movie theater would sneak me in so I could
watch an occasional movie, Laurie and Jack bought an old Steenbeck
(editing) machine for me, John Richard would slip me an unused plane
ticket so I could go home for Christmas, Rod would do anything for me
and drive to Flint whenever I needed something for the film). My late
mother (she would've turned 88 tomorrow if she were still with us) and
my GM autoworker dad told me in the kitchen they wanted to help and
handed me a check for an astounding thousand dollars. I didn't know
they even had a thousand dollars. I refused it, they insisted I take it
-- "No!" -- and then, in that parental voice, told me I was to cash it
so I could finish my movie. I did. And I did.
>
> So on that March day in 1989, as I was driving down Pennsylvania
Avenue, my 9-year-old car just died. I coasted over to the curb, put my
head down on the steering wheel and started to cry. I had no money to
take it in to be repaired, and I certainly had nothing to pay the tow
truck driver. So I got out, screwed the license plates off so I
wouldn't be fined, turned my back and just left it there for good. I
looked over at the building next to me. It said "National Archives."
What better place to donate my dead car, I thought, as I walked the
rest of the way home.
>
> Though it wasn't easy for me, I still never had to suffer what so many
of my friends and neighbors went through, thanks to General Motors and
an economic system rigged against them. I wonder what they must have
all thought when they woke up this Monday morning to read in the
Detroit News or the Detroit Free Press the headlines that Obama had
fired the CEO of GM. Oh -- wait a minute. They couldn't read that.
There was no Free Press or News. Monday was the day that both papers
ended home delivery. It was cancelled (as it will be for four days
every week) because the daily newspapers, like General Motors, like
Detroit, are broke.
>
> I await the President's next superhero move.
>
> Yours,
> Michael Moore
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Billions of Bailouts: What's it all For??

Postby Witchbrew » Sun Apr 12, 2009 1:58 am

Are you sure you want follow the winding way of economics and politics? Everyone on that path seems to end up in Limbo (couldn't resist :) )

You seem to have several issues going at once:
What is happening to the bailout money?
The level of government involvement in bailed-out firms
How did the economy get into a mess (Some of the posts hint at this one so I included it)

All are interesting questions - any particular one you prefer or are you wanting to discuss all three?
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Billions of Bailouts: What's it all For??

Postby Ult_Sm86 » Sun Apr 12, 2009 4:36 am

Any and all. This is about the situation. How we got here, what's going on with it, and how we should've prevented it. Try not to spend too much time on the what-ifs though.
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How did we get here?

Postby Witchbrew » Sun Apr 12, 2009 11:43 pm

There's plenty of what-if's on the financial sites (and virtually all the news services), so I'll leave that to them. Here's a pretty good video http://vimeo.com/3261363 (Use a right click on this one) that talks about the market crisis. There's also a power point presentation that explains it in more colorful language (search on subprime mortgage crisis and then look for stick figures). Since the language is strong, I didn't feel comfortable linking to it. There are also numerous sites that discuss the crisis.

My own opinion is that there were many things that contributed to the mess - some big and some small. The relaxing of housing standards under the Clinton Administration, the lax enforcement of regulations under the Bush Administration, poor mortgage underwriting (easy to do when you are passing the risk on to someone else), inaccurate ratings by the credit rating agencies, changes in accounting rules, changes in trading rules, changes in government regulations, poor risk management (both in modeling and implementation), negative press, etc. Some of these clearly played a much bigger role than others. Ultimately, it boiled down to opportunity, greed and fear. Next thing ya' know - :bamf - the market was gone. The credit markets froze and even good firms had trouble getting the cash they needed.

Many businesses use short-term loans to cover the time between paying suppliers and getting the money from customers. When the short-term credit markets freeze, they cannot access this cash. The government wanted to unfreeze the credit markets - to get cash flowing again - so businesses could get the loans they needed and prevent more failures. For political reasons, they also want to keep homeowners in their homes. Enter the bailout.

I'll include a separate post later on how the money is being used.

How to prevent financial crises? I don't think you can. First, there are financial (business) cycles: booms and busts. Some are much larger than others. Second, there are always new securities, new methods, new loopholes that someone will exploit (opportunity and greed again). You can't perfectly regulate everything, particularly in free markets. Third, there will always be market bubbles. Real estate is a particularly odious one since it hits so close to home (pardon the pun)!

As for firing the CEO of GM, the government also fired the CEO of AIG when they took over that mess.

I don't know if anyone else is interested in this, but hopefully it will address some of your questions, Ult_Sm86 :)
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Billions of Bailouts: What's it all For??

Postby Ult_Sm86 » Tue Apr 14, 2009 2:46 am

Thanks, though most of my questions were not so much mine as general ones that I figured everyone was asking.

And I agree the market is unpredictable, but when I said "how could this have been prevented" I meant, how *COULD* this specific instance have been avoided.

Thank you for your knowledge and your time to actually participate in this thread. Glad someone finally did.
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Billions of Bailouts: What's it all For??

Postby Witchbrew » Tue Apr 14, 2009 5:06 am

I'm glad to participate in the thread.

How could this instance have been avoided? Hmmm.
First, strong business procedures when underwriting loans: documented income and employment at a minimum. The banks that did this are the ones that held up (Wells Fargo is one example). Even if someone else finds the business (mortgage broker), the banks still should have assessed this risk.

Second, proper enforcement of existing regulations and oversight of the banking industry. Regulations are no good unless they are enforced. Oversight (audits, credit ratings) are critical in evaluating firms and their securities. The hard questions need to be asked and answered. And if problems are found? They need to be reported, penalized
(if necessary) and corrected.

Third, better risk management. It's painfully clear that some folks had no idea of the risk on their securities. The more complicated the security, the more the risks need to be carefully laid out and explained. If you use debt to buy a security, you add risk. If you mismatch maturities (1 year debt funding 30 year assets), you add risk.

Fourth, the press. I believe in free speech. I believe in the freedom of the press. I just wish the press knew when to stop. I kept hoping Britney Spears (or anyone else) would do something to distract them but no luck. Day after day of negative press really didn't help. People panicked and sold when it wasn't necessary. No financial institution (bank, mutual fund, investment house) can withstand a run and panics produce runs. IMO, they should have shut the market down for a few days to give it a chance to "catch its breath". I don't know if it would work but it could have given everyone a chance to re-evaluate.

Would keeping investment and commercial banking separate have stopped the crisis? Hard to say on this one. The problem with combining them is that if the investment bank fails, it can take out the commercial bank as well. This is essentially what happened to AIG. The investments unit was in the dumper but the insurance units were fine.

As for the US auto industry? As soon as the hand outs began, everyone was there (as expected). The auto industry. Insurers. Ugh. :( For years, they produced large vehicles of questionable quality. It's hard to get reputation back once it's lost.
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Billions of Bailouts: What's it all For??

Postby Bamfing_Bob » Tue Apr 14, 2009 6:49 am

I'm not the biggest Michael Moore fan, but I must say, I liked the letter.
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Billions of Bailouts: What's it all For??

Postby Ult_Sm86 » Tue Apr 14, 2009 5:05 pm

Most people believe his "liberal views", or at least the way he expresses them, makes him crass and unintelligent. When in fact, the man is actually very intelligent and tends to try to think for what is best for America instead of what is best for singular parties.

I do agree his methods can be rather tactless, but that's not the discussion here.

He makes some very interesting points of ethical questioning.
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Billions of Bailouts: What's it all For??

Postby Witchbrew » Wed Apr 15, 2009 3:20 am

Interesting news - Goldman wants to sell stock to pay off the bailout money they received. Why the big push? They don't like the government limits on their pay. They even discussed paying off enough to get around the bonus limits.

There's also evidence that some bailed out banks are increasing interest rates, fees and engaging in short-term, high interest rate loans. The purpose of TARP is to get credit moving again. Higher rates and fees won't do that. There are complaints that AIG has used bailout money to undercut the competition and take market share. Makes you wonder where the money is going. Michael Moore will have plenty of ideas for the movie he's shooting.
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Billions of Bailouts: What's it all For??

Postby Ult_Sm86 » Tue Jun 09, 2009 2:15 pm

For [url=http://www.mail.com/Article.aspx?articlepath=APNews\General-Business\20090609\US-TARP-Winners-and-Losers.xml&cat=money&subcat=business&pageid=1]ye of little faith[/url]
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