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  1. #1

    The Failing Economy

    I.O.U.S.A.

    "The Worst I've Ever Seen"


    Worse than Black Monday?
    This isn't like Y2K, when if computers were still working at 1am, you knew that they'd survived the test. If AIG hasn't collapsed after New York markets open and the broader stock market is down less than 5%, all that will mean is that there hasn't been a systemic meltdown yet. It's going to take a long time to liquidate Lehman and unwind all of its positions, and nobody has a clue how that's going to play out. Specifically, there might well be a levered-to-the-eyeballs multi-billion-dollar hedge fund or two with enormous Lehman Brothers counterparty risk, and if they start defaulting on their derivatives contracts, delayed contagion could spread very quickly indeed.
    It's not just hedge funds, either, which could end up being the vector by which crisis is spread. It could be a big insurance company, or it could be a series of failures of small and medium-sized banks. Or it could come out of left field entirely: the "shadow banking system" is now so big and so global that for all we know a series of bad decisions by a mid-level technocrat in Kazakhstan could precipitate cataclysm across America and the world.


  2. #2
    Grand Slam Champion jjnow's Avatar
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    Re: The Failing Economy

    I was just reading up on this.

    I'd like to say I'm alarmed but I think at this point most of us expect the worst.
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  3. #3
    Grand Slam Champion owendonovan's Avatar
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    Re: The Failing Economy

    So most of MY tax money is going to bail out fannie, freddie, bears & stern, and the Iraq war while bridges collapse, teachers have to buy supplies for their students, and I get bupkis out this ridiculous mess our government made.

  4. #4
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    Re: The Failing Economy

    And now the bargain hunters will swoop in tomorrow a.m. Any guesses on how much the market rises tomorrow?
    With Lucas Pouille at Indian Wells (2018)

  5. #5

    Re: The Failing Economy

    From Paul Krugman's NYT column today.
    To understand the problem, you need to know that the old world of banking, in which institutions housed in big marble buildings accepted deposits and lent the money out to long-term clients, has largely vanished, replaced by what is widely called the “shadow banking system.” Depository banks, the guys in the marble buildings, now play only a minor role in channeling funds from savers to borrowers; most of the business of finance is carried out through complex deals arranged by “nondepository” institutions, institutions like the late lamented Bear Stearns — and Lehman.
    (...)
    ...all too many investors had no idea how exposed they were.
    (...)
    And here’s the thing: The defenses set up to prevent a return of... bank runs, mainly deposit insurance and access to credit lines with the Federal Reserve, only protect the guys in the marble buildings, who aren’t at the heart of the current crisis. That creates the real possibility that 2008 could be 1931 revisited.
    Scary stuff. So some computer geeks got to play monopoly with real money?

    It should also be mentioned that former Senator Phil Gramm pushed the law through that made this all possible back in 2000.

    http://www.nytimes.com/2008/09/15/op...gewanted=print
    “No matter how cynical I get, I just can't keep up.” – Lily Tomlin.




  6. #6

    Re: The Failing Economy

    Quote Originally Posted by jjnow View Post
    I was just reading up on this.

    I'd like to say I'm alarmed but I think at this point most of us expect the worst.
    I think the situation is alarming.


  7. #7

    Re: The Failing Economy

    Quote Originally Posted by Moose View Post
    And now the bargain hunters will swoop in tomorrow a.m. Any guesses on how much the market rises tomorrow?

    2017 & 2018 Australian Open Champions

  8. #8

    Re: The Failing Economy

    Quote Originally Posted by Moose View Post
    And now the bargain hunters will swoop in tomorrow a.m. Any guesses on how much the market rises tomorrow?
    I think it's in a lot of people's interests that what you say appears to happen. I have never seen so many "experts" so pessimistic about what is coming.
    “No matter how cynical I get, I just can't keep up.” – Lily Tomlin.




  9. #9

    Re: The Failing Economy

    Quote Originally Posted by Moose View Post
    And now the bargain hunters will swoop in tomorrow a.m. Any guesses on how much the market rises tomorrow?
    It will be interesting to see what will happen. I think fed will step in cut fed funds rate at least 50bps and this might stop losses. I don't see big gains tomorrow at all. Maybe Dow will rise about 50 points.
    In the mean time RIP Lehman Br. And Merrill Lynch. Wamu could be next.

  10. #10

    Re: The Failing Economy

    NEW YORK, NY (Sept. 15, 2008) Director Spike Lee ignited a firestorm of media coverage in the European press over the weekend with remarks stating that American President George Bush “has succeeded in doing what Osama Bin Laden could not: Destroying Wall Street.”

    Lee’s remarks came in response to news over the weekend that Wall Street investment bank Lehman Bros. would be forced to declare bankruptcy, and that rival Merrill Lynch was so weak that it was forced to sell itself to Bank of America at fire sale prices.

    The American government was forced to take over mortgage giant Fannie Mae the previous weekend, and subsidized a costly takeover of Wall Street giant Bear Stearns earlier this year. Earlier today, the U.S. Government asked Wall Street giants Goldman Sachs and JP Morgan Chase to lead a $75 billion emergency funding package for AIG to keep the embattled American insurance giant afloat.

    “Through its almost pathological aversion to any form of regulation of the financial markets whatsoever – even the most mildest and rational -- the Bush Administration has allowed what was previously one of America’s safest financial investments, the American home mortgage, to be turned into a weapon of mass destruction against Wall Street,” said Lee, who been headlining the 10-day long Deauville American Film Film Festival held this past week in France.

    “Anyone still searching for George Bush’s famously missing WMD need only look at the Republican administration’s reckless failure to regulate the American home mortgage industry.”

    http://www.huliq.com/3277/68477/spik...25E2%2580%259D


  11. #11

    Re: The Failing Economy

    Bob Herbert of the NY Times is saying that McCain/Palin are planning to deregulate the health insurance industry.

    http://www.nytimes.com/2008/09/16/op...on&oref=slogin

    A study coming out Tuesday from scholars at Columbia, Harvard, Purdue and Michigan projects that 20 million Americans who have employment-based health insurance would lose it under the McCain plan.
    There is nothing secret about Senator McCain’s far-reaching proposals, but they haven’t gotten much attention because the chatter in this campaign has mostly been about nonsense — lipstick, celebrities and “Drill, baby, drill!”

    For starters, the McCain health plan would treat employer-paid health benefits as income that employees would have to pay taxes on.

    “It means your employer is going to have to make an estimate on how much the employer is paying for health insurance on your behalf, and you are going to have to pay taxes on that money,” said Sherry Glied, an economist who chairs the Department of Health Policy and Management at Columbia University’s Mailman School of Public Health.
    In my industry the unions have fought hard to keep the company paying for health insurance for it's members.
    “No matter how cynical I get, I just can't keep up.” – Lily Tomlin.




  12. #12
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    Re: The Failing Economy

    Quote Originally Posted by Ti-Amie View Post
    Bob Herbert of the NY Times is saying that McCain/Palin are planning to deregulate the health insurance industry.

    http://www.nytimes.com/2008/09/16/op...on&oref=slogin


    In my industry the unions have fought hard to keep the company paying for health insurance for it's members.
    There's a tax return benefit involved, but this is going to leave a lot of people without health benefits and tempt those who get them not to use them. Scary.


  13. #13
    Grand Slam Champion missinandre's Avatar
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    Re: The Failing Economy

    Quote Originally Posted by Ti-Amie View Post
    Bob Herbert of the NY Times is saying that McCain/Palin are planning to deregulate the health insurance industry.

    http://www.nytimes.com/2008/09/16/op...on&oref=slogin



    In my industry the unions have fought hard to keep the company paying for health insurance for it's members.

    This is....horrible news to wake up to. Praise God we have government insurance that takes care of everything including prescriptions....This is NOT good IMO.....
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  14. #14

    Re: The Failing Economy

    Terrifying.


  15. #15

    Re: The Failing Economy

    Found this on a website I check into from time to time. At this point we need all the information we can get. Anyone ever heard of this group before?

    http://smirkingchimp.com/print/17180/
    Executive Order 12631–Working Group on Financial Markets
    Section 1. Establishment. (a) There is hereby established a Working Group on Financial Markets (Working Group). The Working Group shall be composed of:
    (1) the Secretary of the Treasury, or his designee;
    (2) the Chairman of the Board of Governors of the Federal Reserve System, or his designee;
    (3) the Chairman of the Securities and Exchange Commission, or his designee; and
    (4) the Chairman of the Commodity Futures Trading Commission, or her designee.
    (b) The Secretary of the Treasury, or his designee, shall be the Chairman of the Working Group.
    Sec. 2. Purposes and Functions. (a) Recognizing the goals of enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation's financial markets and maintaining investor confidence, the Working Group shall identify and consider:
    (1) the major issues raised by the numerous studies on the events in the financial markets surrounding October 19, 1987, and any of those recommendations that have the potential to achieve the goals noted above; and
    (2) the actions, including governmental actions under existing laws and regulations (such as policy coordination and contingency planning), that are appropriate to carry out these recommendations.
    (b) The Working Group shall consult, as appropriate, with representatives of the various exchanges, clearinghouses, self-regulatory bodies, and with major market participants to determine private sector solutions wherever possible.
    (c) The Working Group shall report to the President initially within 60 days (and periodically thereafter) on its progress and, if appropriate, its views on any recommended legislative changes.
    Sec. 3. Administration. (a) The heads of Executive departments, agencies, and independent instrumentalities shall, to the extent permitted by law, provide the Working Group such information as it may require for the purpose of carrying out this Order.
    (b) Members of the Working Group shall serve without additional compensation for their work on the Working Group.
    (c) To the extent permitted by law and subject to the availability of funds therefore, the Department of the Treasury shall provide the Working Group with such administrative and support services as may be necessary for the performance of its functions."
    In actual fact, this secret branch of government has a sophisticated war room using every state of the art technology to monitor markets worldwide. It has emergency powers. It doesn't keep minutes. There is no freedom of information access to its deliberations. There are l47,000 entries in Google on this powerful body, but I could only access l0.
    “No matter how cynical I get, I just can't keep up.” – Lily Tomlin.




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