TranceAddict Forums (www.tranceaddict.com/forums)
- Political Discussion / Debate
-- Official U.S. Bailout Thread
Pages (2): « 1 [2]
Cost of bailouts now exceeds total cost of all major American wars combined:
| quote: |
| According to CRS, all major U.S. wars (including such events as the American Revolution, the War of 1812, the Civil War, the Spanish American War, World War I, World War II, Korea, Vietnam, Iraq and Afghanistan, but not the invasion of Panama or the Kosovo War), cost a total of $7.2 trillion in inflation-adjusted 2008 dollars. According to Bloomberg, the federal government has made commitments worth a total of $8.5 trillion in the bailouts of 2008. That includes actual expenditures as well as loan and asset guarantees. Bianco Research puts the total value of the bailouts at $8.7 trillion. |
I find it curious that the carmakers are asking for 25 billion and getting abused for it, while banks and dodgy lenders are getting money like a kid getting candy at Halloween (and then not lending it on to consumers as readily as people might like).
The Morgan Stanley bonus fund is HALF what the carmakers are asking for. And that's for bonuses!!!
Any bailout to the carmakers needs a lot of strings attached for sure, but the double standard is a bit much given what's at stake.
Sounds like they're trying to break the union by squeezing them right down to the wire.
wow.
http://www.cnbc.com/id/15840232?video=971152629&play=1
Supposedly, TARP is making money.
so, can someone fucking explain to me who is overseeing how money is used and spent in the biggest example of business welfare ever?
like, fuck.
| quote: |
| Originally posted by pkcRAISTLIN so, can someone fucking explain to me who is overseeing how money is used and spent in the biggest example of business welfare ever? like, fuck. |
| quote: |
 NEWS January 15, 2009, 5:00PM EST A New Menace to the Economy: 'Zombie' Debtors Call them "zombie" companies. Many more has-been companies will be feeding off taxpayers, investors, and workers�sapping the lifeblood of healthier rivals By Peter Coy Zombies. Seen one lately? If not, you may soon, because they are about to menace the U.S. economy. In financial lingo, zombies are debtors that have little hope of recovery but manage to avoid being wiped out thanks to support from their lenders or the government. Zombies suck life out of an economy by consuming tax money, capital, and labor that would be better deployed in growing companies and sectors. Meanwhile, by slashing prices to generate sales, zombie companies can drag healthier rivals into insolvency. Sometime in the past few months, zombies went from being a latent risk to a genuine threat�one that is likely to increase in the months ahead. The Bush Administration has already ladled out billions of dollars in assistance to weak banks and automakers. As the economy goes into what may become the worst economic downturn since the Great Depression, the Obama Administration will come under even more pressure to prop up sick financial and nonfinancial companies to save jobs. The debate will center on wounded giants such as Citigroup (C), General Motors (GM), and insurer American International Group (AIG). Other sectors with their hands out include steel, airlines, retail�and homeowners, who may be the scariest zombies of all. Hard choices lie ahead, so it's important to have a sturdy framework for making them. The right approach, say those who have studied the matter, is to prop up a company if its core business is healthy but its financing sources have temporarily shut down. Otherwise, let it go. Postponing the decision by supporting sick and healthy alike will only make the eventual pain greater and reduce growth. "If an institution is poorly managed and does not have a reasonable plan for working out its problems, they ought to go ahead and shoot it," says William M. Isaac, a former Federal Deposit Insurance Corp. chairman who now heads bank consultancy Secura Group. Japan was plagued by zombies during its lost decade of slow growth in the 1990s. Weak Japanese borrowers used the proceeds from new loans to pay interest on old ones�a process called "evergreening" that kept banks from having to acknowledge losses. In the '80s, the U.S. airline industry was pulled down by Eastern Airlines, which was allowed to keep flying (and charging low fares) while in bankruptcy court. That doesn't help anyone. "At some point, you need to wake up and accept the fact that, 'Oops, that's not going to work,' " says St�phane T�ral, an analyst with Infonetics Research who tracked the demise of scads of telecom carriers in the early 2000s. Protecting zombies can stunt long-term growth by blocking what economist Joseph Schumpeter called "creative destruction"�the painful but necessary reallocation of resources from declining companies and sectors to rising ones. That turns out to be crucial. In the U.S. manufacturing and retail sectors, a huge share of productivity gains have come from such reallocation, says economist Steven J. Davis of the University of Chicago Booth School of Business. Case in point: the growth of hyperefficient Wal-Mart (WMT) at the expense of mom-and-pop shops, which were allowed to die. The absence of such reallocation could slow productivity growth. "LEMON SOCIALISM" The problem with the current bailout is that the government may be giving money to companies that don't have a long-term future: zombies. On paper, for example, the Treasury Dept. says it invests Troubled Asset Relief Program (TARP) money only in "healthy banks�banks that are considered viable without government investment" because "they are best positioned to increase the flow of credit in their communities." That's the right idea. In practice, though, the criteria aren't so stringent. Banks like Citigroup still aren't strong enough to lend. "The bailout model is socialism," says R. Christopher Whalen, senior vice-president for consultancy Institutional Risk Analytics. He advocates selling failed institutions in pieces, as was done to resolve the savings and loan crisis in the late '80s and early '90s. In fact, Washington may be moving toward something like that with Citigroup. When a big employer runs into trouble, it's tempting to keep it going at any cost. Economists call this "lemon socialism"�the investment of public money in the worst companies rather than the best. The impulse is misguided, says Yale University economics professor Eduardo M. Engel. "You don't want to protect the jobs," he says. "What you want to protect is workers' income during the transition from one job to another." There's already a powerful and underused weapon against zombies: bankruptcy law. Bankruptcy courts liquidate the weakest companies while allowing the potentially viable ones to extinguish enough of their debts so they can make money again. Even GM, which is staggering now, could emerge as "a new, revitalized company" if it goes through a cleansing bankruptcy reorganization that changes its obligations to dealers, workers, and retirees, says economics professor Edward W. Hill of Cleveland State University. Right now, the biggest zombie problem may lie in housing. Millions of homeowners are juggling mortgages they can't afford to pay alongside other debts: credit cards, auto loans, and so forth. In struggling to keep their heads above water, they're slashing consumer spending, which is harming economic growth. Until 2005, bankruptcy filings would have lowered their consumer debts, freeing up more money for mortgages. But a law passed that year has exacerbated the zombie problem by making it much harder to discharge bad debts. Halfhearted modifications of loan terms haven't helped much. According to a new study by Alan M. White, a Valparaiso University School of Law professor, only one-third of modifications of subprime and near-subprime mortgages in November 2008 involved reductions in the monthly payment, often because late fees got tacked onto principal. As a result, he writes, "many modifications are temporary." That's the zombie condition. Looking ahead, economists are trying to devise ways to make the financial system more resilient and less likely to breed zombies. A group of 16 top financial economists calling itself the Squam Lake Working Group on Financial Regulation is quietly working on a plan it hopes will get the attention of regulators in Washington and other capitals. Kenneth R. French of Dartmouth College, who helped organize the first meeting at New Hampshire's Squam Lake in November, says one goal is to invent a way to shut down or restructure failing institutions with a minimum of collateral damage to other firms and the general economy. Recessions cause great harm, but they can also do some good if they force a needed reallocation of resources toward the most promising sectors. "If we can ride this wave the right way, this is going to be great for the future of the American economy," says Massachusetts Institute of Technology economics professor Daron Acemoglu. Right. Just as long as the zombies don't get in the way. BUSINESS EXCHANGE: READ, SAVE, AND ADD CONTENT ON BW'S NEW WEB 2.0 TOPIC NETWORK Loose Loans During the credit bubble, lenders competed for business by waiving many of the standard terms that force borrowers to stay financially healthy. Without strong loan covenants, zombie borrowers are "underperforming but refuse to die," wrote Louise Bowman in Euromoney's November 2008 issue. Bowman says the lax language in the loans "acts as a life support machine to a terminally ill patient." \To read the article, go to http://bx.businessweek.com/bailout/reference/ |
http://www.reuters.com/article/news...E50I3QQ20090119
Chrysler thinking about using Fiat technology. Gee, I didn't know they were that desperate. Yugo was based on Fiat technology...
| quote: |
| Originally posted by DrUg_Tit0 http://www.reuters.com/article/news...E50I3QQ20090119 Chrysler thinking about using Fiat technology. Gee, I didn't know they were that desperate. Yugo was based on Fiat technology... |
Re: Re: Re: Official U.S. Bailout Thread
| quote: |
| Originally posted by Groundhog Boy Why? Because both allow people to engage in excess risk that everyone should be able to manage, but doesn't? How about Miller-Coors or InBev? I'm sorry, but I've about had it with hearing about evil, predatory banks that lent money to those that asked for it, whether it was for a home or the $20k in credit card debt that they racked up buying HD TVs, PS3s and iPhones (note, Comscore has said that the $25-50K crowd has increased their iPhone contracts by 48% since June). And now it's all the banks' fault? Edited to make sense... |
| quote: |
| Originally posted by pkcRAISTLIN so, can someone fucking explain to me who is overseeing how money is used and spent in the biggest example of business welfare ever? like, fuck. |
I found a paper written by Ben Bernanke about the great depression a while back that gives some interesting insight into what he thinks needs to be done. It's called "The Macroeconomics of the Great Depression: A Comparative Approach"
A big part of it is that he found that countries who left the gold standard earlier did better then those that did not. He points out that this is because they were able to adjust the value of thier currency by printing money.
It's possible that he sees the current situation as quite similar to what happened in the depression and is attempting to avoid deflation through increasing the money supply.
I'm sure there are lots of other considerations that he makes but if you can find the paper it's a good starting point.
| quote: |
| Originally posted by atbell A big part of it is that he found that countries who left the gold standard earlier did better then those that did not. He points out that this is because they were able to adjust the value of thier currency by printing money. It's possible that he sees the current situation as quite similar to what happened in the depression and is attempting to avoid deflation through increasing the money supply. |
I found this article very interesting - it sort of has some relevance to the current situation:
http://news.bbc.co.uk/2/hi/uk_news/magazine/7861397.stm
Banker + gangster = bankster
quote:
It seems timely to resurrect this Americanism from the 1930s - one of many evocative words the United States has contributed to the English language, says Harold Evans.
Americans are pretty good at adding words to the English language. We owe them pin-up girls, highbrows, killjoys, stooges, hobos, drop-outs, shills, bobby-soxers, hijackers, do-gooders and hitchhikers who thumb a ride.
The Americanisms are so much more concise and vivid. Instead of saying "sorry we're late but drivers ahead of us slowed us down when they craned their necks to look at a crash" you can say "we were held up by rubberneckers".
Words pop in and out of our language as social conditions change. The American gangster, which is still with us, has been around as a noun and a reality since 1896 according to my Shorter Oxford, but it seems to have dropped another Americanism from the 1930s and I think now is the time to revive it.
The word is bankster, derived by a marriage of banker and gangster.
It was coined, as far as I can deduce, by an American immigrant, a fiery Sicilian-born lawyer by the name of Ferdinand Pecora. He was the chief counsel to the US Senate Committee on Banking set up in the early 30s to probe the origins of the Crash of 1929.
He exposed quite a lot of the Wall Street practices that Harvard's Professor William Z Ripley had condemned in 1928. The believable Ripley called them - get ready for these Americanisms - "prestidigitation, double-shuffling, honey-fugling, hornswoggling and skullduggery".
The professor had vainly tried to warn President Calvin Coolidge that Wall Street was full of gas and was bound to blow up. To great discomfort all round, Pecora identified Coolidge himself, by then out of office, as one of those who'd been in on the honey-fugling.
The great banking house of JP Morgan had the president on a "preferred list" by which the bank's influential friends were given a chance to buy stock at half price. Shall we say, they made out like bandits?
Today the term bankster perfectly fits Bernard Madoff, whose crooked Ponzi scheme lost $50 billion of what the trade calls OPM - other people's money - invested with him.
Costly rug
But the revelations come thick and fast. People are now struggling for words to describe the latest example of Wall St's money madness. The fabled investment bank Merrill Lynch, run by one John Thain, had so many big zeroes on its balance sheet it would have been liquidated in December but for a merger with the Bank of America.
That was actually a shotgun marriage - in the US vernacular - since the Bank of America was forced to take billions of government money when it learned later that Merrill Lynch was down another $15bn.
Then what? In the few days in December while he was still in charge, Mr Thain reportedly spent nearly $4bn on staff bonuses. That's peanuts on Wall St. In 2007 Mr Thain himself received $83m.
But a week ago, CNBC's Charles Gasparino, in a detailed scoop on the Daily Beast website revealed that during the time Mr Thain was busy cost-cutting, he spent $1.1m doing up his office - $86,000 for a rug, $35,000 for something called a commode on legs.
Readers bayed for blood, posting comments such as: "Oh how I wish this was Revolutionary France and we peasants could storm the offices�"
The anger about the greed that got us into our mess is, in my view, wholly justified. And now we hear that 10 of the big banks that got $148bn from Uncle Sam so they could make loans to get things humming again have actually reduced their loan totals by $46bn.
Mr Thain now is history, having resigned, but the great Bank of America, the biggest in the US and maybe the world is now on the list of banks that may have to be nationalised - a word no red-blooded American ever thought would be uttered in the land of enterprise.
Have money, will lend
The piquancy of all this is that if the term banker is ever to be restored to its former prestige, the public and Wall St might reflect on one highly relevant example of a banker who was not a bankster.
It is the story of Amadeo Peter Giannini, a big man on the side of the little man. When the transcontinental railway started services to California after the line's completion in May 1869, he was among the very first passengers.
He was in the womb of his newlywed mother, 15-year-old Virginia. His father, having made money in the goldfields, had gone back to Italy for her. It is nice to think that as the young immigrants crossed the Rockies, their adventurous spirits somehow crossed the placental barrier.
Amadeo was born on 6 May, 1870. He grew up on a little farm, whose produce his mother and father sold in booming San Francisco. In 1877 when he was six, he saw his father gunned down. His mother moved to the city to buy wholesale from farmers and sell to shops.
Amadeo - or AP as he became known - grew into a tall, strong man, more than able to hold his own in the rough auctions for fruit and veg on the wharfs where traders met the farmers' boats. He helped to build a thriving business.
When he was 31 he sold his share, saying he had no interest in accumulating wealth. "No man owns a fortune," he said. "It owns him." It was the motto of his life.
He'd married and on the death of his father in law, was persuaded to take his vacant place on the board of a little bank in North Beach. He was appalled that they'd not lend money to poor immigrants. The rows in the board room reverberated over North Beach until AP walked out and started a little bank of his own to do that, the Bank of Italy.
From his work on the wharves, he'd become a shrewd judge of character, so he'd cheerfully lend money to pay doctor's bills for delivery of a baby if he judged the couple had integrity.
Phoenix from the rubble
On Wednesday 18 April, 1906, San Francisco was devastated by earthquake and fire. AP rushed to get all his gold and paper money out of danger, hid it under orange crates to conceal it from looters, and stood guard all night in his home.
It must have been a debilitating moment the next day to find his baby bank a mass of charred rubble. The bigger banks, who had vaults too hot to open, had no records and were not lending.
AP instead went down to a wharf close to the smouldering North Beach, flung a plank across two barrels, and with his baritone booming across the desolation, started lending some of his $80,000 to rebuild San Francisco.
He looked for steamship captains he knew, shoved money into their hands, saying "go north and get lumber". AP radiated so much confidence, making a big show of jiggling his little bag of gold, hundreds who'd been hoarding cash and gold banked it with him. North Beach was built faster than any other area.
By 1918 he'd established California's first state-wide banking system. A little local bank in the valley that would have closed in a run after a bad harvest could now keep open by borrowing from the city branch.
He set out to build a nationwide banking system so that distressed areas could be helped by ones that were prospering. Wall St hated him. He beat off their attempts to destroy him. In the Great Depression, he took every opportunity in the New Deal legislation to get California revived in time for the war and the boom that followed.
He did it by putting the community first, himself last. He set up low interest instalment credit plans which enabled thousands to avoid the loan sharks and buy cookers and refrigerators and autos, and he built a whole new electrical industry with his loans.
He financed the Golden Gate bridge, and the Disney movie Snow White and the Seven Dwarfs.
No man could do so much good without being maligned. It was said he wore the mask of populism to create a dangerous instrument of personal power and personal wealth.
The truth is that the man whose life was money had no interest in money. He refused to take increases in pay and spurned every bonus. He banned insider trading. Shortly after retiring in 1945, when he found himself in danger of becoming a millionaire, he set up a foundation and gave it half his personal fortune.
And the little bank for the ordinary man that he founded?
The Bank of America.
| quote: |
| Originally posted by atbell I found a paper written by Ben Bernanke about the great depression a while back that gives some interesting insight into what he thinks needs to be done. It's called "The Macroeconomics of the Great Depression: A Comparative Approach" A big part of it is that he found that countries who left the gold standard earlier did better then those that did not. He points out that this is because they were able to adjust the value of thier currency by printing money. It's possible that he sees the current situation as quite similar to what happened in the depression and is attempting to avoid deflation through increasing the money supply. I'm sure there are lots of other considerations that he makes but if you can find the paper it's a good starting point. |
Powered by: vBulletin
Copyright © 2000-2021, Jelsoft Enterprises Ltd.