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US Economy in CRISIS! (pg. 12)
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| DigiNut |
| quote: | Originally posted by Skipper
Your post that I responded to came off as saying that this government bailout is meant only to appease wall street and it's not. |
Don't be silly - I never use language like that. That's why I qualified it with "in your own words" (not yours personally, obviously...)
That post was an expression of disbelief that the same people who think that both the U.S. Government and Corporate America are always out to screw us suddenly see a bigger picture - at precisely the time when the picture isn't that big.
I don't say these things. I just thought that for once I'd actually be on the side of the Left. Apparently not.
| quote: | Originally posted by UmmiE
:stongue: :stongue: Best reply in the whole thread. |
:stongue: :stongue: Worst reply in the whole thread.
| quote: | Originally posted by Skipper
North America is not the best at making cars, so why on earth should we try? |
I don't know, seems like Canada's actually doing pretty well here.
Outsourcing is fine if you're outsourcing an operation. Outsourcing decisions - your core business - is usually a bad idea. Outsourcing creative development is almost always a disaster. |
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| Skipper |
| quote: | Originally posted by DigiNut
[FONT=Tahoma][COLOR=#99CCEE]I don't know, seems like Canada's actually doing pretty well here.
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That sure isn't because of the auto industry though. |
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| tonybologna |
Paulson and his cronies on WAll st currenty find themselves in a difficult situation- they are currently saddled with worthless derivative paper. Copied from yahoo finance:
His buddies on Wall Street that are up to their ears in what amounts to insurance contracts against mortgage defaults they have no lien on, that what is happening is a transfer of wealth to make good the cooked books of institutions that call a worthless contract an asset on their books and individuals who made bets they’d never have to pay out for the defaults they insured against. It behooves everybody in Congress to well learn just what a derivative is, how it’s merely a contract, creating out of nothing, these investment bankers may as well have been printing their own money, contracts with no real value, drafted by speculators who risked they’d never have to pay out for insuring home loans or other financial instruments they have no real interest in.
I can tell you right now Pauls_n and the cronies don’t want people to understand these horrid, Ponzi scheme things they’re calling assets are worthless paper created by speculators who now can’t make good on the defaults or sell these worthless derivative instruments to anybody. The emperor has no clothes, and this is why they want a quick bailout, with no strings attached, to keep Wall Street crooks from going to jail for cooked books and to try and keep the house of cards, an entire system based on no equity, in anything, alive. As somebody said, “It’s the derivatives, stupid!” I challenge Pauls_n and his ilk to, in the sunlight, show everybody what he plans to buy with that $700B. |
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| The Ear |
| quote: | Originally posted by tonybologna
Paulson and his cronies on WAll st currenty find themselves in a difficult situation- they are currently saddled with worthless derivative paper. Copied from yahoo finance:
His buddies on Wall Street that are up to their ears in what amounts to insurance contracts against mortgage defaults they have no lien on, that what is happening is a transfer of wealth to make good the cooked books of institutions that call a worthless contract an asset on their books and individuals who made bets they’d never have to pay out for the defaults they insured against. It behooves everybody in Congress to well learn just what a derivative is, how it’s merely a contract, creating out of nothing, these investment bankers may as well have been printing their own money, contracts with no real value, drafted by speculators who risked they’d never have to pay out for insuring home loans or other financial instruments they have no real interest in.
I can tell you right now Pauls_n and the cronies don’t want people to understand these horrid, Ponzi scheme things they’re calling assets are worthless paper created by speculators who now can’t make good on the defaults or sell these worthless derivative instruments to anybody. The emperor has no clothes, and this is why they want a quick bailout, with no strings attached, to keep Wall Street crooks from going to jail for cooked books and to try and keep the house of cards, an entire system based on no equity, in anything, alive. As somebody said, “It’s the derivatives, stupid!” I challenge Pauls_n and his ilk to, in the sunlight, show everybody what he plans to buy with that $700B. |
^5
Good find. |
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| Abercrombie |
Best pic taken yesterday;
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| misterpink |
| quote: | Originally posted by slingshot
Or a combination of over-extended cheap money, lax lending standards, securitization gone mad, flawed risk-assessment models, leverage being pushed pass it's sustainable limits, an unregulated $45 trillion credit default swap market, falling house prices....and so on and so forth.
Or it could be outsourcing.... |
All those symptoms you mentioned are, in my opinion, a result of outsourcing. Pyramids only work with a strong foundation. America is a pyramid, 90% of wealth in 10% percent of population, if that. |
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| DigiNut |
| quote: | Originally posted by misterpink
All those symptoms you mentioned are, in my opinion, a result of outsourcing. |
Ridiculous.
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The derivatives post above was spot on, but keep in mind that these are essentially sanctioned by the SEC, which makes the bailout idea even more insulting (yes it's okay for you to cook the books, and if you ruin the company as a result, don't worry, we'll just give you more money!). |
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| VDub |
Senate just voted the amended bailout in...
Now it goes off to the House of Rep's for final approval... |
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| The Highroller |
| quote: |
Wall St. Points to Disclosure As Issue
Accounting Rule Cited in Turmoil
By Carrie Johnson
Washington Post Staff Writer
Tuesday, September 23, 2008; D01
Wall Street executives and lobbyists say they know what helped push the nation's largest financial institutions over the edge in recent months. The culprit, they say, is accounting.
The banks are making their case now in the hopes they can persuade securities regulators and lawmakers to temporarily suspend or roll back an accounting measure that took effect late last year as the credit crisis bloomed.
At issue is a provision that requires companies to disclose more information about the value of their assets, including how much they could fetch on the open market. The accounting standard, known as fair value or mark to market, has been cited as a contributing factor in the collapses of American International Group, Freddie Mac and Lehman Brothers.
There's only one problem, according to regulators and accounting analysts: The provision does not impose new duties on companies but merely exposes bum mortgage bets, making it a convenient scapegoat during market unrest.
"It's easy to blame accounting because it doesn't fight back," said Jack Ciesielski, author of the Analyst's Accounting Observer, a financial newsletter. "Now that there's somebody out there putting some light on the financials, it's shoot the messenger."
Lynn E. Turner, a former SEC chief accountant, said he remembered fielding questions about the accounting provision six months ago from lawmakers on Capitol Hill.
"What the banks are telling everyone is that the accounting has caused the problem," Turner said. "The only thing fair-value accounting did is force you to tell investors you made a bunch of very bad loans."
The standard, which took hold last November, did not apply to any major new classes of investments. But it did require companies to provide investors with more information about how they estimate the value of assets, such as credit card receivables and mortgage loans. Each quarter, companies must affix a price tag to those securities and report it in their financial statements, even if they do not plan to unload them right away.
Under normal circumstances, finding a buyer for a particular asset or estimating its price on the open market is rarely a challenge. In an unusually tight credit environment, however, estimating the fair value of assets grew challenging -- especially as trading partners backed away from risks associated with opaque investments such as tranches of mortgage-backed loans.
In many cases, the price tags dipped to artificially low levels, forcing banks and insurers to take large write-downs and raise capital to shore up their balance sheets, even when they did not intend to sell the assets anytime soon. Critics say the practice launched a desperate cycle from which some companies did not recover.
Supporters of fair-value accounting acknowledge that it can lead to low valuations but say it remains the best way to share information with investors.
"It's intended to be more or less for orderly markets," said Dennis R. Beresford, an accounting professor at the University of Georgia. "But we don't have orderly markets these days. It's not so much that mark to market has people complaining, but marking to a particular market. Today it's more kind of fire-sale prices."
AIG, the subject of an $85 billion federal intervention earlier this month, faced intense pressure to post more collateral with trading partners and lenders who raised questions about the value of investments the insurance giant held. The trading partners were also concerned about credit protection that AIG had sold to others in the form of complex instruments known as credit default swaps. Martin Sullivan, then chief executive, decried fair-value accounting in a February conference call with investors and called for regulators to make changes after AIG took an $11 billion write-down this year. Joe Norton, a spokesman for AIG, declined to comment yesterday.
As another example of recent accounting challenges, analysts cite Merrill Lynch's sale of $30.6 billion of collateralized debt obligations, or pools of mortgage-linked assets, to the investment company Lone Star Funds for only 22 cents on the dollar in July. Jessica Oppenheim, a spokeswoman for Merrill, which this month agreed to be purchased by Bank of America, declined to comment.
Advocates for leading financial institutions, including the Financial Services Roundtable and the American Bankers Association, have been raising the issue with government officials in Washington and New York for months. Arizona Sen. John McCain, the GOP presidential candidate, mentioned fair-value accounting as a problem in a recent stump speech.
Lobbyists have been seeking temporary relief from the accounting measure, which they say establishes bargain-basement prices for assets that would be valued far higher during more normal trading conditions. The events of last week raised fresh concerns among industry executives who fear that investments sold to the government as part of the $700 billion bailout plan will set a bargain-basement precedent for the rest of the market.
Banks also have been fighting their auditors, some of which have reasoned that downmarket conditions have persisted for so long that assets are no longer "temporarily impaired" but now require write-downs and capital infusions. Banking trade association officials are scheduled to meet with SEC regulators this week to discuss the issue, which could prompt some banks to attract new capital to meet regulatory requirements.
"The accounting rules and their implementation have made this crisis much, much worse than it needed to be," said Ed Yingling, president of the bankers' association. "Instead of measuring the flame, they're pouring fuel on the fire."
The odds of a wholesale regulatory reversal in the near term, however, are slim, according to two sources briefed on the process, because a shift away from fair-value accounting would only intensify trouble with pricing complex assets in an unruly market. The sources spoke on condition of anonymity because they were not authorized to speak publicly about the matter.
"It is extremely unlikely they are going to back off of market-value accounting in the midst of a crisis," said a financial services policy expert with long government experience. "When things stabilize, I guarantee you that you're going to see a revised procedure."
J. Edward Ketz, an accounting professor at Pennsylvania State University, says he "doesn't buy" the argument that fair-value accounting is a root cause of the problems. Executives never complained about mark-to-market accounting standards when they helped banks post huge gains on derivative investments during the economic boom, or when fair-value accounting for stock options produced tax benefits, Ketz said.
"If anything, I think that market-value accounting has helped to bring the problems to a head earlier and with less damage, than if market-value accounting hadn't been applied," said Charles W. Mulford, an accounting expert at the Georgia Institute of Technology.
View all comments that have been posted about this article.
http://www.washingtonpost.com/wp-dy...2202688_pf.html |
lol @ Wall St. blaming fair value accounting for this problem. We can thank fair value accounting for exposing these bankers' -ups sooner. Without it, who knows how long these toxic assets would have gone under the radar for.
I didn't see any bankers complaining about fair value accounting when they were rolling around in money because of it in good economic times... |
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| Orko |
The bail out passes!
Topes loose! Topes loose! |
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| The Ear |
There is certainly a good bit of phuckery afoot folks.
That said, here's a Q&A article from the FP w/ Prem Watsa, Chair of Fairfax Financial Holdings. This company has been rocking through the whole storm, so I was waiting for this guy to speak for a while.
There's a good chunk of doom & gloom to it, but there's also a great deal of sound strategy laid out in his answers.
Enjoy.
Link |
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| Skipper |
| quote: | Originally posted by Orko
The bail out passes!
Topes loose! Topes loose! |
It passed the Senate - there's another vote tomorrow. |
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