sounds like a precursor to the Shock Doctrine where one takes advantage of a crisis to twist and privatize even further or put some unpopular corporate driven agenda into place.
We have people like Glenn Beck busy trying to claim the new deal is some god awful thing (why is this guy on the air, he has zero background, I mean less than any commenter on this site! in economics)
But we do not have anyone offering a comprehensive new deal plan, at least no one running for President.
I think one of the key elements to expose are taxes, deficits versus how social programs if done right and face it we have done wrong benefit the economy is in order.
People do not know what to demand because they do not understand the interactions of all of this. They just know that the government taxes them, then does whatever lobbyists wants. They never see any real benefit. Take tax incentives to keep jobs or grow jobs in some state by companies. It's astounding but if one looks at the stats, often that company never actually increases jobs. No accountability, it's take the money and run.
Is what I'm thinking. I'm concerned wall street is making these ponzi scheme implosions main streets problems. With the dot con bubble, so many people through bad advice from corrupt brokers put there retirement money into worthless dot com and tech stocks and then it hit the entire stock market. The Dot Con was not contained and that's because it wasn't isolated to those companies. We had Citigroup, Goldman Sachs, Arthur Anderson and so on all in on the scam.
Then, to me, they simply turned to housing as the new poker chip. So, here we are, over $900B and counting on racking up debt, never mind the effect overall on the stock market and that does affect jobs and affects retirements...since of course main street had their traditional pensions denied, replaced with 401ks.
But, I want to see these super rich people who get whatever they want in Congress to pay. I'm in a Robin Hood mood.
Trading bad debt like baseball cards and here comes the last one holding and seemingly the last one holding is us!
I don't know about AIG frankly but considering Lehman was denied purchase, declared bankruptcy and those very assets were immediately purchased, assuredly at a much lower price....
and if oil speculators get burnt, well not will it affect main street but more why should it affect main street?
The thought of collapse first came to my mind when the Cyborg in Chief (VPUSA) told then Treasury Secretary O'Neill "Deficits don't matter." Anyone understanding Adam Smith's "Money Price of Gold" did what I did in 2003: increased allocation of precious metals to 10 percent. That allocation is still in place despite recent drops in price.
In the late 90's, while consulting for Merrill Lynch and the CMA accounts, I kept noticing how everything done was some kind of trespass on Glass Steagull (Depression Era separation of Banks and Brokers). A manager told me "Oh, we just thumb our noses at Glass Steagull." They still are thumbing away over at Merrill and I would like to ask how that is working out for them in the last few years.
When the same manager asked if I would like to join the Merrill team,
I politely refused.
When insurers go bust, other insurers take over their policies, claims, customers. What Poulson fears is having a process that exposes the degree of fraud and speculation of AIG and the rest financial America. AIG could have been split up after a Chapter 11 wrote down values of worthless debts.
We the taxpayers will have to pay for the ridiculous speculation of AIG.
How many more AIGs are out there? How big is this? Eventually, the U.S. Treasury runs short, there are dollar runs and real panic if they keep this up.
I am concerned about it for the above mentioned reasons but also the more practical reasons that because of higher transport costs compnies are now thinking twice about offshoring, and some folks are finally getting serious about alternative energies
I agree, the precipitous decline, certainly the last $10 in Oil, is probably forced liquidation of some sort. Some hedge fund, investment bank, pension fund, whatever, and it's probably plural, has blown up.
[T]he cogent assumption is not that a collapse of AIG wouldn't spread; the cogent assumption is that even if it did, the 'horror' of the collapse that everyone is saying we should fear would simply NOT BE ALL THAT HORRIBLE. That is to say, if we had enlightened people running our federal government, the 'horror' would not be all that bad for the Average American and it would be over so quickly, people would wonder what the big deal had been that everyone had been so worried about.
Let's go through this a step at a time... How would the Average American be hurt by a complete collapse of the financial sector of the economy? The answer is that he/she would be hurting only if aggregate demand were drop as a consequence of banks lending less money and businesses spending less money. Without intervention by Congress, businesses that are too heavily leveraged would go out of business and many people would lose their jobs. But if the federal government were to increase its spending enough (by taxing the rich and spending that money on infrastructure & human capital) aggregate demand could not only be maintained, we could also easily increase AD if that is what we wanted to do.
To maintain aggregate demand at the levels we desire, it might be desirable for Congress to create taxpayer-owned banks that would buy up the assests of failed private banks at fire-sale prices, fully capitalize them with public funds, and then provide whatever loanable funds might be desired by borrowers. If loan demand is inadequate to maintain aggregate spending at the desired level, then Congress can simply spend more money on public investment.
So what's the problem? What's the horror? The evil geniuses who created our private financial markets would suffer massive losses because they did not prepare themselves for excessive risk. They would lose Big Time, as they should. Within a month of two after such institutions fail, the government could be replacing them with publicly owned entities that have no reservations whatsoever about lending to would-be borrowers.
It would all be over within 6 months and very few people would be unemployed while competing firms buy up the assets of failed firms. As long as demand is strong, everyone would be working and pumping money into the economy at the same time that the few remaining players in the privately-owned financial sector are finding new ways to make a living while competing with The Taxpayer's Bank (one that is not interested in maximizing profits while taking on risks that everyone else must pay for, but only in serving the public interest) and which writes the rules that they must abide by.
(If a reminder is necessary: the Great Depression continued on as long as it did for only one reason: the Federal Government did not spend enough money to eliminate unemployment until World War II began and then unemployment dried up almost over night. Roosevelt's Congress did not authorize enough spending because too many members of the opposition and of the banking community warned that the consequences of 'inflating' the economy would be disastrous. Too bad they listened. Millions of people suffered terribly for no good reason.)
So help me out.... What is this horror that you fear that justifies throwing more billions of dollars at rich people?
____________________
As I diaried yesterday, despite some signs of "contagion", Wall Street's black plague has still not really infected Main Street. Not that Main Street is doing well, but unless you got caught up in the housing bubble, your primary complaint this year has been inflation -- brought about by soaring Oil and food prices, shortly to crash. Take away that, and Main Street ain't going down the tubes just yet. In fact, Joe UltraLight Sixpack gets a bit of a respite.
Wall Street can make these problems Main Street's problems only if We the People allow it. There is a High Political decision to be made shortly, about whether government of the financiers, by the financiers, and for the financiers shall continue; or whether it shall be repudiated and an new New Deal put in its place.
If Americans insist on a new New Deal, and insist on the concrete steps to make it so, there is no reason the sewers can't be sanitized and the black plague kept from decimating Main Street.
So after they declare bankruptcy Barkleys swoops in and buys the U.S. assets.
What's wrong with this picture? Normally when a corporation is bankrupt there is a hearing, it has to go through the courts...there are processes and creditors who are first up in obtaining value...
They are paying $250M for the US assets and the rest is securities.
I see a major lawsuit from shareholders at least in the works.
Let's just hope they keep the 10,000 employees involved.
who McCain consulted with, just today, is on the AIG board and then Greenberg, former AIG chair went public about ousting the CEO and trying to do some sort of takeover. I mean one cannot argue that the current guy had ruined the company to be sure. Yet, These are seriously powerful people. I don't know the entire story but this is truly unusual. I mean they just used the Federal Government to basically acquire a private enterprise.
One needs to wonder on some of these deals, it's just too complex for me to say "good thing, bad thing" except I want to see the federal deficit clock on all of this.
I mean we do know that Sen. Chris Dodd (along with Lieberman) have been heavily bought and paid for by finance lobbyists and this has been true for years. They stopped the expensing of options just as one item but the biggest was setting up an ind. accounting board. Heavy Fannie/Freddie money as well as Obama.
Maybe AIG is the GOP version of all of this, I have no idea but someone has to prove this to me in more detail of the consequences/pro/cons of just letting these institutions plain fail.
But, hell, if they turn a profit in the end, what do I care, these people are running the government anyway, might as well actually make some money out of it!
But, that promise is the thing I most question or wonder about.
I'm still not so sure if this is a good idea or not, but as a classic "business deal" it certainly appears to be a little better than Fannie/Freddie.
But the government ousting a CEO and doing some sort of equity trade seems very bizarre. Maybe they did some sort of "slowing of the implosion" instead of actually making a profit for taxpayers.
I just put up something similar in the Instapopulist but those terms were the US government was given a pure 80% stake in the company, i.e. nationalized. But it was a straight 80% stake. There was no "first up to be repaid" per say or selling off of the many valuable assets of AIG in order to be repaid so this looks somewhat different from the "confirmed" report from an hour ago. Can you confirm the confirm with some references?
A key concept here for Corporate America is CHURN. Executives want CHURN in order to reduce labor costs. CHURN is firing people out of one side of the company - usually those that have been there the longest and accrued better salaries and benefits - and hiring cheaper, desperate, subservient workers on the other side, possibly indirectly through outsourcing and contracting.
Why would any smart American want to enter a field with such poor job security and awful long term career prospects?
As for HP, I personally will avoid buying any of their products. No HP PCs. No HP printers. No HP anything!
Reserve Primary Fund, a money-market mutual fund with $64.8 billion in assets as of Aug. 31, fell below $1 a share in net asset value because of losses on debt issued by Lehman Brothers Holdings Inc.
Investor redemptions will be delayed as long as seven days, the fund's owner, New York-based Reserve Management Corp., said today in a statement. Withdrawals requested before 3 p.m. New York time today will be paid at $1 a share
I've never heard about this before, but it appears to be some sort of money market for banks, investment firms.
Mess o Greenspan has a good piece on how Roubini is becoming a rock star lately with his dire predictions but points out some of this may be piling it out. He points to Dr. Doom on a video clip.
Roubini is saying Congress should immediately recapitalize the FDIC.
sounds like a precursor to the Shock Doctrine where one takes advantage of a crisis to twist and privatize even further or put some unpopular corporate driven agenda into place.
We have people like Glenn Beck busy trying to claim the new deal is some god awful thing (why is this guy on the air, he has zero background, I mean less than any commenter on this site! in economics)
But we do not have anyone offering a comprehensive new deal plan, at least no one running for President.
I think one of the key elements to expose are taxes, deficits versus how social programs if done right and face it we have done wrong benefit the economy is in order.
People do not know what to demand because they do not understand the interactions of all of this. They just know that the government taxes them, then does whatever lobbyists wants. They never see any real benefit. Take tax incentives to keep jobs or grow jobs in some state by companies. It's astounding but if one looks at the stats, often that company never actually increases jobs. No accountability, it's take the money and run.
Is what I'm thinking. I'm concerned wall street is making these ponzi scheme implosions main streets problems. With the dot con bubble, so many people through bad advice from corrupt brokers put there retirement money into worthless dot com and tech stocks and then it hit the entire stock market. The Dot Con was not contained and that's because it wasn't isolated to those companies. We had Citigroup, Goldman Sachs, Arthur Anderson and so on all in on the scam.
Then, to me, they simply turned to housing as the new poker chip. So, here we are, over $900B and counting on racking up debt, never mind the effect overall on the stock market and that does affect jobs and affects retirements...since of course main street had their traditional pensions denied, replaced with 401ks.
But, I want to see these super rich people who get whatever they want in Congress to pay. I'm in a Robin Hood mood.
Trading bad debt like baseball cards and here comes the last one holding and seemingly the last one holding is us!
I don't know about AIG frankly but considering Lehman was denied purchase, declared bankruptcy and those very assets were immediately purchased, assuredly at a much lower price....
and if oil speculators get burnt, well not will it affect main street but more why should it affect main street?
"Captialism will invariably solve any current crisis by creating a future crisis of even larger proportions."
- Karl Marx
The thought of collapse first came to my mind when the Cyborg in Chief (VPUSA) told then Treasury Secretary O'Neill "Deficits don't matter." Anyone understanding Adam Smith's "Money Price of Gold" did what I did in 2003: increased allocation of precious metals to 10 percent. That allocation is still in place despite recent drops in price.
In the late 90's, while consulting for Merrill Lynch and the CMA accounts, I kept noticing how everything done was some kind of trespass on Glass Steagull (Depression Era separation of Banks and Brokers). A manager told me "Oh, we just thumb our noses at Glass Steagull." They still are thumbing away over at Merrill and I would like to ask how that is working out for them in the last few years.
When the same manager asked if I would like to join the Merrill team,
I politely refused.
When insurers go bust, other insurers take over their policies, claims, customers. What Poulson fears is having a process that exposes the degree of fraud and speculation of AIG and the rest financial America. AIG could have been split up after a Chapter 11 wrote down values of worthless debts.
We the taxpayers will have to pay for the ridiculous speculation of AIG.
How many more AIGs are out there? How big is this? Eventually, the U.S. Treasury runs short, there are dollar runs and real panic if they keep this up.
TKH
I am concerned about it for the above mentioned reasons but also the more practical reasons that because of higher transport costs compnies are now thinking twice about offshoring, and some folks are finally getting serious about alternative energies
I agree, the precipitous decline, certainly the last $10 in Oil, is probably forced liquidation of some sort. Some hedge fund, investment bank, pension fund, whatever, and it's probably plural, has blown up.
Eff 'em.
Here is James Kroeger, commenting yesterday at Economist's View:
____________________
As I diaried yesterday, despite some signs of "contagion", Wall Street's black plague has still not really infected Main Street. Not that Main Street is doing well, but unless you got caught up in the housing bubble, your primary complaint this year has been inflation -- brought about by soaring Oil and food prices, shortly to crash. Take away that, and Main Street ain't going down the tubes just yet. In fact, Joe UltraLight Sixpack gets a bit of a respite.
Wall Street can make these problems Main Street's problems only if We the People allow it. There is a High Political decision to be made shortly, about whether government of the financiers, by the financiers, and for the financiers shall continue; or whether it shall be repudiated and an new New Deal put in its place.
If Americans insist on a new New Deal, and insist on the concrete steps to make it so, there is no reason the sewers can't be sanitized and the black plague kept from decimating Main Street.
I know where I stand.
First, you skim off all the profits. Then you declare bankruptcy and have the taxpayers assume the liability for all of your debt. What's not to love?
details
So after they declare bankruptcy Barkleys swoops in and buys the U.S. assets.
What's wrong with this picture? Normally when a corporation is bankrupt there is a hearing, it has to go through the courts...there are processes and creditors who are first up in obtaining value...
They are paying $250M for the US assets and the rest is securities.
I see a major lawsuit from shareholders at least in the works.
Let's just hope they keep the 10,000 employees involved.
Bloomberg is giving more details. It's saying the Fed doesn't require the sale of assets and supposedly it would have caused systemic risk.
But the company has half a trillion bucks in retirement assets that it insured.
I feel a movie in this one somewhere. What a week and we're not done.
Let's place bets on WaMu. I bet Chase buys them out at a firesale price.
who McCain consulted with, just today, is on the AIG board and then Greenberg, former AIG chair went public about ousting the CEO and trying to do some sort of takeover. I mean one cannot argue that the current guy had ruined the company to be sure. Yet, These are seriously powerful people. I don't know the entire story but this is truly unusual. I mean they just used the Federal Government to basically acquire a private enterprise.
Hank Greenberg, wikipedia.
One needs to wonder on some of these deals, it's just too complex for me to say "good thing, bad thing" except I want to see the federal deficit clock on all of this.
I mean we do know that Sen. Chris Dodd (along with Lieberman) have been heavily bought and paid for by finance lobbyists and this has been true for years. They stopped the expensing of options just as one item but the biggest was setting up an ind. accounting board. Heavy Fannie/Freddie money as well as Obama.
Maybe AIG is the GOP version of all of this, I have no idea but someone has to prove this to me in more detail of the consequences/pro/cons of just letting these institutions plain fail.
But, hell, if they turn a profit in the end, what do I care, these people are running the government anyway, might as well actually make some money out of it!
But, that promise is the thing I most question or wonder about.
Believe it or not, Paulson was against the deal, and he really had the final say. I guess the deal breaker was that management leave.
I'm still not so sure if this is a good idea or not, but as a classic "business deal" it certainly appears to be a little better than Fannie/Freddie.
But the government ousting a CEO and doing some sort of equity trade seems very bizarre. Maybe they did some sort of "slowing of the implosion" instead of actually making a profit for taxpayers.
I certainly would say that is nationalized.
I got most of my info from CNBC and the Wall Street Journal.
I just put up something similar in the Instapopulist but those terms were the US government was given a pure 80% stake in the company, i.e. nationalized. But it was a straight 80% stake. There was no "first up to be repaid" per say or selling off of the many valuable assets of AIG in order to be repaid so this looks somewhat different from the "confirmed" report from an hour ago. Can you confirm the confirm with some references?
A key concept here for Corporate America is CHURN. Executives want CHURN in order to reduce labor costs. CHURN is firing people out of one side of the company - usually those that have been there the longest and accrued better salaries and benefits - and hiring cheaper, desperate, subservient workers on the other side, possibly indirectly through outsourcing and contracting.
Why would any smart American want to enter a field with such poor job security and awful long term career prospects?
As for HP, I personally will avoid buying any of their products. No HP PCs. No HP printers. No HP anything!
Bloomberg:
I've never heard about this before, but it appears to be some sort of money market for banks, investment firms.
Mess o Greenspan has a good piece on how Roubini is becoming a rock star lately with his dire predictions but points out some of this may be piling it out. He points to Dr. Doom on a video clip.
Roubini is saying Congress should immediately recapitalize the FDIC.
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