THE ECONOMY

[Klash]

TweetAIG, the wordl's largest INSURANCE company - only was asking for a $80B bridge loan, but the Fed agreed to loan $85B in exchange for an 80% ownership in the company.

Congressional leaders met with administration officials last night and declared (Pelosi and Barney Frank) they don't understand what is going on or how the Fed has the power to do this, but don't know how to stop it even if they wanted to. Hearings are planned.

London InterBank Offered Rate (LIBOR) (the rate banks charge each other) doubled overnight (3.1% to 6.4%) as banks refused to lend each other money. [This is an EXTREMELY bad sign - it implies people "in the know" expect major bank failures SOON... Ed.]

[straydoglogic]

Tweetand that the fed is buying up everything!!!! well..the taxpayers...yayeeee
( we're so screwed )

[daved150]

Tweetall's i want to know is if when do we start getting dividends on our shares?

[dixiechick]

TweetWhat's NOT helping the stock market right now is people are panicking and pulling their money out of the stock market. That's the last thing people need to do... it will cause an even bigger mess.

My brother works for a company that is owned by AIG. They are a major finance company hold lots of peoples retirements including my mom and mother-in-laws retirement plans. This company is financially secure and it will more than likely be sold off to another financial company to raise money to help get AIG out of trouble.

Despite what most people think... with stocks so low. This is a buyers market! I just wish I had some money to invest. If my house would sale then, I could have taken the money to buy some stock. I always miss out on the best time to buy. ERRRRRR

[dixiechick]

TweetThe first time I bought stock was October 20, 1987. This was the day after Black Monday which the largest one-day decline in the stock market at that time. There is a lot more turmoil right now and if you put yourself where people during the crash of the depression place and think about what they must have been feeling and thinking... I'm sure many thought it was the end of the world.

What is really bad are people who are at retirement age or those who have lost jobs and need their investments pay for their retirement/to live off of until they get a job. They can't wait until the market come back up. It's really going to put these people in a bind.

Black Monday

I'm trying not to look at my investments. As long as I don't have to sell anything, it's a paper loss. But sometimes it's like a train wreck... you can't help but look.

[trip]

TweetKlash,

Ur close but not correct in whole.

Over the weekend AIG was looking for 20 billion because all of THE RATING AGENCIES THAT WERE NOT CORRECTLY RATING THINGS HAVE BEEN RATING STUFF LIKE MAD OVER THE LAST TWO MONTHS, ie, finally doing there jobs

what happened was AIG's rating got downgraded on monday, that kicks in a bunch of clauses in contracts where they have too put up more money for all the leverage they hold, and they flat out don't have the money

Paulson and Bernanke have been given a free credit card to do there best and they are trying

what's going on is there are 600 Trillion Dollars In Derivative Insurance on a 13 Trillion Dollar Economy, most of that 600 Trillion Dollars was keyed off of home prices and ratings

with home prices crashing and ratings getting reworked alot of this insurance is coming due yet when ur talking with those gargantuan numbers just a slight tick cracks the whole thing

There basically is a lock down on credit for any business that borrows gobs of money too make money.....LEH leveraged 40 too 1, AIG probably even bigger

It's totally idiocy in action.

Basically you think home buyers were dumb, the board of directors on wall street were no differnt.

Now the problem is banks will not lend too banks, which they do all the time to handle daily transactions. Meaning they fear the next guy is going under so they don't want to send them a million bucks for fear they will never ever get it back.

It's everyman for himself, plain and simple.

[trip]

TweetHere is a good analogy.

Lehman Brothers was the kid pulling the tail of a dog, and no one is surprised the dog turned around and bit him bag. hey, no biggie.

Bear Sterns was the kid playing with matches in his house. Now, the fear there is he could not only burn down the house, he could burn down the neighborhood. So, they saved Bear Sterns too protect the neighborhood.

AIG was the nerdy kid who goes into the bio-tech lab and takes all the vials and starts mixing shit up. And then he goes out into the playground..............


no one know what the hell is going on with aig, it is that toxic at the top


A big problem is there is 900 billion dollars in credit that needs too be rolled over this month. Fannie Freddie had too roll 250 billion, couldn't do it, so Paulson took them over. Now, no one wants to pony up the money too roll the 900 Billion, so all these folks who need the money have to either pay up the loan or take out new loans at rates so high they might as well be on the street selling newspapers

not good

[Waterboy]

TweetLet's back this up a little further.

“[Barack] Obama... blamed the shocking new round of subprime-related bankruptcies on the free-market system, and specifically the ‘trickle-down’ economics of the Bush administration, which he tried to gig opponent John McCain for wanting to extend. But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street’s most revered institutions. Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties. The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but ‘predatory.’ Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street. But the seed was planted in the ‘90s by Clinton and his social engineers.” —Investor’s Business Daily

Thought this might shed some light on the current bank closings. I am not trying to make this political, it was an article from Investors Business Daily

[trip]

TweetIBD, a man after my own heart, i'm a card carrying member for years

there op ed page is run by neo-cons

okay, what clinton did was not bad, he banned red-lining

now, let's also be honest sub-prime loans have been around forever, that is not the problem, there will always be sub-prime loans, cause there will always be sub-prime borrowers

in 2001 bush cut the money cop staff in half, he factually fired the folks who police the banks, they were understaffed, and had no backing from bush

clinton or obie did not allow 40 too 1 leverage................the non-existent regulators did...............which was Phil grahams claim too fame, get rid of regulation

now as dr. phil would say, how is that working

what u will be haring alot about are

CREDIT DEFAULT SWAPS, it's where these guys with massive leverage take out insurance on there leverage, now the guys who own the insurance policies are have too pay off, yet, to get new insurance you have too pay prices you cannot afford, thus, you either run your business with no insurance or close it down

COUNTER PARTY RISK- where no one trusts anyone with debt, cause u don't know what there books say and if they will go bust on u so u don't loan money

without credit, we do not grow, we have 3 million folks a year who need jobs, etc., simply demographics, so with no growth or negative growth, things get sticky

i'm also not politicizing, this is serious doo-doo

[firstenrgy]

Tweet

Klash,

Ur close but not correct in whole.

Over the weekend AIG was looking for 20 billion because all of THE RATING AGENCIES THAT WERE NOT CORRECTLY RATING THINGS HAVE BEEN RATING STUFF LIKE MAD OVER THE LAST TWO MONTHS, ie, finally doing there jobs

what happened was AIG's rating got downgraded on monday, that kicks in a bunch of clauses in contracts where they have too put up more money for all the leverage they hold, and they flat out don't have the money

Paulson and Bernanke have been given a free credit card to do there best and they are trying

what's going on is there are 600 Trillion Dollars In Derivative Insurance on a 13 Trillion Dollar Economy, most of that 600 Trillion Dollars was keyed off of home prices and ratings

with home prices crashing and ratings getting reworked alot of this insurance is coming due yet when ur talking with those gargantuan numbers just a slight tick cracks the whole thing

There basically is a lock down on credit for any business that borrows gobs of money too make money.....LEH leveraged 40 too 1, AIG probably even bigger

It's totally idiocy in action.

Basically you think home buyers were dumb, the board of directors on wall street were no differnt.

Now the problem is banks will not lend too banks, which they do all the time to handle daily transactions. Meaning they fear the next guy is going under so they don't want to send them a million bucks for fear they will never ever get it back.

It's everyman for himself, plain and simple.

Well put!
Let the financial insitutions that made these bad loans take it on the chin. Unfortunately, people like Barack Obama will use opportunities like this to promise monies out of the public treasury to secure votes.

[dixiechick]

TweetIt use to be year ago when my parents and grandparents were trying to loans for house or credit cards, the banks and financial institute were very strict, so credit was hard to come by. Over the years, they relaxed the rule and made it easier for people to get credit. They even extend credit to people and started offering home equity loans and sending out pre-approved credit applications on anything from equity loans to credit cards. Bush/Clinton both are to blame, but they were selling a dream. The American dream for every American to own their own house. That's was their promise to get elected. In order to make this happen they had to press to lighten up the qualifications for loans to make it easier for everyone to get a loan.

The news interviewed this women the other night about her credit troubles. She said that she was so excited when she found out that she qualified for a first time buyers home loan. The real estate agent took her to look at houses and she feel in love with a house that was little pricey. The bank told her yes, she can afford that house... so they closed on the house. She moved in and bought new furniture to furnish her house with her credit cards. Then she applied for auto loan and the bank said yes, here's money for a brand new BMW. Later she took her kids to Disney World on VISA.... but no one told her that she couldn't afford all this. They didn't tell her that she was over her limit. She sitting there blaming the banks, financial institutes because she can't pay back all this money she's owns. Very said that they don't teach personal finance in high school.

Anyway... banks and financial institutes are still at fault here. They should be more responsible for loaning money out to people. That's what we have credit reports for to look at people/companies spending habits.

No matter who's at blame. The damage is done, and big question is how do we fix it? No one wants to bale out these companies. In the long run it means it's coming out of the tax payers' pocket which translated means that the middle class will have to pay for it. It's kind of an evil necessity. If something isn't done, then it could all collapse. No one wants that either.

I can tell you this much the media isn't helping anything. They started crying Recession long before the economy ever went in a recession. When 911 happened, it was so frighten to people that employees in the plant were at lunch ran to the bank taking their money out and filling their car gas tanks up. Then they came back to work and were talking going afterwork and buying guns and amo, etc. Now the media is stirring people up about the banks and investments. They keep it up they are going to cause a wide spread panic. It was so easy to get caught up in the panic. Yes, it's scary and it makes you stomach turn to see your investments drop so low.

[This is an EXTREMELY bad sign - it implies people "in the know" expect major bank failures SOON... Ed.]

Keep in mind that the media likes to making things sound worse then they are because they need to make the golden cash register ring. I'm not saying this isn't serious, but the media loves to prey on peoples emotions.

[dixiechick]

TweetHere's a good article too read:

It's a 'Triple OhmyGad' for the Market
by Brett Arends
Monday, September 15, 2008
provided by Wall Street Journal

This is it. This is what they call "a Triple OhmyGad!"

Say it now. Get it out of your system. Roll up the office window and shout if it will help.

"Ohmygad-ohmygad-ohmygad!"

There. Is everyone set? Few things prepare us for the kind of extraordinary developments that took place last night. The collapse of Lehman Brothers. The federal intervention. The sudden takeover, or rescue, of Merrill Lynch. It is tempting at times like this for people to think of developments like the Crash of '29 and to panic.

But the reality is that the banking sector is not America. Wall Street is not America. Things may turn down for a while and times may get tougher. But life, work and the economy will go on -- even without Lehman Brothers. And this is not so new after all.

The collapse of Barings in 1994, Long Term Capital Management in 1998, 9/11, and the WorldCom panic of 2002: These things happen quite often. And when you are slap bang in the middle of them, they always feel terrifying.

Someone in finance said to me quite casually the other day that this was "much more terrifying than 9/11." Really? Are people kidding? Right now, there is no reason to speculate on banking stocks. There never was.

At times in the last year various sources have confidently announced that this was the time to load the boat with financials. Maybe they were right, I thought, and maybe they weren't. I just had no way of knowing. I could never work out what was in these banks. What liabilities they really had, and what dodgy paper they were holding.

Turned out nobody else knew either. Some of the smartest, most experienced and most sophisticated professionals have lost their shirts on bank stocks in recent months.

This column is not for those who want to treat Wall Street like it's Vegas. It's for ordinary people who want to make Wall Street work for them.

There are a few things I know and they are material now. First, the people who stay at the table and don't make stupid moves here are going to be the ones who make the money in the years ahead.

Second, no one knows how much worse things will get, how much further the market will fall, or when things will turn. And you should not trust anyone who says they do know.

Third, trying to get rich quick is one of the surest ways to get poor quick, and the only way to win this game is to keep investing little, often, and broadly.

Fourth, most great investors made their money buying in a panic. If this isn't a panic, I don't know what is. My old fund management pal Dan Bunting, in London, accumulated a few rules of thumb over 35 years at this game. Among them: "Always buy the market after a spectacular bankruptcy."

Fifth, there are a lot of good stocks out there that are pretty reasonably valued. Even long-standing bears, skeptics and curmudgeons are starting to say this. These stocks may not be dirt cheap. Times may get much worse before they get better. But if history is any guide, buying good stocks when they are reasonably priced and hanging on for five years or more has tended to be the best thing you can do with money.

And sixth: At some point this will end and when the market turns it will be rocket powered. There will be no easy chance to get back in. Invest little, often and broadly. And don't panic.

Write to Brett Arends at brett.arends@wsj.com

Copyrighted, Dow Jones & Company, Inc. All rights reserved.

[dixiechick]

TweetThis article is 2 pages long, so I'm not going to copy it. If you are interested here is the link.

5 banks safe from the storm

His list of safe banks:
Northern Trust
US Bankcorp
Washington Federal
Charles Schwab Bank
Bank of Hawaii

Another article to check out:
5 big winners in the banking crisis
His list:
Wells Fargo
US Bankcorp
Commerce Bancorp
ING
JPMorgan Chase

The banks are Federally insured, so individual accounts up to $100,000. If you are nervous about losing your money. It's suggest putting spreading your money over a couple of different banks. For me, I don't have $100,000, so spreading mine out is pointless. The neighborhood where I live... stuffing money under a mattress isn't even an option. I have also believed not to put all your eggs in one basket, so I use several investment companies... for example: T Rowe Price, Vanguard, Smith-Barney, Wachovia. Once again, not all my money is in one basket. If one goes under, the I have another source.

[straydoglogic]

Tweetlets not forget the beloved ruppert murdoch has said that this is all good news..cuz he too benefits from it...effin scumbag...