Why does Wall Street hate the American worker?
In another unnerving day for Wall Street, investors suffered their worst losses since the terrorist attacks of 2001, and government officials raced to prevent the financial crisis from spreading.
Trading opened sharply down Monday morning, and the mood later turned even gloomier, despite efforts by President Bush and Treasury Secretary Henry M. Paulson Jr., in separate appearances at the White House, to reassure markets that Wall Street’s deepening problems would not weaken an already anemic economy.
Huh. I can’t believe trotting Bush out there to say "we’re cool" didn’t work.
With time running out on it’s finances, American International Group continues to plead for assistance in a meeting at the Federal Reserve Bank of New York.
Scrambling to raise as much as $75 billion in capital, the giant insurer needs either a bridge loan from the Fed itself or from a lending pool organized by a consortium of banks.
And if AIG goes down, it’s gonna be ugly. Dude, where’s my recession?
The S&P 500 posted the steepest drop since the September 2001 terrorist attacks and stocks erased more than $600 billion of value yesterday after Lehman Brothers Holdings Inc.’s bankruptcy spurred speculation that credit-market losses may push the U.S. into a recession.
Fear not. Help is on the way!
Related posts:
- More Innovation from Wall Street: Securitized Viaticals
- Failed Models are a Fixture on Wall Street
- FDL Book Salon Welcomes Barry Ritholtz – Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy
- Seance on Wall Street
- The Downturn is Over for Wall Street, but Main Street’s is Still Going On
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BT!
Some of the fundamentals at AIG are going to lose their jobs.
whoa. where is everyone?
I think I’m glad I’ve been on a “news fast” since Tuesday. Though I did make an interesting discovery: Fox News is unwatchable even with the sound turned off. Who knew?!/s
FunnyD
They will bail AIG out…they have to.
AIG: the large hadron collider of Wall Street.
lol…they have the best coverage when there is a pending disaster…like airplanes landing with no wheels…
LOL there goes my mid morning snack. *cough*
They will bail AIG out…they have to.
If AIG goes down, it’s game over.
Some of the non-fundamentals should too.
The problem with AIG is that have been told, I think…, that they can borrow money from their subsidiaries..you know..the one’s that PAY insurance claims to people. Great. Houston will be delighted. Or….the Fed will bail them out. We shall see.
What really frosts my balls is that MANY leading economists saw this coming from as far back as last year!
You would have to come to the conclusion that the Government was well aware of what was coming down the pike and just let it happen anyway,knowing damn good and well that they were going to stick it to the taxpayers up to the point they feared an absolute revolution.
It seems to me that is exactly what they did, too.
OT: but a little schadenfreude (per TPM)
The St. Paul Pioneer Press can’t help but chortle about the young outspoken GOP lawyer who thought he was gettin’ lucky at the GOP convention but ended up gettin’ robbed.
story here
Does the Fed have the cash for AIG? Its an election year and before Leham went under, Freddie and Fannie, Bear Stears and the Fed took on some or all of this bad debt the car companies wanted $50 billion.
The airlines I’m sure want the same who is going to win the last slice of pie for election votes this year?
Exactly. Let them fall one by one…bail them out…make the taxpayers pay in the long run…print mo’ money…and literally “pass the buck”…increase the deficit….take as much profit as possible, and sell us all out…
DIGG IT is now open Pups!!
The Feds are the “only” people who can “print” cash.
Yes, but unemployment figures are going to stay historically low. Since the two or three part-time jobs they will have to take to survive, will show them as employed in the unemployment figures.
#&%@)& )^&% them.
Yeah, THAT’S the ticket…print some more money. Then we can all be millionaires…like my wife, Morgan Fairchild.
Legally.
Would using money to pay insurance claims be illegal, I think I read that the Fed is thinking of letting bank deposits be used to help banks balance sheets.
I’m not saying it won’t be done, but if you have an insurance policy with AIG get out now.
This is all just the results of unregulated markets and the total lack of proper over site!! Uncle Milton’s best theory’s at their failed best.. Time to put the Chicago school economics in it’s proper place in the dust bin of histories failed economic policies!
There are way too companies (AIG, Ford, etc) waiting in line for bail-outs for the $70B fund to stave off disaster…
Don’t they only come up with the “unemployment” figure by counting who is being paid currently on “unemployment insurance”, as opposed to those whose time has run out and are just out there unemployed? The figure is wholly inaccurate…at least that is my ignorant understanding of how they do it.
Sounds like another bridge (loan) to nowhere.
The more you print cash the lower the value of the Dollar goes Mexico learned this with the Peso in the 70’s you could say they never recovered.
McShame said this AM that “the top of the economy is broken” that elitist jerk – what does he think is going on here at the bottom of the economy
I think I read that the Fed is thinking of letting bank deposits be used to help banks balance sheets.
When did Mr. Greenspan get put back in charge?
Mine, too.
If you’re outta work longer than 6 months, you don’t count anymore.
It’s the Ownership Society:
You’re On Your Own, suckah!
FunnyD
That is true..it is also why people like Warren Buffet will jump in and probably buy something he considers a good future long-term investment. It won’t all be Fed bail-out, because they can’t. It will be selective.
I just love it when Carly Fiorini gets on tv and complains about excessive CEO pay packages. Duuuh
Has Sarah given a thought about what happens in an economy like this to federal money to Alaska?
save us if he is. Not like HE had nothing to do with this mess
Except that the other markets globally are taking too. The dollar is up, even though they’ve been printing more money lately. Weird.
Freddie & Fannie were “too big to fail”
AIG is “too big to bail”
Game Over
Thank you for playing.
“tanking” not “taking”…jeesh…
That is true. Most folks want to work and don’t want to be on unemployment or the benefits have ended. They find work, but it is two or three part-time jobs leading to higher transportation costs, less time with their families, most likely no health care, and just plain a hassle surviving. Unfortunately, they are least likely to be allowed time off to vote.
It may be a conglomerate buy out…not Fed.
Didn’t she get like 22 mil or something after driving HP into the dirt?
Helicopter Ben is just a puppet cleaning up Greenspan’s mess any independent person would be blaming the last guy for the mess.
Alaska is SO last year to Sarah.
Has Sarah given a thought…
umm, didn’t we discuss downstairs beginning questions with words which automatically turn the question into a rhetorical one? *g*
Don’t understand why AIG is too big to fail. Yes, it insures lots of credit swaps (not sure what they are) and if margin calls get called, lots of assets hit the market at distressed prices. The Fed should be bolstering the FDIC, so depositors stay whole. What’s so terrible about the rest of them going down the tube?
And now, in Michigan and other places, the GOP is making a delightful arrangement that if you’ve been foreclosed on, you have no residence anymore, and will not be permitted to vote.
absolutely
So it wasn’t 45 million. Yeah.
big players move markets because they can and they want to make a profit.
http://seekingalpha.com/articl…..and-silver
Dude, where’s my
recessiondepression?I just love it when Carly Fiorini gets on tv and complains about excessive CEO pay packages. Duuuh
Now *that’s* a Republican.
If she hadn’t committed the cardinal sin of fucking up an unfuckable huge corporation, *she’d* have been the Veep candidate.
TCU…you are so right. That’s how the rich get a lot richer quickly.
wow.
I imagine AIG has a Dickensian street waif, smudged face, with tin cup in hand, asking, “Guvnor, spare a mite $40 billion?”
Why do Republicans hate Americans?
They gut our economy whenever they get a chance and send our children to fight unprovoked wars.
Why?
Actually, $75 billion was the amount they needed at the close of business yesterday. By 8pm, when they were downgraded by both S&P and Moodys, they needed over $100 billion to accomplish the same thing. The downgrades last night killed them.
Since Lehman had declared BK as of the start of trading yesterday, and S&P still hadn’t downgraded their stock until after 2 yesterday afternoon, the ratings agencies decided they’d look too bloody foolish to hold off on the AIG downgrades if they waited until they were out of business.
I suspect she turned down the offer.
Fscking up HP is still better than the current VP candidate.
MORE?
YOU WANT MORE?
Do you have a link, LS? Do you know if any of the watchdog groups is on this? Seems like something to get out in front of.
Talk about insult to injury.
FunnyD
Missed all y’all pups last week!
No conscience, you’re on your own, get what you can, screw anyone else, each to his own, eat your own, rip off whenever possible, lie at every opportunity, distort reality.
This is unfair. It took a lot of hard work to take a company as good as HP and jerk it around like she did.
Domino effect.
These distressed assets will hit the market with big supplies and no demand driving the prices wayyyyy down.
Currently banks are making “assumptions” on the fair market value of these assets because they simply aren’t trading.
Once there is a clearing price, all financial institutions have to mark their similar assets down to the clearing price (mark to market), and whammo all of those losses flow through the income statement.
Those losses will cause downgrades in credit ratings to these financial institutions which will necessitate more capital calls and the sale of more distressed assets and whammo all those losses…well you get the picture now.
Democracy Now did a story on it this morning I think.
http://thecaucus.blogs.nytimes…..reet-woes/
McLame wants to appoint a Commission to look at the economic situation.
I like rhetorical questions
http://en.wikipedia.org/wiki/Rhetorical_question
But in the GOP’s case I am asserting not about what they did but whether they have thought about what they did. Since they didn’t we have to think of something.
Wow..the market has been flatlining all day waiting for the Fed’s decision…upcoming in the next few minutes. We are in the last closing hour of WS, and it will be interesting to see what they do.
hey – there’s John Harwood on MSNBC.
Looks like the bruises Teddy left all over him on our recent Book Salon have faded away…
(’Course, a good make-up artist can do wonders)
John McCain claims to have invented the Blackberry
Well, not really, but if the Rs could repeat a silly lie about Gore, turnabout is Fair Play(TM)
The role of government, as it relates to business, is to regulate it so that businesses do not get “too big to fail.” If a business does manage to get “too big to fail,” then the government’s role is to regulate it so that it does not fail. The Republican government failed.
Hmmm…Some on CNBC saying they think most likely AIG will end up in bankruptcy by tomorrow. Others saying the opposite.
I like rhetorical questions
Oh, so am I – I always answer them.
didn’t mean to sound insulting – just goofin’ around….
“The fundamental business of the country, that is production and distribution of commodities, is on a sound and prosperous basis.”
- President Herbert Hoover, in a press conference on October 30, 1929, the day following the Stock Market Crash, on the eve of the Great Depression
Sound familiar?
Part of AIG’s business is aircraft leasing (to the airline industry).
As you’ve all heard, the airlines have cut way back on flights and schedules. American has drastically reduced service to the Caribbean (for example).
Commercial air carriers lease their aircraft from leasing companies or investment groups, who effectively purchase jets from Boeing and others, then lease them to the airlines. It didn’t take a rocket scientist to see that as oil prices rose, aircraft would be parked, leaving the leasing companies stuck with storage and maintenance – with payments of their own to make – and no income.
If AIG sells this “asset” (which may in fact be a liability), it will reset the value of ALL leased jets held on the books of other leasing companies AND reveal the glut of commercial aircraft in the market (sort of like used SUVs), thereby driving down the price of new jets as well as used ones.
The knock-on effect ripples far and wide…and that’s just one asset class.
The market fears having to mark ALL their assets to market pricing, at a time when fire sales determine the value.
I think that we should outlaw golden parachutes foe CEO’s if they leave are fired, retired, company goes bankrupt, gets bought out etc. They should just get their last paycheck and the standard retirement plan.
If they don’t like that proposed law then we could tax them to create a fund to bailout their fellow CEO’s companies.
But then they won’t be welcome to the weanie parties anymore.
I’m goofin too:)
Sound familiar?
Nope. An uninformed person might think it sounds like McCrazy, but we all now know he (McCrazy) was just talkin’ about American workers.
Said so right there on his cue cards…
LS, you are correct – people still job-hunting but no longer receiving unemployment benefits are not counted. The actualy unemployment number in the US is significantly higher than the number being touted.
Last night the new said aIG had enough money to borrow from its subsidiaries to hang on for a little while…
Actual unemployment is over 13%.
See this why I come here your comment says to me avoid Boeing, Airbus etc I never hear avoid a stock or sell a stock until its to late on the MSM business channels.
They also to annuities for retirement… has me worried as they have a chunk of my money out their after the 9-11 stock market debacle… now I just don’t know what will happen to my money just as I was going to start recieving the money monthly(:>((
Anybody tried to get in touch with Vanguard or Fidelity today via phone, to change their 401K? I’ll tell you, Vanguard is completely busy, cannot get through. (Unfortunately, what I need to change cannot be done online)
The problem there is that the subsidiary money they would borrow is money reserved to pay out insurance claims…consider the Ike and Gustav damage claims…Houston and that entire area has been hit really badly.
Also….how does this AIG thing affect 401K’s??? Anybody know or is that more the Lehman Bros issue?
Borrowing from one’s self is not called “borrowing.” It’s called “masturbation.”
Citibank’s mortgage lenders (for example) were so effed up they didn’t even know that some of their highly toxic subprime mortgage backed securities risk had been passed off to other divisions within their own company.
If AIG goes under the weenies will be coming from that plant in Iowa with the immigrant hiring, child labor and food quality problems.
LINK?
FED funds rate – “no change”
No change in Fed funds rate.
AIG opened this morning at 1.85 and is currently at 3.20 but to give an idea of the circling the drain aspect of it is that its 52 week range was 3.50-70.13 or a 95% fall off in share value.
Can’t you change companies? I don’t trust these guys to pay.
So….if there are 5,000,000 foreclosures…is that 5,000,000 who will not be able to vote?
Carly Fiorina, a key surrogate for John McCain on economic issues, said on Tuesday that Sarah Palin does not have the experience needed to run a major company like the one that Fiorina formerly headed.
”Do you think [Sarah Palin] has the experience to run a major company, like Hewlett Packard?” asked the host.
”No, I don’t,” responded Fiorina. ”But you know what? That’s not what she’s running for.”
I love it when these idiots say “it’s pretty bad, about as bad as the stock market dive of ‘29, but we’re not headed into a Depression. But it will be a tight economy at least through January.”
I can’t believe someone would have the gall to stake out the polls with foreclosure lists and confront someone who just lost their house, saying, now you can’t vote. Then again, I’m not a dickhead.
Depends on whether or not they have reregistered at a new address
She also said that she doesn’t think John McCain, Joe Biden or Barack Obama could run a major corporation.
I don’t think Phil Gramm or Carly Fiorina could run a major corporation either.
one of many…it’s more a theoretical exercise…only the FED knows for a fact, and they’re not telling:
http://greenspun.com/bboard/q-….._id=005c2u
As for inflation…Bernanke is smoking crack. The primary risk right now is rampant deflation..on the way to depression.
Well, she is the voice of experience since she showed that she couldn’t do it either.
Probably the Fed announcement. AIG’s price is falling.
Uh oh. The news that the Fed won’t drop interest rates…just caused the market to fall…it is now down 109 in the past 5 minutes.
emptywheel has a post on that topic next door
That is why they really really do deserve all those big bucks
Don’t wish to sound more stupid than I am, but so what? Keeping an asset on the books at an unrealistic price, doesn’t make it worth book value. Banks aren’t lending much now and probably won’t for the foreseeable future. I guess it is smoke and mirrors, that if you keep the balls in the air long enough it may turn into a juggling act. AIG may gain enough time to sell stuff at other than bargain prices. I just see us taxpayers supporting the big guys for what I see as no good reason. You deny reality for so long. It invariably catches up.
Excellent piece on AIG:
http://www.nytimes.com/2008/09…..ml?ei=5070
A tight December means Christmas sales were bad and that retail/shopping and every company affected by shopping, meaning they sell stuff in stores will take a hit.
January and February will be in the toilet to then.
I am not sure as it is part of my IRA with Smith Barney… guess I will have to contact them and ask… I was also going to start consolidating my other retirement funds but with all this crap I am gun shy to do anything except to cash out which has dire tax ramifications for taking it all at once!! Dam fucking republicans!! They have sure screwed up everything from soup to nuts!! I hope the big rich boys take it in the shorts for this one!!I wonder how many other baby boomer’s are now afraid of retirement??? I sure didn’t plan on just living on just Social Security!
If the Republicans have their way that is just will happen. They are already planning to challenge the right of any one with an address that has been foreclosed on!! The only way the republican’s can win elections is to both suppress voting and cheating… They have zero conscience! They are leaches on the public’s TIT!
Talk to a financial planner try and pick a safe company to move your money too. I don’t know of any for sure but one that has not been in the newspapers recently would be good.
I hope everything works out before things collapse.
A little pespective is needed in discussing bailout.
1. The $62 trillion woth of paper that is traded as collaterized debt.
2.The value of that debt when marked to market is tied for one to the properties it is secured by and their equity.
3.They float with real estate liquidity, as prices sag so do the actual value of the $62 TRILLION of paper.
A trillion is a thousand billion so by comparison or less than 1% of the $62 trillion.
The size of the problem is much bigger than billions that are being thrown at it as a bandaid. Central banks worldwide have been throwing billions at this problem for a year by lending or buying the shitpile with our tax dollars.
Bushco opened the door to our treasury is backing up semis to the loading docks and delivering it to crooks that have bilked their investor suckers.
It worked at Lincoln Savings and Loan for Keating and McCain’s Keating 5. It worked at Silverado S&L for Bush’s brother. Like Abramoff the market is a giant casino to skim. “We pay they play.”
Senator Shelby just tipped his hand and inferred that Paulson is leaning toward a bailout of AIG. The fact that he went on the TeeVee to imply that, and express his extreme displeasure about the prospect of it, is indicative of a lot of infighting.
Pelosi: I have a very high standard for POTUS. Bush is proof that anyone can do it, but who can do it well. enormous damage etc.
wow!
Thanks TCU I do have one at Smith Barney and I will be talking to him!! But if he is not much help I know a local one who is at one of my computer accounts!!
I understand that part. I think it will last much much longer than experts are willing to say at this point.
PRECISELY!
It’s gameoverville now, though. Martial Law is next.
per diary over at Dkos:
See my comment #101.
i see it now LOL
thanks. I’m a bit slow today
The FED is going to bailout AIG, and in so doing, cause a massive short squeeze to help pay for it.
bailing out AIG is unfortunately something of a necessity.. I just hope its done in a way that prevents AIG’s directors and CEO from benefiting.
Seems like the FED is slathering money around like crazy. Isn’t the Treasury going to go after an increased debt limit soon and isn’t all of this borrowing going to translate into a reversal of the recent trends of an increasing dollar value?
Crude oil future is currently at $91.50/bbl showing there are some benefits to tight money.
Seems like it is off by a third from its high – I don’t see that being translated into pump prices.
New Christy a couple of flights upstairs
This reminds me of my first law of energy.
4. The ratio of oil to NG is 6 to 1 per BTU
1/3 of retail is christmas shopping. 2/3 of the economy is retail approx. No link but we all know that deliveries (transports) are heavy then. This will be a big drag on the economy if the spending is weak.
Economics 101-2-3 (Samuelson) gives us the M factors (multiplier) or expansion of money in the economy which the bailout is more about. Growth is the key to the free markey economy we are in. As money is issued it is reissued by banks as loan, Thos e businesses return that money to pay for the laon with the profits which are the reloaned and so on up to 5 times. That is the multiplier that expands the economy.
Well banks won’t be loaning out that money as they are cash strapped due to bad debt they keep recording. It is the Mirriam Fractal Spiral that Ian keeps reminding us all of.
The economy has lost it’s momentum. Ir will take a few years to recover. A new energy policy with renewable energy will stop the capital bleeding to the soveriegn funds and OPEC.
With that capital staying here in the systen we can recover as the solar, wind, wave and other alternatives to big oil come on line. Big oil will not go out easily. A few more big hurricanes and they are second fiddle.
We have to pass a carbon tax and fund tax credits for this infrastructure. That is the 5 million new jobs Obama and Gore are talking about. There is a solution, it will take a few years to get going with immediate legislation. That will not be easy with republicans in the white house.
The popularly held opinion is that an orderly wind down is better for the largest financial market and world’s reserve currency than a chaotic firesale.
I agree with that, but no one knows what that is. We truly are in uncharted waters.
Setting: Metropolis before anybody’s heard of AIG, er, Superman.
Lois Lane is falling off a building, screaming her head off and then…
Superman swoops out of nowhere and grabs her and says, “I’ve got you”.
Lois, shocked, but being no dummy says, “You’ve got me? Who’s got you?”
“Let”? Forgive me, no. “Made” is the word. The government MADE this happen.
Remember, it was Phil Gramm, economics adviser to John McCain (who knew he was going to run for president this year), who changed a Great Depression-era law, to create this mess. It’s the housing mortgage crisis come to Wall Street. All that mortgage paper is iffy and nobody knows how to value it, so stock prices are all over the place.
Also, don’t forget who the Bush administration put in charge of Fannie & Freddie, who John McCain said long ago was a problem for the government which should sell them off. Now that McCain is running for president his policies are plaguing America.
Tell that to Treasury Secretary Paulson.
Like the Penguin in the Batman stories it would have been so much better to abort the fat little pig, but no, Republicans demand we respect ALL life and suffer.
Her idea of ‘excessive’ is probably similar to McCain’s idea of ‘excessive regulation’.
She doesn’t believe any pay package would be excessive.
He believes ANY regulation is excessive.
Heh, pretty good.
The kid’s rich. In my day we didn’t have tin cups.
It’s part of their political economic war. See, Democrats have been threatening for some time to actually fix some economic fairness issues and that would endanger the Republican ‘permanent majority’, so they had to stop any and everything Dems tried to do to fix problems. They didn’t want Dems to get any credit for doing good cause that might let Dems get back into the majority. They had to spend us into near bankruptcy to prevent Dems from having money to fix anything (near waterboarding in bathtub and all that). They even rigged mortgages to go bad, so people would lose their homes and perhaps their right to vote.
Of course, this weak government now can’t help bail out rich guys either. Fancy that.
But, at least George W. Bush got to be preznit two terms and upstaged his father. That makes it aaaaalllllllllll worthwhile.
Right?
THAT is definitely one of the crazy things about a marketplace that can’t easily distinguish between this and that.
Sure, there has to be a markdown, but it has to be somewhat rational and not hit bottom just because nobody knows true values. Sure, it will probably reach beyond the companies it probably HAS to pound. But, there has to be a realization in the market that this over-reach of psychological uncertainty will also create some buy-back potential. The net effect would be drop-off…buy-some-back…drop-off…buy-some-back, until there’s a stabilization in the real-world housing market(s) (probably early to mid-2010) and then the financials will probably settle out too.
What’s most important is for this drop-off process to happen here and there and here and there and not just all at once. Now that, all at once, would be a killer. Some here and some there gives people time to adjust, even if it’s a very hard drop-off for one or two firms here and there. The market must be protected from the worse disaster, the huge everybody falls off the edge at once crash.
If AIG can get support from it’s related firms (or anybody with cash) then GREAT! If not, then that’s a big drop-off and a lot of people will get hurt. But, either way there’s a mark-down of assets and some people getting hurt. It’s apparently inevitable.
BTW, the idea of the necessity for a big drop-off to burn out the dead wood isn’t necessarily good. If it’s naturally occurring it could be fine. But, if it’s a contrived market manipulation to kill off weaker firms so the stronger can ’steal’ their assets, then that’s very bad. Having everyone playing so close to the vest that they don’t ever get exposed to risk would hurt the world economy for decades. It’s better that everyone NOT have to raise their skirts all the way. It’s better nobody should be able to manipulate the markets. It’s better for government to regulate than for dog-eat-dog economics to dominate.
probably January of 2010, not 4 months from now.
There are also a lot of CEOs today who’s skills are being called into question. It was probably a lot easier in the Clinton years.