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In dollar amounts it was about 1.5 trillion. Can't give you the percentage you are asking for because those asset backed bonds were never regulated or tracked so those numbers don't exist.
I am one of them, but my take is not actual nationalization, where the government continues to run the bank ad-nauseum, but rather an orderly breakup and liquidation of assets and settlement with creditors similar to a bankruptcy. For example, citi definitely has assets...it has a large retail banking chain that could be absorbed by another ins ution on the right terms. It has a large credit card/collection empire that has value. Other banks and ins utions could perform the same function as the existing citibank. I simply don't accept "too big to fail'...We know that there would be losses to be absorbed by the Fed, but we are doing that anyway...the difference is that with an orderly liquidation we would actually be able to identify these and quantify these losses.
In dollar amounts it was about 1.5 trillion. Can't give you the percentage you are asking for because those asset backed bonds were never regulated or tracked so those numbers don't exist.
OK..a little bump up at the opening but that little optimistic surge is over and the market is down another 50 points going straight down...interesting article in the WSJ this morning...
The Obama Economy
As the Dow keeps dropping, the President is running out of people to blame.
As 2009 opened, three weeks before Barack Obama took office, the Dow Jones Industrial Average closed at 9034 on January 2, its highest level since the autumn panic. Yesterday the Dow fell another 4.24% to 6763, for an overall decline of 25% in two months and to its lowest level since 1997. The dismaying message here is that President Obama's policies have become part of the economy's problem.
Americans have welcomed the Obama era in the same spirit of hope the President campaigned on. But after five weeks in office, it's become clear that Mr. Obama's policies are slowing, if not stopping, what would otherwise be the normal process of economic recovery. From punishing business to squandering scarce national public resources, Team Obama is creating more uncertainty and less confidence -- and thus a longer period of recession or subpar growth.
The Democrats who now run Washington don't want to hear this, because they benefit from blaming all bad economic news on President Bush. And Mr. Obama has inherited an unusual recession deepened by credit problems, both of which will take time to climb out of. But it's also true that the economy has fallen far enough, and long enough, that much of the excess that led to recession is being worked off. Already 15 months old, the current recession will soon match the average length -- and average job loss -- of the last three postwar downturns. What goes down will come up -- unless destructive policies interfere with the sources of potential recovery.
And those sources have been forming for some time. The price of oil and other commodities have fallen by two-thirds since their 2008 summer peak, which has the effect of a major tax cut. The world is awash in liquidity, thanks to monetary ease by the Federal Reserve and other central banks. Monetary policy operates with a lag, but last year's easing will eventually stir economic activity.
Housing prices have fallen 27% from their Case-Shiller peak, or some two-thirds of the way back to their historical trend. While still high, credit spreads are far from their peaks during the panic, and corporate borrowers are again able to tap the credit markets. As equities were signaling with their late 2008 rally and January top, growth should under normal cir stances begin to appear in the second half of this year.
So what has happened in the last two months? The economy has received no great new outside shock. Exchange rates and other prices have been stable, and there are no security crises of note. The reality of a sharp recession has been known and built into stock prices since last year's fourth quarter.
What is new is the unveiling of Mr. Obama's agenda and his approach to governance. Every new President has a finite stock of capital -- financial and political -- to deploy, and amid recession Mr. Obama has more than most. But one negative revelation has been the way he has chosen to spend his scarce resources on income transfers rather than growth promotion. Most of his "stimulus" spending was devoted to social programs, rather than public works, and nearly all of the tax cuts were devoted to income maintenance rather than to improving incentives to work or invest.
His Treasury has been making a similar mistake with its financial bailout plans. The banking system needs to work through its losses, and one necessary use of public capital is to assist in burning down those bad assets as fast as possible. Yet most of Team Obama's ministrations so far have gone toward triage and life support, rather than repair and recovery.
AIG yesterday received its fourth "rescue," including $70 billion in Troubled Asset Relief Program cash, without any clear business direction. (See here.) Citigroup's restructuring last week added not a dollar of new capital, and also no clear direction. Perhaps the imminent Treasury "stress tests" will clear the decks, but until they do the banks are all living in fear of becoming the next AIG. All of this squanders public money that could better go toward burning down bank debt.
The market has notably plunged since Mr. Obama introduced his budget last week, and that should be no surprise. The do ent was a declaration of hostility toward capitalists across the economy. Health-care stocks have dived on fears of new government mandates and price controls. Private lenders to students have been told they're no longer wanted. Anyone who uses carbon energy has been warned to expect a huge tax increase from cap and trade. And every risk-taker and investor now knows that another tax increase will slam the economy in 2011, unless Mr. Obama lets Speaker Nancy Pelosi impose one even earlier.
Meanwhile, Congress demands more bank lending even as it assails lenders and threatens to let judges rewrite mortgage contracts. The powers in Congress -- unrebuked by Mr. Obama -- are ridiculing and punishing the very capitalists who are essential to a sustainable recovery. The result has been a capital strike, and the return of the fear from last year that we could face a far deeper downturn. This is no way to nurture a wounded economy back to health.
Listening to Mr. Obama and his chief of staff, Rahm Emanuel, on the weekend, we couldn't help but wonder if they appreciate any of this. They seem preoccupied with going to the barricades against Republicans who wield little power, or picking a fight with Rush Limbaugh, as if this is the kind of economic leadership Americans want.
Perhaps they're reading the polls and figure they have two or three years before voters stop blaming Republicans and Mr. Bush for the economy. Even if that's right in the long run, in the meantime their assault on business and investors is delaying a recovery and ensuring that the expansion will be weaker than it should be when it finally does arrive.
This crisis begins and ends with the GSEs and the Fed. The sad thing is that we will not have learned our lesson and will go back to yet another period of easy money and asset bubbles, as the government fails to do the one task which it dominates and that is the creation of currency and credit. Fannie/Freddie once they reemerge should either be entirely public or entirely private to avoid the inherent moral hazard in their previous life.
Downturns are regarded as the end of times by the Fed, whereas booms are regarded as a time to keep the liquor flowing. The asymmetrical approach to monetary policy has been a significant factor in the last two bubbles here in the US. The Fed lacks the wherewithal to hold expansions in check. Then again, the Fed is mandated by Congress to pursue full employment.
We're all Keynesians now, all the time. Even the threat of slower growth is an excuse to spend more and cut tax rates. Nevermind that Keynes' prescription was for an economy mired in a severe recession and on the ropes.
Ultimately, it gets back to the people. The government will give the people what they want. The people want Santa Claus. That's why Republicans are as much for increased public spending through new programs and en lements as the Dems are. Meanwhile the people behave as if there's a difference between the two parties and as if elections really matter.
Government acts madly and stupidly because the people are mad and stupid.
It's all the Wall Street bankers fault!
The people, who took advantage of low interest rates and free money for 25 years, have nothing to be ashamed of.
LOL
http://www.breitbart.tv/?p=289503
And this is not fox...it's CNBC...
"“Until the Obama administration starts listening, until they start paying attention to what you’re watching – to the stock market, until they realize that their agenda is destroying the life savings of millions of Americans – then all I can give you is caution."
And here was Obama's response:
WASHINGTON (AP) - President Barack Obama is comparing the stock market to the daily tracking polls used during campaigns, saying that paying too close attention to Wall Street's "fits and starts" could lead to bad long-term policy.
Obama spoke to reporters Tuesday after meeting in the Oval Office with visiting British Prime Minister Gordon Brown. Obama said he is not measuring policies against "the day-to-day gyrations of the stock market," but by whether lending is flowing more freely, businesses are investing and the unemployed are going back to work.
He said he is "absolutely confident" that those things will happen. But the president also said it will take time for the mistakes of the past to work their way through the system.
This isn't a broad credit default problem. Trying to paint it as such is wrong.It's all the Wall Street bankers fault!
The people, who took advantage of low interest rates and free money for 25 years, have nothing to be ashamed of.
Yes Smeagol, it IS Wall Streets fault. Not only did they give the bad loans and they managed to leverage everything around them while asking for regulations to be removed. They flat out ed us all for short term gain.
haven't you heard? cowboy has come full circle to blame it on obama.
Haven't you heard? Clambake is a ing idiot.
Obama didn't create this mess. Neither did Bush.
But Obama COULD take actions to end this mess faster instead of using it as an excuse for radical social re-engineering. If he doesn't wake the up he really is going to mortally wound our financial system and possibly take the world economy with it.
you kiss your mother with that mouth?
i was commenting on your sudden allegiance with cramer. (or anyone else that sooths your residual butt hurt)
It sure looks like one. A pretty severe one, I my add.
Yes Smeagol, it IS Wall Streets fault.
Finding a villain is always the easy way out.
Not only did they give the bad loans
Did they give those loans to themselves? Somebody took those loans and benefited from those loans. Easy access to a plasma and a car is always a nice thing, except if you couldn't afford them in the first placer.
And I'm not saying the bankers are faultless. They are guilty. But as guilty as the regulators, Government and the general public.
and they managed to leverage everything around them while asking for regulations to be removed.
I see regulators that did not do their jobs hidden somewhere in that phrase.
They flat out ed us all for short term gain.
If you did not finance yourself beyond your means in these last 20 years, then yes, you were royally ed.
Otherwise, you are also to blame.
What a great day! Market was only down 38 points! Who cares that it's the lowest it's been in a dozen years...heck...our President says it's no more important than the results of a daily tracking poll in the election. What a relief. I thought people were actually losing money.
I guess my 401K isn't important then?
I'm jumping back in with both feet soon...these bargains look too good to me. I'm already back to buying Pepsico stock through my paycheck. $48 for a stock that has a 37 year dividend record. ing A.
How rational of you.
Well, the good news is that worst case scenario the market will probably only drop a couple thousand more.
I meant to add consumer to the credit. Sure, the defaults are what kicked it off, but what really compounded this was how poorly leveraged wall street was. The financial sector is a mess and they're a mess because they ed up. Yes, Americans took bad loans but had the banks properly covered their asses we woudln't be in this situation.
No doubt that some Americans have made poor decisions, but the real reason we're in this mess is because the people who's job it was to make sure like this didn't happen LET IT HAPPEN.
Wall Street is shares about 97% of the blame. , if you want to know where the blame lies follow the ing stimulus money trail.
The daily changes in the market aren't important. What is important is the health of the financial system. Once that is stable, the market will follow.
And nothing Obama does or says on a day to day basis is going to make Citi and BoA any stronger. Its going to take time.
The issue was not leverage. The issue was bad credit decisions.
Can't argue with that. Bankers made poor credit decisions. They had no clue what type of risks they were taking. and regulators ed up too. Big time. Theywere also clueless regarding how risky banks balnce sheets' has become.The financial sector is a mess and they're a mess because they ed up.
Not only Americans. people all over the developed world.Yes, Americans took bad loans but had the banks properly covered their asses we woudln't be in this situation.
Yes. The regulators.No doubt that some Americans have made poor decisions, but the real reason we're in this mess is because the people who's job it was to make sure like this didn't happen LET IT HAPPEN.
Wall Street is shares about 97% of the blame. , if you want to know where the blame lies follow the ing stimulus money trail.
It is not that simple . . .
Last edited by smeagol; 03-04-2009 at 04:47 PM.
New Stock Market Terms
CEO - Chief Embezzlement Officer
CFO - Corporate Fraud Officer
BULL MARKET - A random market movement causing an investor to mistake himself for a financial genius
BEAR MARKET - a 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex.
VALUE INVESTING - The art of buying low and selling lower.
P/E RATIO - The percentage of investors wetting their pants as the market keeps crashing.
BROKER - What my financial planner has made me.
STANDARD & POOR - Your life in a nuts .
STOCK ANALYST - Idiot who just downgraded your stock..
STOCK SPLIT - When your ex-wife and her lawyer split your assets equally between themselves.
MARKET CORRECTION - The day after you buy stocks.
CASH FLOW - The movement your money makes as it disappears down the toilet.
YAHOO - What you yell after selling it to some poor sucker for $240 per share.
WINDOWS - What you jump out of when you're the sucker who bought Yahoo at $240 per share.
INS UTIONAL INVESTOR - Past year investor who's now locked up in a nuthouse.
PROFIT - an archaic word no longer in use.
# # # # #
If you had purchased $1000 of shares in Delta Airlines
one year ago, you will have $49.00 today.
If you had purchased $1000 of shares in AIG
one year ago, you will have $33.00 today.
If you had purchased $1000 of shares in Lehman Brothers
one year ago, you will have $0.00 today.
But---- if you had purchased $1000 worth of beer
one year ago, drank all the beer,
then turned in the aluminum cans for recycling refund,
you will have received $214.00.
Based on the above, the best current investment plan
is to drink heavily & recycle.
It's called the 401-Keg.
LOL dude - the banking sector is forever crying out for less regulation because they don't need it. Well they got it and they screwed the pooch.
I know that its your field and you don't want it to be true, but the big banks and AIG are the ones to blame here. It IS that simple.
i think esmegmol would know a little more than manny about banking
hes a banker
he works for a bank
a well known bank in america
a well known international bank
as a banker
I don't know mookie, manny is a lifelong college student, and we know how productive they are.
Money laundering drug money is hardly 'working for a bank'....
I could not agree with you more.
I know that its your field and you don't want it to be true
It was my field. I'm another casualty of the recession and the downsizing in the banking industry.
In any case, my field of expertise was lending money to big corporations, mainly in Lat Am. I had nothing to do with derivatives or mortgage backed securities.
but the big banks and AIG are the ones to blame here. It IS that simple.
Big banks and regulators share the blame equally (just because bankers cried for less regulation, regualtoars automatically had to give it to them?).
And Banks are just one part of the financial industry. Regulators lost oversight of many other players (insurance companies, hedge funds, etc), not just banks.
You also have other industries, which have been mismanaged for some time now (the Big Three in Detroit come to mind), who are at the verge of dissapearing and leaving millions without a job. Their problems cannot be blamed solely on the banking insudtry.
The drop in commodity prices has also affected many businesses.
As I said before, it is not that simple.
Last edited by smeagol; 03-05-2009 at 08:27 AM.
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