2008 Financial Thread

[Scott Campbell]

Ty is way to smart for that...Ty is hoping to be retired within the next 3 years..5 max. And, then on to my fun career.

Cept smart guys don't save up to buy a new job.

[Tyrone Bigguns]

Ty is way to smart for that...Ty is hoping to be retired within the next 3 years..5 max. And, then on to my fun career.

Cept smart guys don't save up to buy a new job.

Save up to buy a job? I have no idea what you are talking about.

However, I would say that people who save up and buy a company are doing exactly what you say smart people don't do.

[Scott Campbell]

Ty is way to smart for that...Ty is hoping to be retired within the next 3 years..5 max. And, then on to my fun career.

Cept smart guys don't save up to buy a new job.

Save up to buy a job?

Exactly. Chump move.

[Tyrone Bigguns]

Ty is way to smart for that...Ty is hoping to be retired within the next 3 years..5 max. And, then on to my fun career.

Cept smart guys don't save up to buy a new job.

Save up to buy a job?

Exactly. Chump move.

I never said i was doing that.

But, i certainly can see why someone who has worked for years might decide to buy a franchise or decide to buy an existing business. I don't see that as being a chump move.

But, again..this isn't what i'm doing.

I'll still work, but it will be in a hobby area.

[Scott Campbell]

Ty is way to smart for that...Ty is hoping to be retired within the next 3 years..5 max. And, then on to my fun career.

Cept smart guys don't save up to buy a new job.

Save up to buy a job?

Exactly. Chump move.

I never said i was doing that.

But, i certainly can see why someone who has worked for years might decide to buy a franchise or decide to buy an existing business. I don't see that as being a chump move.

But, again..this isn't what i'm doing.

I'll still work, but it will be in a hobby area.

So opening a restaurant is a hobby?

[Tyrone Bigguns]

Ty is way to smart for that...Ty is hoping to be retired within the next 3 years..5 max. And, then on to my fun career.

Cept smart guys don't save up to buy a new job.

Save up to buy a job?

Exactly. Chump move.

I never said i was doing that.

But, i certainly can see why someone who has worked for years might decide to buy a franchise or decide to buy an existing business. I don't see that as being a chump move.

But, again..this isn't what i'm doing.

I'll still work, but it will be in a hobby area.

So opening a restaurant is a hobby?

I don't know why you continue to postulate about opening a biz. That has never been a plan. I prefer to live off interest/yield/whatever the term you like..and work part time.

Restaurant: So, in your opinion those who open or buy restaurants are chumps? Not taking into account success ratio.

Ty isn't a chef. Ty has never owned or managed a restaurant. The only benefit Ty can see to owning one is that my food/alcohol bill would decrease...assuming i liked my own place.

[Freak Out]

At least you fuckers are working it back towards some financial type talk.

[Freak Out]

We bought a stake in AIG or gave them a loan? The US now has control of AIG. WTF? Can I have my old car insurance back please?

[Kiwon]

We bought a stake in AIG or gave them a loan? The US now has control of AIG. WTF? Can I have my old car insurance back please?

What was the word they were using in "Saving Private Ryan?" - FUBAR.

[texaspackerbacker]

We bought a stake in AIG or gave them a loan? The US now has control of AIG. WTF? Can I have my old car insurance back please?

To be precise, AIG was loaned $85 billion secured by WARRANTS--basically the ability to buy shares in the company at a fixed price. The government doesn't get control of the company unless AIG defaults. Even then, those warrants are basically marketable assets, so I would think the government would re-coup its loan by selling them rather than exercising them and taking over a private business. Of course, if the Dems get in, you never know. Government ownership of the biggest insurance company would be a significant step toward the socialism they covet.

[Kiwon]

Getting killed again today.

Down 9% right now.

[LL2]

We have our life insurance policies with AIG. I guess they are now backed by the security of the government.

China most be a nice lender giving all their money on loan to the US to pay for all these bailouts.

[texaspackerbacker]

I tended to be against bailing out AIG when the news of their plight first came out. However, it seems that they are big into mortgage insurance, among other things, and therefore, on the hook for a helluva lot of defaulted mortgages.

In addition to protecting the other aspects of AIG's business--various other kinds of insurance, as well as pension funds, etc., this mortgage insurance thing puts this bail out in pretty much the same category as the Fannie Mae and Freddie Mac bail outs--protecting the sources of money into real estate financing rather than letting it dry up, as some are fearful of.

Almost everybody agrees that the ultimate solution of the credit market "crisis"--I hate that word--is the end of the downturn in real estate prices. While that would eventually happen anyway, it will be hastened by the availability of more money for mortgage financing.

[texaspackerbacker]

We have our life insurance policies with AIG. I guess they are now backed by the security of the government.

China most be a nice lender giving all their money on loan to the US to pay for all these bailouts.

And yes, why are the Chicoms so "nice" as to loan/invest so much money at such a low rate of return in the American economy?

Good question. I don't really know. It does NOT increase their leverage and power over us--just the opposite. Many decades ago when American banks invested so heavily in third world countries, I thought and said, that didn't give us power over them, it gave them power over us because of the threat of default. Well, it's highly unlikely that WE--America--will default on debt to the Chinese for purely financial reasons. However, this does put China in the position of having a lot to lose in the event of major destruction of America--nuclear war, multiple acts of terrorism with WMDs, etc. Since China is one of very few powers even remotely capable of enabling that sort of thing, it tends to be a good thing that they are putting themselves in a position to lose severely if we go down.

If I was the Chicoms, and wanted to harm America--which they PROBABLY still do, I think a could find a helluva lot more effective ways to use my money toward that end than investing it in American securities. So why do they do what they do? I don't know. Maybe somebody on our side has some kind of arm-twisting ability on them that isn't readily apparent. Maybe the "Illuminati" or the "Zionist bankers" are pulling their strings and preventing them from killing off the parasitic host--America. Who knows!

[sheepshead]

Fannie Mae - whose fault is it anyway?

Our major financial institutions are dropping like flies -- Merrill Lynch, JP Morgan Chase, Citigroup, Lehman Brothers, Fannie Mae, Freddie Mac -- along with some major collateral damage such as insurer AIG, which was heavily invested in Fannie Mae and Freddie Mac (their stock is now worth pennies) and has suddenly lost its cash reserves.

This is an election year, and Democrats want to win the White House and retain their majority control over Congress, so it is a sure bet that Republicans will be blamed for everything.

Fortunately, for those of us who like to see all of the facts before we make a decision, the Internet allows us to search news stories from the past 5 or 10 or 15 years, and track the financial meltdown from the time it was just a blip on the radar of a few astute folks, to the current market crisis. Here are some interesting items that have recently been dug up by bloggers:

The three biggest total recipients of political contributions from Fannie Mae and Freddie Mac are: Chris Dodd, Barack Obama, and John Kerry. All are Democrats. This list is even more stunning when you consider that Obama has only been in the US Senate less than three years, compared to Dodd (27 years) and Kerry (23 years). I'm going to guess that Obama's close ties to community organizing and advocacy outfits like ACORN, with their longstanding support for affordable housing, made Obama the most attractive member of the Senate in terms of supporting anything that Fannie and Freddie wanted. And get this -- Congressional Democrats want to give ACORN and other advocacy groups money from Fannie and Freddie's coffers in the form of an "Affordable Housing Trust Fund."

Near the end of July, John McCain directly addressed the ill fortunes of Fannie Mae and Freddie Mac, and pushed for stronger regulation of both those entities. This is before the bottom fell out of Fannie and Freddie. At that time, Barack Obama had yet to make a statement about the solvency of Fannie and Freddie, or to propose a solution to the problem.

Whose policies led to the credit crisis? Five years ago, the Bush Administration outlined the oversight problems at Fannie Mae and Freddie Mac and proposed much tighter government regulation of them. Speaking for the Democrats, Congressman Barney Frank said, "These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." In other words, in 2003, Democrats believed that more regulation was a bad idea, because it would put a damper on their expanded affordable housing programs. The "free market" had nothing to do with Bush's proposal or the Democrats' opposition to it.

The Clinton Administration pushed for an aggressive expansion of community development and affordable housing funds, luring banks into providing these loans with guarantees that Fannie Mae and Freddie Mac would be underwriting them. Two long-time Clinton cronies, Franklin Raines and Jamie Gorelick (of pre-9/11 law enforcement "wall" fame) together raided Fannie Mae for over $100 million in compensation, while their financial incompetence and accounting shenanigans cost the company billions.

Here's Robert B. Reich, former Clinton Administration Secretary of Labor, on MSNBC last night (transcript from RushLimbaugh.com):

REICH: In the latter years of the Clinton administration -- when I was not there any longer, I should add -- there was an attempt by Alan Greenspan and Bob Rubin and a few others to deregulate financial markets, and they did. They split commercial banking off from investment banking. And many people say, "Well, that was the beginning of the problem," and then, of course, in 2003-2004, Alan Greenspan reduced short-term interest rates to the point where every single bank wanted to lend money. I mean, if you could stand up straight you could get a bank loan because there was so much pressure to get that money out the door. Money was so cheap. So, yes, there is some responsibility on Democrats, some responsibility on Alan Greenspan and the Fed.

This Washington Post editorial sheds a stunning amount of light on the Bush Administration attempts to shore up Fannie Mae and Freddie Mac with additional oversight and regulation, and the repeated attempts of Fannie/Freddie lobbyists and their Democrat acolytes to defeat those reforms. To wit:

President Bush was receptive to reform. He withheld nominees for Fannie and Freddie's boards -- a presidential privilege. While it would have been valuable politically to use such positions to reward supporters, the president put good policy above good politics.

In subsequent years, officials at Treasury and the Council of Economic Advisers (especially Chairmen Greg Mankiw and Harvey Rosen) pressed for the following: Requiring Fannie and Freddie to submit to regulations of the Securities and Exchange Commission; to adopt financial accounting standards; to follow bank standards for capital requirements; to shrink their portfolios of assets from risky levels; and empowering regulators such as the Office of Federal Housing Oversight to monitor the firms.

The administration did not accept half-measures. In 2005, Republican Mike Oxley, then chairman of the House Financial Services Committee, brought up a reform bill (H.R. 1461), and Fannie and Freddie's lobbyists set out to weaken it. The bill was rendered so toothless that [Andrew] Card called Oxley the night before markup and promised to oppose it. Oxley pulled the bill instead.

During this period, Sen. Richard Shelby led a small group of legislators favoring reform, including fellow Republican Sens. John Sununu, Chuck Hagel and Elizabeth Dole. Meanwhile, Dodd -- who along with Democratic Sens. John Kerry, Barack Obama and Hillary Clinton were the top four recipients of Fannie and Freddie campaign contributions from 1988 to 2008 -- actively opposed such measures and further weakened existing regulation.

The story is certainly complicated, but much of the evidence suggested that it was Democrats, not Republicans, who opposed mortgage lending reforms and additional regulation of Fannie Mae and Freddie Mac. Their opposition was linked directly to their support for "affordable housing" (a prominent civil rights/racial issue) and the lobbying dollars that they received from Fannie and Freddie. Money definitely talked, and it was Democrats who were listening.