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Our financial system is insolvent

Discussion in 'Sports and News' started by poindexter, Sep 13, 2008.

  1. Double Down

    Double Down Well-Known Member

    Professor Notorious B.I.G. says this is simply not a problem. He demonstrates his theory here, plotted in graph form.

    [​IMG]
     
  2. Boom_70

    Boom_70 Well-Known Member

    This is a serious deal - Lehman is sitting on billions of dollars of mortgage backed securities that could become virtually worthless. If deal is not structured correctly it will have a negative effect on the entire world financial market.

    When the trading desk at Lehman was trying to move this stuff they could not even get anyone to answer the phone.

    The irony is that Goldman Sachs is the firm that stuck Lehamn with a lot of this stuff. Now former Goldman chairman and now treasury sec Paul has to come up with solution.

    The simple way to look at this is like a game of Old Maid ( seems sexist in the 21st century) a package of securities keeps getting passed around and someone get left holding them.

    Monday could be a very rough day.
     
  3. three_bags_full

    three_bags_full Well-Known Member

    These large companies are dinosaurs, and they'll all be gone before long. This is just the tip of the iceberg, as far as they're concerned.

    If someone is stupid enough to think for a minute that "our financial system is insolvent" because one of these old, greedy companies is failing, then there's no need in debating it. You want to talk about BIG failures? Read up on LTCM (and a guy named Merton Scholes -- probably the biggest financial brain we've ever seen) or Barings Bank.
     
  4. Michael_ Gee

    Michael_ Gee Well-Known Member

    There's hundreds of billions of dollars in debt out there (nobody really knows how much) that will never get paid back. That doesn't mean the system is insolvent (although some institutions in it are). It does mean the system is poorer than most suspect. American society is facing a writedown of assets.
    This is a remarkably ideology-free problem facing the next President, since there are no solutions except sacking up and telling the public the bad news.
     
  5. jgmacg

    jgmacg Guest

    Because he has the biggest car of anyone here, I'm going with Boom on this.
     
  6. three_bags_full

    three_bags_full Well-Known Member

    I'll certainly agree with that.
     
  7. Twoback

    Twoback Active Member

    Well, honestly, it appears to have staved off a recession.
    GDP grew at a 3-plus percent annual rate last quarter.
    Not saying I'm for or against, just giving you the facts.
     
  8. Football_Bat

    Football_Bat Well-Known Member

    I'll disagree slightly. This time last week the feds propped up Fannie and Freddie (a totally necessary move as I've said before) and the market shot up 300 points. I suspect with comparisons to Bear Stearns (another take-out-the-trash-Friday story), form would hold.

    Lehman is bigger than Bear, but would barely make a pimple on Fannie's taint. So the markets can shrug that off still. But if we find out that Ike fucked up a lot more than we know of the oil infrastructure, look out below.
     
  9. three_bags_full

    three_bags_full Well-Known Member

    I'm down with that.
     
  10. Flying Headbutt

    Flying Headbutt Moderator Staff Member

    The problem is the government is trying to get other investment people to pump money into Lehman so BOA or Barclay's or someone else will by them with cleaner records. Those investment houses stand to gain nothing in return, and thus want the government to chip in too, but the government is saying that's not going to happen. So now we're entering a standoff today in these latest meetings.

    I'm sick of the government bailing all these golden parachutists out and would just as soon see Lehman fail. It'd probably be a disaster, but there are lessons to be learned out of this.
     
  11. Michael_ Gee

    Michael_ Gee Well-Known Member

    Headbutt, as satisfying as that would be in some respects, the problem is the U.S. economy and government owe so much money to so many people we cannot afford to let them have a sniff of the idea they won't get paid back. The Fannie-Freddie bailout happened at warp speed in large part because the head of China's central bank said "it had better" and pretty much said his country would dump all its U.S. debt (maybe a trillion) if its Fannie-Freddie debt wasn't made whole.
    This is the unpleasant fact our nation will not accept nor even discuss. Financially, we are no longer autonomous. Forget imported oil. We're living off imported money.
    Don't blame McCain or Obama for not talking. A candidate who made this an issue would get fewer votes than Kucinich. It's not a reality American can deal with.
     
  12. poindexter

    poindexter Well-Known Member

    I've said this for years. Our destiny as a country is determined by the Chinese and Sauds who own us to the tune of 10 trillion. They can call the shots.

    But as people on this thread demonstrate, just say "GDP" and its like everything is all right.
     
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