Our financial system is insolvent

Vanity Fair had a great article about a year ago on the Chinese buying up treasury notes.

 

In fairness, Poin, it works both ways. The Chinese are forced to do things that are not really in their long-term economic interests to make sure the U.S. can keep buying the crap it makes. But if some ambitious Chinese Communist leader comes to the conclusion the way to keep the people happy is to invest in THEIR ability to buy consumer goods, the game is over-and so is the U.S.A. as the world's dominant country.

 

http://online.wSportsJournalists.com/article/SB122139688846233147.html
A sale of Lehman to either Barclays or Bank of America Corp. remained dependent on government financial support, according to people familiar with the situation.

Insolvent. The lot of them.

The five top investment banks handed out 100 billion in bonuses the past five years to "attract and retain" the talent.

You'd think with all that scary "talent", someone would be able to come up with a plan other than "government assistance".

 

I don't know whether the feds will let BOA snap up another bargain-basement item. They've already bought MBNA and Countrywide in the last year.

 

AIG needs a $40 billion loan and wants it from John Q. Public.

http://dealbook.blogs.nytimes.com/2008/09/14/aig-seeks-fed-aid-to-survive/?ref=business

Insolvent. The lot of them.

 

why don't the lehman partners step up and bail it out? why didn't the bears stearns partners?

how much compensation did they suck out over the last 10 years?

each partner probably banked 300-400 million. figure lehman and bear each had 50-75 partners.

why do they get off the hook? the shareholders take the hit, and the partners skate away to their caribbean islands.

 

So what should I do with my 401K tonight? Move it all to "cash" until the ripple effect goes through the market Monday morning? Ride it out? Stick my head between my knees and kiss my keister goodbye?

 

If you're not close to John McCain's age, just ride it out with the stocks. They'll bounce back eventually. That being said, my friend who is in the bond trading biz took most of his money out of U.S. banks in March and moved it to Switzerland. He said then it was only going to get worse. And he has Ivy League biz school credentials.

 

The headlines on wsj online right now look pretty damn serious.



"Oh, hai! You are in Depression now?"

 

It's fascinating watching CNBC World right now. The concern, I don't want to call it a panic but it's bordering on that, is palpable.

Nobody really knows what's going on. One guy says Lehman's bankruptcy is providing "clarity" to which he gets called out on that. Others are saying the markets are headed for a bear market recession.

One guy makes a very good point, it's capitalism so they should have just let Bear Stearns go, Fannie and Freddie go. "They needed to treat the patient rather than just the symptoms."

The line of the day as the Euro markets open and the bottom falls out: "The (US Savings and Loan) bailouts in the 1980s will look like a vicar's tea party compared to this."

 

NEW YORK - When Wall Street woke up Monday morning, two more of its storied firms had vanished.

Lehman Brothers, burdened by $60 billion in soured real-estate holdings, said it is filing for Chapter 11 bankruptcy after attempts to rescue the 158-year-old firm failed.

Bank of America Corp. said it is snapping up Merrill Lynch & Co. Inc. in an $50 billion all-stock transaction.

The demise of the independent Wall Street institutions came as shock waves from the 14-month-old credit crisis roiled the U.S. financial system six months after the collapse of Bear Stearns.

The world's largest insurance company, American International Group Inc., also was forced into a restructuring.

And a global consortium of banks, working with government officials in New York, announced a $70 billion pool of funds to lend to troubled financial companies.

The aim, according to participants who spoke to The Associated Press, was to prevent a worldwide panic on stock and other financial exchanges.

http://news.yahoo.com/s/ap/20080915/ap_on_bi_ge/financial_meltdown

 

And ends with:

Christopher Whalen, managing director of Institutional Risk Analytics, a research firm, predicts that approximately 110 banks with $850 billion in assets could close by next July. That's out of 8,400 federally insured institutions, he said, which together hold $13 trillion in assets.

Individual customers are starting to get nervous about the financial health of their banks for the first time in generations, he said. Whalen's firm analyzes the safety and soundness of banks for business clients, but began receiving inquiries from individuals in the past two months for the first time, he said.

"If we don't get ahead of this, we are going to face a run on the retail banks by election day," he said.