National Bankruptcy

[Lorn]

Re: National Bankruptcy

The BOA/ML merger makes zero sense, at least from BOA point of view. On Friday ML stock closed at $17.05 which is about a $26 Billion market cap.

BOA agrees to pay $29/share or about $44 Billion.

huh? Hello, I understand there is a premium to be paid when buying a company out but it was very obvious that on Monday ML shares would have plunged from that Friday close.

Sounds to me like someone had a gun to BOA and said either your brains or your signature on this merger agreement.

No matter how one looks at it, just plain fugly.

[runningman]

Re: National Bankruptcy

It will be funny to see who bails out BOA in 18 months when we really see how ugly this pig is. We won't know how bad it is until the FED raises interest rates. Then we will see the real carnage of this.

Great Quote from Everett Dirksen

"A billion here, a billion there, and pretty soon you're talking real money"?


AIG gets $85 Billion bailout?? Jesus help us. I owe $2,000 on my VISA why can't we wipe that out??

good article here

http://www.informationclearinghouse.info/article20771.htm

[Lorn]

Re: National Bankruptcy

I owe $2,000 on my VISA why can't we wipe that out??

Done.

[FM]

Re: National Bankruptcy

technically with a couple keyboard strokes you could

[Lorn]

Re: National Bankruptcy

Something which is puzzling. When I ran a company we always did one thing with bad debt at the end of every year, we wrote it off. Bad debt was bad debt.

So now I read idiot Christopher Cox http://www.bloomberg.com/apps/news?p...WO0&refer=home

Buying bad debt? And then trying to dispose of it? What?!

Bad debt is bad debt. Write it off and move on.

[Lorn]

Re: National Bankruptcy

http://www.express.co.uk/posts/view/61982/Is-it-any-wonder-we-re-in-trouble-when-politicians-inhabit-another-world

Ugh...no wonder I agree with Sean.

[Miroslav]

Re: National Bankruptcy

Something which is puzzling. When I ran a company we always did one thing with bad debt at the end of every year, we wrote it off. Bad debt was bad debt.

So now I read idiot Christopher Cox http://www.bloomberg.com/apps/news?p...WO0&refer=home

Buying bad debt? And then trying to dispose of it? What?!

Bad debt is bad debt. Write it off and move on.

Yes, but your business probably didn't have $13 trillion in derivatives spread all over the world like Bear Stearns did. That's about the size of U.S. GDP.

When you write something off, it means that you are absorbing the loss out of your own pocket. That's relatively easy to do when your loss is small in the grand scheme of things and only harms your company and maybe its close business partners. But the whole point of this crisis is precisely that these losses are so large and pervasive that if you simply "write it off and move on", you will likely trigger a global economic meltdown. It's a matter of opinion, but the prevalent thinking in financial/economic/policy circles is that there are times when you do need government-led intervention to unwind massive derivatives positions, to absorb losses in an orderly manner, to keep key market players functional. So while I don't necessarily agree with Christopher Cox's specific proposal, his line of thinking is not completely out in left field...

Of course, the sobering reality is that there is ultimately no way to just make the loss disappear and avoid all of the unpleasant things associated with it. A loss is still a loss and someone has to take it; there is no free lunch. And so the people who take it now are all of us taxpayers over a series of years. But that is still better than the alternative, which would be to take it all overnight and set off a global market panic that could destroy many times the value of what has already been lost so far - and make us all even worse off as a result.

[Lorn]

Re: National Bankruptcy

Well, I hear what you are saying. And yes its the common thinking maybe in the elitist government circles and those who are/think they are in power.

I certainly don't agree with it. Yes, it would be horrible if all this debt were written off. Horrendous actually. But at the end of the day, the hard reality is most, maybe even all of it is absolutely worth zero. So if the government wants to buy something that is worth zero how can that be good? In fact all it will serve to do is make things worse.

I hope these guys are right. But shit is shit, no matter what one does to it.

[Miroslav]

Re: National Bankruptcy

Well, I hear what you are saying. And yes its the common thinking maybe in the elitist government circles and those who are/think they are in power.

I certainly don't agree with it. Yes, it would be horrible if all this debt were written off. Horrendous actually. But at the end of the day, the hard reality is most, maybe even all of it is absolutely worth zero. So if the government wants to buy something that is worth zero how can that be good? In fact all it will serve to do is make things worse.

I hope these guys are right. But shit is shit, no matter what one does to it.

Yes, most of it is obviously worth essentially zero and everyone knows it (although, actually, distressed debt can have value and actually be highly lucrative - aka junk bonds). But that's not the point. The point of such government intervention is a belief that the consequences of letting a Fannie Mae fail and suddenly unwind its losses on the open market is worse than shouldering some of the losses and unwinding them in a slower, more controlled manner.

And that's a matter of case-by-case debate. But I have to say, I really think you're drastically underestimating the impact that an outright failure of some of these institutions can have on us. Have you asked yourself what the likely consequences would have been if we had just stood by and watched while, for instance, Fannie Mae and Freddie Mac died? These institutions originate or guarantee about 75% of our mortgages and held $5 trillion in debt. That is larger than the debt of most NATIONS. So let's start here in the US:

Tons of banks have balance sheet assets full of Fannie Mae and Freddie Mac mortgages. They wouldn't have survived the fallout and you'd have banks going down right and left all over the nation. We have the FDIC, but that's only up to $100k so you can imagine how many people would essentially be losing cash and what the runs on the banks would look like anyways; that would only end up causing more banks to fail. So now you have the entire banking system faltering.

Furthermore, you'd now have a bunch of lenders gone and panic would ensue among the remaining market participants, so liquidity would just complete dry up - overnight. So forget about getting financing if you're a business or a student, forget about maintaining access to your credit cards, forget about buying a car, forget about getting a mortgage to buy a home. Not to mention that home values across the nation would be decimated. So now you have untold millions of consumers suffering and drastically curtailing their spending, and you have businesses folding throughout the nation. Massive unemployment would soon ravage the country and a nasty bout of deflation would take hold. And can you imagine what the equities markets are doing during this time? The crash would make 1929 look like a tea party. Many businesses would end up going under and untold billions of people would lose everything.

And it gets worse. Foreign entities and government obviously notice this and don't want to even touch American debt anymore. Not to mention that many international banks are also interwoven into this matrix and hold tons of assets that originated from Fannie Mae and Freddie Mac mortgages. They'd all start going under. And then you have the international equities markets, and you can guess what will happen to them.

So you end up with the financial equivalent of throwing your car into reverse while driving 100 mph down the freeway. In other words, widespread economic disaster. Our economy would basically stop, and so to a large degree would our way of life as well. It's a pretty damn good case for government intervention.

Here's an article with some good quotes in it from finance ministers and financial experts around the world regarding Fannie Mae and Freddie Mac:

http://www.npr.org/templates/story/story.php?storyId=94424809

[runningman]

Re: National Bankruptcy

cramer thinks it is "Financial Terrorism"

http://www.cnbc.com/id/26778065

[88Mariner]

Re: National Bankruptcy

Cramer is incredibly stupid. it boggles the mind how he got his own show. it certainly wasn't about ability.

[runningman]

Re: National Bankruptcy

I know he has been wrong so many times. I think it is funny when people call in and tell him they lost money.

http://ca.youtube.com/watch?v=ayGcF8dnTV0

[Lorn]

Re: National Bankruptcy

So you end up with the financial equivalent of throwing your car into reverse while driving 100 mph down the freeway. In other words, widespread economic disaster. Our economy would basically stop, and so to a large degree would our way of life as well. It's a pretty damn good case for government intervention.

Well my friend we shall find out over the course of the next little while whether all this bailout nonsense really is what they make it out to be. I hope you are right.