Nextproblem child: LEH. And after them WAMU, then Wachovia , no wait AIG. How about both. They are too big to bail out and they cannot finance themselves. But , yes they are too large to COMPLETELY fail.

Nextproblem child: LEH. And after them WAMU, then Wachovia , no wait AIG. How about both. They are too big to bail out and they cannot finance themselves. But , yes they are too large to COMPLETELY fail.

If I had money in Washington Mutual that I could move, especially if it wasn't in the FDIC insured parts, I'd be getting it out right now. If I hadn't done so already.

 

That doesn't make me face a lawsuit does it?

If I had money in Washington Mutual that I could move, especially if it wasn't in the FDIC insured parts, I'd be getting it out right now. If I hadn't done so already.

 

That doesn't make me face a lawsuit does it?

 

No way. I would have done it already.

 

 

Watch the VIX. When it approaches the high 28 low 29 level, we are goind to break the July lows.

 

 

 

I also believe if WAMU fails, FDIC is out of money.

Edited September 12, 200817 yr by Cknolls

Keep an eye out for GE. They too are in it in a big way.

Sounds like there's a rate cut coming, eh?

 

That's a bad, bad thing if it is.

 

Sounds like there's a rate cut coming, eh?

 

That's a bad, bad thing if it is.

Almost certainly as far as I can tell. The market has probably already priced in a .25 cut.

Only good news is, it looks like both houses in Congress are getting close to a serious energy bill. Offshore drilling will be allowed with some restrictions, tax breaks to big oil go out the window, and those funds are used for bigger tax cuts for alternative energy R&D companies and bigger breaks for consumers on high efficiency vehicles and household energy using equipment. Also, they are talking a 2028 target for 85% of vehicles being non-gas/diesel.

 

Oh, and, one possible positive of the markets crashing out in equities... this could help bolster the real estate market a bit.

 

Alt-A loans outstanding total $1 triilion dollars.

 

Subprime loans totaled $855 billion.

 

$400 billion of the Alt-A's were sold in 2006. 16% of securitized Alt-A loans issued since Jan. 2006 are at least 60 days late.

 

Many of these loans (around $270 billion) were interest only or with a low teaser rate, and reset in 3 or 5 years.

 

So we are going to see a wave of mortgages resetting to new rates; rates that can jump 4-8% or more from the teaser levels.

 

Some option arms are resetting at 12.25%, which can double a payment.

 

Wachovia and WAMU were the biggest sellers of Alt-A loans, and had $122 billion and $53 billion respectively on their books at the end of the second quarter.

-500.

HP just announced 24,700 layoffs. Ouch.

HP just announced 24,700 layoffs. Ouch.

The fundamentals of the economy are strong.

A lot of theirs is "synergy" after the EDS buyout, but still... there's still a lot of belt tightening happening.

 

HP just announced 24,700 layoffs. Ouch.

 

Quick raise their taxes!!! They have a bunch more money now!!!

AIG is down over 50% in pre-market trading.

 

Ouch.

AIG is down over 50% in pre-market trading.

 

Ouch.

GS and MSDW crashing too.

 

And we have just reached a year of me looking for a job. FAN-f***ing-tastic!

 

This is the third time I've been looking for a job in a crap-ass economy.

There is now renewed talk of the Feds stepping in as a last resort option to save AIG.

And there we go. The Feds will give AIG $85 billion dollars, call it a loan but also buy out the majority of the company and pretend it's worth that much.

 

The U.S. government just took an 80% stake in a Dow component, I believe.

 

Workers of the world unite!

I'm going to do my best John McCain impression and say "I don't know anything about the economy", other than the fact it's bad right now. But shouldn't the government stay out of stuff like AIG and maybe even Fannie Mae and Freddie Mac? It seems weird to have them involved in things like this. But again, I know nothing about the economy and realize I could be very wrong. Somebody please help me out and try and explain this.

I'm going to do my best John McCain impression and say "I don't know anything about the economy", other than the fact it's bad right now. But shouldn't the government stay out of stuff like AIG and maybe even Fannie Mae and Freddie Mac? It seems weird to have them involved in things like this. But again, I know nothing about the economy and realize I could be very wrong. Somebody please help me out and try and explain this.

The 2 Mortgage giants are an interesting deal, because they were originally started by the government and it's only been really in recent years that they've behaved as entities in the market rather than as government run things. The government guarantee on them was basically implicit. If the government turned its back and let someone run them in to the ground to make a quick buck, the government was always going to have to bail them out. They actually have provided a fair amount of stability in the mortgage market and the peopel who have mortgages probably pay something like a half a point of interest less because they exist.

 

AIG though is another matter. This certainly seems to be another case of the fed deciding that this company was too big to fail, despite all their mistakes. Lehman Bros. going in to bankruptcy is going to be a mess that takes years to clean up, AIG would have been worse. Would have been a major disruption to an awful lot of people's lives (Imagine needing to get in touch with them related to an insurance policy tomorrow. Yowza).

 

Basically, it's the classic example of the government helping the big guy. You go bankrupt tomorrow because of some medical bills, ha, personal responsibility! You shoulda planned for that. AIG goes bad because of some bad bets, and the government is happy to help.

 

Anyway, congrats Americans, we just bought ourselves a failed insurance company!

I'm going to do my best John McCain impression and say "I don't know anything about the economy", other than the fact it's bad right now. But shouldn't the government stay out of stuff like AIG and maybe even Fannie Mae and Freddie Mac? It seems weird to have them involved in things like this. But again, I know nothing about the economy and realize I could be very wrong. Somebody please help me out and try and explain this.

AIG is arguably one of the biggest players in the entire Financial Services Industry. THey have a piece of absolutely everything and my belief is that as a whole they are a good company. The problem is they were forced to pay up a s***load of debt due to bond's changing and they didn't have enough investments which were liquid that they found themselves in a major hurt for funding.

 

I didn't think it was going to keep getting uglier, but it is.

The 2 Mortgage giants are an interesting deal, because they were originally started by the government and it's only been really in recent years that they've behaved as entities in the market rather than as government run things. The government guarantee on them was basically implicit. If the government turned its back and let someone run them in to the ground to make a quick buck, the government was always going to have to bail them out. They actually have provided a fair amount of stability in the mortgage market and the peopel who have mortgages probably pay something like a half a point of interest less because they exist.

 

AIG though is another matter. This certainly seems to be another case of the fed deciding that this company was too big to fail, despite all their mistakes. Lehman Bros. going in to bankruptcy is going to be a mess that takes years to clean up, AIG would have been worse. Would have been a major disruption to an awful lot of people's lives (Imagine needing to get in touch with them related to an insurance policy tomorrow. Yowza).

 

Basically, it's the classic example of the government helping the big guy. You go bankrupt tomorrow because of some medical bills, ha, personal responsibility! You shoulda planned for that. AIG goes bad because of some bad bets, and the government is happy to help.

 

Anyway, congrats Americans, we just bought ourselves a failed insurance company!

AIG isn't what I'd necessarily call a failed insurance company, they just weren't anticipating a s***load of debt coming due because they couldn't hit the debt covenants. It all came down to a s***load of bonds going bad and them finding themselves in a world of hurt. Is there blame, sure, but they aren't near as dumb as Lehman. Hell, Lehman brothers had every opportunity to get themselves squared away but they were dumbasses, turned down that Korean money and are now s*** up a creek.

 

We have bad bets, but anyone mention how ridiculous PIMCO ending up making out based upon there shorts in Fan/Freddie. That was one hell of a one day earning (this is a little dated, because I've had computer problems at home but wanted to point it out cause I Follow PIMCO big time). My big client at work is the company that founded PIMCO. Bill Gross is also one of my hero's, just a great investor.

AIG isn't what I'd necessarily call a failed insurance company, they just weren't anticipating a s***load of debt coming due because they couldn't hit the debt covenants. It all came down to a s***load of bonds going bad and them finding themselves in a world of hurt. Is there blame, sure, but they aren't near as dumb as Lehman. Hell, Lehman brothers had every opportunity to get themselves squared away but they were dumbasses, turned down that Korean money and are now s*** up a creek.

You are missing another BIG bad component for AIG - they were a big player in credit derivatives on those same bad debts. They swapped out the anticipated risk and even bought some new risk. Once those started being written down in reflection of the bad debts, their asset numbers tanked. And even now that the write down reflects some put-side CDS risk, there is still the reality that some of those swap buyers may not be able to meet AIG's calls, and that gives further risk.

 

So, AIG saw their assets dwindle quickly, and their risk profile skyrocket, in part because they engaged in unregulated swaps.