Financial Crisis update

[Assasin]

Califonia a let go 20000 state workers.
Some of Georgia school districts planning layoff some teachers will be affected. Budget by next month.

it is getting ruff out deh.

We need the stimilus NOW.

[Islandman]

Stimulus coming but it is going to be a drop in the bucket.

Until them find a solution for the technically bankrupt banks like Citi and Bank of America, we going to be caught in limbo.

More and more it looking like some form of nationalization is the only way to save these banks without overpaying for the junk they have on thier books.

[Me]

Bank of America and Citi do not need to be nationalized. They (especially Citi)are already pretty much nationalized.

What they need to do is sell some of their quality assets not their toxic assets. If they are claiming that these toxic assets have higher values than the current market values then let them hold it and get the eventual gain from holding. Any cash flow needs can be satisfied by selling some of their high quality assets.


Bank of America alone has over 20 billion worth of equity interest in International financial institutions. They should be forced to sell that before the get any bailout funds. Waive them capital gains tax on the gain if any.

[Islandman]

Well, if they were really nationalized and not "pretty much", selling those assets would be a govt decision instead of the current managements decision.

Isn't that part of the problem? They are slowly being kinda-sorta nationalized but nobody wants to come out and say it because it is not the so-called capitalist way.

[Hortical]

Bank nationalisation gains ground with Republicans

Bank nationalisation gains ground with Republicans

By Edward Luce and Krishna Guha
Published: February 17 2009 19:44 | Last updated: February 18 2009 01:07

Long regarded in the US as a folly of Europeans, nationalisation is gaining rapid acceptance among Washington opinion-formers – and not just with Alan Greenspan, former Federal Reserve chairman. Perhaps stranger still, many of those talking about nationalising banks are Republicans.
Lindsey Graham, the Republican senator for South Carolina, says that many of his colleagues, including John McCain, the defeated presidential candidate, agree with his view that nationalisation of some banks should be “on the table”.



Mr Graham says that people across the US accept his argument that it is untenable to keep throwing good money after bad into institutions such as Citigroup and Bank of America, which now have a lower net value than the amount of public funds they have received.
“You should not get caught up on a word [nationalisation],” he told the Financial Times in an interview. “I would argue that we cannot be ideologically a little bit pregnant. It doesn’t matter what you call it, but we can’t keep on funding these zombie banks [without gaining public control]. That’s what the Japanese did.”



Barack Obama, the president, who has tried to avoid panicking lawmakers and markets by entertaining the idea, has moved more towards what he calls the “Swedish model” – an approach backed strongly by Mr Graham. In the early 1990s Sweden nationalised its banking sector then auctioned banks having cleaned up balance sheets. “In limited circumstances the Swedish model makes sense for the US,” says Mr Graham.
Mr Obama last weekend made clear he was leaning more towards the Swedish model than to the piecemeal approach taken in Japan, which many would argue is the direction US public policy appears to be heading.
“They [the Japanese] sort of papered things over,” Mr Obama said. “They never really bit the bullet . . . and so you never got credit flowing the way it should have, and the bad assets in their system just corroded the economy for a long period of time.”


Administration officials acknowledge that the rescue plan unveiled by Tim Geithner, Treasury secretary, last week could result in the temporary nationalisation of some weak banks.
The plan sets out a framework for revealing the extent of the likely credit losses facing banks. Most private sector analysts believe the exercise will reveal that some banks have large capital shortfalls.
Policymakers acknowledge that if this is indeed the case, it will be difficult for those with the largest shortfalls to raise the required equity from the markets, in which case the government would probably have to take temporary control. Moreover, while nationalisation remains taboo in some political circles it is increasingly openly discussed among past and present economic policymakers of all leanings.


“In this country nationalisation of some banks – not the whole banking sector – should be a last resort, but it should definitely now be on the table,” said David Walker, head of the pro-free market Peterson Institute and a former senior official in the George W. Bush administration.
The time for biting the bullet may also be fast approaching.
In early April, big institutions will publish their first-quarter results. If the intervening Treasury stress tests have not by then revealed the true state of their balance sheets, then their first-quarter results may do so.
“The first week in April – that’s when the children’s party is over,” says Chris Whalen, co-founder of Institutional Risk Analytics. “That is when the obvious will become apparent.”


The Obama administration remains opposed to federal control. Mr Geithner last week said: “Governments are terrible managers of bad assets.”
Others say he may eventually face no choice. “The danger we face is a Freddie Mac/Fannie Mae scenario where government gives the banking sector guarantees and then socialises the losses,” says Adam Posen, an economist. “That’s the worst thing we could do.”

Copyright The Financial Times Limited 2009

[Me]

Well, if they were really nationalized and not "pretty much", selling those assets would be a govt decision instead of the current managements decision.

Isn't that part of the problem? They are slowly being kinda-sorta nationalized but nobody wants to come out and say it because it is not the so-called capitalist way.

the problem is who is going to manage that. it will be the same wall street folks.

[Karl]

Evryone killing Geithner for 'his weak performance' in outlining the direction in which he plans to go...but how could he do more without giving those seeking a bailout to just drop their hands...slant their proposals towards a 'stop braps' and wait on Geithner to slap bailout money in their hands?

Those awaiting bailout must exercise their minds and provide plans to become viable. In a real sense prove they are worthy of receiving assistance. Those managers who cannot 'turn themselves around' - (they got us into this situation and therefore it could be argued were 'crap' as managers) - must just go or be shown the door.

I have not a problem with the multi-million dollar compensations paid to the top managers...but it must be earned! These managers must be making the entities successful. Can't do the job? ...the reward must be, Bye!

[Gamma]

the delay was critical....in the best of circumstances the impact would have not been immediate, but the continued freefall worsened the situation.

a cynic like me would argue that it wan intentional on the part of the repubs to ensure obama and the dems would fail.....the aim isn't to help america, it is to gain and keep power. that is the central theme of partisan politics...castro and chavez don't have that problem.

[Islandman]

I think where the criticism arose was that Obama talked up the Geithner speech the day before, saying he did not want to say too much and "steal his thunder" so to speak. So many people were expecting more details than he provided.

Re the Detroit auto industry it is looking like bankruptcy is inevitable. I think they are like Air J under Butch and they will be back for more within a year. It seems like they cannot compete with the crappy vehicles and high cost of labor that they have. I say no more bailout for them without total reorganization including union contracts and change of management.

[Assasin]

I think if we had free Healthcare instead of Bush Tax cut these companies would have been better able to compete.

I.5 Trillion dollars tax cut would have reduced their healthcare cost to nothing. Our priorities are screwed up. How can they compete with Japan,Germany and now China etc. when none of those companies have to pay healthcare cost.

[Islandman]

I don't like the term "free healthcare" because nothing is free, but yes it would help if there was a some form of nationalized health care.Them have to get the mafia healthcare costs down for it to work though, or 1.5 trillion would not go very far.

It will be interesting to see if Obama will still try to get something is done in that area in the middle of all of this mess. Looks like everything is going to be a tough fight so him going to have to pick his battles.

[Assasin]

the fact is if we had 'free healthcare" it wouldn't be so market driven.

Look at the cost of healthcare in Britain and Canada? It cost much less because it is not controlled by the doctors and lawyers.