Our financial system is crumbling this week.

[ghostrunner]

I don't know why nationalizing some banks is so scary anyway

Freddie and Fannie essentially were nationalized (their assets had the implicit guarantee of the federal government) and were used as instruments of social policy. That didn't turn out so well.

No, the profits from F and F were under quasi-private control, with losses going ultimately to the taxpayer. That's where AIG, Citi, BoA and friends are now. That's not nationalization. GNMA is under government control, and maybe I've missed some news (I'd appreciate being disabused of this notion), but I haven't heard a peep about problems from it.

Obama's ignored the larger American tradition about flexibility in favor of private markets dogma. As the ABC News interview demonstrates, we're going the route of Japan, even though we know it's stupid. This isn't a rookie mistake, as our fearless leaders are not going into this mess blindly. Taking care of this mess just isn't the highest priority. AD is right, we're not taking this seriously.

The rookie mistake was in asking for too little in the first place, so by the time the conservatives requested their cuts it was smaller than what he wanted. I realize you're saying the bigger error was in wanting that little.

[Hungary Jack]

I don't know why nationalizing some banks is so scary anyway

Freddie and Fannie essentially were nationalized (their assets had the implicit guarantee of the federal government) and were used as instruments of social policy. That didn't turn out so well.

No, the profits from F and F were under quasi-private control, with losses going ultimately to the taxpayer. That's where AIG, Citi, BoA and friends are now. That's not nationalization. GNMA is under government control, and maybe I've missed some news (I'd appreciate being disabused of this notion), but I haven't heard a peep about problems from it.

The implicit guarantee of F and F mortgage loans meant that risk and reward were decoupled: upside to shareholders, downside taxpayers. F and F bought many loans originated by private commercial banks, and now hold roughly half of the nation's mortgages, or roughly $5 T worth of mortgages (book value). By comparison, IIRC, taxpayers on the hook to AIG for roughly $85B.

If this is not de facto nationalization, then I don't know what is.

[Jocephus]

the bank CEO's are being "grilled" by a congressional board...yuou can watch it on any streaming news outlet, probably

[Jocephus]

tentative deal reached

http://www.huffingtonpost.com/2009/02/1 ... 65912.html

[Jocephus]

Multiple Democratic sources had offered details on topics that had to be worked out:


35 percent of the bill would be tax cuts; 65 percent would be spending.


Tax breaks for workers that had been set at $1,000 per family or $500 per individual would be scaled back to $800 per family and $400 per individual.


$44 billion in aid to states, including money for education and other services.


More funding to help people buy health insurance through the federal COBRA program.


$6 billion to $9 billion for modernizing and repairing schools.

The funding for schools is intended to assuage House Democrats who are upset that the Senate cut $20 billion for school construction.

http://www.cnn.com/2009/POLITICS/02/11/ ... index.html

[maddash]

Dr. Doom & the Black Swan
http://www.cnbc.com//id/29103328

The hosts on CNBC are idiots in these clips, but if you can stand them, what Roubini and Taleb say is fascinating.

[TimeForGuinness]

Well I'm just dumb, I never knew there was a company named Musak that puts out muzak. I just thought it was a description of the crappy music you hear in elevators.

http://www.cnn.com/2009/SHOWBIZ/Music/0 ... index.html

...anyways, they're filing for Chapter 11.

[Sutter'sBeard]

Well I'm just dumb, I never knew there was a company named Musak that puts out muzak. I just thought it was a description of the crappy music you hear in elevators.

http://www.cnn.com/2009/SHOWBIZ/Music/0 ... index.html

...anyways, they're filing for Chapter 11.

Ironic and coincidental. Just this morning I was going through my file cabinet and I threw out my Musak accounts payable file. We switched to XM at all of our locations a few years back. The Musak folks wanted $45 a month for 5 stations and XM offered hundreds for $12. Wonder why they failed?

[cpebbles]

Two fantastic new developments today. John Thain, the scumbag mentioned earlier in this thread for his requested golden parachute as he was forced out of Merrill Lynch, has been subpoenaed and is facing possible indictment by the NY attorney general for defrauding the public by secretly forcing through $3.6 billion in 11th hour early bonuses before the acquisition by Bank of America, all on the taxpayers' dime. Hopefully this leads to the first of many indictments. Yes, they were implicitly given the go-ahead for this by the last administration and members of Congress who insured there was a glaring loophole in the golden parachute clause of the bailout, but those folks should be the co-defendants.

And audio of a top Morgan Stanley exec went up on Huffington Post detailing their plans to award bonuses which aren't really bonuses because they're called "retention awards" to their employees and to inflate the bonus amounts using numbers from 2008 only. As they were quick to point out when this went public, the bonuses are not using TARP funds, as if giving a billion dollars in bonuses from other funds and then just borrowing a billion more dollars from TARP is any less objectionable. Thus far, the defenses I've seen of this plan are all to the tune that their employee rosters are going to be raided if they don't let Morgan Stanley employees suck at taxpayers' teets. I guess if they don't throw taxpayer money at their employees, the competitors will, because I have a hard time seeing the banks whose employees didn't run their companies into billions of dollars in debt stampeding to hire a bunch of people who did.

[greenback44]

I know a couple of folks at some bailed-out companies, and we'd gladly hire them back. These are huge operations, and they have plenty of competent employees who had nothing to do with the destruction of their employers.

That said, this being a baseball message board and Wall Street having had an enormous influence on the current operations of so many franchises, I can't help but imagine what Beane or Loria would do if they ran one of these firms. I guess they'd be cutting pay dramatically for all but a small handful of employees -- without the slightest government prodding, but rather from the principle that they can get away with it, driving down expenses. They might even decide that the unemployment carnage on Wall Street is so great, pushing replacement level so high, that they would be better off churning through their workforce with some random firings and hirings.