Posted on 09/21/2008 7:31:49 AM PDT by Brian S. Fitzgerald
I agree that our “laws and regulations” are wanting. We can and should change them to stop all this abuse. My point was that we can’t change the laws and regulations of other countries and some countries may actually use our supposed policy of bailing out foreign banks to their advantage.
“The election is moot now. The next pres is just presiding over the printing of endless hundreds of billions of worthless federal reserve notes.”
Hardly.
This is to put out the fire. This action is both needed and not unprecedented (vis S&L bailout).
The next Congress will now redefine how the financial markets get regulated. THAT IS A BIG DEAL and it makes the election very consequential.
Forbes made the following proposals:
1. Strengthen the dollar
2. Suspend mark-to-market for long-term illiquid assets
3. reimpose uptick rule and enforce rules against naked short-selling
4. Set up RTC-like entity to buy up distressed assets and liquidate them in an orderly way. WHich is what Paulson proposal is doing.
Who actually owns our national debt? Could foreign investors come in and buy us out, and if so, what influence would they have over us politically?
Ping
Any American citizen could be view as the “coppertop” that supports any deal made by the govt. requiring financial backing.
You are spot on. If this deal isn’t in place by tomorrow morning we will likely see some rough sailing in the markets this week. I fear the Congress isn’t smart enough to understand the risk of market collapse. Brinkmanship!
A: ALL OF THEM, IF WE ACT QUICKLY!
I have left phone messages for my two Senators and Congressman, and now am preparing faxes to send today in opposition to the ONE TRILLION DOLLAR BAILOUT!
What do you think all of this is about? It isn't about bailing out a handful of Wall Street bankers. It is about bailing out our "friends" China, Russia, Dubai, Japan, Singapore, et al that dumped their reserves in the US debt markets. The US is effectively bankrupt, and now our "friends" are having their conservator of our assets, Henry Paulson, divide up the spoils...
The US banking system would be in an even worse shape had all the losses from US sub prime-based securities been concentrated in the US.
AIG’s impact on European bank’s regulatory capital
But the AIG case shows the importance of another link across financial markets, namely massive circumvention of regulatory requirements. The K-10 annex of AIG’s last annual report reveals that AIG had written coverage for over US$ 300 billion of credit insurance for European banks.
“…. for the purpose of providing them {European Banks} with regulatory capital relief rather than risk mitigation in exchange for a minimum guaranteed fee”.
Thus, a formal default of AIG would have exposed European banks’ large gap of regulatory capital, with possibly devastating effects on their ratings and market confidence. Which explains why AIG’s problems had sent shock waves through the share prices of European banks. Thus, the US Treasury has saved, inter alia, the European banking system. However, as AIG is to be liquidated, European banks will have to quickly shore up their regulatory capital.
http://www.voxeu.org/index.php?q=node/1669
So does this mean I don’t have to pay off my home?
It didn’t take long to read a little of that to realize that GREED and STUPIDITY are what is driving this.
Exactly my thoughts.
Secured bank loans and the structured products (”CLO”s) that contain them are trading at what seem to be outrageous spreads, given their seniority in the capital structure. A nice feature is that the loans tend to pay floating rates, so if rates blow out the coupon will increase.
bttt
Thank you for your insightful post. Would you agree that the unwinding of the derivatives market would cause a global depression? What do you think the odds are of this happening?
Bingo
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