Free Republic

Ok Dow, now please calm down. Please listen to me. No, over here, look at me. Ok, do I have your attention now? Good. Now listen to what I'm saying about those big banks out there. You don't have to worry about them, ok? When they start making noise about being in trouble, about their investment portfolios tanking, and being near bankruptcy, and stuff like that, just ignore it, ok? They're just trying to scare you. Now let's look at the facts. Those big banks out there took some really big risks. They gambled big-time, and they lost big-time. That's...

Religion is the problem, just like government is the problem. In both cases people have beliefs that don't fit reality. In both cases people try to push their beliefs on other people. In both cases people believe in fairytales that just aren't true. They have no factual support. In both cases people believe "faith" should substitute for facts, like with Obama for instance, and Bush for that matter, and "going to heaven" for instance, and an "ever-burning hell" for that matter. In both cases you can't say what you think. In both cases you have to be "politically correct." In...

OMAHA, Neb. (AP) -- Billionaire investor Warren Buffett says the U.S. is engaged in an "economic Pearl Harbor." In an interview that aired Sunday on "Dateline NBC," the chairman and CEO of Berkshire Hathaway Inc. said the nation's economic situation is not as bad at World War II or the Great Depression, but it's still pretty severe. Buffett said Americans are in a cycle of fear, "which leads to people not wanting to spend and not wanting to make investments, and that leads to more fear. We'll break out of it. It takes time." Buffett's interview centered on President-elect Barack...

When governments in Europe and the US unveiled co-ordinated bail-outs of their banking industries last October, politicians and regulators rightly believed they had narrowly avoided a collapse of confidence of the financial system. But this week it became clear governments will have to take on even more risk from the private sector if they are to restore the flow of credit to the economy. The US government’s decision, finalised late on Thursday, to insure Bank of America against “unusually large losses” on $118bn (€89bn, £80bn) of loans on its balance sheet underscores the sheer scale of the commitments taxpayers are...

The turmoil in global banking intensified on Friday as Citigroup and Merrill Lynch reported huge losses, and shares in Britain’s Barclays plummeted amid fears it might need more capital. After the close, Barclays, whose shares fell 25 per cent to 98p – their lowest level since 1993 – said it knew of no reason for the plunge. The bank, which had a market value of £8.2bn ($12.1bn) at on Friday’s close, added that its full-year results, due out next month, would beat the analysts’ consensus of £5.3bn in pre-tax profits. [snip]

If I had to describe the net effect of the trillions in bailouts already done, and no doubt trillions more being done and to be done, I would use two words: Subsidizing Irresponsibility. Institutions in the financial sector, recipients of the bulk of bailout money, are in trouble due to sheer irresponsibility on their part. There is no other way to describe it. It's just plain irresponsible actions, a long string of irresponsible actions, that have and still are landing them in trouble. Imagine all these huge financial institutions are your teenage children. You want them to learn to be...

NEW YORK (AP) -- Shares of major U.S. banks plunged Thursday as the government mulled giving Bank of America Corp. a fresh multibillion-dollar aid package, raising fears on Wall Street that the battered financial sector may need an even bigger bailout. Bank of America shares fell as much as 28 percent -- dropping to their lowest level in 18 years -- on news that the bank may seek another capital injection to manage losses from its takeover of Merrill Lynch. Citigroup Inc. shares fell to a near 16-year low as investors braced for horrible fourth-quarter earnings due Friday. And JPMorgan...

US Treasury and Federal Reserve actions of the past three months have made one thing abundantly clear: The welfare-state mentality has extended to financial institutions. Treasury and the Fed now believe financial institutions must have a safety net to keep them from being on the streets, just as state governments believe people at large must have a safety net to keep them from being on the streets. The problem with this new policy is the enormous cost of it. Upwards of 8 Trillion dollars handed out welfare-style to financial institutions just in the past three months, with Trillions more likely...

Christmas retail sales are confirming what "gloom-and-doomers" have been saying all year: Consumer demand is falling off a cliff. It's in free-fall. The bottom will eventually be hit, but it won't be a trampoline-bounce back up. It will be death on the rocks. 70% of our economy is consumer demand. When consumer demand dries up, the economy crashes. Why is consumer demand drying up? 1) Massive consumer short-term unsecured debt. In the 2002 - 2007 credit bubble, consumers collectively pushed credit card balances over the 14 TRILLION dollar mark. That massive amount of debt simply cannot be paid off. Credit...

Obama's health care initiatives cannot solve medical incompetence. Part 5 of President-elect Obama's economic stimulus plan talks about upgrading hospitals and doctor's offices to electronic medical records to deliver better healthcare, save lives, and save money. First, the healthcare industry does not need economic stimulus. It is one of the most profitable industries in America, maybe THE most profitable. It has more than enough money to upgrade hospitals and doctor's offices to electronic medical records. Second, many people don't want electronic medical records for privacy reasons. That's the reason it hasn't happened already. Third, electronic medical records are not going...

Recent actions by Congress, the US Treasury, and the Federal Reserve Bank, to "fix" the current financial crisis are having the opposite effect. They are making it worse. We have the same causes this time we have had in previous financial crises. Falling demand for goods and services. It's lack of demand, same as previous financial crises. Government is telling us it is a supply problem. Lack of money to lend. Lack of available credit. It's never a supply problem. It's never lack of supply. There is plenty of money to lend. People qualified to borrow money can borrow all...

This is it folks. The beginning of the end of America. It's not $700 billion. It's really $7.4 TRILLION pledged to back up or buy up all manner of junk securities. Today the Fed announces they will after all buy up most of the junk mortgages. That will push the number easily above $10 TRILLION. That will double our national debt. Prior to these bail-outs it was around $10 trillion. These bail-outs are adding another $10 trillion. They are monetizing all the bad debts in the financial system, at more or less par value. It's complete unequivocal financial insanity. Our...

T Boone Pickens, in his TV spots about his plan for US energy independence, says the $700 billion Americans send overseas for oil each year is the largest transfer of wealth in history. He may be correct until our own federal government far surpasses that. In my previous post about the coming hyperinflation in America "Housing: Silver lining in a very dark cloud" I describe how the soon-coming hyperinflation of our money supply, by the federal government, will financially destroy many Americans. I expect by the time it's all said and done, our federal government will have run the printing...

Statistics paint a grim picture. Foreclosures up 71% over last year. Banks slashing prices of forclosed homes trying to get rid of them, which of course puts more downward pressure on all home values. 750,000 jobs cut this year. Another 150,000 expected by year end. Those are middle-class jobs for the most part. Jobs that made house payments. The federal government has made clear they are going to print money in their futile attempts to stimulate the economy. They're going to print money to bail out all manner of insolvent financial institutions from local banks all the way up to...

In "Solving a national financial crisis in 24 hours." I stated that our financial crisis is really a confidence crisis. There is no underlying economic problem. There is no credit crisis. There is no liquidity crisis. It seems I am right. US Treasury bailouts and Fed liquidity moves have not restored confidence. Home prices are still falling. The Dow is still falling. The inter-bank lending rate, the Libor rate, is going higher. The economy is still faltering. In "Bank tripple-squeeze." I stated that banks are in real trouble due to three things: (1) Banks are falling below federally-mandated reserve ratios....

Bush decides to pump money into the banking system. That's understandable. Banks are in a world of hurt right now: 1) Existing loans are delinquent or defaulting. 2) New lending is falling off. 3) People are pulling their money out. These three things bring about three results: a) Banks are falling below federally-required reserve ratios. c) Banks have less income because they're doing less lending. b) Banks have more expenses collecting on delinquent loans and handling foreclosed homes. The result: Banks are loosing money, with some (many?) approaching bankruptcy. Bush wants to buy bad loans from banks to reduce a...

We don’t have a credit crisis. We don’t have a liquidity crisis. In the last few weeks the Fed and U.S. Treasury have made more credit and liquidity available than ever before in history. They've had no impact. Markets ignore them and keep dropping. Here is a quote from the Financial Times story "The week that panic stalked the markets" , October 10, Michael Mackenzie and John Authers: "The crash in equity markets this week came as investors fled risky assets in panic. Coordinated rate cuts by leading central banks, and many other measures of support hastily adopted by governments,...

The current financial crisis in America was caused by fraud and foolishness. Dishonest people making fraudulent offers, and foolish people buying into those fraudulent offers, subsequently loosing everything ...or nearly everything. It's nothing new. Fraud and foolishness in the financial arena have gone on as far back as you care to look. What is unique about the present day crisis is the magnitude of fraud and foolishness. When fraud and foolishness dominates a sector of the financial arena, large losses are going to occur. That is what happened in the mortgage sector. But the massive losses weren't contained to the...

When McCain announced his "homeowner bailout" at the debate, people thought "finally, something for the grass roots out here." Wishful thinking folks. It is reported now that the McCain campaign has changed the plan's concept to bail out financial institutions, not homeowners. Here's the link: http://news.yahoo.com/s/politico/20081009/pl_politico/14414 McCain is doing exactly what Paulson has done. Bail out financial institutions who caused the problem in the first place. Taxpayers get screwed again.

In the past day or so central banks around the world have reduced short term interbank lending rates to all time lows. Wonderful. Problem is, it doesn't solve the problem. We don't have a credit crisis. We don't have a liquidity crisis. Companies with solid balance sheets, and individuals with solid credit histories, can borrow all the money they want. We have a confidence crisis. Companies who lie about their financial condition can't borrow. Companies who offer fraudulent investments can't sell them. Individuals with lousy credit can't borrow. Reducing interest rates doesn't solve a confidence crisis. Only honesty solves a...