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alstry (35.45)

Are Americans About to Loose Everything????

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September 16, 2008 – Comments (10)

Last week our government took over our two largest mortgage companies in the country.  Tonight our government took over our largest insurance company.  Next we might expect our government to take over our largest auto companies and our largest airlines.  You think the airlines and autos are in any different financial condition vs. AIG or FNM nor any less important to our economy?  Then who knows what is next?

During this process expect millions of jobs to be lost.  Yesterday, just between Lehman Brothers, HP, and EBay.....over 50K jobs will be eliminated. 

Due to its ownership in Fannie and Freddie....our government will start to own more and more houses as a result of rising foreclosures.  As businesses continue to shut down and unemployment rises....expect our government to own an ever increasing number of homes.

Tonight, the first money market fund ever created told its holders that they couldn't withdraw any money for seven days.....not only that when they do decide to withdraw.....the dollar they thought they had in there collecting interest is now worth only $0.97.

As more and more companies default....expect the NAVs of money market funds to decline even further as debt is the assets of MMFs.......

and

when people wake up tomorrow morning and learn what happened......guess what is going to happen to money market funds........you guessed it.........mass redemptions which will result in massive liquidations of debt instruments causing even further distress in the debt markets.

By trying to stop an arterial bleed with a band aid......the FED is only adding fuel the to panic fire.....if the system was simply allowed to clense itself through the tradional capitalistic process which made our country great......we would recover much quicker than the current path of government ownership of private enterprise.

Then if government deems it is in its interest to take over private businesses....why stop there....why not take our retirement accounts, and bank accounts and for that matter....why do we even need to own houses when our government can take over that as well.

A few in CAPS see what is happening.....the rest of you will feel the effects.

Evil triumphs when the good do nothing.

10 Comments – Post Your Own

#1) On September 16, 2008 at 11:00 PM, awallejr (82.39) wrote:

You mean like the bread lines in the 30's?  Sorry, while I don't like seeing all those greedy bastards who caused this mess get off (they simply aren't being prosecuted), I don't want things to just be thrown in the air "come what may."  Maybe you are young enough to deal with it, but there are alot of people who would be truly destroyed.  Again, I honestly do think you would revel in that scenario.

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#2) On September 16, 2008 at 11:00 PM, alstry (35.45) wrote:

Some people characterize this nonsense as bailouts.  However, legally....it is effectively the taking over of private companies by the government.

Not only that, the taxpayer is funding the take over with no dividends in return as they are buying unprofitable insolvent businesses for HUGE sums of money.

The only people getting bailed out are the institutioins who own the debt of these companies......and many of them are FOREIGN bankers.

We are paying out insane sums of dollars to foreign institutions while our citizens are losing jobs by the millions, getting kicked out of their homes, food shelves running out of food, and scores of schools shutting down around the nation.

Sorta reminds me of a rapist telling his victim how much he loves her as he rams her up the backside again and again.....sorry if this offended anyone.....but I am a little piss*d tonight......and hopefully a few of you will be too.

We are CAPs players...pretty soon there will be no more companies we can play with if this trend continues.

 

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#3) On September 16, 2008 at 11:29 PM, awallejr (82.39) wrote:

Why in the world should we be pissed? Unless you owned alot of AIG stock, but that was going to zero anyway.  This loan HAD to happen.  That is probably why the FEDs didn't lower interest rates, knowing a deal was in the works on AIG. If they let AIG just bleed out the consequences would have been horrible.

 

I still believe alot of people need to go to jail, but the SEC and FED AG has done absolute SQUAT so far.

 

And please, stop the exagerating, there are tons of companies out there for you to make or lose money on.  This doesn't change that.

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#4) On September 16, 2008 at 11:43 PM, alstry (35.45) wrote:

You don't get it....but that is OK....you will feel it even though its dark tonight.

The government could have let AIG go bankrupt and supported the orderly unwinding of the assets.  The result would have been exactly the same as what was accomplished tonight except that debt holders would have been paid exactly what they would have been owed.

Now the government owns an insolvent company and is guaranteeing debt holders will be paid.  Since when did we guarantee the debt of private insolvent companies when we can't even provide jobs to millions of our citizens.

Now Democratic leaders want governent to buy even more toxic debt of Wall Street according to a NYT article this evening.  Most of America's assets are leveraged.  If taxpayers can make the payment....the debt is considered toxic.  Thus it will not be too long before government owns all the debt and derivitively most of the assets as more and more tax payers can't meet their debt obligations.

Since when did America start subsidizing drug dealers and punishing the users?

 

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#5) On September 17, 2008 at 12:17 AM, alstry (35.45) wrote:

How Times Have Changed in Just a Short time

If you have cash at a brokerage firm.....you may want to read this AFTER reading my previous blog:

The Reserve Primary Fund money market fund is a popular option used by many large brokerage firms. It was created in 1970. The fund's objective is to generate the highest possible yield without incurring significant risk. It's a great choice to park emergency cash or any other money you might need soon.

It can offer safety because it invests in debt issued by the U.S. government, government agencies or highly rated prime bank debts. You can read in the fund's summary sheet (pdf) that 44% of the fund's money is invested in Yankee Certificates of Deposit, which are CDs issued by foreign banks but denominated in U.S. dollars. These are considered safe investments, shown by the fact the Primary Fund has the highest ratings from Moody's and Standard & Poor's.

http://www.usatoday.com/money/perfi/columnist/krantz/2007-01-16-money-markets_x.htm

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#6) On September 17, 2008 at 12:21 AM, awallejr (82.39) wrote:

You also ignore the worldwide implications, in that a bankrutpcy proceeding is by it's nature a lengthy process and it would have frozen God knows how many worldwide companies.

Alstry we are facing a mess at the moment.  Finger pointing is nice, but it doesn't resolve problems. All the Fed and Treasury can do is deal with the problems as they arise now.  Yeah it might cost us taxpayer dollars, like we never wasted tax funds anyway.  Did you complain on the 107 billion dollar rebates?  It obviously cost the coffers that amount.

We need to get to 2010.  We need to get there in as orderly a fashion as possible.  If it takes these exceptional moves to get us there so be it.  But I for one am not rooting for another Great Depression.  Hopefully we learned lessons from that period of time.  I don't want to see elderly people on breadlines.  I don't want to see massive employment.  I don't want to see our financial system seize up.  I think you do.

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#7) On September 17, 2008 at 12:34 AM, awallejr (82.39) wrote:

Meant massive unemployment heheh.  Scotch kicking in.

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#8) On September 17, 2008 at 12:44 AM, TMFSpiffyPop (99.23) wrote:

It's spelled "lose." :)

And overall, I would relax the near-hysterical tone. Fearmongering based on a few large bailouts, implying that we're ending up in complete socialism, involves as many logical leaps as concluding that parrots will soon master our entire language (and talk us out of our money too). 

You have a good fundamental point, and it's a shame seeing taxpayer money keep getting thrown at failed financial behemoths. But note that there is foreign money doing the same thing (i.e. they think it's a worthwhile bet, too). And it's about creating stability in the face of chaos.

Also, I love pessimists because more often than not I'm buying my shares from them... the ones I look to buy and to add to long-term market beating positions.

So maybe you should keep right on blogging just this way. :) --DG 

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#9) On September 17, 2008 at 12:51 AM, jester112358 (29.41) wrote:

Excellent information on money market fund risk.  You are correct that these aren't any "safer" than deposits on so-called FDIC insured accounts.  The missing element in all this "insurance"?  Trust.  And IRAs aren't necessarily safe from confiscation by the government.  Most people don't understand how risky the whole derivative debt business is.  Obviously, since AIG insures at least 1T$ in bonds (debt), the government felt an orderly "unwinding" was less a possibility than an all out panic.  Knowing people, I agree.  I'm reminded of the long term capital management bailout in 1998.  They had leveraged 2B$ of real capital to control 1T$ of option (derivative) contracts which were defaulted by their counterparties.  One can only guess how many CDSs AIG is covering-but certainly a lot more.  Nice to receive the insurance premiums, I guess, until you have to cover the defaults.  And I'm guessing all the major banks and investment firms have huge credit default (CDS) contracts with AIG and on each other and on AIG.  The government couldn't allow those to be exercised since there's note enough liquidity in the entire country to cover them all.

 My only question:  where can we buy CDSs on the US government debt?  Seems like a "credit event" is quite likely on US treasuries debt too.

 On the bright side the three important aspects of life:

health, hapiness and prosperity.  And notice fellow fools, prosperity is properly listed last!

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#10) On September 17, 2008 at 12:56 AM, Donnernv (< 20) wrote:

Alstry....get a grip, man.  You're losing it.

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