Posted on 09/14/2008 7:39:42 PM PDT by HAL9000
The possible collapse of one of world's biggest investment banks could be "catastrophic" and lead to the "implosion" of the banking sector, Sky sources say.British bank Barclays had appeared to be the frontrunner to take over the struggling Lehman Brothers but has pulled out of the bidding, a source close to the deal said.
And a consortium led by the Bank of America is reported to have also dropped out.
~ snip ~
(Excerpt) Read more at news.sky.com ...
You have a bunch of dumbasses realizing our GDP and using it as a tool to bring us down. F-em, that is a product of our soldiers that gave us our freedom.
This is worse than Y2K
How many of the high corparate officers in these failing institutions have made off with multimillion dollar bonuses in the past 5 years while they they were driving their businesses on fumes?
This is turning in to one hell of a Texas Hold ‘em tournament! Everybody’s All IN.
We might see a bottom if a few banks fail... might not be as bad as the fear of it happening.
As I understand it, AIG has failed to raise money privately because of fears from p/e groups that they do not have enough liquidity going forward. Private equity wants the Fed involved as a good-faith backstop to AIG going forward, before investing in AIG. A bridge loan from the Fed will delay a ratings downgrade and give them time to sell assets and raise money. Fed intervention would presumably reassure private equity that the Fed has their back. This, of course, stands the role of the Federal Reserve on its head.
I understand AIG is predominantly insurance, but their CDS exposure is sizable.
I share your anger at watching corporate execs destroy companies then leave with multi-million dollar payouts.
But... These payouts are part of their employment contract. I don’t know how you go back and modify those contracts after the fact. The proper place to lay the blame is Boards of Directors who approve senior executive plans that include golden parachutes without tying those benefits to company performance.
As much as I hate to see CEOs get fired with huge payouts, I’d hate having the gov’t intervene in these contracts even more. For every CEO who’s run a company into the ground, you can find several who have made plenty of money for their shareholders.
BTW. If any corporate boards are looking for an exec to run their companies into the ground, I’m willing to do it for you for only a couple million.
Even though I’ve speculated that perhaps we as a society perhaps “deserve” another 1929(because of our continued and increasing subsidizing of bad decisions) there are now measures and stopgaps in place in the financial markets’ machinery that are designed to prevent a violent collapse as in 1929. Maybe they’ll work now, maybe not. Maybe they should stop it, maybe they shouldn’t.
My relevant expertise on it all is nowhere near highest authority, other than in a very general sense to say that bad decisions sometimes must be followed by horrible consequences and suffering, so that the actor/actors can learn the needed lesson, and change their ways.
You do realize that those CEOs are ruining capitalism. This was exactly the prescription Adam Smith gave for the destruction of a free market.
Agree 100%
Such a thing happened at a previous employer (EDS) in the late 90s-early 2000s.
The directors who vote in these CEOs with their fat contracts are often playing a mutual “back scratching” game, so often a nice little clique, for a while anyway.
Well, in the old days, you did it with a mob carrying pitchforks and torches.
I'm not one for conspiracy theories, when most things like this can simply be attributed to greed and incompetence, but I was wondering...
Given his past history, and his advanced case of BDS, is it possible that George Soros has been working "in the shadows" to harm the US economy to keep McCain out of office, and tarnish President Bush's record? Remember what he did to the English banking system?
Mark
Many of the CEOs are definitely destructive.
But, what’s the solution to these golden parachutes? Having the government get involved in limiting CEO employment contracts doesn’t make the situation any better.
Are you advocating gov’t intervention to limit executive pay packages? If not, what mechanism do you propose to restrict the contracts other than gov’t intervention?
You could just vote Democrat. Then the Big Rock Candy Mountain will be enacted by the legislature and everyone will get a Mercedes and an in-ground swimming pool paid for by...by...ummm...well, everyone will get free lunches and free housing somehow, don’t ask me to explain how right now, just vote Democrat and they’ll make sure it happens. Oh wait the Khmer Rouge already tried it. Oh well, let the Democrats try; they’re smarter and more compassionate than the Khmer Rouge, right? They’re not? Ummm...but Obama went to Columbia and Harvard and was a community organizer...
lol.
Sadly, pitchforks and torches would only make several lawyers get rich in today’s world.
I’m not trying to defend the execs who run their companies into the ground, but am trying to defend the rule of law. Those boneheads have contracts - you can’t just unilaterally change a contract. I’d be more than happy to find some way of making the boneheads responsible for their poor performance, but don’t see how to do that without getting the gov’t involved. And getting the govt involved will only make things worse.
This whole mess should prominently feature Greenspan's name, given that (in 2004) he urged consumers to take out ARMs and pushed lenders to relax standards to increase home loans. But Andrea keeps the media fawning over this schmuck.
Let the corrupt losers fail. Do not rescue anybody or anything. Forget the election. Let capitalism work, dammit. Lehman gone means more business for Goldman, JP Morgan and B of A. They managed themselves well, and they will prosper. Lehman and Bear didn’t, so so be it. “This is the business we’ve chosen”. Let it work.
They hat $800 billion in Treasury money. I’m thinking they’ve committed up to $600 billion. Not that $600 billion is spent, just committed if needed. So they are down to $200. They need to get more T-bill money. A LOT more T-bill money. Lower rates is NOT the way to get that money. That could crash what is left with the bond market.
After all, you can already get a much better rate on Fannie and Freddie preferred, which now has all of the full faith and backing of the Fed gov that Trashuries have. So who is going to take 1 1/5% on Treasuries who can get 10% on Fannie preferred?
No bottom until there is a bottom in housing. No bottom until the bleeding from foreclosed repossessed homes and jingle mail stops.
Bottom in housing=bottom in Financials. Not until then. No way. No how.
By the way, Alt-A loans like Option Arms are just now getting set to reset in a major way in 2009. Call it the bottom of the 5th inning. We are nowhere near the 7th inning stretch.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.