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Wachovia Begins Early Deal Talks with Citi [uh oh]
The New York Times - Dealbook ^ | 2008-09-26 | Eric Dash, Andrew Ross Sorkin and Michael J. de la Merced

Posted on 09/26/2008 2:18:18 PM PDT by rabscuttle385

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To: nicola_tesla
Just clueless, but I will try.

The US treasury receives tax revenue from so many varied sources, that it always gets about 20% of GDP in revenue, whatever the tax laws are. Anything that raises GDP, raises treasury revenue. Anything that lowers GDP, lowers treasury revenue.

The US financial sector in particular, pays 15% of all federal revenues. That comes from corporate income taxes of financial companies, individual income taxes on payroll in the finance sector supported by the value added services performed there, etc. Cut the finance sector in half, and the US treasury loses $240 billion per year, forever. Worse actually, because the amount finance pays the treasury rises about 6% a year all the time.

It is a golden goose.

If the effects of *not* spending anything on a bailout were that the financial sector continues to operate as always, earns as much as always, supports the overall economy as much as always, and pays into the treasury as much as always - and if, in addition, the treasury doesn't have to pay out anything to the FDIC to bail out depositors in failed banks - then and only then, would the trading results on the securities purchased themselves, be the net cost or benefit to the US treasury.

But none of those things are remotely true. Unaided, half trillion dollar institutions will fail at a rate of 1 per week mininum. The financial sector has reached the limit of its capacity to pay for additional US real estate losses, without cascading bank failure.

Suppose you have a patient on the emergency room table, and you correctly diagnosis that it is his heart that is to blame, because he is having a heart attack. Do you (1) blame his heart, curse his heart, cut his heart out and burn it while spitting on it and cursing? (2) shrug and say, well if his heart is no good he wasn't meant to live anyway, next patient please, or (3) restart his heart?

41 posted on 09/26/2008 4:06:57 PM PDT by JasonC
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To: nicola_tesla
Wrong, sorry. The net payments that the banking system would suffer if all its derivatives trades with itself were cancelled, is zero. There is a buyer for every seller for that stuff, it is notional values only. That is quite different from actual debts owed to the public, or actual assets the public owes to the sector as a whole.
42 posted on 09/26/2008 4:09:24 PM PDT by JasonC
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To: mnehrling

Your interpretation is incorrect. They supposedly bought WAMU for 2.6 billion, however this is for their assets only — deposits and branches — no toxic waste. The US Govt will get that.


43 posted on 09/26/2008 4:19:50 PM PDT by Carol1010
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To: mnehrling

no, it didn’t. The government messed with the market, closed WM and gave it away to JP Morgan. 310 Billion in assets given away for 1.9 billion to another bank. I am starting to think that the crazies are right and there is some kind of NWO stuff going on.


44 posted on 09/26/2008 4:43:26 PM PDT by ClayinVA ("Those who don't remember history are doomed to repeat it")
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To: Carol1010

They just wrote it off, the creditors along with the shareholds were wiped out. Even in Chapter 11 the creditors will get something, not with WM, they get 0.


45 posted on 09/26/2008 4:48:57 PM PDT by ClayinVA ("Those who don't remember history are doomed to repeat it")
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To: maggief

Ever notice how many of these financial advisors are on
several board of directors and hop from one to another.
From Presidential advisors, CEOs, politicians, and big
shot money makers all seem to be able to pull their own
chestnuts out of the fire/run off with the money and
leave taxpayers, shareholders with the bill. The same
names keep coming up.


46 posted on 09/26/2008 5:02:48 PM PDT by jusduat (I am a strange and recurring anomaly)
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To: mnehrling

***...and even returned over a billion dollars of unused FDIC money to the treasury.**

Well, more money for ACORN! ;-)


47 posted on 09/26/2008 5:48:29 PM PDT by Ruy Dias de Bivar (We're not supporting clean coal,” --- Joe Biden)
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To: mnehrling
That’s not an ‘uh oh’, that is good, it is the market taking care of itself. Kind of like WaMu last night.

You're right, but it would be beyond "good" it'd be grrreat. ( I still have money in Wachovia - and would love to see them bought out by a more responsible bank )

48 posted on 09/26/2008 7:09:36 PM PDT by GOPJ (Let free markets work - stupid companies SHOULD go belly-up - including Frannie and Freddie.)
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To: GOPJ

Citibank is fine with me. I think WFC said they were not interested as recently as August, but things change. WFC is also very sound.


49 posted on 09/27/2008 11:20:11 AM PDT by pleikumud
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To: JasonC

Why don’t banks with a need for more capital attract it by offering higher interest rates, as to attrach more depositors?

I distinctly remember that they used to do so...

Nowadays, it seems that banks would rather go bankrupt than do so.


50 posted on 09/27/2008 7:20:15 PM PDT by gogogodzilla (Live free or die!)
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To: gogogodzilla
Why don’t banks with a need for more capital attract it by offering higher interest rates, as to attrach more depositors? _______________________________ Does seem strange. I've been doing short term CDs anticipating that but it hasn't happened so far.
51 posted on 09/27/2008 8:22:29 PM PDT by Joan Kerrey
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To: gogogodzilla
Like 130%, say?

Sorry, that is a reference to the rates on Wachovia notes on Friday. But those involve actual risk, unlike an insured CD.

52 posted on 09/28/2008 7:33:22 AM PDT by JasonC
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To: Joan Kerrey
Washington Mutual did - lot of good it did them. $16 billion in withdrawals in 9 days.
53 posted on 09/28/2008 7:34:36 AM PDT by JasonC
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To: JasonC

Money is money.

If Wachovia needs money, it should make itself attractive and entice those with it.

Attract 100 millionaires to bank with them... and they have 100 million dollars to invest with. (or more)


54 posted on 09/28/2008 2:42:53 PM PDT by gogogodzilla (Live free or die!)
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