patrick.net

Over on Bigpicture blog: Did JPM Cash Call Bring Down Lehman ?

It is becoming more and more clear that that the non-rescue of Lehman is at the epicenter of the financial crisis, and indeed also the main event that lead up to creating of the 700B bailout fund.

No way shorting of the financial 799+ will be allowed again on Wed at 24:00.

permarenter wrote :

Obama worked as a Lawyer for Acorn, Acorn forced banks to give risky loans to uncreditworthy people with no money down, ie no vested interest.

Do you have any reference to any rule which forces banks to give loans to uncreditworthy people.

Fannie mai/mac were there for many years . Did something suddenly change recently ( 2000 +) that it caused a bubble ?

I am not saying that you are wrong in your assertions but more info would certainly help.

I personally pledge $100 to anyone running against each of the 263 “members” (pun intended) of congress, and the 74 sphincters from the senate.

Well, you can save some money here. These two have outraged thier constituents by voting for the Senate bailout bill, an act that is expected to cost them re-election.

Chambliss, Saxby R-Ga.
McConnell, Mitch R - Ky

I don't know if any Democrats who voted "yes" will be hurt. Ironic though, that the Dems may gain a 60 seat majority in the Senate after Nov, in no small part to Republicans not being re-elected because they voted for the bill.

BBC business editor Robert Peston says the German decision is momentous, and that all other EU countries - including the UK - will almost certainly follow suit.

"We tell all savings account holders that your deposits are safe. The federal government assures it," Ms Merkel said.

"We will not allow the distress of one financial institution to distress the entire system. For that reason, we are working hard to secure Hypo Real Estate."
...
Finance Minister Peer Steinbrueck said he was "appalled" that the problems at Hypo had not been revealed earlier.
...
On Saturday, leaders of the major European economies met in Paris for talks hosted by French President Nicolas Sarkozy.

Britain, Germany, Italy and France all agreed to work together to support financial institutions - but stopped short of agreeing US-style bank bail-out plan.

Just ten days ago, citing Anglo-Saxon greed and poor regulation, German finance minister Peer Steinbrueck said the U.S. was in the process of losing its "superpower status" due to the financial crisis that we Americans caused.

Yep, Europe is following us. Expect that German bank bailout to eventually hit around 100 billion Euros. Look for more bank bailouts to come along in France, Britain, Belgium, and Iceland. Huge bailouts, especially considering the relative sizes of their economies.

Real estate may be local, but if real estate prices correct in the USA they will correct world-wide. Same results - banks fail on non-performing loans, stock values fall, nervous gov does bailout.

Peer Steinbrueck said the U.S. was in the process of losing its “superpower status”

EuroPuds have been making that claim as early as 1965. I suspect we will still be hearing it in 2065.

“We tell all savings account holders that your deposits are safe. The federal government assures it,” Ms Merkel said.

The German version of FDIC (although more private) is only about $35k insured, and then only for 90% of the deposit, and not supported at all banks. This is why Reich Chancellor Merkle had to make that policy.

* Free house may be in Detroit or Akron.

"the U.S. was in the process of losing its “superpower status” due to the financial crisis that we Americans caused."

Pure BS, but many Euros will believe it. Europe was also living it up on the credit bubble--both in real estate and retail spending. It might not be the complete credit clusterf*ck that many American did to themselves, but there are many parallels. The UK shouldn't blame their mess on us either.

The US is losing it superpower status, we cannot maintain such a large military presence in the world any more. Either we send the old folks to gas chambers, or we cut our military expenditure.

Oh, raising the marginal tax rate to 80%? Aren't you aware that over 50% of the tax of this country is being paid by 5% of the population, and this 5% has a rather high international mobility when it comes to choice of abode? The most mobile population in the US are those making the highest income, and don't count on their patriotism to pay tax.

Something has to give.

The loss of US' superpower status doesn't mean that Europe is going to come fill the void, nobody can.

It just means that the world will be again unstable, each region with only regional superpowers, and there will be a new age Cold War. I am ok with cold war as long as it doesn't turn hot. The US got a lot of things done during the Cold War, an enemy keeps you alert and on focus, you don't get your country buy property in droves on negative amortization if you are constantly under the risk of a military attack. You will do something useful for yourself and the human civilization.

Sorry PermaRenter, American's aren't buying the GOP bucket o' BS anymore, go peddle your fables somewhere else.

If you want a good analysis of what really happened in the financial system, which was mostly a failure of regulation, check out this blog:

http://economistsview.typepad.com/economistsview/2008/10/barry-ritholtz.html

Asian market down big, now that the all the "good news" are out, what's left to rally the market?

Incidentally, I check the CIBC (a Cdn bank) website, 3 year GIC over $10000 pays about 4% interests. You can also buy them in a number of foreign currency (just don't pick the USD) :)

I think we may have an emergency rate cut.

>> Sorry PermaRenter, American’s aren’t buying the GOP bucket

Majority of DEMs voted for bailout -- how can I vote for DEM in November?

Yep, Europe is following us. Expect that German bank bailout to eventually hit around 100 billion Euros.

It's worldwide -- 24 hour party people!

I have never been so disgusted.

PermaRenter,

vote for Fiorina instead, she will make sure that you get outsourced as well.

But at this stage, I think it doesn't matter. I will probably outsource myself voluntarily. Seriously, if you are worried about illegal or legal immigrants threatening your job prospect, you probably are not that up the ladder anyway and you are stuck here in the US no matter what.

One should always aspire to be a global citizen to migrate to whichever country that serves his best interest at the moment. Therefore I am all for immigration in all countries so that I can pick and choose which one to go to. In fact, most immigrants bring money and skill the host countries lack at a fairly low cost. I am not the type that wants to shut the door once I am in, because where I am right now may be rotten in a few years and I don't want the other countries to shut the door on me, even if I bring enough to the table.

TOB,

news for you, the American elites are precisely this attitude. You don't think the American elites will stick around to bear the consequences do you?

Just heard that Vanguard is being cagey about how they insure their mutual funds - apparently they are insured "privately"

Anyone know if their Treasury Money Market Funds are totally safe and if buying Treasuries through their brokerage is totally safe.

Maybe I should be buying treasuries directly from the government.

TOB,

see what the elites are getting away with? More money and even more power. See, what the working class Americans hate or not hate doesn't make any difference, and I doubt if they care either way. They are busy watching American Idol.

Only the people who aspire to become American Elite but failed will understand what a raw deal they ended up with, and get pissed.

400,000 fucking deadbeats will get to stay in their houses.

http://biz.yahoo.com/prnews/081006/clm041.html?.v=101

@danville woman

You can do it without paying any intermediary or broker and it is easy. Go to www.treasurydirect.gov and set up an account. When you set up the account you them a checking account number. Say you want to put about $50,000.00 into a 6 month treasury bill. You make sure you have 50K in your account before you request to buy. The Treasury will debit an amount a little less than 50K (assuming non-zero rates by the time you do it) from your checking about 3 days after the Monday auction. 6 months after you make your purchase the Treasury will deposit $50K back into your checking. Read the online help first. It is very accessible. There is nothing difficult about buying your own treasury securities. I have moved about 40% of my portfolio into laddered short term treasury bills. I am not saying it is a good investment. I am just saying you don't have to pay anybody to buy them on your behalf. Disclaimer: All of the above is not investment advice. Please seek the counsel of a competent financial advisor and be careful.

TOB - Regarding the numbers, they seriously need to ban L1. It has no limits and now has some sort of a loophole (water cooler talk, no details) which lets the L1s become permanent residents in a record amount of time. So basically you do not need a technical/scientific background, there is no labor cert, there is no cap, the wifey can legally work, and now this loophole. Even H1Bs are screwed by them.

I am all in favor of H1B *but* with strict education, employment and skill-set verification plus no middlemen (read Indian Bodyshoppers). However, existence of L1 is beyond me.

Yes mike_orange. L1 is the NINJA Subprime of the legal immigration world.

cortexity: Those L1 NINJAs will need an immediate bailout to ensure their continued dream of American citizenship! They were victims of predatory citizenship practices... and who can blame them for wanting to remain in their beautiful new home?

There will be no middle class pretty soon IMO.

No matter how you slice it we compete with the world. We can bring the cheap labor here to make our businesses more competitive, or the business will go to the countries where the cheap labor resides.

It is not so much a question of who will do the work as it is where they will do it.

If we bring the labor here, at least their earnings will be spent here.

mike_orange - I do not think I'd go this far in the tech workers. Remember, if it were not for these idiots making 120k and buying 1M houses, bay area real estate would be similar to Stockton.

in the tech workers = in *dissing* the tech workers.

"Can we have a middle class party instead of rich mans party (republican) and poor man’s party ( Democratic) ??"

No. Both parties are for the rich, and mostly controlled by the rich. And any party that is not so would not last. There is no poor man's party.

The politicians bullshit the public to get votes, and then they do what their campaign contributors want. Politicians live by votes, and without campaign contributions they do not win elections.

mike_orange: I agree with Zephyr too - we need to have the citizens wake up and consider careers in technology. It is a chicken and egg situation - why would anyone spend 40k a year college only to compete with a 70k/year H1/L1 who got his degree from god knows what college in India for 2k.

At the same time, I hardly come across US citizens for the technology openings we have at my company. To me it looks like they've completely given up on IT/Technology and moved on to other careers like Sales/Marketing, etc. which is a pretty unfortunate indication.

India is screwed anyway. Their markets hit a 2 year low today and continue to tank lower. The services based economy cannot survive when most of the jobs are created by bodyshops. They had the time and money to innovate, but they chose to do low-risk, high reward cheap outsourcing work and now will go down with us.

Mike,
What you get and have been getting for all of this globalization is greatly reduced prices for the goods you buy. Unfortunately this more competitive business climate not only reduces the prices that you pay, it also reduces wages.

For most of history this has been a net benefit, and in the long run it will continue to be. This is because when we buy goods for less than we can produce them ourselves we get both the goods and have labor available to produce other additional goods to buy with the money saved by the lower prices. A net gain for the economy.

However, during the last 20 years we have been hit with a sudden flood of cheap labor as the communist countries entered the global economy. This flood of cheap labor has reduced wages faster than normal, causing some net loss to the purchasing power of our wages.

If it helps, a lot of chindians have moved to middle management and make their living with visio and powerpoint. Come layoffs, I hardly think such kind will be able to survive - not because of their visa or nationality, but because of the shallow skills they've got. They can fake their resumes but whoever is hiring in these times will not buy it at the face value for sure.

As for outsourcing to foreign countries, it would be completely futile (and counterproductive) to ban the practice. If US firms are not allowed to produce in the cheaper locations, then the US companies will lose business to foreign companies who do produce in those places. The jobs will go there whether our companies benefit from it or not.

The problem we have is half-assed globalization.

First of all, we are living in an era that you will have to compete with the worldwide labor pool of talents no matter you like it or not.

Then, we have capital that is already moving across the globe with a few strokes of keyboard in search of the best opportunities. We have corporations that roams around the world free and moves around its HQ based on whichever provides the best tax advantage (Haliburton is becoming a Middle Eastern company! The only part that is not quite at freedom to move around to look for the best opportunity? Us the people.

America has been able to pay its labor the highest price in the world because it has the strongest consumers, so being located near the biggest consumer pool is a huge geographical advantage. Well this geographical advantage is about to go away. If the consumption power of the US is cut in half, your pay will have to go with it.

So, in such a situation, either you ask nobody to move around (including capital and corporations, ask them to pledge their exclusive allegiance to a country), or everybody gets to move around. Or else somebody will be left behind, really behind.

TOB - Most of it is because of the hiring binges that the companies have. Come to think of it, I pass Sun's Menlo Park office on my way to work every day. Seeing the full parking lot, I always wonder - why the hell they need so many people!?! Similary, Oracle, Cisco, HP, Intel...I always wonder..why do they need so many people? Is it to satisfy the ego of the hiring managers ..the more the reports, the better they feel, the bigger their budget? Something somewhere is just not right.

It is a difficult issue. As long as the living standards of people in other parts of the world are so far below ours, they will be willing to work for much cheaper real wages. Like water finding its level this is unstoppable.

Zephyr - Just like the South Park episode, the goobacks.