A politics thread for things other than the 2008 election

by **phuturephillies** » Tue Mar 18, 2008 20:16:06

pacino wrote:taxpayers would've been responsible the other way too, it just would've devastated a ton of people

a 'wakeup call' will screw up a lot of people's lives

And if we continue down this path, we're going to ruin the lives of an entire generation. The dollar is dying. The Fed panicked. They didn't "help" anyone except for JP Morgan. Now Wells Fargo is going to be licking their chops, hoping to get the same kind of sweetheart deal so they can begin to absorb these subprime nightmare companies as well.

by **pacino** » Tue Mar 18, 2008 20:16:15

TenuredVulture wrote:
pacino wrote:taxpayers would've been responsible the other way too, it just would've devastated a ton of people

a 'wakeup call' will screw up a lot of people's lives

A ton of people are devastated. The entire workforce of Bear Stearns, for starters.

semantics

by **phuturephillies** » Tue Mar 18, 2008 20:21:22

I appreciate the liberal "save the world" mantra, but I'm just kind of tired of it, because its not a real solution. Does it suck for the Bear Stearns employees? You damn right it does. But everyone knows the reputation Bear has. When you sign on to work for a company that uses the tactics they do, you have to understand what you are getting into. Last year at this time, when guys making what I make in a year were getting triple that in a bonus from Bear, were those employees complaining? Anyone with even a basic understanding of economics could look at this subprime fiasco and see disaster. If you were a Bear employee and left all of your holdings in the company, I can't feel sorry for you for losing it.

The Fed should not be promising $30 BILLION to JPM in the event that the loans default. That will trickle down to everyone else in the country. The Fed needs to set an example. Sure, it will suck for the people who are affected directly by the Bear thing, but they're just opening the dam wider and wider, and eventually, they won't be able to plug it.

by **pacino** » Tue Mar 18, 2008 20:23:41

They would've completely collapsed in a day or two and the market would've suffered a lot more than it did, which would've affected a ton more people than this simple takeover did.

by **jeff2sf** » Tue Mar 18, 2008 20:30:12

phuturephillies wrote:I appreciate the liberal "save the world" mantra, but I'm just kind of tired of it, because its not a real solution. Does it suck for the Bear Stearns employees? You damn right it does. But everyone knows the reputation Bear has. When you sign on to work for a company that uses the tactics they do, you have to understand what you are getting into. Last year at this time, when guys making what I make in a year were getting triple that in a bonus from Bear, were those employees complaining? Anyone with even a basic understanding of economics could look at this subprime fiasco and see disaster. If you were a Bear employee and left all of your holdings in the company, I can't feel sorry for you for losing it.

The Fed should not be promising $30 BILLION to JPM in the event that the loans default. That will trickle down to everyone else in the country. The Fed needs to set an example. Sure, it will suck for the people who are affected directly by the Bear thing, but they're just opening the dam wider and wider, and eventually, they won't be able to plug it.

I don't disagree with you're general idea of making a bank pay for bad decisions but you are WAYYY overstating the idea that the rank and file Bear Stearns employees "knew what they were getting into". I mean, unless you're saying all Investment Bankers take that risk, which is semi-reasonable. The size of the bet was often times hidden from the CEO and regulators, so with the exception of a few MDs, it's unlikely that most people knew what they were getting into.

by **phuturephillies** » Tue Mar 18, 2008 20:33:00

Well, yeah, but still, if you go to work for Bear, you know what kind of company you're getting in bed with.

by **TenuredVulture** » Tue Mar 18, 2008 20:38:00

Nothing the Fed did helps the people at Bear Stearns out. Now, you could justifiably criticize the way in which JP Morgan just made a great deal at taxpayer expense.

From what I understand, the problem the fed is trying to solve is in the credit markets--there's no money to borrow, which is creating real problems. Some people are profiting off this intervention (kind of like rent seeking?) as an unintended (but easily predicted) consequence of pumping money into the system.

Anyway, if inflation or dollar weakness really is persistent problem, you younguns will benefit as you're unlikely to try to live off your nest egg anytime soon.

by **jeff2sf** » Tue Mar 18, 2008 20:39:19

Ok, as a guy who worked in finance and had Bear as a client and then looked at them briefly in B-School, please educate me as to "what type of firm they are", relative to any other I Bank?

by **phuturephillies** » Tue Mar 18, 2008 20:52:44

jeff2sf wrote:Ok, as a guy who worked in finance and had Bear as a client and then looked at them briefly in B-School, please educate me as to "what type of firm they are", relative to any other I Bank?

Well, I mean, most of it is readily available. Shady ethics, the whole blowup last summer with two of their hedge funds where one of the senior managing directors equated the hedge fund to putting money in a bank account, as it went on to lose over a billion dollars. They've always had a reputation as being a cutthroat outfit and not entirely honest. A buddy of mine interviewed with them after college and just said he couldn't see himself working in that type of environment after he'd done research on them. Sure, most places like them all deal in this to a degree, but they were at the top of the heap.

by **jeff2sf** » Tue Mar 18, 2008 20:58:31

phuturephillies wrote:
jeff2sf wrote:Ok, as a guy who worked in finance and had Bear as a client and then looked at them briefly in B-School, please educate me as to "what type of firm they are", relative to any other I Bank?

Well, I mean, most of it is readily available. Shady ethics, the whole blowup last summer with two of their hedge funds where one of the senior managing directors equated the hedge fund to putting money in a bank account, as it went on to lose over a billion dollars. They've always had a reputation as being a cutthroat outfit and not entirely honest. A buddy of mine interviewed with them after college and just said he couldn't see himself working in that type of environment after he'd done research on them. Sure, most places like them all deal in this to a degree, but they were at the top of the heap.

Ok, if you're saying that after the hedge fund thing went down, people should have known to get out or not sign up, no argument (though again, isolated incidents by rogues happen at all these places), but my experience with Bear had been uniformly positive. I think "the dirt" that goes out around interviews is colored by personal anecdotes and one man's Bear is another man's Lehman is another man's JP Morgan.

by **phuturephillies** » Tue Mar 18, 2008 21:01:22

...its definitely JP Morgan's now :wink:

by **phuturephillies** » Tue Mar 18, 2008 21:57:50

I love Jim Cramer, more for entertainment reasons than anything else. He's right some times (more than he's wrong), but when he gets it wrong, its usually in spectacular fashion. This is a funny chain of events.

During the summer, the now famous meltdown

[youtube]http://www.youtube.com/watch?v=GKZgfrsItmw[/youtube]

He knew companies like this were in big trouble, and he singled out Bear Stearns.

Then just last week

[youtube]http://www.youtube.com/watch?v=gUkbdjetlY8[/youtube]

Then yesterday

[youtube]http://www.youtube.com/watch?v=i0Y2_LS5mHQ[/youtube]

by **TenuredVulture** » Tue Mar 18, 2008 22:43:16

I guess Floppy writes for jezebel.

by **phuturephillies** » Tue Mar 18, 2008 22:49:46

What if there were some sort of cascading ripple effect? everyone wants to know. What of all that IRRATIONAL FEAR? But you just tell them, Ben Bernanke, that they should maybe sit quietly in their illiquidity and reflect on what the fuck made them think it was rational to buy into all this fancy housing market bullshit in the first place. Just ask them, Ben Bernanke, what they thought was rational about people in Southern California taking out mortgages with monthly payments equivalent to five months' rent?

perfect.

by **phuturephillies** » Wed Mar 19, 2008 12:52:14

The more I read, the more pissed off I get. The Fed has promised up to $30 billion to JPM to cover Bear. Bear's subprime holdings only total $2 billion, and their entire mortgage holdings only total $33 billion.

NEW YORK (Fortune) -- The Fed's agreement to buy up to $30 billion in troubled Bear Stearns mortgage bonds may have saved JPMorgan Chase from a big writedown, according to senior executives involved in the transaction. Ultimately, it enabled a deal to be done even as alternatives rapidly dried up.

JPMorgan (JPM, Fortune 500) executives initially decided to pass on a purchase of Bear Stearns this past weekend, Bear execs said, largely because of the risks tied to Bear's mortgage portfolios. They changed their minds after the Fed agreed to pony up $30 billion in so-called nonrecourse loans - agreements that transfer the risk of Bear's bad mortgage bets to U.S. taxpayers. The Fed's decision paved the way for the Sunday evening deal that put Bear in JPMorgan's hands for $2 a share, a 93% discount to Friday's closing price.

But the value of Bear's balance sheet wasn't the only worry at JPMorgan. Bear execs say JPMorgan was also worried that without help from the Fed, buying mortgages from Bear (BSC, Fortune 500) could force JPMorgan to write down the value of its own mortgage holdings.

That fear stemmed in part from the sharp decline in the value of mortgage debt this year, along with the different calendars the firms report on. At the end of February, Bear had $16 billion in commercial mortgage-backed securities, $15 billion in prime and Alt-A mortgage bonds and $2 billion in various subprime bonds, JPMorgan said. The value of those securities has been in sharp decline, along with U.S. house prices. Indeed, values in the mortgage securities market have plunged just over the past month, as investors in lenders such as Thornburg Mortgage (TMA) - which is dealing with unmet margin calls triggered by plunging prices - will surely tell you.

Link

by **jerseyhoya** » Thu Mar 20, 2008 09:31:05

Tom Reynolds (NY-26) is retiring. We could legitimately lose another 15 seats this cycle in the House.

by **momadance** » Thu Mar 20, 2008 09:32:36

phuturephillies wrote:The more I read, the more pissed off I get. The Fed has promised up to $30 billion to JPM to cover Bear. Bear's subprime holdings only total $2 billion, and their entire mortgage holdings only total $33 billion.

NEW YORK (Fortune) -- The Fed's agreement to buy up to $30 billion in troubled Bear Stearns mortgage bonds may have saved JPMorgan Chase from a big writedown, according to senior executives involved in the transaction. Ultimately, it enabled a deal to be done even as alternatives rapidly dried up.

JPMorgan (JPM, Fortune 500) executives initially decided to pass on a purchase of Bear Stearns this past weekend, Bear execs said, largely because of the risks tied to Bear's mortgage portfolios. They changed their minds after the Fed agreed to pony up $30 billion in so-called nonrecourse loans - agreements that transfer the risk of Bear's bad mortgage bets to U.S. taxpayers. The Fed's decision paved the way for the Sunday evening deal that put Bear in JPMorgan's hands for $2 a share, a 93% discount to Friday's closing price.

But the value of Bear's balance sheet wasn't the only worry at JPMorgan. Bear execs say JPMorgan was also worried that without help from the Fed, buying mortgages from Bear (BSC, Fortune 500) could force JPMorgan to write down the value of its own mortgage holdings.

That fear stemmed in part from the sharp decline in the value of mortgage debt this year, along with the different calendars the firms report on. At the end of February, Bear had $16 billion in commercial mortgage-backed securities, $15 billion in prime and Alt-A mortgage bonds and $2 billion in various subprime bonds, JPMorgan said. The value of those securities has been in sharp decline, along with U.S. house prices. Indeed, values in the mortgage securities market have plunged just over the past month, as investors in lenders such as Thornburg Mortgage (TMA) - which is dealing with unmet margin calls triggered by plunging prices - will surely tell you.

Link

The Federal Reserve is a total fraud. Kennedy had it right when he planned to dissolve its powers. At least Greenspan was somewhat level-headed. Bernanke is just a dope.

by **phuturephillies** » Thu Mar 20, 2008 11:28:04

Greenspan was a jackass.

by **TenuredVulture** » Thu Mar 20, 2008 11:33:59

phuturephillies wrote:Greenspan was a jackass.

Someone else Floppy seems to channel.

by **Wizlah** » Thu Mar 20, 2008 11:36:50

boy, it's getting fun over here. they're starting to spread rumours regarding banks in order to do a bit of short selling. [url=http://www.guardian.co.uk/business/2008/mar/20/creditcrunch.hbosbusiness]HBOS nearly had a run on it yesterday
[/url].
The temptation is to assume that this kind of stuff is only going to affect high finance, but with a significant proportion of the UK and Irish Economies reliant on the property markets, there's a real concern here that this could force some kind of serious recession.

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