Ask Me Help Desk - Trouble in River City

Trouble in River City

Hello:

The US is now officially a Banana Republic, brought to you by the Wall Street looters who sailed off into the sunset with YOUR money.

Do you wonder why they can't seem value the "toxic assets" the banks own?? I don't wonder. Really, it's just a matter of adding them up. I think they're actually afraid that if the REAL number got out, there would be panic in the streets. I think they're right.

Here's the REAL number: The OTC derivatives and credit swaps foisted upon the American public are valued at one quadrillion, one thousand, one hundred and forty four trillion US dollars.

Let's see, that's $1,100,144,000,000,000,000,000... Uhhhh, we don't have that much. Buy gold.

excon

or they are based on monopoly money. At what point does the notion value become the real value ? When you have recession the value of assets shrink . That is one reason why a recession is a correction. People and institutions holding onto these assets have a decision to either hold them for better times or get what they can for it. Neither should be our problem .Futures contracts, forward contracts, options and credit default swaps all have artificial value. They are only worth what they can be sold at right now and I doubt that comes anywhere's near a $ quadrillion +.

But gvt . Intervention and this notion that things are "too big to fail" makes it our problem because it extends the length of a correction.

So AIG gets multiple bailouts that get spent overseas and on executive bonuses and Bernanke tells us we need to give them more.

German and French banks got $36 billion from AIG Bailout - story BURIED

Chorus of outrage over millions in AIG bonuses

I say belly up is too good for them.

Quote:

Originally Posted by tomder55

They are only worth what they can be sold at right now and I doubt that comes anywhere's near a $ quadrillion +.

Hello again, tom:

Uhhh, THAT was my point. They're NOT worth that. They're worth a great deal less, if ANYTHING at all. But the banks are carrying them on their balance sheets at that VALUE. That's WHY they're broke. Because EVERYBODY knows they're NOT worth that much.

That's also why, if we bail them out, it's going to cost us their LOSSES - not what little they can get for 'em now, and the number above IS their losses. In terms of this discussion, the REAL value of those assets needs to be subtracted from what the bank PAID for those assets... The difference is the LOSS.

excon

Quote:

Uhhh, THAT was my point. They're NOT worth that. They're worth a great deal less, if ANYTHING at all. But the banks are carrying them on their balance sheets at that VALUE. That's WHY they're broke. Because EVERYBODY knows they're NOT worth that much.

change the accounting rules and get rid of mark to market.

You know the real reason why they can't give a definitive value of these "toxic" assets, because the really have no idea of their worth.
They have been securitized and repackaged so often that they are simply pieces of paper with a phone number on them and you thought Zombie debt buyers were a joke!

Quote:

Originally Posted by excon

...
Let's see, that's $1,100,144,000,000,000,000,000.....
excon

Thanks: Jimmy, Bill, Barney, Chris, Chuck, and the rest of the cast.

"Dodd's $175,000 AIG Bonus

"HARTFORD−U.S. Sen. Chris Dodd should return the $175,000 his campaigns received from AIG International employees or donate it to charity, according to Republican State Party Chairman Chris Healy Monday.

"According to opensecrets.org, AIG executives and employees were very generous to Sen. Dodd's U.S. Senate campaigns and Presidential bid in 2008.

"'Sen. Dodd was asleep at the switch as our financial markets crashed and burned,' said Healy. 'It's easy to see why Sen. Dodd didn't or wouldn't notice because AIG bought his attention.'

"Sen. Dodd is chairman of the Senate Banking and Urban Affairs Committee."
The Corner on National Review Online

Quote:

Originally Posted by George_1950

Thanks: Jimmy, Bill, Barney, Chris, Chuck, and the rest of the cast.

Hello again, George:

Here's the thing. None of those lefty's knew what a credit default swap was or what an over the counter derivative was. The congress didn't create them. WALL STREET created them.

The congress knew what mortgages were, but mortgages DIDN'T do this... I know, the emails you get want to blame Freddie, Fannie and the lefty's - but don't want to blame the bankers... I know why, of course.

It's cool. But, I'm not going to keep my mouth shut when you try your spin here.

excon

Quote:

Originally Posted by excon

Hello again, George:

Here's the thing. None of those lefty's knew what a credit default swap was or what an over the counter derivative was. The congress didn't create them. WALL STREET created them.

excon

So you think Congress (Barney, Chris, Chuck, et al) can run AIG, CitiGroup, Bank of America, oh what the heck, the entire financial system? GM, Chrysler, too?

Quote:

Originally Posted by excon

Hello again, George:

Here's the thing. None of those lefty's knew what a credit default swap was or what an over the counter derivative was. The congress didn't create them. WALL STREET created them.

excon

Quote:

Originally Posted by George_1950

So you think Congress (Barney, Chris, Chuck, et al) can run AIG, CitiGroup, Bank of America, oh what the heck, the entire financial system? GM, Chrysler, too?

Hello again, George:

I'm sorry. I don't get the connection... But, I don't get many connections you righty's make.

excon

not true ;the Clintoons walked away from real reform in 1998

Quote:

In 1998, an obscure federal agency, the Commodity Futures Trading Commission, raised the prospect of regulating the burgeoning market in complex financial instruments, which then had a notional value of $28.7 trillion. Today the notional value is $531.2 trillion, according to the International Swaps and Derivatives Association.
The nation's leading financial officials – Levitt, Federal Reserve Chairman Alan Greenspan, Secretary of the Treasury Robert Rubin, and his deputy Lawrence Summers – pummeled the proposal, saying it was dangerous to even discuss the idea. Led by Rubin, Levitt and Greenspan, the Clinton White House instead proposed a modest set of reforms. Months later, Clinton Administration officials walked away from their own recommendations, concluding the market could be best managed by the financial industry.

Asked about Democratic House Speaker Nancy Pelosi's observation that the financial collapse can be blamed on the “anything goes'' policies of the Bush Administration, Levitt said, “No, I think it goes back before that. This was decided under Clinton as well.''

Former Clinton Official Says Democrats, Obama Advisers Share Blame for Market Meltdown - ProPublica

Even Bill Clintoon has admitted he did a bad job regulating them.

Quote:

I think that the only thing that our administration did or didn't do that we should have done is to try to set in motion some more formal regulation of the derivatives market. They're wrong in saying that the elimination of the Glass-Steagall division between banks and investment banks contributed to this. Investment banks were already... banks were already doing investment business and investment companies were already in the banking business.

http://edition.cnn.com/2009/POLITICS...nda/index.html
He then goes on to deny the role his HUD had on the process. But the truth is that banks were compelled to issue risky mortgages . Stuck with cr*p paper they bundled them together and sold them off as derivative instruments.

But getting back to market to market . These loans are good for 15-30 years . Why report them at their current market value when a mortgage holder will probably have the paper for that time ? Most likely the market will rebound quite a bit in 2 decades .