American Melt Down?

Discussion in 'Business & Economics' started by Michael, Sep 15, 2008.

  1. Diode-Man Awesome User Title Registered Senior Member

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    I wonder. IF the dollar crashed, would it be possible for the economy to continue running, using trade of goods and services? Hopefully it won't crash, maybe it will just slump a little? :shrug:

    What percentage of the national debt is owed to American banks, As compared to owed to other Banks?

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    Can ethanol be implemented without food shortage or food price increase?
     
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  3. kmguru Staff Member

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    I recommend Charlie Rose show where Charlie interviewed the founder of AIG - Hank Greenberg. My understanding is that greed took over risk management after they kicked him out and got involved in risky financial instruments.....

    http://www.charlierose.com/shows/2008/9/16/1/a-conversation-with-hank-greenberg

    The whole thing boils down to super greed in the absense of sound regulation. After all, the money belongs to someone else and if your competitor says, they will give you 30%, then you have to match it....
     
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  5. Carcano Valued Senior Member

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    Some major currencies have had huge declines in value over the last century without collapsing.

    The British pound and the Japanese yen are both examples.
     
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  7. Carcano Valued Senior Member

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    Only if its from sugar cane...sugar is not really food.

    Lots of calories...empty calories.

    All sugarcane should be diverted to ethanol production, with corn syrup or sugar beets used for food sweetening agents.
     
    Last edited: Sep 18, 2008
  8. kmguru Staff Member

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    And it could benefit the world....
     
  9. Carcano Valued Senior Member

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  10. kmguru Staff Member

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    Which means Japanese are nice. They give us the money to buy TOYOTA....

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  11. nietzschefan Thread Killer Valued Senior Member

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    We'll see if things free fall tomorrow. Looks like the AIG bailout might have done absolutely shit all nothing.
     
  12. camilus the villain with x-ray glasses Registered Senior Member

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    goddamn, our economy is worse than I thought. Could it really be an American Meltdown? It's some crazy shit. Gas went up quite a bit in my area. POEPLE SERIOUSLY, we cannot AFFORD another 4 years of Republicans and expensive wars, we need help here at home. Sun, this is the brokest I been in over 4 years.. im hurtin bad right now. AGAIN, please no republicans!
     
  13. one_raven God is a Chinese Whisper Valued Senior Member

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    I am an under-educated and over-paid middle management level executive at the world's largest bank whose stock has been falling for months on end and has been involved in far too many scandals over the past few years for comfort.
    This "recession" could very seriously impact me directly - and soon.
    Honestly, though, I think, depending on how the elections go (not just presidential) and how we deal with it, a serious market crash could end up being positive for this country and help get us from under the thumb of corporate giants.
    We should have never let ourselves get into the position that just a choice few companies failing could send our whole nation's economy into a tailspin and profoundly affect the markets in the rest of the world.
    If my bank fails or goes into receicvership, there will likely be a stock market crash reminiscent of '29 - and that just may be what this country needs to reinvest it's resources locally and make "ownership society" more than just a placebo campaign slogan.
    It may help us to replenish manufacturing jobs, local craftsmen and privately owned small businesses - which I think would make for a MUCH more stable, resilient economy.

    I would have to file for banruptcy and start from below zero once again, but it just may be worth it.
     
    Last edited: Sep 18, 2008
  14. Pandaemoni Valued Senior Member

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    AIG acted as counterparty, on a massive scale, on what are known as "credit default swaps" that (to boil down something that gets complicated) are generally used as a way to guarantee loan payments. AIG was, thinking of it that way, guaranteeing payment on a large number of mortgage loans (sort of), and when they went belly up, the lenders had rights to call on certain payments under the swaps.

    (More exactly they were entering credit default swaps on Notes that were themselves collateralized by pools of mortgages (aka "mortgage-backed securities"). When the mortgages tanked in value, the collateral for the securities looked bad, and they had to may both payouts and pay margin calls under their swaps forcing them to take a loss and tying up a lot of their liquid assets. In effect, they were "insuring" payments under the mortgage backed securities, and were not properly diversified.)
     
    Last edited: Sep 18, 2008
  15. camilus the villain with x-ray glasses Registered Senior Member

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    I feel you Raven, I also look at it almost prophetically. I've been thinking, could the 2012 Prophecies actually influence a stock market crash and recession and usher in an era resembling the Great Depression? Shit's starting to look bad. And Im already feeling it. Damn yo..
     
  16. camilus the villain with x-ray glasses Registered Senior Member

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    and thanks for this info Carcano. First time I actually thanked you.
     
  17. nietzschefan Thread Killer Valued Senior Member

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    Well said. I agree wholeheartedly. I would go broke also, to obtain that environment of craftsmanship , quality, and rampant small business entrepreneurship and more importantly, the accountability that goes along with that.
     
  18. one_raven God is a Chinese Whisper Valued Senior Member

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    We have been beholden to the corporations for far too long and have let it get far too out of hand.

    It's kind of ironic...
    Every investment advisor admonishes us all to be diversified in our investments, but our nation is not.
    We should have thousands of local banks and investment firms and not allowed the size and scope of firms today.
    A single coprorate entity failing should be a blip on the market radar, not the cause of a worldwide recession.
     
  19. camilus the villain with x-ray glasses Registered Senior Member

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    ^wisdom to my ears, or eyes in this case.
     
  20. Pandaemoni Valued Senior Member

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    The question is: how much are we willing to pay for it? It was not all that long ago when banks were all pretty much local, and it was relatively expensive and inconvenient. Banks became larger because there are advantages to pooling capital. We can prevent that in the same way that we can prevent Walmarts from moving in. The problem is, not many want to pay for the expensive Mom & Pop operations, if inexpensive Walmart is an option.

    There is also the problem that big banks run the financial system in the world. No big banks in America, just means that America loses its seat at that table. Banks in the U.K. (like Barclays) and elsewere (Credit Suisse, Soc Gen, Paribas, Danske Bank, Commerzbank, Mizuho, The Bank of Tokyo-Mitsubishi, etc.) would reap those rewards.

    It seems to me that there are better fixes than arbitrary limits on bank sizes.

    As for insurers, insurers have to be big. There are no Mom & Pop insurance companies, because their credit sucks. You need insurers with lots of money and geographic diversification.
     
  21. one_raven God is a Chinese Whisper Valued Senior Member

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    The inconvenience would be a thing of the past with the communication advances we have achieved since then.
    The so-called advantages to pooling capital is exactly what causes us to be in the situation we have with individual banks which own upwards of 40% of the Nikkei (or at least did at one time recently).
    With banks investing in local companies, rather than multi-national corporations we not only invest in our own communities, but as I said, diversify our resources.
    Banks do not need to have $14 Billion quarterly earnings to remain solvent or even profitable - just to become a corporate superpower.

    I never shop at Walmart, and would much rather buy from the guy who owns the store, knows my name and my mother's name.
    He has a sense of pride and responsibility in teh community in which he lives.
    You're right that many do not agree with that, and it's a terribly sad fact - this is the reason we are where we are now.

    We work for the corporations...
    We pay taxes to support the tax breaks they get to spend trillions of dallors a year on deductible advertizing to convince us to buy the shit...
    We invest in them...
    Their lobbyists have our politicians in their pockets...
    More and more public services get privatized and sold off to them...
    Our society is beholden to them, as are all of us, and there is little to no direct public accountability.
    We are damned fools and are now settling into the bed we made and hiding our heads under the covers hoping these same coprorations and the corrupt politicians will see us through this mess, because we have sold off our power for shares in a company beyond our control.
    Yes, you can say that people have the power because they can choose who they do business with. Think about what the repurcissons would be if Citi, HSBC, Ford and GM failed. The country would be in turmoil and it would take generations to recover from it - generations of unskilled laborers and white-collar deal brokers.

    As I see it, there is no better, more stable, more resilient economy than one that empowers it's citizens to go into business for themselves or support themselves by craft.
    The stronger the individual is, the stronger the nation is.

    What rewards are they?
    The more we position ourselves as brokers, the more vulnerable we are to world markets, which can be disrupted by a single executive's string of stupid mistakes or megalomania.

    Arbitraray? Where did that come from?
    What better fixes do you have in mind?

    That's not entirely true.
    Yes, they have to be rather large and have credit and capital, but they don't need to be nearly as large as AIG, nor do they necessarily need geographic diversification.
    When I worked at the North Carolina Department of Insurance, we dealt with a good number of local, moderately sized insurance companies.
    Again, if you want to be a monster and insure the world, you have to be the size of AIG, and when AIG crashes, we all pay $85 Billion.
    I dealt with a lot of insurance companies with only several thousand clients.
     
  22. Michael 歌舞伎 Valued Senior Member

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    Wow one_raven,

    I hope you turn out ok. I agree, we need something to jar Americans into thinking again.

    Michael

    Here's an update on some financial institutes. I didn't realize Citibank was doing so badly.

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  23. CIEan Registered Member

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    Thats amazing, and scary. They lost so much in value.
    But did the government really have to step in and take over AIG, Fanny Mae, and Freddie Mac? Couldnt they have just loaned them the money to recover?
     

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