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S&P says pressure building on U.S. "AAA" ratin
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mises

Joined: 05 Nov 2007
Location: retired

Posted: Fri Sep 19, 2008 7:17 am Post subject: S&P says pressure building on U.S. "AAA" ratin

Quote:

NEW YORK (Reuters) - Pressure is building on the pristine "AAA" rating of the United States after a federal bailout of American International Group Inc, the chairman of Standard & Poor's sovereign ratings committee said on Wednesday.

The $85 billion bailout of AIG on Tuesday by the U.S. Federal Reserve "has weakened the fiscal profile of the United States," S&P's John Chambers told Reuters in an interview.

"Lack of a pro-active stance could have resulted in further financial stress and put pressure on the U.S. triple-A rating," Chambers said. "There's no God-given gift of a 'AAA' rating, and the U.S. has to earn it like everyone else."

The cost of insuring 10-year U.S. Treasury debt against default rose on Wednesday to a record high, a day after the government rescued insurer AIG with an $85 billion loan. At one time, AIG was the world's largest insurer, ranked by market value. At midday on Wednesday, AIG's stock was down 33 percent at $2.50 on the New York Stock Exchange.

http://www.reuters.com/article/idUKN1752966920080917?pageNumber=3&virtualBrandChannel=0

mises

Joined: 05 Nov 2007
Location: retired

Posted: Fri Sep 19, 2008 7:34 am Post subject:

Oh my.

http://www.politico.com/news/stories/0908/13602.html

Quote:

Paulson plan could cost $1 trillion

Congressional leaders said after meeting Thursday evening with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke that as much as $1 trillion could be needed to avoid an imminent meltdown of the U.S. financial system.

Paulson announced plans Friday morning for a "bold approach" that will cost hundreds of billions of dollars. At a news conference at Treasury headquarters, he called for a "temporary asset relief program" to take bad mortgages off the books of the nation's financial institutions. Congressional leaders had left Washington on Friday, but Paulson planned to confer with them over the weekend.

"We're talking hundreds of billions," Paulson told reporters. "This needs to be big enough to make a real difference and get to the heart of the problem."

Stock markets soared around the world in anticipation of the rescue, with British and Chinese indexes recording their biggest gains ever.

Senate Banking Committee Chairman Chris Dodd (D-Conn.) said on ABC�s �Good Morning America� said lawmakers were told last night �that we�re literally maybe days away from a complete meltdown of our financial system, with all the implications, here at home and globally.�

�What you heard last evening is one of those rare moments � certainly rare in my experience here � was that Democrats and Republicans decided we needed to work together, quickly,� Dodd said.
See Also

The solution being proposed by the Bush administration is the most expensive bailout in the nation�s history, sharply curtailing the ability of the next president to push for tax cuts or new spending.

Congressional leaders tell Politico that to expedite the rescue, Treasury plans to seek additional authority rather than creating a new entity. The plan involves buying up hundreds of billions of dollars in bad mortgages to take them off the books of financial institutions that otherwise might fail.

Sen. Richard Shelby of Alabama, the ranking Republican on the Banking Committee, told �Good Morning America�: �I figure it will be at least half a trillion. But if you look at what the Fed has already done [by rescuing insurance giant AIG], and the extension of power to Treasury to deal with Fannie Mae and Freddie Mac, I believe we're talking about a trillion dollars.�

Some Republicans are expressing concerns about writing essentially a blank check to the Bush administration.

�They're lurching from one crisis to another,� Shelby said. �They don't seem to have a superplan to deal with this. ... We want to see the plan. This is not a done deal yet. But we know there's crisis, there's stress, in the financial markets that we haven't seen in, say, 70 years.�

Some conservatives are balking even more bluntly.

Sen. Jim DeMint (R-S.C.), a member of the Joint Economic Committee, told the Los Angeles Times: �What is missing from it and from the recent string of bailouts is a commitment to return to a free enterprise economy. ... What we need now is not what could be nearly a trillion dollars in new taxpayer bailouts but pro-growth policies that allow our markets to correct and start growing again.�

That, in addition to:

- Bear Stearns
- Economic Stimulus progam
- Fannie & Freddie
- AIG
- No Short selling rules
- Fed liquidity programs (Term Lending facility, Term Auction facility)
- Money Market fund insurance program

Sure is getting expensive! Pretty soon we aren't gonna have enough left for the Rods From God program.

blaseblasphemener

Joined: 01 Jun 2006
Location: There's a voice, keeps on calling me, down the road, that's where I'll always be

Posted: Fri Sep 19, 2008 7:41 am Post subject:

ABORTION IS MURDER!!! JESUS IS COMING SOON, REPENT!!! I SUPPORT DA TROOPS!!! NO MORE TAXES!!! NO COMMONIST MEDICINE!!! Oh, I'm sorry, what was that you were saying about the economy? I don't really follow the news. It's kinda borin'.

ontheway

Joined: 24 Aug 2005
Location: Somewhere under the rainbow...

Posted: Fri Sep 19, 2008 11:46 am Post subject:

Quick, quick, Reinflate the Bubble! Reinflate the Bubble! This is the best the socialists can muster as a socialist solution to this socialist problem. Make the bubble bigger. And the pop will be bigger when it comes. But first, a little hyperinflation before the big bang. These socialists are so stupid. (There should be a minimum IQ of 120 to vote or run for office.)

mises

Joined: 05 Nov 2007
Location: retired

Posted: Fri Sep 19, 2008 11:47 am Post subject:

Quote:

Money-Market Funds Get $50 Billion Backstop From U.S.

By Christopher Condon

Sept. 19 (Bloomberg) -- The U.S. will insure money-market funds against losses for the next year as it seeks to prevent a run on $3.35 trillion of assets that average investors and institutions rely on as a safe alternative to bank deposits.

The U.S. Treasury will use an existing $50 billion emergency pool to offset any losses incurred by investors as fund managers cope with the worst financial crisis since the Great Depression. The plan is similar to federal insurance on U.S. bank accounts, though it's temporary and doesn't carry the same $100,000 limit on reimbursements, a Treasury official said today on a conference call.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a9oT3F7XFBYo&refer=home

50 billion. Meh.

mises

Joined: 05 Nov 2007
Location: retired

Posted: Fri Sep 19, 2008 11:50 am Post subject:

Quote:

Bailout rage: "Socialism in America ... Welcome to the Third World!"

Backlash against the unprecedented taxpayer bailout for banks is building, with critics ripping recent U.S. economic policy as "punch drunk," "casino capitalism" and "socialism in America."

"The free market for all intensive purposes is dead in America,� said Sen. Jim Bunning, R-Kentucky, the most vocal bailout critic in the Senate. �The action proposed today by the Treasury Department will take away the free market and institute socialism in America."

"Dear United States, Welcome to the Third World!" wrote Los Angeles Times columnist Rosa Brooks. "It's not every day that a superpower makes a bid to transform itself into a Third World nation..."

Housing and economic blogs again crackled with rage against the Bush administration's emergency plan to purchase illiquid assets from the nation's banks and lenders.

"I am livid," commenter "Jenna" wrote on L.A. Land. "Words fail to express how angry I am. I didn't get million dollar bonuses, I didn't use my home like an ATM, I didn't buy a home I couldn't afford. Nonetheless, I am going to have to pay for something that was completely avoidable. It isn't brain surgery to know that selling homes to people who can't afford them was a bad idea and that someday they would have to pay the piper."

"We are doomed," wrote another commenter on L.A. Land. "I am fresh out of outrage."

Another commenter asked, "How can they do this? The financial system will start the party over again tomorrow. It is so unfair and crooked, stealing from our children to pay for this."
Mutual fund pioneer John Bogle said the U.S. government appears "punch drunk" in its stumbling efforts to rescue the financial system. �We're playing a game of casino capitalism, interfering with the way the market is working,� Bogle told Bloomberg News. �The government seems punch drunk. It doesn't seem systematic.�

Historian Allan Meltzer called the bailout plan "social democracy at its worst." He told Bloomberg News, "
�If they remove financial losses from the financial institution,� the government should ensure that �the financial company will still owe the money,� he said. �Civilized countries like Chile do that.�

http://latimesblogs.latimes.com/laland/2008/09/bailout-rage-so.html

The bankers should be required to "donate" their bonuses from the last 5 years to the government to pay for the damage they caused. This is absurd.

Ya-ta Boy

Joined: 16 Jan 2003
Location: Established in 1994

Posted: Fri Sep 19, 2008 11:54 am Post subject:

If things go true to form, the trillion dollar figure floating around is a low estimate. Apparently, the Chinese are feeling generous about loaning it to us.

mises

Joined: 05 Nov 2007
Location: retired

Posted: Fri Sep 19, 2008 11:55 am Post subject:

ontheway wrote:

Quick, quick,

Reinflate the Bubble! Reinflate the Bubble!

This is the best the socialists can muster as a socialist solution to this socialist problem.

Make the bubble bigger. And the pop will be bigger when it comes. But first, a little hyperinflation before the big bang. These socialists are so stupid.

(There should be a minimum IQ of 120 to vote or run for office.)

I am coming around to the massive deflation argument now. The whole shabang is a giant credit bubble. It has to pop and life has to get more affordable.

mises

Joined: 05 Nov 2007
Location: retired

Posted: Fri Sep 19, 2008 11:56 am Post subject:

Ya-ta Boy wrote:

If things go true to form, the trillion dollar figure floating around is a low estimate. Apparently, the Chinese are feeling generous about loaning it to us.

Yeah, the FT had an editorial yesterday or the day before estimating 2 trillion.

The equity markets are going to have an epic, historic and violent crash rather soon.

khyber

Joined: 16 Jan 2003
Location: Compunction Junction

Posted: Fri Sep 19, 2008 12:05 pm Post subject:

I'm so happy that someone's finally thinking about the investors. It's such a refreshing change from....

mises

Joined: 05 Nov 2007
Location: retired

Posted: Fri Sep 19, 2008 12:06 pm Post subject:

No kidding. This is all disgusting.

mises

Joined: 05 Nov 2007
Location: retired

Posted: Fri Sep 19, 2008 12:14 pm Post subject:

Quote:

$2,500 Per Person

That�s how much this proposed bailout is going to cost.

Are you ready to shell out $2,500 to help Wall Street firms that made bad (often government-influenced and government-incentivized) decisions?

Doesn�t matter. You�re going to. Either through taxes or devalued currency. And that�s just until the next crisis, which is inevitable now that we�ve sent the message to big corporations that taxpayers will pay for their mistakes.

And don�t blame this on the free market. There�s nothing free-market about any of it. It�s corporatist socialism.

http://www.theagitator.com/2008/09/19/2500-per-person/

Expect it to double or triple. Plus all the other stuff.

PBRstreetgang21

Joined: 19 Feb 2007
Location: Orlando, FL--- serving as man's paean to medocrity since 1971!

Posted: Fri Sep 19, 2008 3:26 pm Post subject:

Quote:

The bankers should be required to "donate" their bonuses from the last 5 years to the government to pay for the damage they caused. This is absurd.

Spot on. To say nothing of the severence packages these loans will help pay for the CEOs. Its the US tax payers who will spend 24 million for the severence of Fannie and Freddie. The money covering the legal defense of the ex-Ceo of theirs who quit in 04 and now has a criminal investigation on-going. When the share-holders of those companies decide they want to sue the directors who will pay for the defense? Oh yes, the taxpayers. Many of those same taxpayers who are probably living with their folks since the same banks now getting aid bought their morgatge from the bank that forclosed on their house.

Anyone in charge of these companies outta just have all their assets liquidated and use that money to pay for their bail-out.

Ya-ta Boy

Joined: 16 Jan 2003
Location: Established in 1994

Posted: Fri Sep 19, 2008 5:31 pm Post subject:

Quote:

$2,500 Per Person

When put that way, it's not such a big deal. One month's income from the average hakwon. Now all we have to do is get Korea to open up 297,000,000 more hakwons for a month.

mises

Joined: 05 Nov 2007
Location: retired

Posted: Fri Sep 19, 2008 6:51 pm Post subject:

http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=A1YourView&xml=/money/2008/09/19/ccambrose119.xml

Quote:

Drastic measures are needed to halt the credit contraction, writes Ambrose Evans-Pritchard

Yesterday's move by the US Federal Reserve, the European banks and the Bank of Japan to douse the global banking system with $184bn (�101bn) may get us through the week without another catastrophic failure, but it does nothing to halt the downward spiral into debt deflation.

"The central bank action treats a symptom of the disease, not the disease itself," said Stephen Lewis, chief economist at Insinger de Beaufort. "It is a palliative. At root, there is no way of imbuing worthless financial claims with value."

The yield on three-month Treasury notes remains near zero - a level last seen after Pearl Harbour - reflecting a near total loss of confidence in all financial instruments. The five-year CDS credit default swaps on a great clutch of America's biggest companies are flashing imminent bankruptcy signals: Washington Mutual (2638), General Motors (2284), MBIA Insurance (2187), Advanced Micro (1773), Ford Motor (1718).

We are dangerously close to a $3.5 trillion collapse of America's money market fund industry. "It's an incredibly serious issue. A tipping point in this crisis would be when you have a run on money markets, and we are right on the cusp of that," said Paul McCulley, PIMCO's portfolio chief.

Holy cow.

http://www.nytimes.com/2008/09/20/washington/19cnd-cong.html?hp=&pagewanted=print

Quote:

Congressional leaders were told �that we�re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.

Oh my.

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