There was nothing so wrong with the existing fiscal infrastructure that wouldn't provide BETTER for continued economic bouyancy than any 'bailout.'
When Silverado was 'bailed out' the federal banking system was sound and the FDIC provided funding for the S&L bailout. But, this was different. This literally was the federal system taking a huge nose dive into insolvency.
Republicans don't listen. They like to 'cover their tracks' long enough to blame others. You try to tell folks that if allowed to file bankrupcy rather than face a bailout would provide PROTECTIONS rather than the continued accumulation of 'continued bad' debt. They just don't 'get it.' Or don't WANT to 'get it.'
The 'thing' is this, now, AIG is losing ground again. And why? Because it didn't have the protections it needed to 'reorganize' and attempt survival. The monies that Paulson and Bernanke gave AIG simply went to 'continue' the losses that existed in the first place. AIG never had a breather, simply continued financing of their previous 'bad decisions.' Let's put it this way: the AIG 'bailout' wasn't so much a bailout as a chance to tread water a little bit longer. Why? Anyone's guess.
The chances the $700 billion 'bailout' will 'come back' to the USA Treasury is skeptical at best. The Paulson 'sell-out' of the financial markets may have staved off the liquidation of Goldman-Sachs, but, the 'idea' that all the bailout money was simply 'short term' bouyancy to a recovery is unrealistic. Besides, why 'bailout' rather than file for 'bankrupcy protections.' The USA Legislature was sold a 'bill of goods' under pressure from a panicked public.
Effectiveness of AIG's $143 Billion Rescue Questioned (click here)
By Carol D. Leonnig
Washington Post Staff
Writer Monday, November 3, 2008; Page A18
A number of financial experts now fear that the federal government's $143 billion attempt to rescue troubled insurance giant American International Group may not work, and some argue that company shareholders and taxpayers would have been better served by a bankruptcy filing....
Nobel Winner Aumann Says Bernanke, Paulson Steps `Not Smart' (click here)
By Tal Barak and Alisa Odenheimer
Nov. 2 (Bloomberg) -- Robert J. Aumann, the Israeli economist who won the 2005 Nobel Prize in economics, said the steps taken by Federal Reserve Chairman Ben S. Bernanke and U.S. Treasury Secretary Henry Paulson to save financial markets ``weren't smart.''
``The intervention by the regulators to save the U.S. economy will lead to further bankruptcies of banks and insurance companies,'' Aumann said at a rabbinical conference in Jerusalem yesterday. ``They are only encouraging institutions to take more uncalculated risks.''
The crisis in the financial markets was caused by the incentives provided to managers of banks and other financial institutions that caused them to act to their own benefit and not the banks', he said. Bonuses were given on the basis of loan sales, without considering who the borrowers were, he said.
More than 100 of the world's biggest banks and securities firms have posted about $685.4 billion in asset writedowns and credit losses because of the financial turmoil. A month ago, Congress approved a $700 billion rescue package that gave the Treasury wide authority to buy and guarantee assets to prevent a U.S. financial collapse.
Aumann, who won the Nobel Prize for his work on game theory, said there is ``no financial crisis'' in Israel. The Israeli government's decision not to intervene in the financial markets was correct, he said.
To contact the reporters on this story: Tal Barak in Tel Aviv at tbarak@bloomberg.net; Alisa Odenheimer in Jerusalem at aodenheimer@bloomberg.net. Last Updated: November 2, 2008 11:19 EST
George Magnus, senior economic adviser to UBS, is widely acknowledged to have predicted that the US sub-prime mortgage crisis would trigger a global recession. Photo: Jane Mingay
George Magnus: the man who predicted the sub-prime crisis would lead to recession (click here)
George Magnus does not look like a prophet. Yet this is the man widely acknowledged to have predicted that the US sub-prime mortgage crisis would trigger a global recession.
By Josephine Moulds
Last Updated: 11:22PM GMT 02 Nov 2008
George Magnus, senior economic adviser to UBS, is widely acknowledged to have predicted that the US sub-prime mortgage crisis would trigger a global recession. Photo: Jane Mingay
Last March, when US Treasury Secretary Henry Paulson was busy reassuring the world that he for one was not concerned about global market gyrations, Magnus wrote a paper that now seems eerily prescient. As senior economic adviser to UBS, he suggested that the US sub-prime mortgage crisis could cause the end of the credit cycle "with potentially systemic economic consequences".
Liquidity could dry up, exposing the stratospheric levels of debt in the system, with knock-on reactions in complex financial asset structures and prices. Financial institutions, he wrote, could put a freeze on lending, prompting a recession that would give rise to more defaults, a downturn in the credit cycle and a negative feedback loop with the economy.
So, how does it feel to forecast the biggest financial crisis since the 1930s? "I'd like to have predicted something really nice," laughs Magnus, who at 59 has the air of a University lecturer rather than an investment banker....
Cotton merchant Paul Reinhart AG's US unit files for Bankruptcy Protection (click here)
10/18/2008 3:57 AM ET
(RTTNews) - Paul Reinhart Inc., Dallas, an indirect subsidiary of cotton merchant Paul Reinhart AG of Switzerand, announced the recent filing of protection under Chapter 11....
Digital Vision handed bankruptcy protection (click here)
Published: 16 October 2008 19:54
Author: Will Strauss
Last Updated: 16 October 2008 19:54
The short-term future of Digital Vision, the Swedish manufacturer behind the Film Master grading system, has been secured after the company successfully applied for its domestic equivalent of Chapter 11 bankruptcy....
Frontier gets OK to toss union pact (click here)
Machinists, judge hope outsourcing can be avoided
Bloomberg News
Published October 31, 2008 at 8:05 p.m.
Frontier Airlines can reject a contract with unionized machinists after agreeing to changes that make outsourcing aircraft maintenance work less likely....
Infinity condo developer files for bankruptcy protection (click here)
By Ryan Starr - Surrey North Delta Leader
Published: October 15, 2008 5:00 PM
Updated: October 16, 2008 10:46 AM
Wall Street woes have sent shockwaves through Surrey's Main Street.
The developer of the five-tower Infinity project in North Surrey has filed for bankruptcy protection as a result of the collapse of one of its chief financiers, Lehman Brothers.
The global investment bank filed for bankruptcy Sept. 15 after the U.S. Treasury Department refused to bail it out in the midst of the global credit-market meltdown....
Hilander loses bankruptcy protection (click here)
Wednesday, October 15, 2008 12:52 PM PDT
By Erik Olson
A federal bankruptcy judge in Tacoma revoked bankruptcy protection for the Hilander Family Fun Center in Kelso last week, leaving the business vulnerable to shutdown for failure to pay as much as $436,000 in back taxes....
Auto parts supplier base teetering in downturn (click here)
By Sharon Silke Carty, USA TODAY
DETROIT — While the big U.S. automakers lobby the government for some form of bailout, industry watchers are bracing for a major failure of the auto supply base if one or more of the Detroit 3 seek bankruptcy court protection....
Goody's says court confirms reorganization (click here)
Associated Press 10.08.08, 7:59 AM ET
NEW YORK -
Apparel retailer Goody's Family Clothing Inc., which filed for bankruptcy protection in June, said a court confirmed its reorganization plan.
The U.S. Bankruptcy Court for the District of Delaware confirmed the plan, which is expected to become effective in about 10 days.
In a statement Tuesday, Goody's Chief Executive Paul White said the decision will allow the business to move forward with "renewed vigor."...
Vocations go on vacation as the Mid-South economy stumbles (click here)
By David Flaum , Memphis Commercial Appeal
Sunday, November 2, 2008
Rising foreclosures and bankruptcy filings, more small businesses launched, fewer apartment renters, lower new-car sales and higher used-car sales -- all signs of one troubling trend: rising unemployment.
The September jobless rate of 7.1 percent for Tennessee was the highest in 21 years -- including during two recessions -- said William Fox, executive director of the Center for Business and Economic Research at University of Tennessee-Knoxville....
Stores may post weakest October sales on record (click here)
By ANNE D'INNOCENZIO – 2 days ago
NEW YORK (AP) — After slashing their spending in September as the financial meltdown intensified, shoppers went into full retreat in October, spooked by rising layoffs and shriveling retirement funds.
Retailers reporting October sales data for established stores next week expect to see the weakest performance for that month since at least 1969 — in many cases percentage declines in the mid-teens — and are frantically cutting prices even more to pull in shoppers.
"Consumers just stopped shopping," said Michael P. Niemira, chief economist at the International Council of Shopping Centers....
Oct. 07, 2008 IN BRIEF
Sun Country will seek bankruptcy protection (click here)
Vacation-oriented Sun Country Airlines will file for bankruptcy protection but will keep flying to Southern Nevada and other destinations...
Cotton firms get relief in Reinhart bankruptcy (click here)
BY NANCY COLE
Posted on Thursday, October 30, 2008
Arkansas cotton producers holding contracts to sell at least a portion of their 2008 crop to Paul Reinhart Inc. are breathing a little easier this week.
U. S. Bankruptcy Judge Harlin DeWayne Hale for the Northern District of Texas has authorized Reinhart, the fourth-largest U. S. cotton merchant, to reject all of its outstanding cotton-purchase contracts....
North Georgia business bankruptcy filings surge (click here)
By MARGARET NEWKIRK
The Atlanta Journal-Constitution
Sunday, October 26, 2008
The popped housing bubble and crushed credit market have pushed record numbers of North Georgia businesses into bankruptcy court this year.
Chapter 11 filings are up between 50 percent and 70 percent over all of last year, depending on how they’re counted....
BUSINESS CH. 11FILINGS IN N. GEORGIA•
1998 -- 113
1999 -- 80
2000 -- 152
2001 -- 132
2002 -- 185
2003 -- 128
2004 -- 177
2005 -- 148
2006 -- 148
2007 -- 161
2008 to date -- 283
This year
January -- 6
February -- 53
March -- 24
April -- 15
May -- 34
June -- 29
July -- 16
August -- 53
September -- 24
October-- 29
Figure includes multiple related filings.
Thursday, October 23, 2008
Dynamic Leisure files for bankruptcy protection (click here)
Tampa Bay Business Journal
Wholesale travel company Dynamic Leisure Corp. has filed for Chapter 7 bankruptcy protection.
The company’s most recent quarterly report filed in May with the Securities and Exchange Commission several references to its failed attempts to gain capital.
“We have experienced historical losses and a substantial accumulated deficit. If we are unable to reverse this trend, we will likely be forced to cease operations,” the filing said.
At the time of the filing, the company reported $8.7 million in assets....
AND THEN out of tragedy comes a little ray of economic sunshine. Will there be insurance available to prevent complete losses in the future? Sure. At a price. Who cannot afford to pay the price actually? Someone is making money.
Lloyd's investors benefit from AIG fallout (click here)
By Ellen Kelleher
Published: November 1 2008 02:00
Last updated: November 1 2008 02:00
The black cloud hanging over the American International Group (AIG) may be poor news for the US economy, but it is good news for the syndicates of Lloyd's of London which are already seeing business flow their way as a result.
The troubles at AIG, which has received $123bn in emerging lending from the US Federal Reserve, are forcing both underwriters and clients of AIG to defect to Lloyd's. So the UK group's trading prospects are set to improve even after a long hurricane season, as rates are expected to rise in the wake of the US insurance giant's near-collapse and the credit crisis.
Indeed, some of the most popular of Lloyd's 75 syndicates, including Hiscox, are already looking to increase their capacity - or the amount of business they are able to write - next year to prepare for growing demand. And the tectonic shifts in the balance of power of the world's insurance sector are being welcomed by the 2,500 or so private investors who now underwrite about 17 per cent of the £16bn Lloyd's has in capacity. As rates rise, profits tend to rise with them.
"We believe that the effective nationalisation of AIG, the losses from hurricanes Gustav and Ike and the damaged financial health of several other leading insurers and reinsurers will lead to a steady improvement in Lloyd's prospects over the next two to three years," said James Sparrow, chief executive of Alpha Insurance Analysts, a members agency which offers private investors the chance to underwrite premiums in Lloyd's syndicates....
The list of bankrupcies filed in the month of October are far to numerous to continue to list here. The point is that although banks failed and were sold, the businesses within the American Landscape might be surviving okay.
Job preservation and creation needs to be the focus of any federal plan to protect the American economy.
Wall Street will take care of itself.
The businesses that provide the economy 'with purpose' and 'longevity of purpose' while employing a widening tax base will determine the best outcome to the failing and flailing USA economy.
