BEHIND THE SCENES ...No Bailout: Feds Made New Policy Clear in One Dramatic Weekend

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    Sep 16, 2008 12:10 PM GMT
    Interesting story in the Washington Post about what went on this weekend...

    http://www.washingtonpost.com/wp-dyn/content/article/2008/09/15/AR2008091503312.html?hpid=topnews&sid=ST2008091503351&s_pos=
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    Sep 16, 2008 12:52 PM GMT
    Bear Stearns, Freddie Mac, Fannie Mae. The Feds have rightly cut off the money. I mean how much more can the US taxpayer expect to pony up? AIG supposedly wanted some cash and they were turned away. This whole tangled mess is likely got a ways to go yet. I almost feel sorry for the next US President.
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    Sep 16, 2008 12:57 PM GMT
    What really worries me is that the US itself is in such deep debt, too.

    There is going to come a time when the world will pull the plug on the US' credit, too.

    This idea that we can continue spending without ever paying taxes has come to its end....whether the american people and Republicans want to face up to it or not.
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    Sep 16, 2008 2:15 PM GMT
    The overnight interest rate jumped to 6.44% (the rate banks lend to each other), the Asian markets are tumbling, the Russian stock market dropped 17% in one day (ouch). As one expert put it "we have never gone through this before, there is no precedent for what is happening". Reading Bloomberg.net is like watching a horror film. You don't know what is coming but you know it is going to scare the sh*t out of you.

    And the fact that the US is not in a technical recession really does not mean much. Economic statistics have a tendency to be lagging indicators, while the stock market is a leading indicator. Also the stimulus package that took place in the spring gave the economy a short-term boost in the summer which has now disappeared. Unfortunately the US is not in a great position to continue to offer stimulus packages due to their fiscal position.

    One thing for sure the next administration will need to look closely at the regulations (or lack of same) to ensure that the sub-prime mess never happens again. Self-regulation does not work, it is a contradiction in terms.

    The saving graces for the world economy are ironically China and India, the countries politicians love to bash. They still have healthy growth rates and are still demanding raw materials, machinery, planes, etc.. Also oil is dropping off which is helping to a certain extent.
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    Sep 16, 2008 2:41 PM GMT
    The world system is based on the US. The other countries have to have faith in the US. The financial crisis in the US is going to have effects thruout the world. If the US doesnt get its act together and the world loses faith in the US, it may be that the world's financial system will remain uncertain and everyone's economies will suffer.
  • HndsmKansan

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    Sep 16, 2008 3:03 PM GMT
    Well I think what happened needed to happen. No more bailouts and
    no bailout to AIG if it comes to that. I heard that Goldman is also having issues.

    Dow Jones in positive territory this morning (at 10:00 cdt), but I can't get in with many of my companies to discuss client business because of the flood of phone calls from shareholders.....
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    Sep 16, 2008 6:20 PM GMT
    On days like this I try and search the Bloomberg website to find stock markets that are in positive territory. Here are some economic "heavyweights". Botswana, Kuwait, Slovakia, Bangladesh. Spain is also up (they most know something nobody else does). Russia is a disaster (vodka sales will be skyrocketing among Russian traders I am sure) and the Hang Seng is pretty sickly as well (down over 7%).

    An AIG collapse could cause no end of problems for the world insurance companies, but supposedly Greenberg and others are trying to takeover the company through a proxy fight. The Wall Street melodrama might actually push the Presidential election campaigns out of the limelight for a few days.