I was just reading the NY Times article "81% in Poll Say Nation Is Headed on Wrong Track".According to their poll, the majority are worst off than they were 5 years ago. The majority are also taking the populist view by favoring a bailout of individuals and not financial institutions even at the expense of protracted recession. (which is currently not the reality, re: Bear Stearns). Additionally, less than half of parents are expecting a better standard of living for their children than they themselves have.
Considering that current projections "have Social Security running out of money in 2041 and Medicare using up its reserves in 2019".
There is also the potential for the financial markets to incur another bubble meltdown worst than the sub-prime one, refer to "Derivatives the new 'ticking bomb' Buffett and Gross warn: $516 trillion bubble is a disaster waiting to happen".
That is some major disconnect and pessimism between "We The People" and their representatives. Depressing, knew there was a reason I stopped reading finance news, OK getting off soapbox...
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some finance sector questions that I haven't seen reasonable answers for:
If a financial institution gets a bailout, why would you trust recommendations from their financial advisor(s) on your finances ?
If the bailout is such a good thing why did the market drop before and after ? If the market swings on the order of trillions of dollars like that on such general information, where is the financial forethought ?
If a financial institution can claim solvency one week and insolvency the next, why would you trust their products, their corporate risk culture or their accounting practices ?
If the government is at the taxpayer's expense, sponsoring bailouts and providing massive tax breaks to businesses that make the wrong choices ? Where can I sign up (jk :) ?
How can the FDIC not have enough money to cover a large bank failure and yet be able to raise the coverage limits from $100,000 to $250,000 ?
Are these "shock and awe" moves to rescue the economy during this financial crisis doing a greater good for the few or a greater good for the many ?
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Bank Watch:
The Bank Implode-O-Meter blog Archive For writedowns and distress
117 Banks On FDIC's "Problem List" - Agency offers tips on how consumer finances can stay safe
Banks skirt oversight by switching charters - System allows banks to choose between federal and state enforcement
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Unemployment soars to 8.5 percent; 13M now jobless
Minnesota Bank Asks Why It Pays for Wall Street Greed (Update2)
U.S. Economy: Unemployment Rate Increases to 8.1% (Update2)
Buyback halts may spell more trouble for Wall St.
Americans ‘Get’ TARP, They Just Can’t Stand It: Caroline Baum
Financial Firms Need $1 Trillion More in Equity, Rajpal Says
Americans think Madoff's behavior is common - A CNN poll shows that many people think fraud occurs often in financial institutions, and that more government oversight is needed to stop it.
Blank Check for Banks, Pink Slips for Detroit
Floyd Norris: Shareholder Value - Over the last four years, major American companies as a group paid more money to shareholders than the companies earned.
Fed Refuses to Disclose Recipients of $2 Trillion (Update2)
Madoff Told Sons of $50 Billion Fraud Before Telling FBI Agents
Fraud detected more often at bankrupt companies
U.S. Payrolls Decline by 533,000, Most Since 1974 (Update1)
Citigroup Needs to Confess Its Writedowns Now: Jonathan Weil
Citigroup says gold could rise above $2,000 next year as world unravels
Joint Statement by Treasury, Federal Reserve and the FDIC on Citigroup
U.S. May Be in for ˜Great Recession,™ Longest Postwar (Update1) - found this a little disturbing that it takes a year after the fact to officially acknowledge a recession, it does not bode well for a meaningful solution
All Fall Down
‘Problem’ Banks Rose 46% in Third Quarter, FDIC Says (Update1)
FDIC Quarterly Banking Profile - 3rd Quarter 2008
A Resue Plan Without Taxpayer Money: Gretchen Morgenson
Seven trillion reasons to expect a long winter:James Saft
More Bailout Obscenity
Financial Meltdown: The Greatest Transfer of Wealth in History
How Voters See the Bailout - There is little doubt that most Americans were not impressed by the passage of the bank bailout bill.
FDIC Chief Raps Rescue for Helping Banks Over Homeowners
Banks Try to Drag Us Back Into the Drowning Pool: Jonathan Weil
Risk Drifts From Banks to Governments to You, Me: Mark Gilbert
Brooklyn Home Prices Drop as Banks Cut Jobs and Curb Lending
To cut losses, homeowners consider default - Some struggling homeowners are being tempted to default on purpose in order to qualify for mortgage relief from the federal government or their lenders.
Karl Marx and the world financial crisis: Bernd Debusmann
Devil Is in Bailout's Details - Government's $250 Billion Cash Injection Sparks Welter of Issues
DealZone - Behind the deals and deal-makers
The Crisis Goes From Bad to Worse
Market's 7-Day Rout Leaves U.S. Reeling - Stocks in a Slow-Motion Crash as Dow Drops Another 679 Points; After Year of Declines, Investors Lose $8.4 Trillion of Wealth
White House Overhauling Rescue Plan
Housing Pain Gauge: Nearly 1 in 6 Owners 'Under Water' - More Defaults and Foreclosures Are Likely as Borrowers With Greater Debt Than Value in Their Homes Are Put in a Tight Spot
AIG Not Sorry For Spending Your $$ - The bailed out insurance giant tries to explain why a $440,00 excursion to a fancy hotel wasn't an affront to taxpayers.
Bankers Might Need 50 Years to Regain Credibility: Joe Mysak
Broken Wall Street Means Merrill Model Succumbs to Independents
S&P 500's Decline Makes Decade Worst Ever, Granville Sees Crash - "The increase in borrowing costs may cause the U.S. government's $700 billion bailout package to fail" - "You don't cure a blast wound with a band-aid,"
The Dow tanks -- but that's no surprise
Prepare for the inevitable: higher taxes
$5 Trillion Cash Pool Needed to Stop Rout, Ohmae Says (Update1)
Buffett's "time bomb" goes off on Wall Street
AIG rescue fails to boost investor confidence - "The government's rescue of insurance giant AIG prevented a deeper financial catastrophe but is being seen only as a stopgap measure and has failed to restore investor confidence."
After AIG rescue, Fed may find more at its door - "continuing a system where profits are privatized and...losses socialized"
World May Face `Japan-Like' Economic Stagnation, GIC's Tan Says
Wall Street model broken by credit crisis
Lehman Monday
`Tectonic' Market Shift as Lehman Fails, Merrill Sold (Update1)
Lehman Files Biggest Bankruptcy Case as Suitors Balk (Update4)
Selling Short America and the Rest of the World
Citibank Says, “Stealing From Our Customers is a Business Decision”
U.S. Must Buy Assets to Prevent `Tsunami,' Gross Says (Update3)
U.S. Stocks Slump on Rise in Jobless Claims; Caterpillar Drops
Buffett Says Fannie Mae, Freddie Mac `Game Is Over' (Update4)
PINK SLIPS ARE ON RISE
U.S. Spending Rises; Prices Jump the Most Since 2005 (Correct)
Mortgage Writedowns to Total $1 Trillion, Gross Says (Update1)
Fannie Mae Unsold $5 Billion Homes Bring Peril to Shareholders
Citigroup's $1.1 Trillion of Mysterious Assets Shadows Earnings
Gramm's words were an outrage; his actions have been worse
U.S. Weighs Takeover of Two Mortgage Giants
Bankers Use Secret Clinics, Nurses to Beat Breakdowns (Update1)
UBS exec and McCain advisor Phil Gramm: U.S. is 'nation of whiners'
SEC faults ratings agencies for flawed practices
U.S. Economy: Pending U.S. Home Resales Drop in May (Update1)
Toxic CDOs Given Up for Dead Coming to Life With Pension Funds
Citigroup - $69.1B/$36B/$22.7B
Bank fined for $7.8 billion rogue trader scandal
U.S. Economy: Employers Cut Payrolls for Sixth Straight Month
Deepening Cycle of Job Loss Seen Lasting Into '09
Report: UBS tie challenges McCain campaign
Home Foreclosures, Delinquencies Hit Record in the First Quarter
McCain camp points out Obama's UBS, lobbyist links
McCain Adviser Phil Gramm Shaped McCain’s Economic Policy While Lobbying For Foreign Bank
Buffett sees US already in recession
Lehman adds Japanese stocks to dark liquidity pool
US traders prefer to keep their dark pools in the shadows
Dark pools tackle gaming risk
UBS offloads $22bn mortgage assets to BlackRock at steep discount
UPDATE: Goldman, UBS And Morgan Stanley In Dark Pool Pact
A Wish List for Fixing Wall Street
The discreet charm of other people's money:James Saft
Fed `Rogue Operation' Spurs Further Bailout Calls
Payrolls Probably Shrank, Growth Slowed: U.S. Economy Preview
U.S. Consumer Sentiment in April Probably Fell to 26-Year Low
Job Losses Hit 47,000 - No Let Up In Bloodletting
Realtytrac: Foreclosure Activity Increases
The March numbers show that overall foreclosure activity so far this year continues to run nearly 60 percent above the levels we saw last year,” said James J. Saccacio, chief executive officer of RealtyTrac. “On a year-over-year basis, default notices were up nearly 57 percent and bank repossessions were up nearly 129 percent, but auction notices were up only 32 percent, indicating that more defaulting homeowners are simply walking away and deeding their properties back to the foreclosing lender. This deed-in-lieu-of-foreclosure process allows the lender to take possession of a property without putting it up for public foreclosure auction.
FACTBOX-Dark pools lexicon
Signs of deeper credit crunch malaise
Buyside seeks structured product regulation
US corporate pension schemes down by $20bn
IMF Says Financial Losses May Swell to $945 Billion
US pension scheme funding ratios drop again
Prepare for a Gruesome Retirement
2 comments:
The Derivatives bubble is a scary thing. Questions everywhere and not sure what the Investment Bank's future is? Hearing rumors that UBS may just sell or spin off there investment back.
yes the derivative bubble sounds like the final bell, can't bailout more than you have in your coffers without more negative impact.
From my laymans view, I used to provide IT support for a fixed income trade floor. There was a product creation group that used digital circuit design software to map out flows from their products based on loans and mortgages.
The stuff looked so cross leveraged that it took full time finance PHD's with staff to create, implement and maintain.
With the collapse of the mortgage companies, and their mortgage products, that these product creation groups built on, I would expect similar existing products would have to be re-evaluated from stability/risk/compliance standpoint and re-engineered/developed.
That sort of thing is a major time and cost overhead that may not be financially feasible or logistically possible.
In that respect I would expect companies to start identifying and firewalling these products (like I hear UBS is doing, I believe they still have about 15B sub prime / 15B Alt A outstanding) to localize them, as a form of risk control or for quick sale if possible.
As for UBS, they are suffering a reputation loss so anything is possible with stockholder/client pressure.
Ospel was replaced with Kurer, a lawyer. I guess, that would not have been done if there is was no sale/spin off contingency. They basically have someone in place able to handle that sort of eventuality.
I am keeping an eye on it to see if I should roll my 401k/SIP out of there.
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