American capitalism new lifeline and source of survival – US government bailouts

Discussion in 'Economics' started by SouthAmerica, Sep 14, 2008.

  1. .
    September 14, 2008

    SouthAmerica: I have been reading about how much money Bill Gross from Pimco made from the current crisis regarding Fannie and Freddie.

    The article on The Financial Times (UK) said that Bill Gross had switched a large chunk of Pimcos investments into Fannie and Freddie because he could smell a US government bailout of these financial institutions and his bet paid very well when the US government nationalized Fannie and Freddie – his company made an estimate US$ 1.7 billion dollars in profits.

    Bill Gross is laughing all the way to the bank at the expense of US taxpayers.

    Bill Gross bought a ton of Fannie and Freddie in the last 10 months and then started lobbying the US government for a bailout of these institutions.


    Over the weekend the Treasury Secretary Paulson met with various senior members of the Wall Street elite Investment bank and banking houses to decide the faith of Lehman Brothers.

    I thought at this point there were no business small enough that should be let go bankrupt and out of business here in the US according to Ben Bernanke and his pals.

    I thought Paulson and Bernanke were going to consolidate the entire US financial system as a new subsidiary of the US government.

    The US government is going to become even bigger after they nationalize the major US automakers, most of the airline industry, insurance industry and so on.

    All these bailouts have one positive side to it the US government is becoming a one-stop shoppe and most Americans will need to make just one telephone call when they want a mortgage, buy a car, do their investments, banking and insurance, travel anywhere by major US airline, and much more.

    The only thing that Americans still will need to learn as time goes on is if they need to call the US treasury or the Federal Reserve to reach one of these businesses.

    No more a bunch of statements on the mail on a monthly basis from Merrill Lynch, Lehman Brothers, AIG, Washington Mutual, car dealers, airline points, from your bank, mortgage company, and so on…You are going to get only one statement from the US government with all this information.

    I don’t understand how Bank of America can be a buyer of Lehman Brothers – I remember just a few months ago when Bernanke was looking around for bank that could take over Bear Stearns and during that debate the experts said that Bank of America was not in the financial position to make a bid for Bear Stearns, mainly after that bank tookover Countrywide.

    And in the last six months if anything the Countrywide fiasco got even worse because of a deteriorating real estate market and that would have placed Bank of America on an even more delicate financial position.

    I don’t understand how Bank of America is even considering taking over Lehman Brothers at this time.

    I wonder which bank or financial institution will be left in the United States that would be in a healthy financial position to be able to come to the rescue of Merrill Lynch, AIG and many more companies that are collapsing in the current massive financial crisis?


    Since the American banking system is in the middle of the biggest financial crisis since the Great Depression that eliminate them from coming to the rescue of anyone.

    That leaves the door open for massive nationalization of US financial assets by some governments such as the US and China governments.

    The US nationalizes these financial institutions with bailouts from the Treasury and the Federal Reserve and these assets become part of the balance sheet of the US government.

    Some of these financial institutions such as Lehman Brothers will be nationalized by some foreign governments and will become part of the balance sheet of governments such as China – e.g. investment made by China's Sovereign Investment Fund on these US major financial institutions

  2. The US government is going to become even bigger after they nationalize the major US automakers, most of the airline industry, insurance industry and so on.

    The current trend of the gov't to micro manage our lives (wear a helmet, seat belt, no transfat, no smoking, don't step on the that bug there's only two left) I say booyah, dump everything in the gov't lap.

    The pols are always advertising what they are going to do for us, let 'em step up to the plate on private industry terms.

    Maybe the sooner we give in, the pendulum will begin to swing the other way.
  3. Well now.....

    Money is money is does not matter where or how it was obtained....

    When assets are placed in the hands of the lawmaker and enforcer....this is a lot like having a sheriff in a small town that owns all of the businesses....The threat of the sheriff to the supposed other businesses that do not have the legal powers....tends to sway the competitive edge and ownership of all assets in the lawmakers own direction....assets to be used per instruction....

    Just how many people in the US actually own their cars?

    Just how many people actually own their houses ?

    Just how many people actually own the items that they bought when a balance is still due on a credit card ?

    Just think of commerce in the US when anyone who wants to buy a house has to put down at least 25%....put down at least 40% on a car........have difficulty getting a credit card ?

    What happens to the world economy when these simple changes occur ?

    Pretty soon....everybody gets a sheriff's card so that they can get a job and buy food.....even TV vouchers....

    It is getting more difficult to distinguish large corporations from the US government.....

    And the small cowboy entrepreneurs that actually create and build the economy and make it possible to even have large corporations and a government.....are just faced with more bullshit legal largesse......and more financial freedom headwinds....

    The financial estuary that gives birth to cowboy entrepreneurs is that which must be protected first.....or all else fails.....

    One may argue that the US government does not share this view.....
  4. It is getting more difficult to distinguish large corporations from the US government.....


    I agree AND it is being marketed to people under the adage "scales of economy". Bigger is not better but it sure is alot easier for the gov't to control. The gov't can't have all these maverick (mom and pop) enterprises operating their business as they see fit.

    Plan A) regulate the business through liability insurance. The insurance co tell's you how and what is needed to conduct a proper business. They charge you a premium for this valuable information.

    Plan B) regulate through fear via lawsuit.

    Plan C) Locally, seek out little Hitlers and put them in planning dept and zoning offices to maintain order.

    Who in the heck needs a Grandma's Diner when she hasn't the foggiest clue what a transfat is.
  5. Let's hope it leads to an adjustment... toward financial prudence.... and away from reckless, willy-nilly "borrow and spend".

    Down payments wouldn't need to be so large if there were insurance to cushion weak borrowers... like the "old days" of PMI for real estate.
  6. .

    September 15, 2008

    SouthAmerica: I am not surprised by the current financial meltdown in Wall Street since I have been writing about that for many years.

    I don't know why Bank of America paid US$ 50 billion dollars for Merrill Lynch considering that if they waited just a few more days they could have bought that Wall Street company for US$ 20 billion dollars.

    The US government is not going to bailout any other company anymore until they have to bailout AIG.

    If the US government is not going to bailout anybody else then it is time to sell the auto stocks and also the airline companies.

    How many banks and insurance companies are ready to explode and file for Chapter 11?

    What else will be socked into the black hole?

    This morning Thomas Friedman from The New York Times was being interviewed at MSCNBC and he was almost begging the Chinese government to come and rescue the American financial system from a meltdown.


  7. SA

    There is a great deal of irony in life.

    You live and complain about your adopted country ... USA

    Whereas I live between Argentina and your native country Brasil which we like so much that it will become our base from '09

    Funny old world.

  8. .

    September 15, 2008

    SouthAmerica: Reply to Fearless9

    A friend of ours (American) who lives here in New Jersey went to Brazil to visit one of his friends also American who has been living in Sao Paulo for many years.

    My friend is a lawyer and his practice deals only with the major oil companies. His wife was going to be on a business trip for a while and he decided to take a 2 week vacation and meet his friend and travel around Brazil just the 2 of them.

    He just came back from Brazil last week and he could not believe the euphoria that they found every place that they went in Brazil.

    He had visited Brazil a number of times before, but on this trip he said you could see on the face of the people everywhere they went that everybody is optimistic and they think the future had arrived for Brazil.

    His friend told him that he took all his money from the United States and that he has invested it in Brazil.

    He asked my mother why Ricardo still living here in the United States instead of going back to Brazil?

    He came back very impressed with the state of affairs that he saw in Brazil.

    In the meantime our financial system here in the United States is imploding and the carnage will continue in the future for how long just God knows.

    The implosion is far from over and nobody really knows what is coming next in the pipeline.

    Those idiots leveraged these institutions 30 to 1 and as high as 60 to 1.

    When you use the power of leverage like that you can make a ton of money on the way up, but when the system starts de-leveraging then you get sucked into a black hole.

    Just fasten your seat belts because more banks and all kinds of financial institutions will be sucked into the black hole.

    The US financial system right now is operating in imploding mode and many of the weak links of the system are going to be sucked into the black hole.

    Remember we are on a downward spiral and the system is imploding - not only the financial system, but also housing prices, unemployment, and so on...

    Merrill Lynch represents just the beginning of all kinds of unexpected fire-sales that will affect the US economy.

  9. wave


    People keep looking and asking for the next bubble. In light of these historic events, I believe the bubble of corruption and greed has begun to pop and a new era of integrity and honesty will evolve out of all this.
  10. ElCubano


    naomi campbell's russian billionaire boyfriend just bought her an $18 million penthouse in Sao Paolo....something must be up
    #10     Sep 15, 2008