Fund Crisis in Florida Worrisome to States

[Bozita]

Source: NYTimes

December 5, 2007
Fund Crisis in Florida Worrisome to States

By MICHAEL M. GRYNBAUM
Top Florida officials moved yesterday to stabilize an investment pool for local governments after a multibillion-dollar run prompted the state to temporarily suspend withdrawals by cities and school districts.

Local governments, which have been unable to remove any money from the fund since Nov. 29, will be allowed to start making limited withdrawals as early as tomorrow, officials said. The turmoil has left some towns and school districts unable to meet payrolls or pay bills and has raised concerns about similar funds across the country.

Florida’s governments in recent weeks have withdrawn billions of dollars from the fund because of concern over investments linked to subprime mortgages. It is unclear what losses the fund may sustain.

But the sudden flight from the fund, which came despite its relatively small exposure to subprime-related debt, points to a broader uncertainty among officials in other states over how far the credit and mortgage crisis might spread.

Read more: http://www.nytimes.com/2007/12/05/business/05invest.html?_r=1&ref=business&oref=slogin

[donkeyotay]

1. What a deal this was for the financial institutions, They wanted to spread risk

So that every mom and pop had to take a little hit, no one would squeak. What's shaving a point off this fund's return or reducing this pension a bit? Many would pay, a few would profit, and no one would notice. They created this pool of paper, and took wild risks - even to the point of pump and dump - because the more paper they could create, the more profit they made, and the risk had been transferred to the unsuspecting. What a racket. But no one could have foreseen this. Who could have imagined that greed would lead to excess?
:sarcasm:

[havocmom]

2. Same plan the sub-prime mortgage lenders used

When asked about all the workers (10,000 in his company) laid off when the scheme collapsed, one punk fat cat replied: Their job was to make me money. Now that's over.

Same deal. Make the transaction. Pocket the fees. Sell the paper (pocket commission) and let the pool of investors take the hit when the foreclosures start to mount up.

Who would have imagined that greed + deregulation would lead to excessive fleecing of the common man?

[donkeyotay]

3. Rather than address the problem of this being a foreseeable outcome

of compromised regulators and corporations buying influence, the congress focuses on treating the symptom instead of the disease. Makes me crazy because you know this isn't the last. Here's the pattern: Corporate cronies get an Enron scam going. Reap profits. Eventually the scam goes to excess and the harm caused is exposed. Public outcry of harm to poor. Congress goes in and takes taxes to (theoretically) help the poorest of the poor. (Or Halliburton.) There's the conveyor belt in action: Corporations game system for profit, kick back a little to the politicians who helped and will help next scam, tax payers expected to bail out... so who's never held accountable? The folks who profited in the first place. No wonder the rich are getting richer and the middle class is disappearing.

[Robbien]

4. There are six more states reporting these type investments in their funds

Orange County Calif., Connecticut, Massachusetts, Montana, Maine and King County, Washington.

So far.

[KamaAina]

5. Orange and King counties got statehood?

:-)

Actually, I could almost see the State of O.C. (population nearly equal to that of Conn.), as long as one of its Senators was, say, Loretta Sanchez, rather than two repukes.

edit: Sadly, this is nothing new to O.C. It nearly went bankrupt a few years ago because some hotshot sunk its money into derivatives, which promptly tanked. :eyes:

[donkeyotay]

6. You don't suppose they should pass that tax increase on hedge funds, do you?

There are going to be a lot of these issues of innocent holders of this debt, so maybe those who profited from the excess should be taxed to pay for it? Probably not. I saw Hillary on the business channel, and I thought she did pretty good, but to my amazement they credited her with rallying the market and took it has an endorsement that the banks, insurance companies, etc. would get taken care of. I wish someone would call for the financial institutions to be taxed to pay for these bailouts. Let them pay for their own mess.

[cliss]

7. Here we go ~

(fasten your seat belts, pull it real tight)

The roller coaster ride is about to take a very STEEP turn down. These toxic, radioactive FUNDS are cropping up all over the world. Even a little village in northern NORWAY. They had to freeze the funds because the fund is bankrupt.
~Cheatin, U.S. style
They are all finding out that we EXPORTED our paper shit all over the globe. Cheated every single pension plan, every community they're all finding out the same thing: Radioactive rotten crap. Paper that's not even worth using for toilet paper.
~ Surprise!!~

=====================
The entire world - one big ENRON.
Isn't it amazing? After Enron's collapse. You would think that they learned something, or at least made it tougher for them to cheat and get away with it.
What happened?
It got worse! A thousand million billion times worse.
OMG. Enron was Tea Time down at the local kindergarten, compared to this.