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Ghost Dog Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 04:48 AM
Original message
Obama Team Pushes to Complete Rescue as Stocks Plunge
Edited on Wed Jan-21-09 04:49 AM by Ghost Dog
Source: Bloomberg

Jan. 21 (Bloomberg) -- President Barack Obama's economic team is pushing to complete a bank-rescue plan that can be twinned with the $825 billion stimulus package being negotiated with Congress to alleviate the rapidly deepening financial crisis.

While full details of the rescue haven't been settled yet, people familiar with the deliberations said the package is likely to include a $50 billion-plus program to stem foreclosures, fresh injections of capital into the banks and steps to deal with toxic assets clogging lenders' balance sheets.

Officials feel like they need to move quickly to provide some sense of calmness and assurance to the market that the government isn't going to let this problem get out of hand, said John Douglas, a partner at the Paul, Hastings, Janofsky & Walker law firm and a former general counsel at the Federal Deposit Insurance Corp.

In his inaugural address yesterday, Obama called for bold and swift action to resolve the crisis that's cost the economy almost 2.6 million jobs last year, the most since 1945. Bank stocks sank yesterday, driving the Dow Jones Industrial Average to its worst-ever inauguration-day decline.

The president meets with his economic advisers today. One option that may be gaining ground: coupling the establishment of a so-called bad bank to buy some toxic assets with government guarantees to limit losses on those that remain on banks' balance sheets.

Read more:

Across the land, an atmosphere of hope and optimism prevails. The Bush regime has gone. A new president is in the White House.

While America had its eyes riveted on the live TV broadcast of Barack Obama's presidential inauguration, financial markets were sliding. A major "market correction" had occurred. Removed from the public eye, virtually unnoticed, a new stage of the financial crisis has unfolded.

Immediately following the inauguration, the Dow Jones plummeted, largely affecting the share prices of major financial institutions. The quoted stock values of major Wall Street banks plummeted. Citigroup fell by 20 percent, Bank of America by 29 percent and JP Morgan Chase by 20 percent. The Royal Bank of Scotland fell by 69 percent in New York trading.


The difficulties and book value losses of major banks were known well in advance of the inauguration of President Obama. So why now? The inauguration of a president Obama was expected to provide confidence to financial markets. Exactly the opposite occurred. There was nothing spontaneous and accidental in this collapse of banks' stock values.


Coincidentally, the chairman of the Securities and Exchange Commission, Christopher Cox, appointed by Bush in 2005, resigned on the very same day of the presidential inauguration, leading to vacuum in the adoption of crucial financial regulatory decisions. His successor, Mary Shapiro, will only take office following lengthy Senate confirmation hearings.

Those who had advanced knowledge and/or inside information regarding the text of Obama's speech and who had the ability to "move the market" at the right time and the right place, stood to gain in the conduct of major speculative transactions on stock markets and currency exchanges. Were these speculative transactions planned in advance of January 20th? (See Video)


Over the years, the financial establishment has set up private hedge funds invariably registered in the name of wealthy individuals. Large amounts of wealth have been transferred from the large financial institutions to these privately owned hedge funds, which largely escape government regulation.


America's largest banks have, over the years, sifted off part of their surplus profits to various proxy financial outfits, hedge funds, accounts registered in tropical offshore banking havens, etc. While these billion dollar transfers are conducted electronically from one financial entity to another, the identity of the creditors is never mentioned. Who is collecting these multibillion debts which are in large part the consequence of financial manipulation?

The collapse in bank stock market values was in all likelihood known in advance. The banks had already moved their loot to a safe financial haven.


Where is the bailout money going? Who is cashing in on the multibillion dollar government bailout money? This process is contributing to an unprecedented concentration of private wealth.

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GliderGuider Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 05:05 AM
Response to Original message
1. "...the government isn't going to let this problem get out of hand"
Helloooo? Anybody home? This problem has been out of hand for a full year now. Jesus, I know y'all don't want to spook the horses, but try telling us the truth once in a while for god's sake. We're all adults, you know. We can handle the truth.


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madrchsod Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 07:07 AM
Response to Original message
2. where did the money go?
will obama`s crew demand the banks open their books to the public? the banks lost 65 billion out of the 250 billion we gave them. obama`s crew better demand an open account of all the money we are giving them.
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Ghost Dog Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 08:07 AM
Response to Reply #2
3. "the entire financial sphere is suspected of being a giant black hole"
Edited on Wed Jan-21-09 08:09 AM by Ghost Dog
LEAP 2020 sees us entering a period of insolvency, including financial system insolvency:

...the situation prevailing today throughout the entire global financial system, a large part of the world economy and all the economic players (including States) who based their growth on debt in the past years. The crisis translates and magnifies a problem of global insolvency. The world is becoming aware of the fact that it is a lot poorer than it used to believe in the last decade. And 2009 is the year when all the economic players must try to assess their real level of solvency, knowing that many assets are still losing value. Moreover a growing number of investors no longer trust the traditional instruments and indicators of measurement. Quoting agencies have lost all credibility. The US Dollar is just a fiction of international monetary unit and many countries are striving to get away from it as quickly as possible (6). Thus, quite rightly, the entire financial sphere is suspected of being a giant black hole.

Roubini: Credit Crisis Losses Could Hit $3.6 Trillion January 20, 2009 10:36 AM ET At a conference in Dubai, NYU's Nouriel Roubini said credit crisis losses could hit $3.6 trillion, up from $1 trillion worth of writedowns and losses estimated by Bloomberg to have already roiled the global financial system.

... Roubini says that if losses are really as large as he fears it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis. He also warns the disease is spreading to Europe, where the Royal Bank of Scotland Group faces an estimated $41 billion loss. Roubini also said the global slowdown will keep oil prices in the $30-$40 a barrel range this year, and he predicted commodities would fall another 15-20 percent from current levels...

So, is the money just vanishing down a black hole, vapourising, since the globalised financial system was sitting on a bubble inflated by leverage and exotic toxic instruments? And/Or are certain or incertain parties taking advantage of the situation and making killings, resulting in "an unprecedented concentration of private wealth"?
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mbperrin Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 08:32 AM
Response to Original message
4. Not another dime for any bank whatsoever.
Let the FDIC do what they've done so well for decades.

I'm tired of people like bankers pissing on me and trying to convince me it's raining.
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asp64064 Donating Member (47 posts) Send PM | Profile | Ignore Wed Jan-21-09 10:07 AM
Response to Original message
5. SBA, SBA, SBA, Idiots!!!
We already have a system to save our economy and everyone is worried about saving criminal banks and all their scams. What exactly do we need banks for, they don't make loans, they don't build or create anything useful except ways to screw the public. They suck fees and interest out of people who can't even afford a cup of coffee.

Push all of the stimulus out to the SBA administration and the economy will respond quickly, we will have an accounting of where the money goes and small businesses can expand and create real jobs. Give wall street to the world community so they can be prosecuted for all the scams they sold to investors "your pension and retirement funds that don't exist anymore". That's how you fix the economy and jump start growth. Oh wait, that won't work, the banks and politicians won't be able to line there pockets.
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Ghost Dog Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 11:58 AM
Response to Reply #5
9. How is Small Business defined by the SBA?
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Hugabear Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 10:12 AM
Response to Original message
6. Capitalism is failing, utterly and completely. Time to put it out of its misery.
Time to take power out of the elite fatcats, the Wall Street bankers crooks, and put it back into the hands of the people.
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WriteDown Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 11:09 AM
Response to Reply #6
Capitalism isnt just about the financial markets. Its also about the ability to own your own businesses (vs govt ownership) and control your own fate. Is the proposal to have all business owned by the govt? If so, I dont really see that arrangement being in the hands of the people since the govt would decide what goods and services are needed and how much one would pay.

Capitalism as defined by Webster:

: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market
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Hugabear Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 01:16 PM
Response to Reply #8
10. Capitalism is the abilty to run your own business and screw anyone you want
To me, capitalism means that you get to fuck over your employees, deny them health coverage, pay them shitty wages, or move their jobs overseas to countries that allow even more exploitation.
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radfringe Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 10:35 AM
Response to Original message
7. heard some blatherheads on radio this morning
wringing their hands and wailing over the idea of nationalizing banks...

my thoughts - if nationalizing banks is what it take to save what is left of our economy, then so be it.
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RCinBrooklyn Donating Member (421 posts) Send PM | Profile | Ignore Wed Jan-21-09 01:31 PM
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Ghost Dog Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 01:45 PM
Response to Reply #11
12. Now there's a slogan.
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