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Lehmans goes down, global banking in crisis

The Americans seem to beleive a rescue package will emerge for AIG, so there markets have stabilised. It will probibly be another $70 billion or in that order to keep it operational and running. If so that will be $140 billion in a week to mop up the fallout of two companies.

We wait and watch.
 
Fed seem to be stepping in according to rumours.

AIG going pop... probably bigger than anyone else going pop, bonkers....

Morals out the window again it seems... after all the bollocks spouted since Lehmans pop... :D
 
"Conservatorship" is the word being mentioned. A bridging loan to give it time to sell assets and recapitalise. Yes because there is no private finance available to provide a nice big earning bridging loan to a healthy company that only needs a spot of short term money. (hint private banks dont rate there chances of getting all the money back.)
 
Kanda said:
Fed seem to be stepping in according to rumours.

AIG going pop... probably bigger than anyone else going pop, bonkers....

Morals out the window again it seems... after all the bollocks spouted since Lehmans pop... :D
Click to expand...

Bailed out by US central bank according to Beeb news alert
 
kabbes said:
I feel sorry for anybody that loses their job, even if that job is being an investment banker. People aren't immune from my sympathy when they go through a personally tough time just because other people are more deserving of that sympathy. I have enough sympathy to go round.
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That's a bit like sympathising with Dr Crippen for losing his wife.

OK, so not all investment bankers are making the decisions that counted here. But sympathy? Does a 24 year old starting a new job on £45k not realise that he's going into an extremely high risk business? Does he think that's a normal salary? Is he really that monumentally stupid?

It's a bit thick to expect a very high-paying job to come with no risk and a bit rich to expect sympathy when the dice fall the wrong way.
 
So, call me a simpleton. Good that's done. But when it comes down to it. public finance needs to prop up free enterprise. But public ownership is frowned upon. Privitisation of essential services, yarda, yarda.

Make your minds up. *at at Uk/US gov's*
</simpleton>
 
xenon said:
So, call me a simpleton. Good that's done. But when it comes down to it. public finance needs to prop up free enterprise. But public ownership is frowned upon. Privitisation of essential services, yarda, yarda.

Make your minds up. *at at Uk/US gov's*
</simpleton>
Click to expand...
It's simple really. Firemen, life guards, soldiers and so on take high risks for low rewards. The good folk in the City merely seek to redress this logical imbalance by taking on low risks for high rewards. They're performing a public service, dammit. :mad:
 
extra dry said:
US government rescues insurer AIG
US traders, 16 September 2008
The prospect of an AIG collapse raised concerns on trading floors.

The US Federal Reserve has announced an $85bn (£48bn) rescue package for AIG, the country's biggest insurance company, to save it from bankruptcy.


from the bbc http://news.bbc.co.uk/2/hi/business/7620127.stm
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I wonder how this sector will justify its obscene salaries and pay offs now? Where is the risk now being taken? By the fucking tax payer!
 
bi0boy said:
I think you will find that it's been allowed to take a $20 billion loan from it's subsidiaries, not from the government.
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Jessidog said:
Just wait and see, OK?


Read my post, AIG are fucked. I should know.
Click to expand...





Well. Well. Well.


Didn't take long did it?


Eighty five thousand million US dollars of taxpayers money.


Billions upon billions of dollars of PROFIT have been made over the years and that money went into private pockets.

Now that there are USD 85 billion of LOSSES, that, of course, comes out of the public pocket.


Oh jolly hockey sticks!


After syphoning hundreds of billions from the public in order to transfer it to private mercenaries running amuck killing hundreds of thousands of innocent peeps in Iraq, now we have another massive transfer from the public purse, stripped to give to the private financial institutions.


The Bush administration is culpable for the greatest fraud and theft in the history of humanity.


:(


Woof
 
It is odd isn't it?
Robert Willumstad seems to have lost the helm too.

116000 staff all over the world , you just know that this number will fall as the vultures start
 
I need to have a close look at AIG to see what really happened. But I strongly suspect the mark-to-market problems that I spoke about in the "How do you feel about Lehman's employees?" thread. That is, AIG would be holding a highly liquid, highly secure portfolio that matched their liabilities -- textbook correct. But accounting principles make them mark that portfolio irrelevalently to market, meaning that its apparent worth suddenly drops through the floor, despite the fact that they have no plans whatsoever to sell any of the bonds, which are a match for their liabilities. Combine this with the fact that what they have been sold as AAA investment turns out to be infected with subprime (for which you can hardly blame the purchaser that thought he was getting AAA in good faith). All of a sudden they look financially shaky without *necessarily* any mismanagement.

Of course, mismanagement is also a possibility. It's just not the only possibility. Personally, I don't think it is even the most likely possibility in this specific case.
 
Jessiedog said:
After syphoning hundreds of billions from the public in order to transfer it to private mercenaries running amuck killing hundreds of thousands of innocent peeps in Iraq, now we have another massive transfer from the public purse, stripped to give to the private financial institutions.

The Bush administration is culpable for the greatest fraud and theft in the history of humanity.
Click to expand...

Socialising the losses and privatising the profits. :(

...

So what is USA government debt now as a percentage of GDP?

Is it worse than Japan and Italy? I seriously doubt they'll get a stern letter from the IMF.

The advantages of being the world's superpower.
 
kabbes said:
I need to have a close look at AIG to see what really happened. But I strongly suspect the mark-to-market problems that I spoke about in the "How do you feel about Lehman's employees?" thread. That is, AIG would be holding a highly liquid, highly secure portfolio that matched their liabilities -- textbook correct. But accounting principles make them mark that portfolio irrelevalently to market, meaning that its apparent worth suddenly drops through the floor, despite the fact that they have no plans whatsoever to sell any of the bonds, which are a match for their liabilities. Combine this with the fact that what they have been sold as AAA investment turns out to be infected with subprime (for which you can hardly blame the purchaser that thought he was getting AAA in good faith). All of a sudden they look financially shaky without *necessarily* any mismanagement.

Of course, mismanagement is also a possibility. It's just not the only possibility. Personally, I don't think it is even the most likely possibility in this specific case.
Click to expand...



Given the scandals AIG have been involved in over the last few years, I would have thought that mismanagement is virtually a given.


Not to mention that AIG was a leader in the field of bundling worthless mortgages into "AAA" investments (through collusion with the Rating Agancies,) and then selling them on.


Not to worry though, eh? Mismanagement, madness or otherwise, there's plenty of hard-earned taxpayers money to chuck around - and at least the board of directors at AIG are still getting paid.


I'm wondering how culpable the Rating Agencies are - they were the ones being paid to put "AAA' stamps on "encrusted crap" - would a class action lawsuit be in order?


Woof
 
Badgers said:
Just rebrand the whole lot as the bank of England and be done with it.
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yup. Nationalise the lot, without compensation. Then sack, again without compensation, all those whose activity amounts to nothing more than gambling. Then absorb the rest, the ones who actually do something useful, into a payscale that's on a par with maybe the NHS or local government.
 
newbie said:
yup. Nationalise the lot, without compensation. Then sack, again without compensation, all those whose activity amounts to nothing more than gambling. Then absorb the rest, the ones who actually do something useful, into a payscale that's on a par with maybe the NHS or local government.
Click to expand...

Well I doubt things will go quite that far, but I have heard some talk in recent days that banks will return to being utilities that dont make silly profits.
 
Though he left the company a few years ago after an accounting scandal, Mr. Greenberg’s fortune remains locked up with A.I.G., in which he has a stake of about 11 percent through various holdings, according to Bloomberg News.

Early in 2005, questions arose about financial transactions that had the effect of making the company’s earnings look better. Mr. Greenberg resigned as chief executive after regulators sent a wave of subpoenas to the company; eventually A.I.G. restated earnings covering a five-year period. His successor tried to restore confidence in the company but his efforts did not meet with investor approval and he was replaced this summer, after the company announced that it lost $7.8 billion in the first quarter of the year, the biggest loss in its history. In August it announced that it had lost another $5.3 billion in the second quarter.
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No history of shennanigans at AIG then.


A.I.G.’s problems rest in the company’s London-based financial products unit, part of its financial services group, which is exposed to securities tied to the value of home loans — the same kind of securities that forced Lehman Brothers into Chapter 11 bankruptcy proceedings on Monday. The financial products group sold credit-default swaps, complex financial contracts allowing buyers to insure securities backed by mortgages. Many of the buyers were European banks. As home values have fallen, the value of the underlying mortgages has declined, and A.I.G. has had to reduce the value of the securities on its books.

The company has other forms of real estate exposure. One subsidiary, American General Finance, makes home loans and has suffered along with the housing market. Another subsidiary, the United Guaranty Corporation, provides mortgage guarantee insurance. Still other units buy mortgage-backed securities directly.
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http://www.nytimes.com/2008/09/17/business/17aig.html?hp



I could see what was happening back in early 2005. The whole thing was a pack of cards, inevitabley destined to collapse.



But hey, at least the board of directors are still getting their inflated salaries.



Woof
 
yes, utilities, a worthwhile comparison. Their staff seem to work in pretty unpleasant looking industrial units with peeling paint and for some reason don't get paid anything like a minimum £35k plus (up to) 30% annual bonus plus share options and yet they do something that society actually needs.
 
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