Citibank today was NATIONALIZED
Citibank today was NATIONALIZED
slice anyway you want, semantics that it was or was not. In my book that = GOVT ownership. IMHO more to come as we have become the United States of Socialized America. This is a SAD day folks. Bailouts announced daily, 24/7 printing press, Largest Treasury auction yesterday ever, and the black hole gets bigger as they BK this Nation and the IMF will come a calling as the Recievership. Thank the crooks folks. imho
GoBabyGo
Citibank today was NATIONALIZED
Citibank was not "nationalized." You've posted another lie.
The US government increased it's stake in Citi, in exchange for continued help to try to get this nation out of a big mess.
Do you prefer banks such as Citi go bankrupt? Do you prefer folks all over making runs on the bank, withdrawing funds, thus triggering even more problems?
Or do you prefer efforts to stabilize the banking system, which is exactly what is going on?
Give it a rest.
The US government increased it's stake in Citi, in exchange for continued help to try to get this nation out of a big mess.
Do you prefer banks such as Citi go bankrupt? Do you prefer folks all over making runs on the bank, withdrawing funds, thus triggering even more problems?
Or do you prefer efforts to stabilize the banking system, which is exactly what is going on?
Give it a rest.
Citibank today was NATIONALIZED
All yall liberals can slice any way you want but citi was nationalized, but dont let the facts get in the way of yall's dreamland world that you are living.
Citibank today was NATIONALIZED
Nationalization in the context of socialism is something we don't want.
Nationalization in the context of temporary, counter-cyclical policy such as the Resolution Trust Corp during the S&L crisis and the Home Owners Loan Corp entity during the Depression were successful programs and did not lead to "socialization" in any form.
[ March 02, 2009, 03:35 PM: Message edited by: KJ Duke ]
Nationalization in the context of temporary, counter-cyclical policy such as the Resolution Trust Corp during the S&L crisis and the Home Owners Loan Corp entity during the Depression were successful programs and did not lead to "socialization" in any form.
[ March 02, 2009, 03:35 PM: Message edited by: KJ Duke ]
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sportsbettingman
- Posts: 3038
- Joined: Sun Jan 23, 2005 6:00 pm
- Contact:
Citibank today was NATIONALIZED
Ha!!!
That's two KJ! (vanishing posts)
Remind me of me!
That's two KJ! (vanishing posts)
Remind me of me!
"The only reason for time is so that everything doesn't happen at once."
~Albert Einstein
~Albert Einstein
Citibank today was NATIONALIZED
Originally posted by sportsbettingman:
Ha!!!
That's two KJ! (vanishing posts)
Remind me of me! was editing Lance, my response is there now
[ March 02, 2009, 03:36 PM: Message edited by: KJ Duke ]
Ha!!!
That's two KJ! (vanishing posts)
Remind me of me!
was editing Lance, my response is there now [ March 02, 2009, 03:36 PM: Message edited by: KJ Duke ]
Citibank today was NATIONALIZED
Obama flipped the switch on my view of the short-term when he decided to come out with his "tax the rich" policy in combination with big increases in handouts and govt healthcare spending. We've been a net seller since that speech, has the market had an up day since?
Incredibly stupid to propose tax increases in this environment, particularly on that segment of the population that controls the bulk of private capital which is needed for any hope of job creation outside of govt work.
Just finished reading a well-done working paper by Christina Romer, a Berkley economist, on the economic impact of tax changes. Her conclusions suggest that a 1% increase in taxes will result in a 3% decline in GDP over the following three years. And far worse, it will lead to an 8.5% decline in business capital investment (aka non-residential fixed investment) over that same period.
Why is this working paper even more significant? Because Romer was appointed by Obama to head his economic council. Which tells me one thing - he is listening to the wrong policy advisors. Starting to remind me of Bush and his Cabinet. Obama has some great advisors on his economic team, like Romer - but if their ideas get stifled by his politically partisan advisors (squeaky wheel gets the grease?), we are in trouble.
If the Obama camp doesn't show signs of "getting it" very soon, I think we're headed for my earlier worse-case scenario of 550 on the S&P, which probably means around 5500 on the Dow.
[ March 02, 2009, 04:18 PM: Message edited by: KJ Duke ]
Incredibly stupid to propose tax increases in this environment, particularly on that segment of the population that controls the bulk of private capital which is needed for any hope of job creation outside of govt work.
Just finished reading a well-done working paper by Christina Romer, a Berkley economist, on the economic impact of tax changes. Her conclusions suggest that a 1% increase in taxes will result in a 3% decline in GDP over the following three years. And far worse, it will lead to an 8.5% decline in business capital investment (aka non-residential fixed investment) over that same period.
Why is this working paper even more significant? Because Romer was appointed by Obama to head his economic council. Which tells me one thing - he is listening to the wrong policy advisors. Starting to remind me of Bush and his Cabinet. Obama has some great advisors on his economic team, like Romer - but if their ideas get stifled by his politically partisan advisors (squeaky wheel gets the grease?), we are in trouble.
If the Obama camp doesn't show signs of "getting it" very soon, I think we're headed for my earlier worse-case scenario of 550 on the S&P, which probably means around 5500 on the Dow.
[ March 02, 2009, 04:18 PM: Message edited by: KJ Duke ]
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sportsbettingman
- Posts: 3038
- Joined: Sun Jan 23, 2005 6:00 pm
- Contact:
Citibank today was NATIONALIZED
I'm not too savvy...but I can understand barroom economics!
"Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that’s what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20.” Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.
But what about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
“I only got a dollar out of the $20,”declared the sixth man. He pointed to the tenth man,” but he got $10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than I got”
“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!
And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier."
"Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that’s what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20.” Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.
But what about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
“I only got a dollar out of the $20,”declared the sixth man. He pointed to the tenth man,” but he got $10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than I got”
“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!
And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier."
"The only reason for time is so that everything doesn't happen at once."
~Albert Einstein
~Albert Einstein
Citibank today was NATIONALIZED
Spot on Lance!
Citibank today was NATIONALIZED
I would do three things which would put us on the road to economic recovery quickly, and stock market recovery immediately.
1) Eliminate the FICA tax for 2009-2010.
2) Refinance every mortgage in America that was underwritten by a U.S. bank between 2004-2008 at 4% for 30 years, straight out of Treasury, on a dollar-for-dollar basis.
3) Proclaim that there will be no tax increase of any kind through 2011.
Eliminating FICA puts 7.65% more money in the hands of every employee up to the current $102k per year cutoff. It also reduces the cost of labor for every employer in the country by the same amount. This immediately boosts consumer spending and it changes the cost of labor equation for employers making them FAR more likely to retain existing, or hire new, workers. And this isn't a stimulus plan that takes 3 years to take hold, it starts working today, 100%.
Gov't refi's effectively takes the entire mortgage mess out of the banks hands. Their balance sheets are drastically better overnight. It also means more money in the hands of every homeowner in the country that bought or financed an overpriced asset which was caused by the aggressive credit cycle. Home prices would immediately stabilize and we could stop pouring money into failing institutions.
No new taxes for two years would encourage private capital to invest rather than staying parked on the sidelines.
These three things would FIX IT in the short-run. Once the economy is functioning normally and on stable ground in 2011 we could begin work on some of the longer-term issues.
[ March 02, 2009, 04:57 PM: Message edited by: KJ Duke ]
1) Eliminate the FICA tax for 2009-2010.
2) Refinance every mortgage in America that was underwritten by a U.S. bank between 2004-2008 at 4% for 30 years, straight out of Treasury, on a dollar-for-dollar basis.
3) Proclaim that there will be no tax increase of any kind through 2011.
Eliminating FICA puts 7.65% more money in the hands of every employee up to the current $102k per year cutoff. It also reduces the cost of labor for every employer in the country by the same amount. This immediately boosts consumer spending and it changes the cost of labor equation for employers making them FAR more likely to retain existing, or hire new, workers. And this isn't a stimulus plan that takes 3 years to take hold, it starts working today, 100%.
Gov't refi's effectively takes the entire mortgage mess out of the banks hands. Their balance sheets are drastically better overnight. It also means more money in the hands of every homeowner in the country that bought or financed an overpriced asset which was caused by the aggressive credit cycle. Home prices would immediately stabilize and we could stop pouring money into failing institutions.
No new taxes for two years would encourage private capital to invest rather than staying parked on the sidelines.
These three things would FIX IT in the short-run. Once the economy is functioning normally and on stable ground in 2011 we could begin work on some of the longer-term issues.
[ March 02, 2009, 04:57 PM: Message edited by: KJ Duke ]
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Gordon Gekko II
- Posts: 1941
- Joined: Wed Dec 31, 2008 6:00 pm
Citibank today was NATIONALIZED
Originally posted by KJ Duke:
If the Obama camp doesn't show signs of "getting it" very soon, I think we're headed for my earlier worse-case scenario of 550 on the S&P, which probably means around 5500 on the Dow. maybe denninger and schiff knew what they were talking about?
If the Obama camp doesn't show signs of "getting it" very soon, I think we're headed for my earlier worse-case scenario of 550 on the S&P, which probably means around 5500 on the Dow. maybe denninger and schiff knew what they were talking about?
Citibank today was NATIONALIZED
Originally posted by Gordon Gekko II:
quote:Originally posted by KJ Duke:
If the Obama camp doesn't show signs of "getting it" very soon, I think we're headed for my earlier worse-case scenario of 550 on the S&P, which probably means around 5500 on the Dow. maybe denninger and schiff knew what they were talking about? [/QUOTE]Why would you say that? If a freakin' idiot says the sun will come up tomorrow he's still an idiot when the sun comes up.
[ March 02, 2009, 05:44 PM: Message edited by: KJ Duke ]
quote:Originally posted by KJ Duke:
If the Obama camp doesn't show signs of "getting it" very soon, I think we're headed for my earlier worse-case scenario of 550 on the S&P, which probably means around 5500 on the Dow. maybe denninger and schiff knew what they were talking about? [/QUOTE]Why would you say that? If a freakin' idiot says the sun will come up tomorrow he's still an idiot when the sun comes up.
[ March 02, 2009, 05:44 PM: Message edited by: KJ Duke ]
Citibank today was NATIONALIZED
A voice of reason ...
How Washington can prevent 'zombie banks'
By James Baker (in the Financial Times)
Beginning in 1990, Japan suffered a collapse in real estate and stock market prices that pushed major banks into insolvency. Rather than follow America's tough recommendation - and close or recapitalise these banks - Japan took an easier approach. It kept banks marginally functional through explicit or implicit guarantees and piecemeal government bail-outs. The resulting "zombie banks" - neither alive nor dead - could not support economic growth.
A period of feeble economic performance called Japan's "lost decade" resulted.
Unfortunately, the US may be repeating Japan's mistake by viewing our current banking crisis as one of liquidity and not solvency. Most proposals advanced thus far assume that, once confidence in financial markets is restored, banks will recover.
But if their assumption is wrong, we risk perpetuating US zombie banks and suffering a lost American decade.
Evidence - a mountain of toxic assets, housing market declines, a sharp economic recession, rising unemployment and increasing taxpayer exposure through guarantees, loans, and infusion of capital - strongly suggests that some American banks face a solvency problem and not merely a liquidity one.
We should act decisively. First, we need to understand the scope of the problem. The Treasury department – working with the Federal Reserve – must swiftly analyse the solvency of big US banks. Treasury secretary Timothy Geithner’s proposed “stress tests” may work. Any analyses, however, should include worst-case scenarios....
Next, we should divide the banks into three groups: the healthy, the hopeless and the needy. Leave the healthy alone and quickly close the hopeless. The needy should be reorganised and recapitalised, preferably through private investment or debt-to-equity swaps but, if necessary, through public funds. It is time for triage.
To prevent a bank run, all depositors of recapitalised banks should be fully guaranteed, even if their deposit exceeds the Federal Deposit Insurance Corporation maximum of $250,000. But bank boards of directors and senior management should be replaced and, unfortunately, shareholders will lose their investment. Optimally, bondholders would be wiped out, too. But the risk of a crash in the bond market means that bondholders may receive only a haircut. All of this is harsh, but required if we are ultimately to return market discipline to our financial sector.
This is not a call for nationalisation but rather for a temporary injection of public funds to clean up problem banks and return them to private ownership as soon as possible. As president Ronald Reagan’s secretary of the Treasury, I abhor the idea of government ownership – either partial or full – even if only temporary. Unfortunately, we may have no choice. But we must be very careful. The government should hold equity no longer than necessary to restructure the banks, resume normal lending and recoup at least a portion of taxpayer investment.
After replacing bank management with new private managers, the government should have no say in banks’ day-to-day operations.
The FDIC can assist. Just this year, it has placed more than a dozen American banks – admittedly all small – into receivership. We might also consider setting up something akin to the Resolution Trust Corporation, created in 1989 to liquidate the assets of failed savings and loans. The RTC eventually disposed of almost $400bn in assets of more than 700 insolvent thrifts.
To avoid bank runs and contain market disruption, the Treasury should announce its decisions at one time. Washington will also need to co-ordinate its actions with other major capitals, especially in western Europe and east Asia. At best, this will encourage other countries to take similar steps with their own banking systems. At a minimum, other governments can prepare for the financial turmoil associated with the announcement.
This approach is not pretty or easy. It will cost a lot of money, with the lion’s share coming from US taxpayers, at least in the short to medium term. But the alternative – a piecemeal pumping of more public money into insolvent banks in the vague hope that things will improve down the road – could truly be historic folly.
Eventually our banks and economy will start to recover. When they do, we would be wise to avoid another Japanese mistake – raising taxes. To counter mounting debt created by government stimulus packages, Japan increased taxes in 1997. Consumption dropped and the country’s economy collapsed.
Our ad hoc approach to the banking crisis has helped financial institutions conceal losses, favoured shareholders over taxpayers, and protected senior bank managers from the consequences of their mistakes. Worst of all, it has crippled our credit system just at a time when the US and the world need to see it healthy.
Many are to blame for the current situation. But we have no time for finger-pointing or partisan posturing. This crisis demands a pragmatic, comprehensive plan. We simply cannot continue to muddle through it with a Band-Aid approach.
During the 1990s, American officials routinely urged their Japanese counterparts to kill their zombie banks before they could do more damage to Japan’s economy. Today, it would be irresponsible if we did not heed our own advice.
[ March 02, 2009, 05:39 PM: Message edited by: KJ Duke ]
How Washington can prevent 'zombie banks'
By James Baker (in the Financial Times)
Beginning in 1990, Japan suffered a collapse in real estate and stock market prices that pushed major banks into insolvency. Rather than follow America's tough recommendation - and close or recapitalise these banks - Japan took an easier approach. It kept banks marginally functional through explicit or implicit guarantees and piecemeal government bail-outs. The resulting "zombie banks" - neither alive nor dead - could not support economic growth.
A period of feeble economic performance called Japan's "lost decade" resulted.
Unfortunately, the US may be repeating Japan's mistake by viewing our current banking crisis as one of liquidity and not solvency. Most proposals advanced thus far assume that, once confidence in financial markets is restored, banks will recover.
But if their assumption is wrong, we risk perpetuating US zombie banks and suffering a lost American decade.
Evidence - a mountain of toxic assets, housing market declines, a sharp economic recession, rising unemployment and increasing taxpayer exposure through guarantees, loans, and infusion of capital - strongly suggests that some American banks face a solvency problem and not merely a liquidity one.
We should act decisively. First, we need to understand the scope of the problem. The Treasury department – working with the Federal Reserve – must swiftly analyse the solvency of big US banks. Treasury secretary Timothy Geithner’s proposed “stress tests” may work. Any analyses, however, should include worst-case scenarios....
Next, we should divide the banks into three groups: the healthy, the hopeless and the needy. Leave the healthy alone and quickly close the hopeless. The needy should be reorganised and recapitalised, preferably through private investment or debt-to-equity swaps but, if necessary, through public funds. It is time for triage.
To prevent a bank run, all depositors of recapitalised banks should be fully guaranteed, even if their deposit exceeds the Federal Deposit Insurance Corporation maximum of $250,000. But bank boards of directors and senior management should be replaced and, unfortunately, shareholders will lose their investment. Optimally, bondholders would be wiped out, too. But the risk of a crash in the bond market means that bondholders may receive only a haircut. All of this is harsh, but required if we are ultimately to return market discipline to our financial sector.
This is not a call for nationalisation but rather for a temporary injection of public funds to clean up problem banks and return them to private ownership as soon as possible. As president Ronald Reagan’s secretary of the Treasury, I abhor the idea of government ownership – either partial or full – even if only temporary. Unfortunately, we may have no choice. But we must be very careful. The government should hold equity no longer than necessary to restructure the banks, resume normal lending and recoup at least a portion of taxpayer investment.
After replacing bank management with new private managers, the government should have no say in banks’ day-to-day operations.
The FDIC can assist. Just this year, it has placed more than a dozen American banks – admittedly all small – into receivership. We might also consider setting up something akin to the Resolution Trust Corporation, created in 1989 to liquidate the assets of failed savings and loans. The RTC eventually disposed of almost $400bn in assets of more than 700 insolvent thrifts.
To avoid bank runs and contain market disruption, the Treasury should announce its decisions at one time. Washington will also need to co-ordinate its actions with other major capitals, especially in western Europe and east Asia. At best, this will encourage other countries to take similar steps with their own banking systems. At a minimum, other governments can prepare for the financial turmoil associated with the announcement.
This approach is not pretty or easy. It will cost a lot of money, with the lion’s share coming from US taxpayers, at least in the short to medium term. But the alternative – a piecemeal pumping of more public money into insolvent banks in the vague hope that things will improve down the road – could truly be historic folly.
Eventually our banks and economy will start to recover. When they do, we would be wise to avoid another Japanese mistake – raising taxes. To counter mounting debt created by government stimulus packages, Japan increased taxes in 1997. Consumption dropped and the country’s economy collapsed.
Our ad hoc approach to the banking crisis has helped financial institutions conceal losses, favoured shareholders over taxpayers, and protected senior bank managers from the consequences of their mistakes. Worst of all, it has crippled our credit system just at a time when the US and the world need to see it healthy.
Many are to blame for the current situation. But we have no time for finger-pointing or partisan posturing. This crisis demands a pragmatic, comprehensive plan. We simply cannot continue to muddle through it with a Band-Aid approach.
During the 1990s, American officials routinely urged their Japanese counterparts to kill their zombie banks before they could do more damage to Japan’s economy. Today, it would be irresponsible if we did not heed our own advice.
[ March 02, 2009, 05:39 PM: Message edited by: KJ Duke ]
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Sir Larry Wildman
- Posts: 25
- Joined: Tue Jan 06, 2009 6:00 pm
- Contact:
Citibank today was NATIONALIZED
Originally posted by KJ Duke:
quote:Originally posted by Gordon Gekko II:
quote:Originally posted by KJ Duke:
If the Obama camp doesn't show signs of "getting it" very soon, I think we're headed for my earlier worse-case scenario of 550 on the S&P, which probably means around 5500 on the Dow. maybe denninger and schiff knew what they were talking about? [/QUOTE]Why would you say that? If a freakin' idiot says the sun will come up tomorrow he's still an idiot when the sun comes up. [/QUOTE]The Earth rotates, the sun doesn't go down or come up.
quote:Originally posted by Gordon Gekko II:
quote:Originally posted by KJ Duke:
If the Obama camp doesn't show signs of "getting it" very soon, I think we're headed for my earlier worse-case scenario of 550 on the S&P, which probably means around 5500 on the Dow. maybe denninger and schiff knew what they were talking about? [/QUOTE]Why would you say that? If a freakin' idiot says the sun will come up tomorrow he's still an idiot when the sun comes up. [/QUOTE]The Earth rotates, the sun doesn't go down or come up.
I could break you, mate, in two pieces over my knees. You know it, I know it.
Citibank today was NATIONALIZED
larry ... so my analogy works either way 
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sportsbettingman
- Posts: 3038
- Joined: Sun Jan 23, 2005 6:00 pm
- Contact:
Citibank today was NATIONALIZED
Originally posted by KJ Duke:
larry ... so my analogy works either way HA!!! (I get it!)
larry ... so my analogy works either way
HA!!! (I get it!) "The only reason for time is so that everything doesn't happen at once."
~Albert Einstein
~Albert Einstein
-
sportsbettingman
- Posts: 3038
- Joined: Sun Jan 23, 2005 6:00 pm
- Contact:
Citibank today was NATIONALIZED
From my man Dave (Leroy's Aces)
"excerpts from Warren Buffet’s letter to Berkshire shareholders:
On the after-effect of government bailout
This debilitating spiral has spurred our government to take massive action. In poker terms, the Treasury and the Fed have gone “all in.” Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome aftereffects. Their precise nature is anyone’s guess, though one likely consequence is an onslaught of inflation. Moreover, major industries have become dependent on Federal assistance, and they will be followed by cities and states bearing mind-boggling requests. Weaning these entities from the public teat will be a political challenge. They won’t leave willingly.
On government bailout
Whatever the downsides may be, strong and immediate action by government was essential last year if the financial system was to avoid a total breakdown. Had that occurred, the consequences for every area of our economy would have been cataclysmic. Like it or not, the inhabitants of Wall Street, Main Street and the various Side Streets of America were all in the same boat.
On his own mistake
… But there’s another less pleasant reality: During 2008 I did some dumb things in investments. I made at least one major mistake of commission and several lesser ones that also hurt. I will tell you more about these later. Furthermore, I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action.
On stock and bond price declines
… the market value of the bonds and stocks that we continue to hold suffered a significant decline along with the general market. This does not bother Charlie and me. Indeed, we enjoy such price declines if we have funds available to increase our positions. Long ago, Ben Graham taught me that “Price is what you pay; value is what you get.” Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.
On one of his lieutenants (jokingly)
Ajit came to Berkshire in 1986. Very quickly, I realized that we had acquired an extraordinary talent. So I did the logical thing: I wrote his parents in New Delhi and asked if they had another one like him at home. Of course, I knew the answer before writing. There isn’t anyone like Ajit.
On home ownership
Home ownership is a wonderful thing. My family and I have enjoyed my present home for 50 years, with more to come. But enjoyment and utility should be the primary motives for purchase, not profit or refi possibilities. And the home purchased ought to fit the income of the purchaser.
On the lesson of housing debacle
The present housing debacle should teach home buyers, lenders, brokers and government some simple lessons that will ensure stability in the future. Home purchases should involve an honest-to-God down payment of at least 10% and monthly payments that can be comfortably handled by the borrower’s income. That income should be carefully verified.
On local governments’ fiscal problems
Local governments are going to face far tougher fiscal problems in the future than they have to date. The pension liabilities I talked about in last year’s report will be a huge contributor to these woes. Many cities and states were surely horrified when they inspected the status of their funding at yearend 2008. The gap between assets and a realistic actuarial valuation of present liabilities is simply staggering.
On the danger of muni
When faced with large revenue shortfalls, communities that have all of their bonds insured will be more prone to develop “solutions” less favorable to bondholders than those communities that have uninsured bonds held by local banks and residents. Losses in the tax-exempt arena, when they come, are also likely to be highly correlated among issuers. If a few communities stiff their creditors and get away with it, the chance that others will follow in their footsteps will grow. What mayor or city council is going to choose pain to local citizens in the form of major tax increases over pain to a far-away bond insurer
On modeling
Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the symbols. Our advice: Beware of geeks bearing formulas.
On pricing of risk
The investment world has gone from underpricing risk to overpricing it. This change has not been minor; the pendulum has covered an extraordinary arc. A few years ago, it would have seemed unthinkable that yields like today’s could have been obtained on good-grade municipal or corporate bonds even while risk-free governments offered near-zero returns on short-term bonds and no better than a pittance on long-terms.
On Treasury bond bubble
When the financial history of this decade is written, it will surely speak of the Internet bubble of the late 1990s and the housing bubble of the early 2000s. But the U.S. Treasury bond bubble of late 2008 may be regarded as almost equally extraordinary.
On cash and cash-equivalent
Clinging to cash equivalents or long-term government bonds at present yields is almost certainly a terrible policy if continued for long. Holders of these instruments, of course, have felt increasingly comfortable – in fact, almost smug – in following this policy as financial turmoil has mounted. They regard their judgment confirmed when they hear commentators proclaim “cash is king,” even though that wonderful cash is earning close to nothing and will surely find its purchasing power eroded over times.
On approval
Approval, though, is not the goal of investing. In fact, approval is often counter-productive because it sedates the brain and makes it less receptive to new facts or a re-examination of conclusions formed earlier. Beware the investment activity that produces applause; the great moves are usually greeted by yawns.
On derivatives
Derivatives are dangerous. They have dramatically increased the leverage and risks in our financial system. They have made it almost impossible for investors to understand and analyze our largest commercial banks and investment banks…
On integrity of financial markets
A normal stock or bond trade is completed in a few days with one party getting its cash, the other its securities. Counterparty risk therefore quickly disappears, which means credit problems can’t accumulate. This rapid settlement process is key to maintaining the integrity of markets.
Derivatives contracts, in contrast, often go unsettled for years, or even decades, with counterparties building up huge claims against each other. “Paper” assets and liabilities – often hard to quantify – become important parts of financial statements though these items will not be validated for many years. Additionally, a frightening web of mutual dependence develops among huge financial institutions. Receivables and payables by the billions become concentrated in the hands of a few large dealers who are apt to be highly-leveraged in other ways as well. Participants seeking to dodge troubles face the same problem as someone seeking to avoid venereal disease: It’s not just whom you sleep with, but also whom they are sleeping with.
On corporate survival (sarcastically)
Sleeping around, to continue our metaphor, can actually be useful for large derivatives dealers because it assures them government aid if trouble hits. In other words, only companies having problems that can infect the entire neighborhood – I won’t mention names – are certain to become a concern of the state (an outcome, I’m sad to say, that is proper). From this irritating reality comes The First Law of Corporate Survival for ambitious CEOs who pile on leverage and run large and unfathomable derivatives books: Modest incompetence simply won’t do; it’s mindboggling screw-ups that are required.
On leaving during annual meeting (jokingly)
… If you decide to leave during the day’s question periods, please do so while Charlie is talking. The best reason to exit, of course, is to shop. We will help you do that by filling the 194,300-squarefoot hall that adjoins the meeting area with the products of Berkshire subsidiaries. Last year, the 31,000 people who came to the meeting did their part, and almost every location racked up record sales. But you can do better. (A friendly warning: If I find sales are lagging, I lock the exits.)"
I love how he talks..."Poker", "All-in", "Nerdy", "sucking my thumb", etc...love the "down to earth" approach, and hope it is sincere.
~Lance
[ March 02, 2009, 09:02 PM: Message edited by: sportsbettingman ]
"excerpts from Warren Buffet’s letter to Berkshire shareholders:
On the after-effect of government bailout
This debilitating spiral has spurred our government to take massive action. In poker terms, the Treasury and the Fed have gone “all in.” Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome aftereffects. Their precise nature is anyone’s guess, though one likely consequence is an onslaught of inflation. Moreover, major industries have become dependent on Federal assistance, and they will be followed by cities and states bearing mind-boggling requests. Weaning these entities from the public teat will be a political challenge. They won’t leave willingly.
On government bailout
Whatever the downsides may be, strong and immediate action by government was essential last year if the financial system was to avoid a total breakdown. Had that occurred, the consequences for every area of our economy would have been cataclysmic. Like it or not, the inhabitants of Wall Street, Main Street and the various Side Streets of America were all in the same boat.
On his own mistake
… But there’s another less pleasant reality: During 2008 I did some dumb things in investments. I made at least one major mistake of commission and several lesser ones that also hurt. I will tell you more about these later. Furthermore, I made some errors of omission, sucking my thumb when new facts came in that should have caused me to re-examine my thinking and promptly take action.
On stock and bond price declines
… the market value of the bonds and stocks that we continue to hold suffered a significant decline along with the general market. This does not bother Charlie and me. Indeed, we enjoy such price declines if we have funds available to increase our positions. Long ago, Ben Graham taught me that “Price is what you pay; value is what you get.” Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.
On one of his lieutenants (jokingly)
Ajit came to Berkshire in 1986. Very quickly, I realized that we had acquired an extraordinary talent. So I did the logical thing: I wrote his parents in New Delhi and asked if they had another one like him at home. Of course, I knew the answer before writing. There isn’t anyone like Ajit.
On home ownership
Home ownership is a wonderful thing. My family and I have enjoyed my present home for 50 years, with more to come. But enjoyment and utility should be the primary motives for purchase, not profit or refi possibilities. And the home purchased ought to fit the income of the purchaser.
On the lesson of housing debacle
The present housing debacle should teach home buyers, lenders, brokers and government some simple lessons that will ensure stability in the future. Home purchases should involve an honest-to-God down payment of at least 10% and monthly payments that can be comfortably handled by the borrower’s income. That income should be carefully verified.
On local governments’ fiscal problems
Local governments are going to face far tougher fiscal problems in the future than they have to date. The pension liabilities I talked about in last year’s report will be a huge contributor to these woes. Many cities and states were surely horrified when they inspected the status of their funding at yearend 2008. The gap between assets and a realistic actuarial valuation of present liabilities is simply staggering.
On the danger of muni
When faced with large revenue shortfalls, communities that have all of their bonds insured will be more prone to develop “solutions” less favorable to bondholders than those communities that have uninsured bonds held by local banks and residents. Losses in the tax-exempt arena, when they come, are also likely to be highly correlated among issuers. If a few communities stiff their creditors and get away with it, the chance that others will follow in their footsteps will grow. What mayor or city council is going to choose pain to local citizens in the form of major tax increases over pain to a far-away bond insurer
On modeling
Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the symbols. Our advice: Beware of geeks bearing formulas.
On pricing of risk
The investment world has gone from underpricing risk to overpricing it. This change has not been minor; the pendulum has covered an extraordinary arc. A few years ago, it would have seemed unthinkable that yields like today’s could have been obtained on good-grade municipal or corporate bonds even while risk-free governments offered near-zero returns on short-term bonds and no better than a pittance on long-terms.
On Treasury bond bubble
When the financial history of this decade is written, it will surely speak of the Internet bubble of the late 1990s and the housing bubble of the early 2000s. But the U.S. Treasury bond bubble of late 2008 may be regarded as almost equally extraordinary.
On cash and cash-equivalent
Clinging to cash equivalents or long-term government bonds at present yields is almost certainly a terrible policy if continued for long. Holders of these instruments, of course, have felt increasingly comfortable – in fact, almost smug – in following this policy as financial turmoil has mounted. They regard their judgment confirmed when they hear commentators proclaim “cash is king,” even though that wonderful cash is earning close to nothing and will surely find its purchasing power eroded over times.
On approval
Approval, though, is not the goal of investing. In fact, approval is often counter-productive because it sedates the brain and makes it less receptive to new facts or a re-examination of conclusions formed earlier. Beware the investment activity that produces applause; the great moves are usually greeted by yawns.
On derivatives
Derivatives are dangerous. They have dramatically increased the leverage and risks in our financial system. They have made it almost impossible for investors to understand and analyze our largest commercial banks and investment banks…
On integrity of financial markets
A normal stock or bond trade is completed in a few days with one party getting its cash, the other its securities. Counterparty risk therefore quickly disappears, which means credit problems can’t accumulate. This rapid settlement process is key to maintaining the integrity of markets.
Derivatives contracts, in contrast, often go unsettled for years, or even decades, with counterparties building up huge claims against each other. “Paper” assets and liabilities – often hard to quantify – become important parts of financial statements though these items will not be validated for many years. Additionally, a frightening web of mutual dependence develops among huge financial institutions. Receivables and payables by the billions become concentrated in the hands of a few large dealers who are apt to be highly-leveraged in other ways as well. Participants seeking to dodge troubles face the same problem as someone seeking to avoid venereal disease: It’s not just whom you sleep with, but also whom they are sleeping with.
On corporate survival (sarcastically)
Sleeping around, to continue our metaphor, can actually be useful for large derivatives dealers because it assures them government aid if trouble hits. In other words, only companies having problems that can infect the entire neighborhood – I won’t mention names – are certain to become a concern of the state (an outcome, I’m sad to say, that is proper). From this irritating reality comes The First Law of Corporate Survival for ambitious CEOs who pile on leverage and run large and unfathomable derivatives books: Modest incompetence simply won’t do; it’s mindboggling screw-ups that are required.
On leaving during annual meeting (jokingly)
… If you decide to leave during the day’s question periods, please do so while Charlie is talking. The best reason to exit, of course, is to shop. We will help you do that by filling the 194,300-squarefoot hall that adjoins the meeting area with the products of Berkshire subsidiaries. Last year, the 31,000 people who came to the meeting did their part, and almost every location racked up record sales. But you can do better. (A friendly warning: If I find sales are lagging, I lock the exits.)"
I love how he talks..."Poker", "All-in", "Nerdy", "sucking my thumb", etc...love the "down to earth" approach, and hope it is sincere.
~Lance
[ March 02, 2009, 09:02 PM: Message edited by: sportsbettingman ]
"The only reason for time is so that everything doesn't happen at once."
~Albert Einstein
~Albert Einstein
Citibank today was NATIONALIZED
Originally posted by KJ Duke:
I would do three things which would put us on the road to economic recovery quickly, and stock market recovery immediately.
1) Eliminate the FICA tax for 2009-2010.
2) Refinance every mortgage in America that was underwritten by a U.S. bank between 2004-2008 at 4% for 30 years, straight out of Treasury, on a dollar-for-dollar basis.
3) Proclaim that there will be no tax increase of any kind through 2011.
Eliminating FICA puts 7.65% more money in the hands of every employee up to the current $102k per year cutoff. It also reduces the cost of labor for every employer in the country by the same amount. This immediately boosts consumer spending and it changes the cost of labor equation for employers making them FAR more likely to retain existing, or hire new, workers. And this isn't a stimulus plan that takes 3 years to take hold, it starts working today, 100%.
Gov't refi's effectively takes the entire mortgage mess out of the banks hands. Their balance sheets are drastically better overnight. It also means more money in the hands of every homeowner in the country that bought or financed an overpriced asset which was caused by the aggressive credit cycle. Home prices would immediately stabilize and we could stop pouring money into failing institutions.
No new taxes for two years would encourage private capital to invest rather than staying parked on the sidelines.
These three things would FIX IT in the short-run. Once the economy is functioning normally and on stable ground in 2011 we could begin work on some of the longer-term issues. This was worth reading multiple times. Is it that simple? Why has this approach not been tried? What are the obstacles?
I would do three things which would put us on the road to economic recovery quickly, and stock market recovery immediately.
1) Eliminate the FICA tax for 2009-2010.
2) Refinance every mortgage in America that was underwritten by a U.S. bank between 2004-2008 at 4% for 30 years, straight out of Treasury, on a dollar-for-dollar basis.
3) Proclaim that there will be no tax increase of any kind through 2011.
Eliminating FICA puts 7.65% more money in the hands of every employee up to the current $102k per year cutoff. It also reduces the cost of labor for every employer in the country by the same amount. This immediately boosts consumer spending and it changes the cost of labor equation for employers making them FAR more likely to retain existing, or hire new, workers. And this isn't a stimulus plan that takes 3 years to take hold, it starts working today, 100%.
Gov't refi's effectively takes the entire mortgage mess out of the banks hands. Their balance sheets are drastically better overnight. It also means more money in the hands of every homeowner in the country that bought or financed an overpriced asset which was caused by the aggressive credit cycle. Home prices would immediately stabilize and we could stop pouring money into failing institutions.
No new taxes for two years would encourage private capital to invest rather than staying parked on the sidelines.
These three things would FIX IT in the short-run. Once the economy is functioning normally and on stable ground in 2011 we could begin work on some of the longer-term issues. This was worth reading multiple times. Is it that simple? Why has this approach not been tried? What are the obstacles?
"I don't remmeber what I don't remember.”- Jerry Garcia
Citibank today was NATIONALIZED
Originally posted by Dub:
quote:Originally posted by KJ Duke:
I would do three things which would put us on the road to economic recovery quickly, and stock market recovery immediately.
1) Eliminate the FICA tax for 2009-2010.
2) Refinance every mortgage in America that was underwritten by a U.S. bank between 2004-2008 at 4% for 30 years, straight out of Treasury, on a dollar-for-dollar basis.
3) Proclaim that there will be no tax increase of any kind through 2011.
Eliminating FICA puts 7.65% more money in the hands of every employee up to the current $102k per year cutoff. It also reduces the cost of labor for every employer in the country by the same amount. This immediately boosts consumer spending and it changes the cost of labor equation for employers making them FAR more likely to retain existing, or hire new, workers. And this isn't a stimulus plan that takes 3 years to take hold, it starts working today, 100%.
Gov't refi's effectively takes the entire mortgage mess out of the banks hands. Their balance sheets are drastically better overnight. It also means more money in the hands of every homeowner in the country that bought or financed an overpriced asset which was caused by the aggressive credit cycle. Home prices would immediately stabilize and we could stop pouring money into failing institutions.
No new taxes for two years would encourage private capital to invest rather than staying parked on the sidelines.
These three things would FIX IT in the short-run. Once the economy is functioning normally and on stable ground in 2011 we could begin work on some of the longer-term issues. This was worth reading multiple times. Is it that simple? Why has this approach not been tried? What are the obstacles? [/QUOTE]Because this plan rewards those that play by the rules.
quote:Originally posted by KJ Duke:
I would do three things which would put us on the road to economic recovery quickly, and stock market recovery immediately.
1) Eliminate the FICA tax for 2009-2010.
2) Refinance every mortgage in America that was underwritten by a U.S. bank between 2004-2008 at 4% for 30 years, straight out of Treasury, on a dollar-for-dollar basis.
3) Proclaim that there will be no tax increase of any kind through 2011.
Eliminating FICA puts 7.65% more money in the hands of every employee up to the current $102k per year cutoff. It also reduces the cost of labor for every employer in the country by the same amount. This immediately boosts consumer spending and it changes the cost of labor equation for employers making them FAR more likely to retain existing, or hire new, workers. And this isn't a stimulus plan that takes 3 years to take hold, it starts working today, 100%.
Gov't refi's effectively takes the entire mortgage mess out of the banks hands. Their balance sheets are drastically better overnight. It also means more money in the hands of every homeowner in the country that bought or financed an overpriced asset which was caused by the aggressive credit cycle. Home prices would immediately stabilize and we could stop pouring money into failing institutions.
No new taxes for two years would encourage private capital to invest rather than staying parked on the sidelines.
These three things would FIX IT in the short-run. Once the economy is functioning normally and on stable ground in 2011 we could begin work on some of the longer-term issues. This was worth reading multiple times. Is it that simple? Why has this approach not been tried? What are the obstacles? [/QUOTE]Because this plan rewards those that play by the rules.
-
headhunters
- Posts: 1976
- Joined: Tue Mar 28, 2006 6:00 pm
Citibank today was NATIONALIZED
the obstacles are the people we elect; whose only job, the only thing they need to be good at, is getting elected. also, some great ideas on all this- but one other thing needs to change and that is the way companiers are audited. having the company pay the auditor is the most ridiculous system ever. have the clients pay. in madoffs case if these people had each paid a small % for a good auditor this guy might have been caught. yes he could have bribed the auditor- but at least it is a crime to do that. the company paying the auditors has much to do with this- and the bribe is more business and higher fees for the auditors- all of it legal.