Bear Stearns Companies Inc. (BSC)
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- General Discussion on BSC
- Lloyds Buys HBOS: Good Deal or Bad? [view article]
- Combating Cascading Short Spirals [view article]
- Financial Landscape: Writedowns, Losses and Capital Raised [view article]
- Nine Months Later: Some Annual Predictions from the Financial Press [view article]
- What Happened to the Fed's $1.816 Trillion Lifeline? [view article]
- 3 Things America Needs to Do to Get the Economy Back on Track [view article]
- The Coming Crash of 2008: A Result of Overleveraging [view article]
- Putting the Perception and Reality of the Financial Crisis Into Perspective [view article]
- Bear Stearns’ Bailout by the Fed, JPM: A Century Old Conspiracy [view article]
- Where's the Bottom? Still Anybody's Guess [view article]
- Lessons From the Banking Meltdown [view article]
- Investment Bank Crisis: The Greatest Show on Earth [view article]
loading ...Recent BSC Articles
- Combating Cascading Short Spirals
- What Happened to the Fed's $1.816 Trillion Lifeline?
- 3 Things America Needs to Do to Get the Economy Back on Track
- Putting the Perception and Reality of the Financial Crisis Into Perspective
- Where's the Bottom? Still Anybody's Guess
- Lloyds Buys HBOS: Good Deal or Bad?
- Should I-Banks Trade Publicly?
- Nine Months Later: Some Annual Predictions from the Financial Press
- Will Lehman's Bankruptcy End the Moral Hazard?
- Buyouts and Shakeups: How the Financial World Is Changing
- Full List of Articles »
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3 Things America Needs to Do to Get the Economy Back on Track [view article]
One easy solution:Print more money. This will have the effect of undervaluing the dollar and propping up Oil /Commodity prices.
This will hurt us but it will keep the jobs here in the US.
Chinese have kept their currency undervalued and are benefitting because
a) since the US is not printing money -- this is causing recssion in US (harming US business) but keeping the oil/commodity prices down
b) this help the Chinese because of lower commodity prices and they can inflate their currency (get more business from the US)
Reply
now
3 Things America Needs to Do to Get the Economy Back on Track [view article]
Great article Reply3 Things America Needs to Do to Get the Economy Back on Track [view article]
3 things, a miracle, a miracle, a miracle... ReplyNeubert
Putting the Perception and Reality of the Financial Crisis Into Perspective [view article]
The day I realized I had lost a significant portion of my net worth (ex-MD at Lehman) in Lehman Brothers I saw a guy killed on a bicycle right outside my office. Suddenly, I wasn't so upset about my financial loss. Replygordon
3 Things America Needs to Do to Get the Economy Back on Track [view article]
produce more crude oil - we can make our own high-quality (no resid) syncrude from illinois/west kentucky high-volatile bituminous coal via 2-stage hydroliquefaction. the r.reagan administration in its infinite wisdom cancelled the program in 1985. we could have had those plants up & running by now.> jack Reply
t
3 Things America Needs to Do to Get the Economy Back on Track [view article]
This article makes the appropriate linkages between the current crisis and our current account imbalance. But it doesn't go far enough. Plus, the exchange penalties on the Chinese will probably provoke a trade war. Better a multi pronged strategy incorporating the following:(1) Increase taxes on the rich to lower our budget deficit.
(2) Eliminate the payroll tax and the corporate income tax and replace it with a value added tax / national sales tax. This will end our penalties on labor and replace it with a penalty on consumption. It will have much the same effect as the exchange rate manipulation he suggests, without the trade war overtones. And it will improve the competitiveness of our companies. Combined with the tax change in (1) it will leave us with a tax system that is less regressive than the one we have now.
(3) Produce more oil and natural gas here now.
(4) Adopt the "Pickens plan" to go after renewables in a big way, use natural gas for our transportation, and improve our electric system transmission capability.
(5) Add subsidies and incentives for anything that will reduce our dependence on oil - community based agriculture, mass transportation, a reinvigorated intercity bus and train network, indeed improved mileage standards, and hybrid/electric, natural gas, and hydrogen vehicles.
(6) Do what it takes to allow a resurgence of nuclear power. Reply
ks
3 Things America Needs to Do to Get the Economy Back on Track [view article]
The next president - no matter who it is has a lot to clean up! Reply3 Things America Needs to Do to Get the Economy Back on Track [view article]
@humblemasterThe basic ideas of what you're saying looks correct, but your math seems to be off. Remember that percentages are multiplicative not additive. (i.e. 50% gain + 50% loss is not back to even) Reply
3 Things America Needs to Do to Get the Economy Back on Track [view article]
Isn't it funny and scary how we have begun to use "billions and trillions" in our everyday vocabulary........ Thank you, once again, king george iii bush for your "error-free decision-making and mission-accomplished&q...nomccainnopalinNOMOREB... Reply
gordon
3 Things America Needs to Do to Get the Economy Back on Track [view article]
you want to encourage saving & reduce consumption? a national retail sales tax will do the trick, earnings which are saved & not spent on goods are not taxed. of course the house republicans will screech that this is unamerican.crocodil - redesign - you are describing Murphy's Law (he worked for lockheed aircraft in 1948) - 'if an aircraft part can be installed upside down some wall street banker will do so'.
> jack Reply
3 Things America Needs to Do to Get the Economy Back on Track [view article]
This is all good, but until we address the deteriorating job market, noting is going to help. xmplary.blogspot.com Reply3 Things America Needs to Do to Get the Economy Back on Track [view article]
wow - this article is bad.taxing forex??? just please tell me how to do that? you can exchange money all over the world. and i fail to see how taxing is not conterproductive. japan has artificially maintained their rate for years at the detriment of the balance of trade,
your solution about cars would take 10 years or more to even start seeing a small effect on imports. you can immediately effect imports with natural gas as existing cars can be back fitted to cars already on the road.
i do not want to start taking each point you raised and debunk it. read this article at your own risk.
Reply
Putting the Perception and Reality of the Financial Crisis Into Perspective [view article]
FINANCIAL “CRISIS”One cannot resolve a problem unless one understands the problem.
PROBLEM: Financial institutions have reduced their lending.
The problem results from the impaired equity portion of the balance sheets of these institutions, with the impairment caused by write-downs of their assets (loans).
Due to the losses they have taken, these institutions, by law, have had their maximum potential lending amounts reduced.
The amount they are able to lend is contingent upon the amount of their equity capital (EC), e.g., if an institution has an equity capital of one billion dollars and is able to lend up to 20 times its equity capital, it could lend up to 20 billion dollars.
After taking loan write-downs (losses) of two hundred million dollars, its EC would now be 800 million dollars, thus it would have its maximum lending authority limited to 16 billion dollars, i.e., a constriction of its legal authorization to lend.
This is the crux of the problem.
The institutions have funds, i.e., liquidity. But, without the legal authority to increase lending, they are sitting in stagnant water.
Those who say that one going to one’s ATM for a withdrawal may find a closed sign are, absolutely, lying or ignorant.
If one is a Representative or Senator and is lying, he or she should be Impeached and removed from Office.
Likewise, if that Representative or Senator is ignorant, he or she, apparently, is not, adequately, accepting his or her fiduciary responsibility of understanding a subject prior to advocating or voting for it, thus he or she should also be Impeached and removed from Office.
PAULSON PLAN: Purchase impaired mortgages from financial institutions with taxpayer funds.
Indeed, this would positively affect an institution’s EC, because the impairment (loss) would have been transferred to the taxpayers. This reversal of loss would be achieved by paying face price rather than market price, since if the market price were paid, there would be no effect upon EC.
This contemplated action is anti-capitalistic, immoral, and a method of stealing from taxpayers.
The taxpayers did not cause the capital impairment (this IS the problem, i.e., “It’s the balance sheet, stupid”).
Anyone involved with designing this scheme and voting for it should be incarcerated as co-conspirators to steal from the citizenry.
The scheme’s authors and those who advocate for it would be precipitating an admission that capitalism doesn't work, which is a lie.
Capitalism is the best economic tool ever devised, but as with any tool, it can be and has been abused.
Congress should accept most of the responsibility for creating the economic atmospheric conditions that enabled the abuse.
Further, any resolution of this financial phenomenon will not abate the underlying problems of the economy.
It is not the lack of lending that has damaged the economy. It is the economy, affected by greed, that has damaged the lending, but, of course, if appropriate corrective actions are not taken in regards to this financial phenomenon, our weak economics will be adversely affected.
If the Paulson plan were adopted, it would be the most massive SPE by multiples, the dollar would weaken, interest rates would go up, thus the decline in home prices would be exacerbated, and the EC would require further resuscitations.
BEST PLAN:
1) Allow some institutions to go the route of Countrywide, Bear Stearns, IndyMac, and Washington Mutual. I, also, like the AIG model.
2) Most rational institutions will do what UBS, Merrill Lynch, Goldman Sachs (just recently with Warren Buffett) have done, i.e., they have raised additional EC, usually by selling preferred stocks.
Months ago, when Merrill sold 6 billion (as I recall the amount) dollars of preferreds paying 9%, I knew they were desperate, and that this was just an early domino.
Goldman Sachs, from what I have heard, is paying Buffett 10% for the preferreds. Keep in mind; this is after-tax money. The only reason for Goldman Sachs to take a desperate (GS also gave Mr. Buffett 43,000,000 warrants to purchases GS common @ $115 per share) action was because it knew it was experiencing an EC impairment and needed to raise additional EC.
Please keep in mind that pain is not all bad. It is a signal that something is wrong and indicates that the source of the pain (problem) must be determined, analyzed, understood, and finally the best alternative action must be taken.
We are experiencing pain regarding this financial phenomenon.
3) As a last resort, it would be appropriate for the government to establish a fund (call it the RTC 2.0 AKA Peoples' Financial Fund) and use those funds to purchase (just as have Mr. Buffett and others) preferred stock from institutions. The fund should follow Mr. Buffett’s lead and demand additional potential remuneration in the form of long-term warrants.
The stock would receive dividends and would have a convertible feature to convert to common stock, at the option of the fund.
Further, until certain parameters were met, the preferred ownership would assume voting control, thus the matter of executive compensation would be moot.
We either believe in capitalism or we don’t.
We will have displayed a pragmatic solution well within the parameters of capitalism.
The U.S. dollar will strengthen.
The next step would be to address the underlying economics with the basic problem being unbridled greed.
We should not have a "shot" stimulant as we did earlier.
We need to eliminate the largess given to the very wealthy, in error, by the Bush tax cuts, and to reduce taxes on the middle-class on a permanent basis.
This will have an immediate positive effect upon our economics and we will be on the path to a rational economy.
I will appreciate all comments regarding the foregoing.
Michael Z
Sherman Oaks, Ca.
Reply
Putting the Perception and Reality of the Financial Crisis Into Perspective [view article]
you cannot use logic and economic fundamentals to anticipate the dow. it does not seem to ever correlate to economic conditions. is this a bottom? i really doubt it when bigger minds than mine say this is the worst financial situation in 100 years. but the dow does what the dow does. Reply3 Things America Needs to Do to Get the Economy Back on Track [view article]
Americans have been living in paradise for many decades. Our democratically elected politians are so nice, they make laws to encourage us to enjoy more and work less, spend more and save less. If we save, we are penalized by heavy taxes, if we consume, we won;t be held responsible for not paying our debt back. We keep telling ourselves we are really willing to work hard, but definitely not for the low pay and long hours that the immigrants are willing to accept. We keep saying if only the Chinese Yuan are made to rise by 40%, then we will get all those jobs back, but most of those jobs will just migrate to India, or Vietnam, or Cambodia, or Bangladesh, or an endless list of other countries whose citizens are eager to work for even less then the Chiense do. When even our economic 'scholars' are not willing to tell us Americans the hard truth, we will not be able to prevend the eventual decline of this country.Tax credit for those who save more than 10% of their income, and tax all consumption related debt for the rich and middle class. This is what is really necessary to turn things around, and we won;t have to sell treasury bonds to foreigners to finance our debt, and the trade deficits will be eliminated automatically no matter how other countries try to manipulate their currencies. Reply