hoover

Big Banks: The Consensus Is Cracking

Capatilism is failing precisely because mega monopolies are allowed to exist, reducing their need to compete in the market, while creating an impossible playing field for their competitors. The idiotic "too big to fail" lunacy reduces these worthless giant's need to compete to ZERO! Even a kid can see that a monoply game rigged toward one player (like, a rule that Joey is not allowed to lose) while the other three players have to compete with him, has a pre-determined winner. When you end the rewarding of those that produce the best product or service for the best price, it is the end of capitalism and prosperity.

Eight Reasons Bank of America Is Going to $20

Is BAC a company? Are Citi, GM and AIG actual companies or ghosts of former companies? If taxpayers (or anyone else) continually pour money into a company just so it can keep afloat, when does it cease being a company -- in 6 months, a year, five years, twenty years? We are beginning a weird system of reverse capitalism where taxpayers continually pour money INTO debt destroyed companies (rather than real companies PAYING OUTpartial earnings to shareholders) just to keep the image of phantom companies alive. Believe in ghosts and denial if you want. But, for me, companies (large or small) must be real.

Unintended Consequences of Four Government Policies

I disagree that enormous salaries must be paid to attract so-called superb talent for top executives. I would suggest its a bogus economic theory floated in the media and in academic circles by the very wealthy. Why do I think this? First, gross failure and incompetence have been obviously displayed by the overpaid heads of the biggest banks and auto companies. Obviously they are not paid for performance. Also, in the bowels of most big corporations (which I served for 33 years) there are talented people that perform most of the corporation's "thinking and managing" work. The range of pay in this large group of middle people (managers, engineers, supervisors, legal staff, buyers, department heads, project chiefs, sales managers, and many others) range from maybe $60,000 to say $300,000 or so at many corporations. If you look at manufacturing labor (another essential component) it may range from $25,000 to $50,000 or so. So, why do you have to pay $20 or $40 million (basically a lottery winner) for REAL talent for a hotshot CEO? The Chinese get talented very successful big biz CEO's for $100,000. Common sense tells me that CEO's are worth only a fraction of what they make and they should be fired regularly for incompetence like evryone else.

Five Missing Pieces to the Stimulus Plan

Citi and Bank of America are beyond dead -- don't waste your CPR talent. Dead would just be no assets left or liquidation to bring a resolution to all debts and end with zero. Beyond dead is government pouring money down an endless rat hole that has no bottom with no hope of ever getting back to a zero balance.

On Jan 29 08:54 PM sheople wrote:

> Stimulus package. I used to give CPR to people that needed it. Sometimes
> we did it on dead people.

Five Missing Pieces to the Stimulus Plan

Rick, I don't believe you will get any answers to your questions, which are excellent questions. So, I can only assume that silence by government regarding what's going on with banks for the past six months means banks are in an ongoing unmitigated disaster. If there was even a possiblility of controlling the implosion don't you think the government would release a little of the data that Bloomberg and others are seeking? Silence only makes investors believe the worst. If Citi and Bank of America were basically Ponzi financial insitiutions that are now trapped with no way out, and many other banks were in the same mess, what would the government do? Probably stonewall just like they are doing while they buy time. That seems to me to be the most logical explanation.

Solving the Bank Crisis: More TARPs Are Not the Answer

I don't understand why no one suggests the answer to this whole economic mess is to break up the big banks into 20 or 30 smaller banks, each competing with one another. A 1/20th or 1/30th of Citibank or Bank of America would still be a very large bank. But it might be of a manageable size. Isn't the problem with banks the same as the problem with the auto companies, GE, and all other Golliath sized corporations? They are not too big to fail -- they are TOO BIG TO EFFECTIVELY MANAGE. Their size allows them to grow only because size offers great advantages in elbowing other companies out of the way using "under-the-radar" momopolistic schemes, lobbying power, high tech schemes that don't triigger antiquated antitrust laws, geographical advantage, and giant borrowing power -- plus a government that does not aggressivly enforce antitrust laws. They use these methods rather than producing a better product at a better price, to gain market share. Do you really believe the U.S. auto industry would be bankrupt if there were 40 auto manufacturers competitng with each other rather than 3 (or make that 2 1/2). I, for one, don't. Decades ago, economists sometimes referred to the law of diminishing returns -- the bigger the production the less efficient it gets after a point. Just an opinion for thought.

Banking Is Tanking Worse Than Ever

My guess is that we are in the initial phases of a Japanese style depression which started in Japan in the early 90's. Since then, Japan has more or less drifted sideways but with some slow improvement. Japan's problems began with a real estate crash, and their real estate mortgages were even more irresponsible than ours (like 100- year generational mortgage loans). On the other hand, Japan had (and has) a very competitive manufacturing base and families traditionally have a lot of savings.

Many U.S. families, by contrast, have run up so much debt, it would take a decade or two of wages (after taxes and necessary expenses) to pay off the non-mortgage portion of debt. Also, many big corporations rely entirely on revolving lines of credit for OPERATIONS, not just necessary loans for expansion.

I hear too often how necessary it is for individuals to make sure their credit score in good shape, which has created the psychology that everyone has to live on credit to survive. That is a dangerous bit of propaganda spewed out by financial interests for years through advertising and their media control. In any event for what it is worth, it seems to me that we are following Japan's route downhill rather than following the economic mistakes leading to the Great Depression. The bottom will probably occur this year or next and we will muddle along in a malaise for the next decade or so.

Banking Is Tanking Worse Than Ever

You make a very good point that banks are more regulated today than in 1929; yet they are obviously just as unstable if not more so. So, their awful financial statements are probably even worse than they appear.

On Jan 24 02:34 AM The hand wrote:

> it might be worse then 1929. banks were not as closely regulated
> as they are today (yah, lot of good that did). many that were bankrupt
> played games to keep their doors open. communication is much faster
> today.
>
> the truth is that the worst of the financial crisis has not set in
> yet. the losses in the banks have trillions to go - and i have not
> even started thinking about the impact of the commercial market meltdown.
>
>

BofA Following Citigroup to $5 or Lower

Yes, $2 trillion or more is needed to stabilize the financial system. But, of course it takes LESS than $2 trillion to buy up all of the troubled mortgages and other loans. And that tells you that maybe the mortgage mess is only the excuse, and not the biggest problem. Where has the money gone? They aren't saying. Another reason to believe the mortgage mess is not the real problem. There is a lot of investment money on the sidelines just waiting jump into the market and buy bank stocks and other worthless stocks. They want to get in at the bottom before the next big boom. Good luck!

On Jan 15 11:39 AM Ishortyou wrote:

> the financial system needs at least 2 trillion dollar capital injection
> to stabilize at the least.

Home Prices May Be Nearing Bottom, Bank Equities to Follow?

I can't count the number of times during the past two years that "housing is bottoming". Maybe it is, or maybe its getting ready to drop another 20%. But, I do agree that replacement cost, which is not dropping much, is a theoretical price support for housing. One could of course argue that in time even replacement costs may drop (caused by falling material prices and falling labor). Another thing that helps support housing prices psychologically is government regarding property taxes -- counties will overvalue assessed values to rake in as much taxes as possible. Buyers (assuming there are any) do look at assessed values in determining what fair value is.