$1 USD, that's like $1 CAD?

[Tatar Khan]

Fed gives $37.8 billion loan to AIG

So the feds bail out AIG. Then the execs go on a $440,000 vacation on October 3. Then the government gives them more money.

Sure glad these banks are not allowed to fail. Think of how badly this would affect the resort industry!

Barclays bankers jet off to Italy for lavish

[Andrew]

Money as Debt

Really good 47 min video explanation of banking system. It apparently (not knowingly) also explains how we got into the current financial crisis (about 1/2 way through).

If you havn't taken economics courses related to banking it is a good simple overview of it.

EDIT:

Looks like the bottom of the market occurred Friday. Anyone who bought then is rich now.

Stock market is up 11%.

I figured this would happen because near end of trading Friday there was a rally with people buying up stocks.

Unless this is a classic case of dead cat bounce.

[Andrew]

AIG Executives Rack Up a Reported $86,000 Tab During Hunting Trip

"This was an annual event for customers of the AIG property casualty insurance companies in the U.K. and Europe, and planned months before the Federal Reserve Bank of New York's loan to AIG," company spokesman Peter Tulupman said Wednesday morning.

I guess since it was planned in advance it is ok. ::)

AIG Taps $82.9 Billion, Two-Thirds of Credit Line

Banks Admit Bailout Won't Work

Our system is broke. But even when we get past this mess it will be the same thing waiting to happen again in the future, since it has been happening for centuries.

Nice to see oil dropping and gas prices dropping. It almost seems as though they knew the economy would suck now, so they gouged as much money as possible from consumers before it crashed.

[Tatar Khan]

AIG Executives Rack Up a Reported $86,000 Tab During Hunting Trip I guess since it was planned in advance it is ok. ::)

Don't see a problem with that. Are you suggesting that AIG should not do the event and let the existing customer leave the company and cause even more problems for AIG?

Banks Admit Bailout Won't Work

Our system is broke. But even when we get past this mess it will be the same thing waiting to happen again in the future, since it has been happening for centuries.

Not sure who said it but this is bull's manure on the stick. The new BASEL II treaty is being created to outline risk management policies that banks in the Western world should follow with regards to credit derivates papers.

Second of all this would give the system needed liquidity

Thirdly if the person means that in the future if there would be a run at the banks or mass default on loans that it would cause banks and financial institutions to fail than that is true. However the probability of that happening is low due to all the experience that has been learned.

Finally I believe that who ever made the statement about the bailout not working got the same mental power as the one who predicted fro Goldman Sachs that oil will go over $200 per barrel in June or the financial representative they had on CBC few weeks ago.

[Andrew]

Wall Street banks in $70bn staff payout

So no matter what happens, the banks will continue doing what they have always done, and governments will not let them fail.

That is my point. So AIG is spending taxpayer money to get/keep "customers". I'm sure these customers that are getting benefits are happy, but how exactly do these benefits create a return on their money? Wouldn't they be looking more towards AIG being profitable, and not based upon how much they spend on customers in hunting trips?

I'm sure investors (now taxpayers) are happy that money is being spent on hunting trips for a failed bank. You would think a failed bank would cut spending on items not related to actual banking, other than customer appreciation (which most likely only happens to the rich customers). I doubt some Joe schmoe that had a savings account can look forward to a hunting trip. Or a person who bought $10k worth of stock back when it was $50, but now worth less than $3.

[Andrew]

Bank of Canada cut interest rates by 0.25%, which predictably made the CAD worse (1.3 cents or so that day).

Now the CAD is worth 80 cents.

I'm having fun watching the stocks plunge in late day trading. Looks like bargain hunters are out buying up stocks though.

Some guy on TV said if you are under 35, you have no idea/experience what a recession is.

Ontario runs $500-million deficit but won't cut health, education spending: Duncan

Yep, looks like a recession. The early 1990s recession was fought with spending sprees which did not help and only caused larger debt.

My gov is predicting $30 million deficit, which they've been doing for the past 20 years. Bunch of dumb people. Even during the boom times it was deficit after deficit and poor spending.

[Tatar Khan]

Wall Street banks in $70bn staff payout

So no matter what happens, the banks will continue doing what they have always done, and governments will not let them fail.

That is my point. So AIG is spending taxpayer money to get/keep "customers". I'm sure these customers that are getting benefits are happy, but how exactly do these benefits create a return on their money? Wouldn't they be looking more towards AIG being profitable, and not based upon how much they spend on customers in hunting trips?

Here how it is since I am myself in financial services I see how this things are going. If AIG won't spend money on its existing clients they will jump ship to another company that will be willing to do that. The idea is this AIG screwed up with some things but its other funds and insurance contracts are there and they won't be affected unless those clients would start to leave. If you bought units of mutual fund than you own it, and if the company that manages goes under you would still own those units it doesn't matter. Insurance contracts would still be honored by the special organizations. So trouble of one department would not affect another department unless they would let it. So by spending on their current clients AIG is assuring them that all is well and that they are running and all is well. If they would not have that hunting trip than the message would be that they are really in trouble even after bailout and maybe you should look towards somebody else for the same services AIG provides.

I'm sure investors (now taxpayers) are happy that money is being spent on hunting trips for a failed bank. You would think a failed bank would cut spending on items not related to actual banking, other than customer appreciation (which most likely only happens to the rich customers). I doubt some Joe schmoe that had a savings account can look forward to a hunting trip. Or a person who bought $10k worth of stock back when it was $50, but now worth less than $3.

Taxpayers are bondholders and so they have no say in operations of the company but than their money is not as much dnager as bondholders have the first claim to the assets. Yeah Joe Schmoe would not be getting a hunting trip but that is because servicing him is easy and if he jumps ship things would not go crazy, however if 500 million dollar clients goes than things would get hurtful. And to the guy who just bought the stock of AIG when it was up and only that stock, I would say that he should have diversified. I would personally buy AIG right now, as it starts rebounding I'll get good growth however I would not buy just AIG I would buy some US Financial companies fund.

Bank of Canada cut interest rates by 0.25%, which predictably made the CAD worse (1.3 cents or so that day).

Now the CAD is worth 80 cents.

Great for Canada this is great. The major banks however are not responding with their prime or they also started to change their mortgages that were prime - something to prime + something. Terrible time to get a mortgage. I know only one financial company in Canada that still has prime-0.05 mortgage and that is weak also. Canadians banks don't want to have run away problems with cheap credit.

I'm having fun watching the stocks plunge in late day trading. Looks like bargain hunters are out buying up stocks though.

Some guy on TV said if you are under 35, you have no idea/experience what a recession is.

Ontario runs $500-million deficit but won't cut health, education spending: Duncan

Yep, looks like a recession. The early 1990s recession was fought with spending sprees which did not help and only caused larger debt.

My gov is predicting $30 million deficit, which they've been doing for the past 20 years. Bunch of dumb people. Even during the boom times it was deficit after deficit and poor spending.

They been screaming recession, depression and all that stuff always. I am just waiting until that gets old. Before this it was the oil prices and they will go through the roof and we will have no oil and all stupidity like that. The only time it qualifies as a recession when you have negative GDP growth. I meet plenty of people who are predicting the end of the world and the complete destruction of the stock markets.

But yeah it is true that Canadian government seems to doesn't know how to spend. In London most major museums are free. In Toronto getting inside Royal Ontario Museum will cost you $30 and it is not even worth that there. Parks costs $25 per car to enter. Went to US I payed $6 per car. Roads in Toronto are crap, everywhere else I went in the world except few third-world countries roads are great. Canadian government is really inefficient in its spending. Come on when person who issues passports uses one finger to type that just bad.

[Andrew]

World markets slump on recession fears

Overseas markets went down 9-10%

Should be a fun day at wall street!

Maybe it will actually hit the circuit breaker levels (-10%, -20%).

Futures are showing possible crashes and were halted.

[Andrew]

So the Canadian dollar sucks, around 68 cents. and the stock markets are crazy. Yesterday was biggest percentage gain since 1930...

banks have spent or set aside $108 billion to pay out bonuses to top executives

Good thing they got the bailout! Or else *gasp* they might have to reduce bonuses!

[Andrew]

Holy shit the US feds cut interest rates by 0.5%, and are now at 1%.

Fed Cuts Key Rate by Half Point to 1%

This could work, or it could do the same thing as it did in Japan. I doubt it will because American consumers will somehow continue to spend more than they make and keep the economy propped up.

Dowjones is attempting to dive. EDIT: it didn't EDIT: now its surging... EDIT: surge died at closing bell. Went from +3% to -1% in 12 minutes.

So the interest rate was around 1% after tech bubble, then climbed, then crashed now. So is now a good time to take on debt? I remember hearing it was a good time to get fixed debt back in 2002 or so when interest rate was low, compared to when it was high in 2006-2007. Glad to see my student loan becoming worthless with inflation and low interest rates.

Loonie up 3.67 cents.

[Tatar Khan]

Markets do dive at the end of the month due to the retirees selling their holdings to have money to spend next month.

[Andrew]

AIG Already Running Through Government Loans

What is brought up in this article is that AIG and other banks could be committing fraud on their balance sheets and such to get loans. They are so big that government cannot let them fail. So with all the bank mergers happening now, in 15-20 years when the next recession or credit crisis occurs, the banks will be even bigger and will have to be bailed out again.

AIG has declined to provide a detailed account of how it has used the Fed’s money. The company said it could not provide more information ahead of its quarterly report, expected next week, the first under new management. The Fed releases a weekly figure, most recently showing that $90 billion of the $123 billion available has been drawn down.

State regulators close the 17th bank to fail this year

Here is an interesting list of banks that are having problems and could fail according to some guy who based it upon public records.

Decent estimates on guessing which banks will fail next.

[chatfsh]

Here is an interesting list of banks that are having problems and could fail according to some guy who based it upon public records.

Decent estimates on guessing which banks will fail next.

Now keep things in perspective.  The banks contained in that list are relatively small potatoes.  The Total Assets for that entire list are only $184 Billion, whereas Wachovia Bank alone had over $800 Billion in Total Assets.  So even if every single one of those banks failed, it wouldn

[Khan]

Is there really a Chevy Chase bank?

[SandChigger]

Yes.

It's headquartered in Maryland.

Chase Manhattan merged with Chevrolet (General Motors) to create it back in the spring of 2005.

[Khan]

http://en.wikipedia.org/wiki/Chevy_Chase_Bank

In 1955 it took the name Chevy Chase Bank.

[SandChigger]

Can't fool you. ;)

[Khan]

Can't fool the all seeing eye of the internet. ;)

[Andrew]

UK interest rates slashed to 3%

They dropped the interest rates by 1.5%

Homeowners warned not to expect cheaper repayments

Nice to see that consumers will not see any of this rate cut. Those greedy homeowners.

[Tatar Khan]

Homeowners warned not to expect cheaper repayments

Nice to see that consumers will not see any of this rate cut. Those greedy homeowners.

Ok so the article is not explaining things properly. Nothing new when the journalists reporting business and economic news are unable to explain things properly due to misunderstanding things themselves. So in other words the new loans would not be given at cheaper rates is what the banks have announced. In other words those who have already loans they would be benefiting but not the new guys who are taking loans now. The same is done in Canada when the prime rate dropped to 4% the banks stopped giving out the sub-prime loans and instead giving out prime plus loans.

The reason is obvious. The banks don't want to give cheap credit to prevent the problems of US happening in their home markets.

[Andrew]

Bloomberg Sues Fed to Force Disclosure of Collateral

Good to see someone wanting the government to be held accountable. The government is not disclosing what assets it is buying from the banks.

The Fed has lent $1.5 trillion to banks, including Citigroup Inc. and Goldman Sachs Group Inc., through programs such as its discount window, the Primary Dealer Credit Facility and the Term Securities Lending Facility. Collateral is an asset pledged to a lender in the event that a loan payment isn't made.

The Fed made the loans under 11 programs in response to the biggest financial crisis since the Great Depression. The total doesn't include an additional $700 billion approved by Congress in a bailout package.

So the banks have 2 trillion dollars from the Fed.

The Fed staff planned to recommend that Bloomberg's request be denied under an exemption protecting ``confidential commercial information,'' according to Alison Thro, the Fed's FOIA Service Center senior counsel.

Yep, 2 trillion dollars is confidential. Just keep handing the money over to the banks who made large profits during good times, and when bad times occur make sure they stay alive so they can keep the profits. Because having large banks fail would be bad for the economy, and thus that is why you see lots more mergers of big banks taking over the failed banks. The bigger they are the more secure they are from failing. Give crappy assets (or none!) as collateral to the government, and profit! No public paper trail, and no accountability required.

EDIT:

Another AIG Resort "Junket": Top Execs Caught on Tape. KNXV Discovers $343,000 Secret Gathering, AIG Signs and Logos Hidden

AIG wants even more money from the government, all the while blowing more money. Don't try the "but its the profitable portion of the company!" defense. With any normal business, if one part of a business does bad, the company has to cut spending, or eliminate that part of the business. They government shouldn't be bailing out a currently unprofitable part of the business (which was profitable for 10 years), just so it doesn't affect the other part of the business.

I really hope to get on the government gravy train at some time. My province over a 2 year period gave 5 Quebec investors $250,000 each for doing nothing (sitting on a board) and driving a local business into bankruptcy.

[Andrew]

The U.S. federal government deficit soared in October to a record $237.2 billion, as the government invested more than $136 billion in various bank bailout programs, the Treasury reported Thursday.

Not including the bailouts, the deficit was still twice as large as it was in October 2007.

So in October the government blew $700 per American.

EDIT:

Financial Crisis Tab Already In The Trillions

Already 3.8 trillion spent. More than was spent on WWII inflation adjusted.

EDIT:

BANK TO SPLASH £2.5M OF BAILOUT CASH ON PARTIES

One of the high street banks bailed out by the Government is spending almost £2.5million on Christmas parties for its staff, it emerged last night. The decision by Lloyds TSB, which accepted a £5.5billion handout just a few weeks ago, has sparked outrage.

It also emerged that Royal Bank of Scotland is to spend £1million on Christmas parties for its staff, despite receiving a £20billion bailout.

This is for 67,000 employees, so about $60 an employee.

This is why bailouts don't work. Banks continue operating the same as always. No cutbacks, nothing.

So a bank gets 5.5 billion in bailout, then spends 2.5 million on a Christmas party. I think the bank got 2.5 million more than it should have.

EDIT:

Japan slides into recession, 1st time since 2001

[Andrew]

Big Three CEOs Flew Private Jets to Plead for Public Funds

Yep, they need billions in bailout money so they can continue flying private jets around.

Wagoner flew in GM's $36 million luxury aircraft to tell members of Congress that the company is burning through cash, asking for $10-12 billion for GM alone.

Wagoner's private jet trip to Washington cost his ailing company an estimated $20,000 roundtrip. In comparison, seats on Northwest Airlines flight 2364 from Detroit to Washington were going online for $288 coach and $837 first class.

Yet Ford continues to operate a fleet of eight private jets for its executives. Just Tuesday, one jet was taking Ford brass to Los Angeles, another on a trip to Nebraska, and of course Mulally needed to fly to Washington to testify. He did not address questions following the hearing.

These companies need to fail. They made mistakes, and they should pay for them.

What needs to happen is that all the plants get shutdown for 6 months or so, retool the factories to build hyrbrids at a minimum, and the rest electric cars.

If they want to continue to build gas guzzlers then no bailout for you.

Although funny thing is that Americans are now purchasing more SUVs now that gas prices are down. Seems they only have an attention span of 6 months.

Hurray! recession! cheap gas! quick lets go buy a cheap SUV that no one wants.

The workers at these plants are making $70 an hour. That is also another problem.

Here is the best quote from that article:

GM and Ford say that it is a corporate decision to have their CEOs fly on private jets and that is non-negotiable, even as the companies say they are running out of cash.

See? They don't even care. They just made the decision on whether to get bailed out or not.

If they get bailed out they will continue doing the same shit they've been doing for the past 30 years.

[Andrew]

Uh oh. The current bottom has broken. The bottom for the market this past month has been DJI 8000. Yesterday it closed a couple points below that, and today it lost 5-6%, now at 7552.

The TSX (Canada stock market) lost 9% today.

Now 7500 is the bottom, which was last reached in Oct 2002, and March 2003. Below that it goes back to September 1998, then January 1998 (and every year before that).

Automaker Rescue Plan to Be Considered Next Month

Levin joined Republicans in advocating a plan to borrow $25 billion for automaker liquidity from funds previously approved for fuel-efficient vehicles. Reid declined to consider the plan, saying it lacked support. Levin said he believed it would get 60 votes in the Senate and that he will advocate it in December.

Yep take money away from fuel efficient vehicles so they can continue building SUVs. So we can expect hybrids and electric cars to not be built or researched, and in 5-10 years time oil/gas will spike and consumers will be screwed again.

Phht, oil is so cheap now we might as well scrap all renewable energy plans. It's not like it will happen again. There are still oil rich countries to be invaded anyways.

Flaherty to deliver economic update next week

Finance Minister Jim Flaherty announced Thursday he will deliver a long-awaited economic update next week, even as a newly released report forecast a possible $5.3 billion in federal deficits over the next two years.

Bye bye 15 consecutive year surplus.

Looks like Harper lied when he said we would not go into a deficit and that the Canadian economy was "sound" or whatever election bullshit he said. For the past month they said deficits will not happen. Some people predicted they were just saying this to soften the blow so it would be a "whoops, how'd that happen?"

Because it would be irresponsible to admit a deficit now and try to fix it. ::)

[Tatar Khan]

Automaker Rescue Plan to Be Considered Next Month

Yep take money away from fuel efficient vehicles so they can continue building SUVs. So we can expect hybrids and electric cars to not be built or researched, and in 5-10 years time oil/gas will spike and consumers will be screwed again.

Phht, oil is so cheap now we might as well scrap all renewable energy plans. It's not like it will happen again. There are still oil rich countries to be invaded anyways.

Well you said it yourself earlier that SUV sales are up in North America. Than why should the big three build hybrids and electric cars when people clearly want the SUVs. People have voted for SUVs through the demand for those cars. If they would have bought hybrids than yes it is a different story.