The Biggest Financial Story of the Past 50 Years

Wow.

That about sums up the events of this past weekend, which saw the following events transpire:

  • After failing to finagle a government bailout, Lehman Brothers (NYSE: LEH  ) filed for bankruptcy protection.
  • Bank of America (NYSE: BAC  ) spurned Lehman Brothers and instead agreed to acquire Merrill Lynch (NYSE: MER  ) .
  • Insurer AIG (NYSE: AIG  ) begged the Federal Reserve for as much as $40 billion of assistance.

This is bigger than either JPMorgan Chase's (NYSE: JPM  ) buyout of Bear Stearns or the government bailout of Fannie Mae (NYSE: FNM  ) and Freddie Mac (NYSE: FRE  ) . Our colleague Bill Mann, in fact, has deemed this weekend's credit-crunch-inspired string of bailouts, buyouts, and bankruptcies "the biggest financial story of the past half century."

Bigger than the dot-com bust? Yep. Bigger than Black Monday in 1987? Yep. Bigger than the oil shock of the 1970s? Mmmhmm.

NYU economics professor Nouriel Roubini, George Soros, and the International Monetary Fund have all called the overall credit crisis the worst since the Great Depression.

Are you nervous yet?
As always, Fools, stay calm. The price of panic is high.

We've been through many financial crises together over the years, and we'll get through this one. As Bill told us, mark this down as an "accidental victory for capitalism." There's some cleansing going on in the markets. The dust will settle eventually. We don't know when, or who the next headline-maker will be.

We do know that Fools need to keep their patience and their sense of perspective. We'll be monitoring the news and providing our analysis on an ongoing basis. You can review all of our coverage of this climactic weekend below. Be sure to bookmark this page and come back for all the latest from Fool.com

First, some perspective from Bill Mann and our advisors

The U.S. government's intervention

AIG's government bailout

Lehman Brothers' bankruptcy

What this means for your finances

Macro-level views

The next companies to fail?

The Merrill Lynch/Bank of America deal

Neither Anand Chokkavelu nor Brian Richards owns shares of any company mentioned. JPMorgan Chase and Bank of America are Motley Fool Income Investor recommendations. The Fool has a disclosure policy.


Read/Post Comments (44) | Recommend This Article (73)

Comments from our Foolish Readers

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  • Report this Comment On September 15, 2008, at 3:35 PM, newjersian wrote:

    This is a dooms day for American economy. It is like dropping a nuclear bomb on ourselves. People are equally responsible to spend beyond our means.

  • Report this Comment On September 15, 2008, at 7:40 PM, iowana wrote:

    This is another panic that will get straightened out and we will have learned some very important answers that will soon be forgotten There are many other financial institutions not in trouble and they get a competitors network of banks or properties for a song and then they move on. We are not all penniless.

  • Report this Comment On September 15, 2008, at 8:30 PM, kamuirei wrote:

    As the 23 year old in the room... I must say this is awesome... if not so much for my parents.

  • Report this Comment On September 16, 2008, at 3:25 AM, aussie67 wrote:

    it is simply repeating itself on massive raging scale that hsnt played out yet fully and the rule book got sodden and hard to read the book, let alone agree on what it means, fear stalks us thought the day and each night, this is simply the massive hedge fund effect where all the trendy trades are hammered as as they hear siren cry of the risk manageror . odereing everyone to reduce risk. "get me the hell out" good and bad,,all the trendy trades hi/low ccy diffs....anything that there is money in will be given a kick,,huge huge volumes.

    if AIG goes there will be much more to come,,,1 trllion : credit canker has spread all over the patient and is efecting others. across the board. Maybe Buffet was Right,.! AS

    a

    a

  • Report this Comment On September 16, 2008, at 10:20 AM, jptf wrote:

    Surely a time to look to buy? Or at least to get some of the comanies who will suvive/grow in the aftermath sorted out or selection.

    Guidance is called for, I believe some American once said "buy when others are fearful".

    John

  • Report this Comment On September 16, 2008, at 10:58 PM, dividendgrowth wrote:

    AIG failing would have started the chain reaction in a financial weapon of mass destruction called Credit Default Swaps.

  • Report this Comment On September 17, 2008, at 12:58 PM, fibreoptik wrote:

    Precisely John!

    Buy when others are fearful :) So now we can just watch the prices on some fantastic companies get whittled down by their fear... then swoop in for some VERY sweet deals =)

    Thanks Lehman Bros. and friends! LOL!

  • Report this Comment On September 17, 2008, at 2:57 PM, hctwins2 wrote:

    Learned lessons my foot. I wish the gov would put the [c.e.o.s] in jail for a very long time. If a c.e.o. makes 500 mil and pays a 50 mil fine. That only encourages the rest to do the same. If we do anything crooked they banktrupt us and our families pay . Also it is a farse to fine companies. Let the people that run them, answer for their deeds. Put them in jail and pay the fines, and that will stop the rest of them.

  • Report this Comment On September 17, 2008, at 6:29 PM, WileyCyote wrote:

    So far, this is inded the biggest financial story of the last fifty years. However, it may not be over yet!

    How many more shoes (or boots) are there to drop ?

    What about the very large number of foreclosures and other events which haven't surfaced yet?

    It would seem that the gate keepers are no longer present or have deserted their posts.

    One can take situations right out of "The Battle for the Soul of Capitalism" by John Bogle and extrapolate them into the AIG mess.

    Maybe we need a third choice in this election year. How about a team of Warren Buffett, Charlie Munger, John Bogle and David Einhorn?

  • Report this Comment On September 19, 2008, at 11:35 AM, ChrisCDR wrote:

    I do not believe this is a win for Capitalism. If Gov't bail-outs weren't involved, I would. But using Tax dollars to bail-out bad decisions of private companies is not a win for Capitalism.

  • Report this Comment On September 19, 2008, at 12:29 PM, ITankResevoir wrote:

    This market is a bargain for the new investor. Outside of this nation being physically under new management, nations do not go bankrupt.

    The advantage of a good tire without air is obvious metaphor to the freeway that is taking a new Milton Friedman stand of "money is the concrete real world" and a socialized rich never really faces the loss, so the low player does.

    If you can live on more than one sidewalk in life, this is time, as they say, "If you do not have it to lose, stay out". Though, a $400.00 roll of chips in Vegas never had as long a title after the table than this one. My advice, "cut loose" from anyone now, and do the cash that is yours to win or lose. The big debt is sorted in the end, the little ones you can avoid by never eating with them again.

    Glad I belong to MENSA or I would not have friends to avoid psychiatry with. They are not getting out of the hospital – now is the time to leave them there.

  • Report this Comment On September 19, 2008, at 1:05 PM, OF2Day wrote:

    I would like to see these business’ causing all this turmoil to be audited using the SOX (Sarbanes-Oxley) requirements AND those of their relevant ISO (International Standards Organizations) certification’s at the same time, along with those of GASS. All auditing groups must exchange findings, replies to findings, etc...

    I feel these audits, when performed in unison will create the “perfect storm” needed for financial management reform. In fact, I would like to see these audits performed, in unison, on any business within the range of the authority of these requirements.

  • Report this Comment On September 19, 2008, at 1:12 PM, MichaelZZ wrote:

    HAPPY DAYS ARE HERE, AGAIN...................................

    or are they?

    SOME THOUGHTS:

    You have to admit, this is very interesting, i.e., desperate.

    It is the most massive example of "putting lipstick on a pig" one can imagine.

    I haven't seen the particulars, other than the short prohibition, but I am guessing that banks will be allowed to sell the poorest of loans to a government "agency", thereby "fixing" their respective balance sheets.

    The prices, again an assumption, will be at face value, since if at market value, the banks' capital would continue to be impaired.

    The "agency" would "hope" the loans can be mitigated, over time (5-10 years), whereby the losses would be "minimal". (cough, cough)

    This does not alleviate the problem going forward, other than to allow the banking system some breathing room.

    Institutions will still be hesitant to loan without substantial down payments, i.e., the old style of little or no down payments is passe.

    Good question: What are "We, the People" receiving for bailing out the banking industry?

    Did the People cause this malaise? No.

    Did the industry cause the problem? Yes.

    Could this have been "resolved" differently? Yes.

    If the People are taking the risks, they should not be stuck with the ugliness (losses), rather they should participate in a potential upside, e.g.: rather than, in effect, giving funds to the industry, I would prefer to see the purchase of preferred stock, enabling the institutions to remain adequately capitalized, but whereby the People, and not the shareholders would reap benefits, rather than going the hara kiri route.

    Please keep in mind, I am not fully aware of all the particulars, i.e., the foregoing is conjecture.

    Those at Enron were prosecuted for creating SPE’s.

    Be wary, be very, very wary.

    best,

    Michael

    08:20am PDT, 09/19/08

  • Report this Comment On September 19, 2008, at 1:46 PM, mrsceptic wrote:

    Oh, it’s so much clearer now. So we allowed an unregulated financial sector to

    conduct a free market with no governmental oversight. Is that correct? Isn’t that “free market” a Republican religion? Doesn’t this have a detonation factor somewhere between an atomic bomb and a hydrogen bomb? But hey, we’ll rebuild with government cash. (read taxpayer money) I hope everyone remembers that free markets are great

    until you lose money! I have lost money, have you? By the way, where’s my

    goddamn bailout?

  • Report this Comment On September 19, 2008, at 2:03 PM, chuckles107 wrote:

    The disgusting fact about this mess is that a lot of CEO's have gotten rich while screwing up their companies and costing many of us huge sums of money.The most noteworthy was the $160 million that the previous ML pres got for destroying his company. Many Many others that I've tried to forget about such as WAMU, etc.

    The mortgage crisis was predicted as far back as 2006 by some pretty smart people, but the high paid executives went along with the game to enrich their bonuses and options. Where the heck is Elliot Spitzer when we need him. Probably staring down the barrel of his wife's .357.

    For the first time in my working career I finally want to be part of a class action suit. Start with WAMU.

  • Report this Comment On September 19, 2008, at 2:47 PM, swtsakey wrote:

    Wow,

    I'm not that financial savvy but aren't these the same companies that lobbied for tighter bankruptcy laws? How ironic? And what about the people who have lost their jobs, homes and retirement, who is going to bail them out? How do we get back on track to get the economy rolling again?

    I understand there's no need to panic but this is scary......

  • Report this Comment On September 19, 2008, at 3:32 PM, McCouk wrote:

    Do I recall that in 1907, a broadly similar panic was overcome by JPMorgan the First>

  • Report this Comment On September 19, 2008, at 3:33 PM, cloud121 wrote:

    this has been comeing for sometime, now we pay the piper.

  • Report this Comment On September 19, 2008, at 3:46 PM, MichaelWhitaker wrote:

    I am English writing from Canada with a home in England trading in American Stocks and English Property.

    The Capitalist system (described as “the Least Worst”) is being brought into disrepute and letting it’s supporters down. Effectively Owners historically managed and grew businesses staff were trained supported and encouraged to stay as part of the team. Often accommodation, mill houses, farm crofts and even sometimes holiday trips were part of the package. This benevolence was not entirely altruistic happy loyal workers meant growing profitable companies/dynasties.

    Populations grew; farmers were drawn to work in towns. Industry became bigger, physical communications improved, markets became more accessible, industries magnified to meet that potential. Businesses outgrew family control either from future generations declining abilities to cope or aggressive take over. In time size of enterprises became so huge that ownership became so diverse that it was no longer managing the business. Owners became shareholders and managers became employees. Owners over time became institutions and then they were run by employee managers. Sums involved changed from thousands to billions in just the last decade. How many know the number of noughts in a billion, let alone a trillion. I am 68 when I was educated at Grammar School in England a billion was a million million—unimaginable figure. Strangely over time it has become a thousand million.

    The current crisis and other recent somewhat lesser crises have their roots in all this. The intellect of man has not changed to match the enormity of world trade. The innate greed of mankind was always there but such weakness was weeded out due to the associated incompetence. If one subscribes to the view that every man has his price then that’s where we are now and that’s the problem. Salaries are so huge and temptations so great that intellectual inadequacy and avarice overwhelm the “present day Manager”. As described above the new owners are themselves Managers and the Managers of industry are uncontrolled they set their salaries and compensation (rewards for failure). An ambitious mature manager may not care if he is obliged to go as the payment he has fixed for himself may be viewed as reward. Managers fix incentives for themselves which require their sales staff to compete aggressively again incentivised by bonuses to magnify sales at almost any cost. Taking huge risks doesn’t matter to them either the risks pay off with higher rewards or the built in benefits on dismissal make such venality a win win for the individual. Care and compassion for customers and remote staff is subsumed under the overwhelming temptations of avarice they have been allowed to engineer for themselves.

    Who is to blame?? What is the solution??

    Certainly humanities intellect isn’t going to grow to match the occasion.

    Avarice as part of human nature is the reasonable engine to drive the capitalist entrepreneur – that drive won’t be contained when control is missing and temptations are so extreme.

    Christian morality was and has always been a modifier of behaviour. Intellectuals chose to deride Christianity by arguing Darwinism proves Creationism isn’t true. They are pulling some of the backbones out of society. We are seeing with these crises some of the results of that denial. A very precarious argument just now being reasonably considered by thinking open minded scientists and clergymen.

  • Report this Comment On September 19, 2008, at 4:57 PM, 7162Staghorn wrote:

    The SEC should have studied early on and stopped the creation and sale of all those special bundles of funds that hid the subprime mortgages inside them and caused all this mess. This is why the SEC was created after the Depression- to expose and stop these shenanigans! They are partly to blame and they should be chastised in public for this.

    However, those greedy stockbrokers who created these special funds, promoted them and sold them should be exposed for fraud, prosecuted and sent to jail and made to pay and return all their ill gotten wealth! They were the THIEVES who stole America's wealth and dishonored her!

    Manolo Navarro

  • Report this Comment On September 19, 2008, at 5:36 PM, janep64 wrote:

    I believe our economy is sound just a few knuckle heads to deal with. No take over or loan should have been administered until all the top brass left without their big paychecks and perks. They are the cause for the misfortune of these companies. There is no way they should still be in power. There is so much greed worldwide now that its take take take and dont worry about tomorrow. Well today they found themselves broke.

    I believe the oil companies are also responsible for the things happening to the citizens of this country because of our high fuel prices and food and everything else being raised.

    Its time for the oil companies to come to the realization they need to lower their prices and respect us citizens.

  • Report this Comment On September 19, 2008, at 5:49 PM, solarpowerman wrote:

    And once again, THE RICH are bailed out by king george iii bush-it! He is THE WORST president in the anals of history!

    His administration had oversight on fannie and freddie ....... where was it? He let some die and chose who would live ....... as all kings do! The poor died again, and the rich just got richer! The taxes are coming no matter who is elected ...... but to vote for his twin mccain should be a sin!

  • Report this Comment On September 19, 2008, at 7:47 PM, FreedomFreedom wrote:

    As Professor Roubini stated, we are becoming a country where the profits are privatized and the loses are socialized! We are witnessing the end of America as we know it. This is the end of the free market system and when the government makes their $1 trillion purchase of all the bad mortgages our neighbors will be defaulting on US!! Not on the foolish banks who lent the $300,000 to the 21-year old couple with an annual income of $25,000!!! I DID NOT LEND THEM THE MONEY, SO WHY ARE MY GRANDCHILDREN GOING TO HAVE TO FINISH PAYING THEIR LOAN!!???

  • Report this Comment On September 19, 2008, at 7:51 PM, 44humble wrote:

    Trust cant be replaced by a government bail-out. Trust is lost by a large sector of citizens, where the financial area as a whole is concerned. An example, an elderly friend who has worked harder than most for what he has, listened to a broker who was really unconcerned. And the broker invested $25,000. in Lehman Brothers Bonds. And never looked at it again. The man trusted the broker to do what he could with his money. You can throw all the money you want at any company you choose, you can clean every balance sheet so it sparkles. But will you trust it?...There is a huge value that cant be measured, which is now lost, and will not be easily replaced. Trust.

  • Report this Comment On September 19, 2008, at 7:51 PM, FreedomFreedom wrote:

    To vote for McCain is to drive the FINAL nail into the coffin Bush has built for us. McCain is a charlatan who lost all of his principles in his ego-driven rush to be elected president. He is willing to sacrifice the country he professes to love just so he can become Commander-in-Chief. And then...WATCH OUT!! So please do yourself, and everyone else a favor and elect Obama. America cannot survive 12 years of BUSH!!!

  • Report this Comment On September 19, 2008, at 8:00 PM, FreedomFreedom wrote:

    So MichaelWhitaker, Darwinism is to blame for this mess? You had me fooled for a minute. I thought you actually knew what you were talking about.

  • Report this Comment On September 19, 2008, at 8:11 PM, FreedomFreedom wrote:

    ITankReservoir, I did not realize MENSA had lowered their standards. Your comments are typical of someone who believes they are above it all. Nations do not go bankrupt? Tell that to Zimbabwe, tell that to early 20th century Germany. There are hundreds of nations that exist only in history books. We are witnessing the end of America as we know it.

  • Report this Comment On September 19, 2008, at 8:28 PM, tucsoncyclist wrote:

    Can you say eleven trillion dollars in debt?

    $11,000,000,000,000.

    \i-ˈle-vən\ \ˈtri(l)-yən\ cause that is where we are headed.

    "Keeping taxes low and restraining spending leads to a vibrant economy; it leads to new jobs; it leads to better opportunities; and it leads to a shrinking deficit." - George Bush

  • Report this Comment On September 19, 2008, at 8:43 PM, Mandragoran75 wrote:

    How can we call all this stuff bailouts when the owners of the companies are losing about 90% to 100% of their money? The alleged problem with bailouts is that they keep the market from sending its message; if I lost 90% of my money I would think that was a sufficiently negative message and try not to go there again:-)

    And, as to the state of the economy, when Bush came in, he inherited a recession from Clinton's administration, with the breaking of the dot-com bubble; Bush did not raise taxes to get us out of that, he cut them. Even after 9/11, and the mortgage problems, and the oil price bubble, our economy grew at a 3+% rate in the last quarter; employment is down from 95% to 94%; how's that for strength? If we can avoid electing Herbert Hoover (AKA Obama) to raise taxes the way he did before (they had a Great Depression, but not a great time) we may be OK.

    Also, let's not forget that we keep hearing not that all the mortgage-backed securities are worthless, just that nobody has been able to establish a new value; surely many of these loans are not worth face value, but if the government is smarter than usual, we will not pay face value, and the value could turn out to be more than we taxpayers are paying. OTOH, a lot of time has gone by; why hasn't anyone looked at a representative sample of the loans and made a reasonable estimate of their remaining value??

  • Report this Comment On September 19, 2008, at 8:54 PM, tucsoncyclist wrote:

    The problem with your post is economists did not call a recession until after GB started sending out the first round of checks in 2001. Only the White House declared it, and they are not qualified. Second, who is losing 90%? Not the CEO's. Third, where are the jobs? 5 million jobs in eight years. The population has increased by over 16 million. We all know that the unemployment number is bogus, excepy maybe you. And what about spending? 7 trillion dollars later we are on the verge of complete failure as an economy. The only way to survive now is to put it on the backs of the taxpayer.

    Jan 20, 2005 "We will widen the ownership of homes and businesses, retirement savings and health insurance - preparing our people for the challenges of life in a free society. By making every citizen an agent of his or her own destiny, we will give our fellow Americans greater freedom from want and fear, and make our society more prosperous and just and equal."

  • Report this Comment On September 19, 2008, at 9:06 PM, Mandragoran75 wrote:

    More to the point, we generally consider the Fool organization to be for economics, not so much into politics, (although of course when we are in great danger of electing a candidate who wants to raise taxes when the economy is already in trouble, the best thing we can do for prosperity in the future is to avoid that:-).

    I have been watching the mortgage companies slowly go farther and farther downhill, hoping to find the bottom and pick up some bargains, but I haven't seen any, and of course I'm happy that I didn't guess wrong and buy stuff that was just on the way out. Today they seem to have taken off so fast that there may not be any way to catch the train. What can the Fool tell us about any of that?? Where do we go from here, which is the way that’s clear:-)??

  • Report this Comment On September 19, 2008, at 9:30 PM, Mandragoran75 wrote:

    [ economists did not call a recession until after GB started sending out the first round of checks in 2001. ]

    OK, economists are surely not calling this a recession now, either; they can't, because we haven't seen even one negative quarter, and we may not see any, because of the continuing strong measures that the government is taking. How about we agree that the last recession did not start until at least 5 minutes after W took his hand off the Bible, but it was far too early in his first term to be anything that any policy of his could have caused; not much question about that, is there? Generally we can see the beginning of trouble well ahead of the first negative quarter; if I had a suspicious attitude, I would be suspicious that you already knew all that, just because of where we are posting this stuff:-) Again, Bush did not raise taxes, he cut them, and we have had several years of pretty good prosperity, in spite of some terrible damage to the economy that Bush couldn't have prevented. All my life I have been hearing that the low-wage countries were going to bury us, as Khruschev's people never could, but we are still surviving and even doing reasonably well. Other than Bush and Reagan's work, and millions of ordinary people like us refusing to give up, can you explain why we are surviving in the face of such strong competition from outside our country? Before voting for "change", I'd like to understand how we have been getting by so far; pouring gasoline on a fire instead of water is a change, too, but it won't save our burning house:-)

    BTW, when we read about billions of dollars in losses, where has all that money gone, and what can we learn about managing our own investments now and going forward, from understanding that?

  • Report this Comment On September 19, 2008, at 9:44 PM, suntzu777 wrote:

    Search for companies, with strong cash balances and no debt, therefore they won't be relying on credit and you will be fine. As long as an investor lives below his means each week saves on a regular basis and invests, any storm can be ridden out.

  • Report this Comment On September 19, 2008, at 10:01 PM, Jest4kks wrote:

    Get real. Trickle down means trickle out...of the country. The idea that man will "out of the goodness of his heart" create jobs when he hits the mother load is the biggest pile of doo to ever have been mouthed by supposedly educated people. It denies mans most basic survival instincts which is too much is never enough. Man will always want more money and more power it is his nature.

    In order to achieve balance we must have taxation which means that men (and I use the term loosely) must create businesses to hold onto their money or lose large sums of it to taxation. In addition, any person who benefits from a society to such a great extent owes back to the society and I don't mean giving to the charity of your choice. I mean paying your taxes and taking care of those who are not as fortunate. Yeah, I know its a lousy idea...its called responsibility to your nieghbors, to your kids, to your society. I know its a little socialist so what. Clearly this society has had enough of capitism run wild and we are reaping what we've sowed. The pilfering and plundering has been going on since Nixon decided to go off the gold standard, Reagan unleashed the pirates on our country when he deregulated the whole financial sector and then came Bush who decided to stop counting the money...talk about a motley fool! What did we think was going to happen? Oh, thats right we were busy eating a Big Mac and talking on our cell phones about what was on tv last night. Sorry, I'm a little TOed.

    Ok I got that off my chest. Take whats left of your money and put it under your mattress for awhile until things get settled cause this aint over.

  • Report this Comment On September 19, 2008, at 10:57 PM, Jest4kks wrote:

    P.S. A couple of things. One, I am not advocating tax hikes; just a reallocation of percentages so that the very wealthiest pay the most and we "would be" middle class folk (not to mention the poor) can have a fighting chance.

    Two, the reason your grandchildren will be paying for the aig bailout is because you probably voted for the guys who made it all possible because you thought you were going to save money. Thats called pennywise and pound foolish.

    Three, If you are foolish enough to believe that this country is not in recession then you are about to choke on the manipulated statistics and you can wash it down with McCain for president. This country cannot survive another 4 years of Republican leadership in the Whitehouse. We've gone way too far right and its time for some balance. Four, Statistics are only as good as who is giving them to you. Consider the source always. Use your instincts; if you smell something in the air its probably there. I expect that I will recieve a fair ration of irate feedback but, "look to the left, now look to the right", chances are pretty good one of your neighbors is getting ready to undergo bankruptcy or foreclosure or lose thier job or have a medical crisis...hope its not you. Hey, I like to make money as much as the next guy but, if there is no one to buy anything what will you sell? If there is no one making anything what will you buy?

  • Report this Comment On September 20, 2008, at 1:17 AM, kingoshri wrote:

    A question for all fools:

    "Where do you draw the line?"

    ...

    Did companies draw the line when it came to fair trade? - no.

    Did companies draw the line when it came to nature and the enviroment? - no.

    Did companies draw the line when it came to human rights issues? - no.

    ... Then why should they suddenly draw the line when it comes to their shareholders, clients or businesspartners? - There is no line.

    ...

    If global economy doesn't draw the line on other issues, it will eventually self-destruct, if not now, then next time.

    The warning signs are everywhere...

    ... The sad thing is that some of us fools still think we can make a profit out of it...

    ...

    The time has come to become a Moral (yes.. MORAL) investor, and a Moral consumer, because it is the only way to stop this madness, and make companies change their attitude.

    Right now they are all thieves and robbers, and the rest of us are all.... yep ... fools....

  • Report this Comment On September 20, 2008, at 2:00 AM, michlynn wrote:

    We hear very little about the unwinding of legislation over the last 8-10 years which started this whole debacle. Until such vehicles as derivatives, credit default swaps, etc., (which were created with this legislation while capital reserve requirements were not required) are prohibited and/or capital reserve requirements are implemented, we cannot be certain that banks, mortgage brokers, brokerage houses and insurance companies will not take these insurance-like vehicles again and create another scenario like the one we are in now where the hardworking person holding two jobs has to bail out the monolithic corporation while they watch their house go into foreclosure. These corporations lobbied hard for such legislative changes and probably helped write them, lobbied even harder to make them unregulated, and Congress listened. Now our senators, our presidential candidates, our representatives cry about the greedy financial markets, cry about the inability of the SEC to regulate the stock market, cry about how people were so greedy to take out such outrageous mortgages. All diversions, diversions from the source of this debacle, our Congressional leaders, including Presidential candidate John McCain. But oh..how easily we are diverted.

  • Report this Comment On September 20, 2008, at 5:26 AM, rfacas wrote:

    The events of the last week are indeed very scary. Why? because its all new territory that none of the leaders in the financial world and political world have experienced or do they have models to use. It is times like this when real leaders emerge (more on this below).

    The new territory? I call it global supermarket capitalism. Although the movement of capital across the globe and financial dealings have been becoming ever increasingly complex for decades, no one thought it was possible for the system to get locked up, but looking back it was inevitable. All that capital looking for new markets and all those innovative financial products with unknown risks and dead-end recourse, eventually there had to be a day of reckoning.

    And the reckoning was that all these so called independent investment banks who innovated all these products were in over their heads and the solution was consolidation. Consolidating the independents with large derivative exposure and other mortgage market players into global supermarket banks with supermarket assets to weather any challenge to its solvency. And the American government became the backstop for locked-up markets, in effect the global central banker.

    The upshot is that the American financial system in true Shumpeter fashion is restructuring to meet new global market realities to handle the free movement of capital across the globe and innovative financial products with little or no controls. Restructuring by consolidating into larger, stronger and more resilient global financial powerhouses.

    Oh yeah, its times like this when real leaders emerge; one of those real leaders who has emerged is Hank Paulsen. Obama would like to re-regulate the system which is typical pollyana thinking and would be a disaster resulting in a prolonged recession if not a depression. The global capitalism genie is not going back into the bottle. McCain would like to fire the SEC Commissioner which unlike Obama at least it would be harmless to the economy; but chances are McCain would offer Paulsen a job in his administration, probably Sec'y of State which would be a good thing.

    Welcome to the post-industrial world and get used to insecurity, permanent crisis and lack of any status quo.

  • Report this Comment On September 20, 2008, at 4:13 PM, cork41 wrote:

    It would be intresting to so see the breakdown of shareholders on the books on aig ; lehman ; northren rock etc. Anyone laying odds on how much the registar has changed from professionals to pension / investment funds over the last few years . It would make a great research paper . I would bet the temptation to stuff the books would just be to great .....watch your pension!!!

  • Report this Comment On September 21, 2008, at 9:23 PM, IB1FOOL2 wrote:

    TRICKLE DOWN ECONOMICS DON'T

    ALWAYS WORK BECAUSE JOBS

    ARE CREATED TO FILL THE NEED

    OF A COMPANY'S CLIENTS. IF THE

    CUSTOMERS OF THAT RICH PERSON

    NO LONGER HAS THAT NEED THEN

    THE EMPLOYEE DOING THE SERVICE

    IS NO LONGER FULLFILLING THE NEEDS OF THAT COMPANY'S

    MANAGEMENT IE THE ULTRA RICH.

  • Report this Comment On September 23, 2008, at 12:20 PM, noneedforaname wrote:

    We are all idiots speculating on what oversight needs to be done to avoid catastrophe. There will be no oversight. This catastrophe has been planned. There is no way that the American people are a consideration in this Ponzi scheme. The people in control own land in France, Spain, Italy, Australia, etc. You think they care ultimately about you, your family, or America? So what's it all for? To control the public and government. The FIRE (financial insurance real estate) sector has been raping the public's wealth and civil liberties for a long time. They have used their network of crooks and liars to create wealth. They have used that wealth to influence corrupt legislators to pass laws in order to remove restrictions that would have stopped this from happening, i.e. Glass-Speagal Act. Ultimately, they have gained all the power by duping the public into believing the Federal Reserve and Treasury Dept. are acting for our welfare. Henry Paulson is a crook as much as Clinton and Bush are criminals for being complicit in this game. WAKE UP! Putting your money under your mattress is not going to work. We need to share our resources with our friends and family. I'm sorry if this sounds socialist, but the money changers have corrupted the system to the point where it is a cancer that has consumed the body. There is no pleasant status quo scenario. We will have to sacrifice in order to right the wrongs of all these corrupt politicians and financial executives who we called leaders. They have names and they need to be brought to justice. http://www.youtube.com/watch?v=Fjg9Ew6vs-I. They never do the dirty work, but pay to have it done. Their atrocities are innumerable and this financial crisis is just the latest. No matter what happens we must NOT PANIC! We must UNITE because there is always strenght in numbers. We might not believe the same things, but we have one belief that we all share FREEDOM. Do not let them put the shackles on you. Do not let them reduce us to serfdom. Start by educating those around you as well as learning more. www.michael-hudson.com

  • Report this Comment On September 23, 2008, at 12:27 PM, noneedforaname wrote:

    Glass-Steagall

  • Report this Comment On September 23, 2008, at 12:33 PM, noneedforaname wrote:

    "Imagine how our world would look like if the economy had been turned over to Al Capone as head political capo and to Mafia financial manager Meyer Lansky as Treasury Secretary in the 1930s, with the pyramid schemer Carlo Ponzi heading the Federal Reserve and bank robber Willie Sutton as Attorney General." Michael Hudson

  • Report this Comment On October 10, 2008, at 1:42 AM, denniswolz wrote:

    10/01/08

    Do you want to make a difference?

    If you do, read the following and send it to at least 8 people. Also send a copy to anyone in Government that you know and let them know what you are going to do on Nov 4th. Within a few days everyone will have read the following and hopefully buckle down and have faith that within a few years you and I will be better off than the rich greedy bastards that now run your government and businesses. Bring main street back to life!

    What is going on now is very good for Main Street.

    Oil came down again today. Corn, Cattle, Soybeans, everything except gold is down today. This has to happen, now or next week or next month.

    Until Commodities match wages we are simply living in a false economy and it cannot continue forever. No way, now how. In the last 10 years wages have hardly risen for the 95% of the working public, adjusted for the devalued dollar wages actually fell. Commodities have risen as much as 10 times in that period (oil from $10 to $150). Wages pay for everything and commodities make up everything, gas, oatmeal, eggs, houses, you name it, what you buy is a commodity. Their price has to be relative to wages or you have to buy less.

    Our government, your banker, your talking heads on the TV and radio talked you into buying a house you couldn’t afford, a car you couldn’t afford, a student loan that you couldn’t afford, a credit card you couldn’t pay down, all to line their greedy pockets. This money was given to you even though it didn’t really exist so that you could drive up commodity prices and line their pockets. It might have made you feel good but it is destroying our way of life.

    Given all this oil needs to be somewhere between $30 and $50 per barrel. In fact if we could get oil to $40 the other commodities will be back to where they were before all of this funny money started flowing 10 years ago.

    How do we get oil prices down? Demand is going to do it sooner or later because the global economy will shrink until that point. We could speed up this drop in price and pump the reserve dry if you had to. Conserve, conserve, conserve, drive only when you have to. Once we get it down the government can keep oil down by buying and selling in the market with the vengeance of a greedy commodities broker who gets rich on the back of others. Another way is to strengthen the dollar, the higher the dollar the lower oil goes. Quit spending on stupid things until you balance the budget.

    Once main street can afford to buy gas and shop for groceries, then and only then will the markets start to function again. Then we can start to talk about fixing the system again. Stocks used to be in the form of certificates, you actually owned a share. If you bought a barrel of oil you took it with you, you actually owned something, you didn’t just trade it to drive the price up or down. When this is all over we need to establish laws that control greed and dishonesty, not laws that line the rich and powerful.

    Get rid of the IRS and go to value added. A rich fat cat buying a 10 million dollar home would pay 1 million dollars in tax to the government at 10 percent. You and I would have to pay the government 30 dollars if we bought a lawnmower for $300, 10 cents for a loaf of bread. A 10 percent tax would more than finance any government worth its salt, do away with the rest. The state would collect the money just like it does the sales tax every month and send it to Washington. Congress could make this happen overnight, but they will not because most of the money will come from the 10 percent at the top who are your congressmen and bankers and greedy CEO’s, your voice will never be heard on this matter.

    Have your government pass a law to cut all government employees by 33%. The waste in our government is criminal, criminal, criminal. By reducing government by a third you would actually speed it up and get out of deficit spending (balance the budget and spend real money again).

    Take interest rates to +-1%. Banks giving you money at 7 or 8 percent when you get less than 1 percent on your savings only builds more and more banks. Banks and your government do not have to be rich fat cats. Banks could lend money at 1 percent over their cost and still get by. The government could lend to the banks at zero, therefore interest rates at 1 percent.

    The cost of money causes inflation. High interest rates are simply passed on to the consumer in the form of price increases thus causing inflation and higher prices. Control the supply of money and you control inflation. Control the deflation of the dollar and you control inflation.

    Lower interest rates and save mortgage holders, a zero principal mortgage would owe how much every month at a zero interest rate, zero. Even the person that is over their head with a $500,000 mortgage would owe less than $900 per month at 2% interest. This would fix most foreclosures and be enough to pay for any work the banker is doing on your behalf. It will not pay his 10 million per year salary but who cares.

    The best way to fix this mess is to form a new Independent party and get rid of Republicans and Democrats. But we don’t have time to do this right now. The next best way to let our government know we are serious about a fix is to remove anyone in office on November 4th. Forget your political allegiance, anyone in government has to understand that we want change. Having all new faces in all units of government from the county rep to the state rep to the federal rep will send a message heard around the world.

    My vote in November is to vote anyone in out, it is a shame that Bush isn’t up for reelection so that I could take him out also. By the way I will be glad to be president, write me in as your candidate for president. I will do the job for free.

    Send this to anyone in government you know and wish them good luck in finding a job come January

    Thanks for your attention to this matter.

    Dennis

    Send me an email and let me know what you think – denniswolz@att.net

    If you send this on mark your email at 512. Whatever number is on your copy times it by 8 and replace that number. This will let everyone know how many people have read and passed it on. We can make a difference.

    8

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