Over the last two days I, along with many others have been wondering why the people of the United States have seemed more inclined to punish Wall Street financiers than save their own pensions. Well this little synopsis of the collapse of Leaman Brothers reported on page 7 of today's Telegraph provides some inkling of the answer.
Bank goes bust. Shareholders get wiped out. Creditors stand to lose more than $100,000,000,000. Bankruptcy causes further crisis of confidence in entire banking system, requiring $700,000,000,000 bail-out funded by taxpayers. Employees get $3,500,000,000 bonuses
Only change I've made in to write in all the noughts - because the word 'billion' has become so devalued over recent days. And I wasn't sure whether 'bail-out' is spelt correctly.
8 comments:
Glyn: your zeros are correct! How did you do it!!!
Actually, on reflection, I now see that the proposed 7 * 10 to the 11 dollar bail-out would be a HUGE error, not necessarily because of the proposed bail-out $ amount, but it might set a precedent for the legislative and executive branches of US government.
I rather see a few more banks go under like what just happened to Washington Mutual and Wachovia.
As people are starting to realize: there are ups/downs to this story; there are two types of bank that are getting caught up in the back draft of the subprime mortgage fiasco: banks that be eaten and banks that will eat the banks that will be eaten. Citibank bought Wachovia at a bargain price (Wachovia stock plunged 90% in one day).
The point I am making is that there has to be some carnage on Wall Street and at least three or four big banks are eaten before there's any rescue package - shareholders have to be punished for backing reckless management. There has to be a consequence for taking the dumbest risks imaginable - fancy loaning money to folks who could never pay back the loans - but it went on here like 'no tomorrow' and idiot banks both in the USA and Europe (including the UK) bought up the resulting 'securitized debt' - they called them 'assets', which are finally recognized for what they are: toxic debts, not assets. Wall Street earned bundles in commissions and bonuses by manufacturing 'securitized assets' - some to banks in Europe, financial institutes in the USA, etc. So fair dooze, the shareholders of those idiot buyers of toxic debts must be wiped out and the banks eaten alive.
I do recall a prediction about a MEGA economic storm coming that would impact on the City of London (CoL) and related financial institutions. That no government would be able to stop it. No one believed in that prediction, but it was as clear as day is to night that it would happen. Now it’s happening. I recall that the prediction suggested city finance workers should plan to go into public sector jobs like teaching before the brown stuff hit the fan.
I do see opportunities for Wales and the USA. There are too many bright people in the USA for the USA to be on its knees for too long. The UK could be on its knees a lot longer, but Wales could break free and do well. Sadly though, I notice elements in Wales (current WAG members) unable to grasp what needs to be done to boost Welsh GVA per head of population ... and of course, let' not forget the humble Welsh pigeon.
I wasn't sure whether 'bail-out' is spelt correctly.
That depends on whether your metaphor refers to a leaky boat (bale) or release from gaol (bail). In the present situation in the States, with the Feds investigating Fannie Mae and Freddie Mac, either might be appropriate. :-)
(Confession: I used the wrong spelling in a message on the CIx conferencing system earlier today and was picked up on it.)
As to the Bush/Paulson package, it must be flawed if both economic liberal Republicans and social democratic Democrats make common cause to defeat it.
anon - I share the 'bad taste' involved in requiring the taxpayer to pay for the incompetence and greed of financiers, but I do not have enough knowledge to make out a case against Government intervention. And in the UK it seems that pigeons have moved from the fields into gardens, as a result of a huge increase in bird feeding.
Frank - Personally, I prefer 'bale out', but this does not seem to be the spelling being used.
Glyn, I have been further corrected. "Bail out" is the correct spelling for leaky boats, "bail out" is the correct metaphor for getting the bankers out of trouble, and "bale out" is the spelling when referring to parachuting from a stricken plane.
In view of the recent distressing deaths of two bankers, it would be tasteless to go further.
Glyn> re: pigoens moving from rurar areas into the burbs/gardens ... now we know what Eric Katona meant by his classic statement: "When the seagulls follow the trawler, it's because they think sardines will be thrown in to the sea."
anon - Eric Cantona, who was a hero of mine after the direct action he took against a Crystal Palace fan named Simmonds (I think)made more sense than the Telegraph reporter who wrote that pigeons were moving into gardens because of changes to farming practices - as if its the same pigeons..
Lehman
anon - I know it is - but I know someone named Leaman which momentarily intruded into my mind. Thanks.
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