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If nationalized common shareholders would get wiped out, preferred shareholdders would get wiped out and bondholders wold take a substantial haircut if not a complete decapitation. Foreign sovereign wealth and large domestic pension funds are fully exposed to these equities and would feel extreme immediate pain.
Perhaps more important, any bondholder haircut would trigger the credit default swaps on C and BAC debt in the several trillions. The market would melt down immediately on such an event, but unfortinately there appears no real meaningful policy away around this. The monster in the closet will not go away and the government cannot pay the monster enough to leave.
well, you wouldn't want them to be the last big company to get one of these, would you. just think how bad they'd feel at the next corporate spa retreat!
Meanwhile, as the centralized economy fades, local businesses are thriving. The do -it-yourself economy is chugging. Here is a list of businesses I've been in during the last week that are very, very busy: local hardware store, local sewing and craft store (part of a regional chain), IKEA, neighborhood food markets. People are buying. They just aren't buying the same things.
The reason for the verious bailouts has been that every financial institution and insurance company etc.. is tied to each other, unfortunately world wide, through credit default swaps (a type of insurance against bad debt). If one loan goes bad, the other guy has to pay up and they are all on the hook to each other for each other's obscene levels of debt. This was allowed to happen when banks and i-banks were allowed to lever up their assets to 33 or more to 1.
The assets were your cash or investments, That is long gone and the cash on deposit at just the banks is like $7 trillion, all gone. Now the US government through FDIC is on the hook for alot of those deposits, and to prevent a run on the banks, the government is guaranteeing all the bad debt that was created on 33 times the deposits.
And this has happened around the world. There was never any real value to all this debt, this credit bubble (including house price inflation) was just about alot of fees for generation of the debt instruments.
So right away, I say forgive all and any debt and shut down the banks. The government has already replaced them anyway by quaranteeing the debt and being on the hook for the deposits. I mean all debt, yours and mine too, world wide. Wipe the slate clean. So you wipe out the income on the debt, the banks do not deserve the income, and its highly unlikely alot could even be repaid.
We wake up tomorrow debt free including consumers, businesses, and governments. So where does the next days funding sources come from? The same illusionary sources, it will just be the government for a while-guaranteeing X to pay Y for some
Z inlcuding next weeks pay check.
The problem we little people have always has is that the whole thing is some great power or mystery and it is not at all.
What should happen for a while is the prosecution and the foreclosure of assets of every individual who profited from this scam. Most of the assets will be worthless now but it does not matter. Better to shut down the 20,000 sq ft mansions then to allow them to be held privately. Profit is not the problem, in general, stealing is. And all things that are part of the public good, natural resourses, oil, natural gas, coal, water, gold , sunlight, air, wind should belong to everyone. You own the land , if you treat it right, but nothing under it, running over it, or the air above it. And services that benefit the public good such as, for example, electricity and garbage collection should never be a profitable service.
Just my thoughts. And do not give me that crap that nothing will be invented with out private incentive. Pretty much everything that is invented is from pure joy of invention, from thinking, not from ponzi schemes.
European-style "socialism" works - even the capitalist assholes who run Citibank agree!
A provision requiring companies receiving federal bailout money to divest of their private aircraft or leases is being stripped from a House relief bill, U.S. Rep. Todd Tiahrt's office said Wednesday.
Congressman Barney Frank, D-Mass., chairman of the House Financial Services Committee, on Friday introduced the language to the Troubled Assets Relief Program Reform and Accountability Act of 2009.
He has agreed to accept Tiahrt's amendment to strip out the language, Tiahrt said. Frank is rolling the amendment into his own manager's amendment to the bill, Tiahrt said.
story here It isn't just the Republicans or the Bush administration that is the problem.
http://www.huffingtonpost.com/2009/01/27/obama-...
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http://pacificgatepost.blogspot.com/2009/01/dis...
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The White House and Congress continue with misguided policies, and incompetent distribution of taxpayer money.