Okay, this is going to cover some thoughts I've had on a few subjects. You may be bored. I'm not going to lie. I'm in finance and I think you should understand a few of the factors that are contributing to current events.
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http://www.economist.com/world/unitedstates/displayStory.cfm?story_id=12573630&source=features_box2
“Problems in the financial system”, explains Douglas Elmendorf, an economist at the Brookings Institution, “evolve in a matter of hours, days and weeks.” - duh. The interblags have made doing business impossibly smooth, communications incredibly efficient, and therefore, any and all historical situations incomparable to the present. There is. No. Precedent. For. What. Is. Happening. Today. We didn't have the information infrastructure to move economic events in this way years and years ago. If the world is going to peg itself against a currency (i.e. USD) then they should be aware that anything that happens in that locale's economy will dick your local economy too. Sucks that you're reliant on good ol' Uncle Sam, doesn't it? Too f'in' bad. Hope that Obama can hire competent people other than the Bald and the Bearded (Paulson and Bernanke) to head Treasury.
Paulson and Bernanke (haha the "Dream Team" .. seriously Paulson being from Goldman -- the ever-untarnished company name spoken in reverent tones in bars full of junior traders/bankers in NYC -- and Bernanke -- the textbook intelligencia representative who has written countless college editions for economics majors across the U.S.) has obviously created enough framework for there to be additional provisions to the Emergency Economy Stabilization Act of 2008. Gotta say, it's been drafted to allow for more legislation to be passed to help our economy and boost consumer confidence, revive the credit markets, et al. -- and the power that Treasury holds now amounts to having the global economy by... the... balls. So... this is not a happy job right now to be selected for. Very few would want it. And even if the Bald Ones were asked again... would they want it for the glory? The unmitigated and unadulterated fame of being responsible for fixing this international crisis? Or face the music if they plans fail?
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OH. YES. The i-banks collapsing. The U.S. gov't is totally depending on Wall St. at this point to fix their own mess. Or they were, until everyone stopped trusting each other. This is my favorite passage over the past few months:
...from 1834, it has a message written just for today's crisis: it's titled "Credit: Man's Confidence in Man". Under a picture of two men shaking hands, you can read this quotation from Daniel Webster, from a speech he gave in the U.S. Senate, on March 18, 1834:
"Commercial credit is the creation of modern times and belongs in its highest perfection only to the most enlightened and best governed nations. Credit is the vital air of the system of modern commerce. It has done more -- a thousand times more -- to enrich nations than all the mines of the world."
(http://www.huffingtonpost.com/dr-r-keith-sawyer/credit-mans-confidence-in_b_132582.html)
When there is no more trust between the banks or the bankers, or from one man to the next -- that is where we are right now. And you know what? The gubment was betting on someone taking over. There's no freakin' way that they would've just stood there wringing their hands. Barclay's was at least smart enough to buyout part of Lehman, but just letting the rest of it fail, and domino effect the rest of the market, ruining confidence internationally... this was a chance to say "Wake up" to the world, and make them understand that this wasn't just Wall Street.
I suspect that Paulson and crew wanted to wear down the competition for his beloved Goldman Sachs too. Less banks = more clients.
But confidence in man? Confidence in the market? Who's going to trust each other in an environment where the littlest man not making his mortgage payments has impacted the i-banking financier who now has even more reason to drink, and less money to do it with? Yes my friends, we are in troubled times.
BTW you did know that Washington Mutual is under the water too, right? And with the mergers going on overseas (Brazil's banks are merging as well), we are seeing some interesting situations arise from this ... shift in market dynamic.
I might take it upon myself to draw some pictures of what's been going on recently in the markets for everyone's amusement.
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I'm glad that Obama won this election, we don't have as many issues to deal with (intelligence, competence, overall stupidity of Palin; or the geriatric senility that will soon follow McCain within the next few months/years). Glad enough to drink myself silly at a bar on Tuesday, sitting at the edge of my seat. YES WE CAN! WOOOOOO~
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Mark to Market Accounting: has caused leverage ratios to dip into all kinds of disproportionate numbers (and in turn, blasting investor confidence in what is now the backbone of our economy -- did you know that 6 banks make up about $14 trillion dollars worth of assets in the U.S. ?). Valuation at Purchase Price has saved Barclay's Capital and Deutsche Bank from reporting even larger losses (see: http://www.economist.com/finance/displaystory.cfm?story_id=12564031). What is the future of accounting, if they have changed international accounting practices in order to hastily allow banks to prevent writedowns in this manner? This is going to be a huge issue, and whoever takes this on will change how business is done... or maybe nothing needs to be changed, and the gubment just has to fix our economy...
Oh ho ho ho the questions continue...
Law of the Game 2.0
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There's still some cleaning up to do, but by and large, Law of the Game
Phase 2.0 has begun. And that means you should be visiting
www.lawofthegame.com rat...
10 years ago
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