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StrangerThan -> RE: Fed doesnt bail out Leman brothers (9/15/2008 5:31:25 AM)
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quote:
ORIGINAL: pahunkboy
http://business.scotsman.com/bankinginsurance/Lehman-heading-for-Chapter-11.4490637.jp
so now all hell is supposed to break lose. I dont see how these investment banks are relevent to anything.
After the baffling amount of bail out money that has been promised so far, we see no return on it.
so now all hell breaks lose??? hmm.
the typical person has no idea what leman does. who they are.. and what function they serve.
I am not an accounting major--- but then "they" all cooked their books so badly that they themself do not trust others or their own books. So why must the tax payer fund such madness?
I'm not an accounting major either, but the current state of affairs in the US is one that a lot of people have been predicting for years. As far as the shit hitting the fan, it's not been a matter of if it's going to, but when. You can figure a variety of contributing factors to it, but a good deal of it comes from the loosening of credit in the 90's. The US has ridden a credit driven frenzy of buying over the past couple of decades. That's all fine and good until it comes time to pay the bill. Most of us understand that at the personal level. Where it gets convoluted is when investment groups, developers, brokers look at the billions in suddenly freed up money floating on the markets and figure out ways to get their share. Again, that's all fine and good as long as there's some responsibility involved.
Unfortuately, the mindset in the country has devolved in most things to responsibility being what's legal, not necessarily what's right. And in those legalities have been hordes of lawyers working over time to find ways around the intent of law or finding the holes in them. Back that up by the real knowledge that the federal government can't let some things fail, and we've had the setup for the taxpayer footing the bill for a lot of developers and investors raking in billions with the sure fire knowledge that eventually, once the credit supply started maxing out, the government would step in. We have a history in the US of letting things go until we simply can't let them go any further, then finding a couple of people to blame it all on and some how feel justified in prosecuting an executive here and there while thousands lose retirements, benefits, pick something.
The trickle down effect was good while it lasted. On a personal level, new cars, new houses, new boats, lots of new things came to a lot of people during the heyday, but the heyday is over for many. How that translates into a national problem is that the vast pool of credit is gone that investors previously could count on tapping into when offering things like houses they knew they could sell to the suddenly credit rich on fantastic terms that let everyone live easy for a while. Most good parties come to an end though and having been in my share of them, the next morning is often one of those, groan and moan crawl out of bed and think you're dying kind of things. The US markets are feeling that kind of hangover from the easy days, only now there's no longer such a massive pool of credit lying around to bail them out. It's not new news. Politicians, investment groups, corporate folks, a lot of people have known these days were coming with the estimates being when, not if. A lot of those same folks reaped billions knowing taxpayers would eventually foot the bill.
Add to that mix a war we didn't really need to fight that has cost us hundreds of billions, probably closer to a trillion dollars, a few disasters here and there, gas prices that have driven up the cost of goods faster than you get raises to cover the difference, and not only has the credit pool shrunk, but the distance your dollar will stretch has shrunk considerably. There's not much good news in the current situation. Market analysts like to call it a retraction. That's one of those bullshit terms that really means, it's time for someone to pay the bill.
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