US economy going down? Will it recover? - THE US Financial Crisis.

[colossus]

US economy is really in recession, the circumstances simply shows. We should be wary about this. At the same time, we should do something to prevent further damage to our economy. With the president's pronouncement, I'd like to think we can fight the battle against economic recession.

Our banks have prepared for it, news reports say. I guess we just really have to accept that we are affected because US is affecting the world. Nonetheless, we are not without any defense.

[EZRA]

Don't worry... bailouts have been handed. EVERYONE refuses to let AIG fail. PERO!! after this. who's next? and will the FED shelf out some $$$ again to bail them? Was watching CNBC this morning but I can't help but laugh - they're saying that we have reached the bottom of this financial crisis. how can they even say that?


FRB: Press Release--Federal Reserve Board, with full support of the Treasury Department, authorizes the Federal Reserve Bank of New York to lend up to $85 billion to the American International Group (AIG)--September 16, 2008

For release at 9:00 p.m. EDT

The Federal Reserve Board on Tuesday, with the full support of the Treasury Department, authorized the Federal Reserve Bank of New York to lend up to $85 billion to the American International Group (AIG) under section 13(3) of the Federal Reserve Act. The secured loan has terms and conditions designed to protect the interests of the U.S. government and taxpayers.

The Board determined that, in current circumstances, a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth, and materially weaker economic performance.

The purpose of this liquidity facility is to assist AIG in meeting its obligations as they come due. This loan will facilitate a process under which AIG will sell certain of its businesses in an orderly manner, with the least possible disruption to the overall economy.

The AIG facility has a 24-month term. Interest will accrue on the outstanding balance at a rate of three-month Libor plus 850 basis points. AIG will be permitted to draw up to $85 billion under the facility.

The interests of taxpayers are protected by key terms of the loan. The loan is collateralized by all the assets of AIG, and of its primary non-regulated subsidiaries. These assets include the stock of substantially all of the regulated subsidiaries. The loan is expected to be repaid from the proceeds of the sale of the firm’s assets. The U.S. government will receive a 79.9 percent equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders.

[schanqz]

how would AIG affect philamlife?

[EZRA]

Here's the next candidate to fall.. WAMU.


US Regulators Try To Find Buyer For Washington Mutual -Report
Last update: 9/17/2008 6:10:48 AM
DOW JONES NEWSWIRES

U.S. federal regulators have recently called a number of banks asking if they would consider buying Washington Mutual Inc. if it should eventually falter, The New York Post reported in its Wednesday editions. Federal banking regulators have recently called Wells Fargo & Co. (WFC), JPMorgan Chase & Co., Inc. (JPM), HSBC Holdings PLC (HBC) and several other financial institutions to gauge their interest in a possible acquisition, but no merger discussions are currently under way, according to sources.

Full story at: http://www.nypost.com/seven/09172008/bus....

[chad_tukes]

OT: on the bright side, gas prices are expected to continue to fall down in the next few weeks.

[ian_1983]

how would AIG affect philamlife?

AIG is the parent company of Philamlife, though Mr Cusia assured investors and policy holders that they have a separate capital based. But the good news is the FEDS already bailout AIG in the straggering amount of 85Billion.

[ian_1983]

Here's the next candidate to fall.. WAMU.


US Regulators Try To Find Buyer For Washington Mutual -Report
Last update: 9/17/2008 6:10:48 AM
DOW JONES NEWSWIRES

U.S. federal regulators have recently called a number of banks asking if they would consider buying Washington Mutual Inc. if it should eventually falter, The New York Post reported in its Wednesday editions. Federal banking regulators have recently called Wells Fargo & Co. (WFC), JPMorgan Chase & Co., Inc. (JPM), HSBC Holdings PLC (HBC) and several other financial institutions to gauge their interest in a possible acquisition, but no merger discussions are currently under way, according to sources.

Full story at: http://www.nypost.com/seven/09172008/bus....

I think JM Morgan is more interested in acquiring WAMU. Though both sides denied that there is a negotiation going on. But my bet is on JP Morgan, Just like Lewis of BofA, Dimon dont want to miss this oppurtunity of acquiring WAMU on a bargain price.

[EZRA]

Lisod kaayo mo tuo aning mga balita... atung Lunes.. 20 Billion ra kuno ang bailout for AIG, karon 85 Billion ang nigawas. Action kaayo karon sa market.. hopefully ug kinsa ninyo diha naay stocks and calls sa Financials inyong na buhi-an.

[ian_1983]

Good thing the FEDS bailout AIG for a staggering $85Billion. I guess AIG is just too big to FALL.

[chad_tukes]

Commentary: How to prevent the next Wall Street crisis

NEW YORK (CNN) -- Many seem taken aback by the depth and severity of the current financial turmoil. I was among several economists who saw it coming and warned about the risks.

There is ample blame to be shared; but the purpose of parsing out blame is to figure out how to make a recurrence less likely.

President Bush famously said, a little while ago, that the problem is simple: Too many houses were built. Yes, but the answer is too simplistic: Why did that happen?

One can say the Fed failed twice, both as a regulator and in the conduct of monetary policy. Its flood of liquidity (money made available to borrow at low interest rates) and lax regulations led to a housing bubble. When the bubble broke, the excessively leveraged loans made on the basis of overvalued assets went sour.

For all the new-fangled financial instruments, this was just another one of those financial crises based on excess leverage, or borrowing, and a pyramid scheme.

The new "innovations" simply hid the extent of systemic leverage and made the risks less transparent; it is these innovations that have made this collapse so much more dramatic than earlier financial crises. But one needs to push further: Why did the Fed fail?

Commentary: How to prevent the next Wall Street crisis - CNN.com