A simple guide to making sense of the financial mess

This subprime primer was forwarded by my pal Dauber. It is incredibly accurate. If you haven’t yet received it via email you can find the entire thing at BusinessPundit or drop me a line and I’ll send you the powerpoint stack. I haven’t found out who did it, but he/she/they is/are a genius (s).


4 thoughts on “A simple guide to making sense of the financial mess

  1. IT WAS A PRESIDENTIAL INITIATIVE WHICH PROMPTED THE SHODDY LOAN PRACTICES TO BENEFIT BUILDERS! (and 1994’s Act giving full authority over home lending to the Fed.) READ ON . . .

    I hear there was a memo circulating about the trading floors yesteray, which indicated this proposed bail out of Wall Street is necessary to save Main Street folks like McDonald’s franchisees so they might afford new coffee machines and such, to compete with Starbucks, and upgrade their breakfast menus. This sad, transparent excuse for justifying bailing out financial institutions is a disgrace! I, the taxpaying constituent, WILL NOT APPROVE funding for such nonsense. If McDonald’s, using the example put forth, can’t afford to compete, IT IS NOT THE US GOVERNMENT’S–i.e., MY–PROBLEM!
    These entities now in trouble are responsible, as well as the Bush Administration, for this debacle. The greed and cronyism over the past 8 years remains unprescedented. Pres. Bush’s favorite Republican base of “the have’s and the have more’s” CAN PAY ALL THEY WANT, FROM THEIR OWN PERSONAL POCKETS, to rectify the many financial problems we now face. However, you will not use me or my tax dollars to save those who have already profited at my expense. Not for those whom this administration would clearly be pleased to see reap continued gargantuan profits, maintaining their nouveau riche, most profitable status quo, rather than face their own restructuring or demise. You guys just want to print more PESOS? Don’t think so… Bear Stearns, Morgan Stanley, Lehman, Merrill, the many traditional banks and brokerage houses, but; the LENDERS who took advantage of unsuspecting home buyers with INCOMPREHENSIBLY UNFAIR LOAN ‘PRODUCTS’, INSTITUTED FOR BUILDERS–NOT PURCHASERS–to move their inventory, will need to correct their own errors. GREED IS NOT GOOD!
    We bailed Bear Stearns, to no visible positive outcome. We are bailing AIG, which will likely produce the same result. When & where, and at what dollar figure does this stop? Most every firm holding bad loans, took advantage of the opportunity to dump their bad paper onto Freddie and Fannie (i.e., taxpayers), having been given plenty of time to ditch, profitably, just prior to the Federal bail out of both GSI’s. AND, what about the $9M I’ve heard the FRE or FNM CEO wants to walk with? Executive compensation is yet another major problem. Reward these people for a job well-done? I think not.
    Yet, as of 9.22 alone, enough cash exists for stock buy-backs for (AP, Dow Jones News and others reported) Compass Group; CPI Plastics CEO boosting holdings to 600k shares; LBO Capital’s letter of intent with iMobile; Flagstone to repurchase 5M shares; Sims acquires Weinert Recycling; Triquent Semi-Conductors buys, by exercise, 17,500 shares; Brookfield buying GMAC; GAP buying Athleta for $150M cash; EDF bids for BGY.LN; and, the ImClone buyout offer. M & A is alive and thriving. Shoring up ownership for the future is clearly paramount. BUT, Paulson, Bernanke, and this Administration tries to sell America on a desperately necessary $700B urgent bail out? The transactions cited herein are only what I had time to note tonight, most of them announced just TODAY. Since Bear Stearns, there have been NUMEROUS STOCK REPURCHASES made on Wall Street, predominately by banks and Wall Street firms. Where did they get the money to buy back their own stock? Don’t tell me there is no cash. IF they had to borrow anything to buy back their own stocks, there was cheap money for them to access. The low interest rates go to corporate America, lowered for them by their Fed Friends. With so much emphasis on saving Wall Street firms and banks, there is nothing available for homeowners–not because it isn’t there. It’s because they want and/or claim they need that cash for themselves. Bailing out Wall Street will not produce loans for people qualified, needing and wanting to purchase homes. This is a case of greed wanting to hold on to profits, and continuing to accrue more, at taxpayer expense.
    Either way, we are in trouble, but tossing money at Wall Street has proven one thing only, thus far: They are using it to make more money for themselves, lining their pockets; NOT for making funding available to homeowners with mortages–current or delinquent–or those wanting to acquire homes.
    Rest assured, I will not be alone protesting on the D.C. Mall, if and when this sham goes to a vote in its current proposed state. Free markets–are you all so out of touch you have forgotten the basic economics of supply & demand, lazzais faire capital markets? GREED created this massive problem and the GREEDY MUST REPAIR THEMSELVES OR SUFFER THEIR OWN LOSSES AND/OR DEMISE!

  2. I see the markets around the world are shuddering over the chaos in out capitol this Friday morning. Although I agree that the bail out is the wrong solution, I’m nervous about the short-term impact on securities.

    Waiting for the knight in shinning armour!

  3. This was flat-out brilliant. Thanks for sharing the link. It’s a great time to be raising money for startups, I hope — ’cause we’re starting to look safer than bonds or the markets!

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