Analysis
Our analysts study the financial crisis on a daily basis. Back in 2007 I warned our family, and friends with investments, that the market was too high at 12,500 and it could not be sustained. those who lost moeny on Fannie Mae, Freddie Mac, and AIG had no one to blame but themselves. Many people did not see the bailout bill, bank bailouts, and financial implosion on the horizon.
Draft legislation that would change how over-the-counter derivatives are regulated might prohibit most trading in the $29 trillion credit-default swap market. Is this needless regulation or a good idea announced too late to stop a disaster? Let’s ask the biggest party givers – AIG. U.S. regulators and politicians are stepping up pressure on banks to use clearinghouses and agree to increased oversight of the OTC markets to improve transparency amid the credit crisis. Bad bets on credit-default swaps led to the U.S. takeover of American International Group Inc. in September.
Financial woes spread to money market funds for the first time during this financial crisis. A $62 billion money market fund Primary Fund from Reserve on Tuesday saw its holdings fall below its total deposits, a condition known as “breaking the buck” that hasn’t happened to a money market fund since 1994. Money market funds are supposed to be conservatively invested and almost as safe as cash. Combined with a stock market loss of 450 points, something is clearly wrong.
Should we balance the nation’s budget or should we pay down the national debt? It would be nice to do both but that is not going to happen. Instead, thanks the most inept bipartisan government in history, we have mortgaged our future and the future of our children for generations to come. I’ve said for years that the real money makers are those who finance a nation’s debt. Here in the United States that entity is the Federal Reserve Board itself, owned by its member banks. The Federal Reserve Board lends money to the Treasury by printing federal reserve notes and selling them at face value.
It looks like Lehman is forming a relationship with non-performing loans and the debt collector. Italian bank Banca Monte dei Paschi di Siena said on Wednesday it would sell a 30 percent stake in a unit that manages and recoups non-performing loans for 30 million euros ($47.20 million) to Lehman Brothers’ European arm and finance firm Caf. Caf specializes valuing, buying and recouping bad loans. (A debt collector by any other name is a debt collector, regardless of the country they are in.)