Anyone watch Frontline's - "Inside the Meltdown"? Tiz and other econ guys?

3peet · Feb 18, 2009

Just started watching this. Its an examination/documentary of the fire sale of Bear, JPM, Lehman. The Feds, Paulson, Bernake.

"It was a game of hot potato, hot potato, and everyone ended up with the potato"

Talking about how CNBC and Bear analsysts went on CNBC to calm the market by saying everything's fine. And quell the concerns, when in actuality shit was hitting the fan. Stuff about Goldman and Bear's relationship disolving. The growing firestorm of "no confidence". Just a total pandora's box.

3peet · Feb 18, 2009

Damn you guys really gotta watch this piece by PBS. Its really good. Talk about seeing the inside view of the banks and how they scurried to cover up what was an empty box. And the talk of the housing market and how at cocktail parties or BBQ's that the very "act" of buying a home meant you were gonna get rich. Nevermind, whether or not you could afford the payment or not.

When your at a party having a good time, its hard to leave the party

Then the over all exposure of Bernake and Paulson, then even CNBC, and how they were reaching for straws trying to save the economy. Aboslutely fascinating stuff.

tocco05 · Feb 18, 2009

All this shit was planned. This whole crisis was planned to happen. Wake up bro.

3peet · Feb 18, 2009

Sorry Toc, Honestly I can't wrap my arms around a conspiracy of the countries economic collapse. But then again, when you have fiscal conservatives like Paulson allowing to "bail out" companies and government intervention instead of letting them flounder like a capitalist should, you may have a point.

btw...to the rest of the econ guys. Exactly what is a "credit default swap"

3peet · Feb 18, 2009

Omni · Feb 18, 2009

I recorded it.Watching it tonight.

tiznow · Feb 18, 2009

oh yeah in the early days these guys were running around like chickens with their heads cut off they didn't really know what the fuck to do

that's not to say they know now either but at least they stabilized the credit markets and averted the doomsday scenerio for now

the thing i always wonder is if lehman (which immediately led to AIG having to be taken over) was a calculated move in that they were like we have to let one go in order to show congress how bad shit really is as far as getting congress to pass the TARP deal to bailout the entire industry rather than one by one cleaning up like bear stearns

3peet · Feb 18, 2009

It seemed as if Paulson stepped in in this case because he was a fomer Goldman exec and furthermore a former Wall Street guy.

I was blown away when they showed on Sept 16th, 2008 he calls in all the of the top 9 bank CEO's and tells them, "Your gonna take this money (TARP 1) whether you like it or not." I mean, what exactly was that shit?

tiznow · Feb 18, 2009

yeah they wanted some shared sacrifice across the spectrum so the taxpayer didn't get totally raped by this whole deal

like the taxpayer got a good deal getting preferred shares in some of the better banks that didn't need the money, are still making a profit now, and paying the treasury dividends

like GS already has said they want to pay it back

great video pretty much how tiz envisioned things for the most part

although the video gives you this sense that these guys know what they are doing and have things under control...in reality it was one huge scramble and they just were making shit up as they went....and still today they really aren't sure how to tackle the issue.....like TARP II with private investment getting involved to remove toxic assets....the details sketchy as hell and they have no clue how/if it will even happen....

as for CDS a simple answer is......its insurance....AIG sold insurance to alot of other entities expecting that lehman wouldn't go tits

up....when it did it couldn't pay out

3peet · Feb 18, 2009

tiznow said:
although the video gives you this sense that these guys know what they are doing and have things under control...in reality it was one huge scramble and they just were making shit up as they went....and still today they really aren't sure how to tackle the issue.....like TARP II with private investment getting involved to remove toxic assets....the details sketchy as hell and they have no clue how/if it will even happen....

Oh I totally agree. After watching this video and seeing some of the discussion between Bloomberg, CNBC and Nightly Business report, its clear as day NOBODY knows what to do. As we go forward with the new admin, all they're doing is getting everyones heads together to fix as they go. I guess in the bigger picture I can't see how a capitalist take can work. There's no way anyone (including government) can just sit by and let things sort themselves out. Personally if they did, I think we'd still be stuck in Sept 18th were there's no confidence anywhere and money simply stops moving, home prices continue to plummet, EVERYONE moving to the sidlines and jobless numbers go into the high teens or low 20's.

To me the market reaction will continue to swing drastically whenever plans are presented because there's just so much uncertainty. However, I'm ok with the non-specifics Sec Treasury Geithner gave last week because the important part is to get this problem right and not just come out and start giving specific answers. To me they're still trying to figure it all out. This problem is so friggin complicated from so many different directions it WILL take a surgeon to fix it one by one.

I think right now, I agree with intervention to "control" the bleeding.

tiznow · Feb 18, 2009

well at this point its all about maintaining the faith in the american people and faith in the government securities in general

as long as people are content with what is going on, keep their money in banks, money market funds, buying treasuries (which is how they fund things like TARP etc...) and fell fine with that everything is okay with the "system"

on the other hand if they lose the faith and people say fuck this government promises are bullshit i'm hoarding my money in my matress and loading up in gold to protect myself

than there is nothing the government can do to stop the demise of our financial system as we know it

at least back in the 30s our currency was backed by gold still yeah they had to confiscate gold and all that shit but our currency still had intrinsic value

right now our currency backed by nothing other than faith that our government and banking system as we know it will survive

all fiat eventually fails as it has throughout the history of man.....the USD will be a worthless currency (unless we save it near term and move back to sound money backed with intrinsic value) at some point the question is will it be in the next few years or 100+ years from now

fiat based societies are one huge pyramid scheme of faith

if enough people start yanking from the system and say fuck this i want out i don't trust it anymore...the pyramid will entirely collapse

just like what happened with madoff

tocco05 · Feb 18, 2009

These motherfuckers planned this shit. wake up. This shit wasn't an accident. This is all part of the plan.

3peet · Feb 18, 2009

tocco05 said:
These motherfuckers planned this shit. wake up. This shit wasn't an accident. This is all part of the plan.

Anyways...

tiznow · Feb 18, 2009

tocco05 said:
These motherfuckers planned this shit. wake up. This shit wasn't an accident. This is all part of the plan.

well it was easily predictable that's for sure tiz saw this coming for years

that said it wasn't micromanaged planning or anything by a few people

investment bankers made huge bonuses and had incentive to chase these bubbles along with the sheep consumers that thought the housing bubble would continue indefinitely, mortgage lenders, home flippers, RE agents etc....and banks leveraging up this debt on top of it all....

saying this was "planned"

is like saying the tech bubble was planned

i mean it was engineered in some sense with greenspan keeping interest rates low for a long time, government promoting home ownership, lenders lending out to terms that anybody with a brain knew they might not pay back...etc...

bubbles happen....tech bubbles on the one hand don't threaten the underlying system as a whole

financial based bubbles on the other hand do...

tocco05 · Feb 18, 2009

This whole collapse was planned. There are ulterior motives going on here. The next collapse will be the US dollar. It will collapse.

tiznow · Feb 18, 2009

why would they want the USD to collapse?

the fiat creators got us and the whole world for that matter by the balls

they got it good....and they want to keep it that way

3peet · Feb 18, 2009

It wasn't friggin planned. Keep the discussion logical. Saying the econonmic crisis was planned sounds more like a bunch of weed smokers sitting around talking about the "The Man".

It was simply everyone in the country getting drunk off of quick wealth and not wanting to look at the bottom. And like Tiz said and what I believed 2 years ago, we can't have home equity skyrocket for all the years going forward. The party can't last forever. You know sometings definitely wrong when (1) Home loans are given to those who shouldn't qualify in the 1st place. Like Barney Frank said, 30 years ago, "You had to be frisked to get a home loan because banks were expecting the loan to be paid back." (2). Lending vehicles continued to change and evolve radically in the span of 2-3 years. After working for the most part with only 4-5 products and the basis of the business was based around interest rate, products exploded into a plethora of options simply to keep the demand frenzy.

tiznow · Feb 18, 2009

the problem is your boy obama still dont' want to look at the bottom

now we get to spend billions to attempt to prop up home prices that need to fall

delaying the inevitable

from a keneysian standpoint and being a save the system whore

the best solution to this mess IMO

is throw everything you have at the banks hard hard hard

and let the rest of the economy fall on its face hard, find a bottom, and get it over with with a swift painful manner....

that said the risk of backlash and civil unrest could grow under those circumstances i suppose so maybe they need to balance that some

the bottom line though the more government gets involved on the non banking end of things the longer our pain is gonna last just like what happened in the 30s

in addition the debt burden hanging over american's heads on the other side grows in size as well.....

we got so much other shit to worry about longer term like the ponzi scheme social security etc....

tocco05 · Feb 18, 2009

tiznow said:
why would they want the USD to collapse?

the fiat creators got us and the whole world for that matter by the balls

they got it good....and they want to keep it that way

Why? For total control. A one world currency. They want control over everything and everyone.

tocco05 · Feb 18, 2009

tiznow said:
the problem is your boy obama still dont' want to look at the bottom

now we get to spend billions to attempt to prop up home prices that need to fall

delaying the inevitable

They want to debase the dollar. Make it collapse. It's all part of the plan.