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March 17, 2009


European banking collapse -> Total banking collapse -> big time war.

They're keeping it secret because the U.S. is going to pay for it all (at least at first).

Certainly all of the formerly national financial markets are now interdependent, but it's not all true that the US is the only government spending lots of money right now on bailouts.

The greatest danger we face is the isolationist instinct: if countries try to go it alone out of a misguided desire not to "pay for other countries' problems", we're all toast.

Moreover, the isolationist instinct was damaging enough for the USA in the 1930s when it had become the world's greatest creditor. It will certainly be catastrophic now that the the United States has become the world's greatest debtor. It is an odd instinct to rail against foreign financial institutions when you literally depend on them to maintain the day-to-day operations of your government.

russell, the extent of CDS obligations that AIG is liable for is more like $400 billion, with a 'b'.

Yes, that sunk in, eventually. Light dawns on Marblehead.

Thanks slarti!

However, the belief that property has some magic intrinsic value that paper money or any other kind of asset doesn't is precisely the reason for a constant cycle of property booms and busts in most modern economies.

It's hard for me to think about economics other than in concrete terms, so the way that phenomenon looks to me is that it's the value of the money that's kind of 'magic'.

The value that real property has that money doesn't have is that you can grow potatoes on real property. That is, in fact, intrinsic value.

During the normal operation of modern economies, that's kind of an academic point. When the modern economy blows up, it can become pretty relevant.

his decision to indulge in vilifying the recipients of these bonuses is deplorable.

My impression is that Obama, and not to his credit, is making Geithner the point man on this.

"Still – I do get a kick out of the VRWC meme when we have pundit conf calls out of the WH every morning, this list with the (yes) liberal media, and Obama’s millions of minions on his em list… There has never been a more coordinated government response (propaganda) across the pundit class, politicos, and grassroots."

Steve: you list three items to get to your conclusion that "There has never been a more coordinated government response (propaganda)"

The problem here is that:
a) the cited mailing list has as much to do with the government as Obsidian Wings does: nothing.
b) the fact that the former Obama campaign and DNC have mailing lists is no different from the fact that the RNC had and has mailing lists
c) the fact that this White House makes conference calls, and other Democratic groups make conference calls, is no different from the fact that the Bush White House made conference calls, and Republican/conservative groups made conference calls and had meetings (Grover Nordquist, anyone? NRA? Etc.).

So your conclusion simply isn't supported by your cited reasons.

The President of the United States is currently demonizing individuals, possibly inciting someone to violence. It doesn’t take much imagination to picture someone destitute by this economy deciding to end it all and take as many Wall Street types with him as he can. Yes – I will hold Obama’s rhetoric responsible for that if it happens.

More fool you if you do.


"I don't want to quell that anger -- people are right to be angry, I'm angry. I want to channel our anger in a constructive way. The most important thing is to stabilize the financial system, get credit flowing again, and make sure we change how these businesses operate so they don't put us in situation where when things go bad, tax payers fit the bill."

Come on, Steve, there comes a point when you might want to start questioning your assumptions and sources of news before you use them as a launch pad for outrage.

It's not that I'd be surprised if someone went and committed violence against employees or property of AIGFP. I've said as much before, and frankly what surprises me is that it hasn't happened yet. But trying to blame Obama's words for that, as opposed to the criminal negligence, stupidity and greed of these people, is so far out in East Wingnuttia that I'm amazed that comment didn't have to pass through customs on the way here.

But trying to blame Obama's words for that, as opposed to the criminal negligence, stupidity and greed of these people

And, although it really ought to go without saying, the crazy person who actually commits said violence.

russell, the extent of CDS obligations that AIG is liable for is more like $400 billion, with a 'b'.

Just to kind of close the loop on this particular issue, Liddy has apparently stated that the face value of AIGFP's obligations that have yet to be unwound is about $1.6 trillion.

Which is to say, $400 billion times four.

Not intended to be a pushback specifically at you slarti, just putting the number out there.

How many times the actual value of AIG in it's entirety is $1.6 trillion dollars, byrningman?

AIG doesn't have that much money. They don't have it, and they can't get it. Not in a million years.

They're broke. Busted. Belly up.

Bankrupt. Say it after me. "Bankrupt".

Nobody wants to actually push them into technical, legal insolvency, because then, apparently, the wheels really do come off.

But they are broke.

At the moment, the only party with a snowball's chance in hell of making good on those obligations are the US government.

In financial terms, that translates into me and you.

Get ready to pony up, because we will be paying for a long time to come.

If we are either legally obligated to pay these guys their bonuses, or if that's the only way we can get them to do the right thing and stick around long enough to unravel the bloody f**king mess they've created, then let's just freaking do it.

And as soon as that job is done, I'd like to put my boot so far up their asses that they can shine my shoes with their tongues.

Nothing personal, I just don't like pissing my money away on folks like that.

Not intended to be a pushback specifically at you slarti, just putting the number out there.

yes, I've seen this number recently. It makes me wonder why it's different now than it was back in September, and whether it's going to change by a factor of four again, anytime soon.

It could just be that Reuters had bad information back then, and this is better information.

yes, I've seen this number recently

It certainly is a moving target.

From what I've read since writing my last comment here, it seems like the $1.6 trillion may be other derivatives, not the CDS.

So, maybe the $440B is CDS specifically, and the $1.6T is other products.

Funny to toss numbers like this around, innit?

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