Doesn't get much different than these two radio outlets!
NPR Morning Edition September 16, 2008
Investors Feel the Pain of Lehman Bros. Collapse by Chris Arnold
At 2:00 mark:
“This happens every cycle and I used to work on Wall Street and I competed against Drexel Burnham and Shearson and Dean Witter and EF Hutton and they’re gone. Each of them made one mistake or another along the way. This is nothing new. I don’t think we’ve entered a new era of the 1930’s and the Depression.”
“At the end of the day, no one really misses them. Because
someone else steps up and takes over their business. And quite frankly, a lot
of the people that work at these firms, the better of them get jobs across the
NPR Morning Edition September 19, 2008
Financial Sectors' New Buzzword Is Deleverage by Chris Arnold
At 2:05 mark:
“Wall Street was borrowing at 30 or 35 to 1 so all you
needed was a slight little downtick in home prices, which were backing up these
sub-prime loans, and you completely wipe firms out.”
Who Do You Trust? Conservatism.
September 25, 2008
RUSH: Now, I went and grabbed a piece today in the Wall Street Journal, and it happens to end up being one of the most persuasive pieces I have read in all of this. It's by Andy Kessler, a former hedge fund manager, and he's the author of How We Got Here, published in 2005. Let me join his column in progress: [Quotes from column]
I have some thoughts on this because this piece makes it clear this is
not a bailout. It's a rescue. Now, these things still have some
value. I don't know what the value is, and they haven't been
foreclosed on. They're pretty close to worthless, but it's not
technically a bailout. And of course you're hearing all these warnings
if we do this then there's not going to be any credit. Okay, now, what
does that mean? ...
Okay, here we go. The piece I just read to you, Andy Kessler, I should
give you the headline. "The Paulson Plan Will Make Money for
Taxpayers." He's a former hedge fund manager, and that's how he
analyzes this. He's one of these economists that has commuter models
and he's run some projections. Now, if this guy is right -- and who
knows? See, we don't know who to trust, and we don't know who's going
to end up being right. Our experienced is, "I'm from the government
and I'm here to help you," means we're going to get screwed. And we
know there's not one single person involved in this I trust with that
prediction. There's not a Ronald Reagan here. If a Ronald Reagan was
saying, "We gotta do this," I would believe it. There isn't one of
those. So you've gotta scrounge around. It's actually a great
Snerdley came in today and said, "I have never worked harder in my life trying to understand this financial thing. I've been spending more time this past week working on trying to understand this. 'Cause this is all Greek, all this lingo jingo they use, talking about these derivatives and the credit swaps," but it has been an amazing educational exercise. But if this guy, Mr. Kessler, is right; it underscores points made prior to today by me on this program. Number one: that the federal government is nationalizing the financial markets. I don't care what anybody says, this is nationalizing the financial markets. Number two: these loans (he makes it clear in this piece) have not yet defaulted, even if they are risky. Number three: when the market recovers, the federal government will be able to make lots of money selling the undefaulted loans back to the private sector. Even if they're sold below their original value, it will be more than the government paid to take them off the hands of the financial institutions today.
It's made clear by Mr. Kessler in his piece. Also we can conclude since he's a former hedge fund manager and he likes this, that Wall Street's desperate for this to happen so that these financial institutions that are in need of cash can get it and get it fast, whatever price they have to sell their loans for. Cash is king right now, they don't have any, and they need it. They can't borrow. They can't lend. They can't do diddlysquat. The federal government, as Mr. Kessler makes clear, will have a windfall of potentially trillions of dollars -- which, experience tells me, will be used to expand the size of government. ... Does it contain a lot of golden opportunities for people to take some of this stash and enrich themselves personally? Now, these are the kind of rules there are going to have to built into this. I'll tell you, as you go through this and you understand it, what becomes clear to me -- and I said at the beginning of this hour, "Who do you trust?" I trust conservatism. Conservatism and free market economies work. It is based on growth. ... The federal government, as Mr. Kessler, Andy Kessler of the Wall Street Journal today makes clear, the federal government will have a windfall of potentially trillions of dollars if his computer models are accurate -- which they will, I think, use to massively expand the federal government. I have yet to see a massive pile of money show up that was unexpected that's either given back to us or used to reduce debt. ... We have far too many people who are becoming rich from government policy rather than the give-and-take of the free market. So put simply, based on this article I read in the last hour from Andy Kessler in the Wall Street Journal, the federal government appears to be the only entity capable of coming up with the enormous amount of money it's going to take to take over these loans -- which have not failed yet but which the government itself requires these banks to devalue as assets. Now, they are required to base their value on current prices. This is what mark to market is.