It's getting really ugly... if Countrywide tries to reorganize under Chapter 11, the rest will follow, the long term problem being that there is a lot of worthless crap on all of their books due to the record number of defaults and foreclosures and no-one will be willing to swallow that, especially lenders and creditors.
From an updated NYT report:
Many traders have been betting recently that the lender might need to file for bankruptcy. Countrywide denied that rumor Tuesday, and its stock partially recovered from a plunge. Still, it remained sharply lower on the day; Lehman Brothers said in a note that Countrywide's earnings power has declined severely, and The New York Times reported the company fabricated documents related to the bankruptcy case of a Pennsylvania homeowner.
Subscribe to:
Post Comments (Atom)
6 comments:
The best thing that could happen would be for Countrywide and a few homebuilders to go bust. That's generally the way these things end--not begin.
I think this is what it looks like when one boom is over and the next one has yet to begin. Let's face it. The economy was hopelessly addicted to real estate as its engine of growth--an understandable reaction to the dot-com bust and 9/11--but once this financial mess is cleaned up, I think we'll see a more balanced economy.
America still has a few strengths. We're still the number one manufacturing economy in the world, the number one agricultural economy on earth, the leader in aerospace, high tech, biotech, pharmaceuticals, the third largest oil producer on earth and no one else even plays football. Plus the aircraft carriers. We've got those, too, in case our creditors get testy.
Yeah... let's just put a few companies out of business and throw their thousands of employees to the mercies of your 'blessed' market economy.
I agree that the economy generally follows a cyclical pattern but I think, unlike previous periods of growth, this particular period was predicated and founded on immense and profligate borrowing. The Bush economic miracle you always allude to was, for the most part, a chimera and the market has lifted the curtain and realized as much.
Greenspan only grudgingly agreed that the, at the time proposed, Bush tax cuts for the rich would provide stimulus to the economy. He insisted that they were by no means a credible or sustaining economic fix. He has been proven right.
Bush and his economic advisers have always been constrained by their own myopic and self-centered vision of who should benefit in their America. The broad inclusionist theories of the prosperous Clinton years was abandoned in order to reward the patronage of the oil drenched, corporate glitterati that Bush and Rove held in such high regard.
Fine for them, but, it's now becoming abundantly clear, not so great for the American economy as a whole.
Yes this is a wonderful country with boundless resources both natural and human. But it must be managed and nurtured responsibly. That leadership and stewardship has been sadly lacking the last 7 years. The oil companies and the military industrial complex will surely look back with nostalgia at this period, most other sectors of the economy will be quick to forget the Bush years as they begin to understand and learn to prosper in a more ethically and morally sound future.
No question there was a lot of profligate borrowing and lending. Taking some lenders out and shooting them is how you make sure it doesn't happen again.
Life is imperfect. The Clinton boom was largely a function of the most spectacularly speculative dot-comism the world has ever seen, and and the most massive corporate fraud (Worldcom, GlobalCrossing, Enron).
The conservative in me might suggest that this is the result of a breakdown in societal restraint. Freedom requires a virtuous populace. A contract is a contract. That's why there has to be a cost for fucking up, or it'll just keep happening.
I have to take strong issue with your characterization of the Bush tax cuts as "for the rich". Among the many false memes perpetrated by the media, it's the most overused and demonstrably false.
If any of these nitwits actually took the time to study the Bush package, they would have found that the percent reduction for lower income brackets in every instance exceeded the percentage break given to the higher brackets.
If I pay $100,000 in taxes and you give me a 7% break, I save $7000.
If I pay $10,000 in taxes and you give me a 15% cut I save $1500. Thus you can say that the rich guy got 82% of the tax cut.
But the net effect is that the rich guy's share of the overall tax burden rises from 91% to 92%.
The top 5% income earners now earn about 40% of the money and pay about 55% of the taxes. That's a record share of the tax burden.
The reason tax cuts work is because they leave more money in the hands of those who create wealth. They're either going to spend it, which creates economic activity (and tax revenue), or save or invest it, which also fuels economic activity. High marginal tax rates create a massive disincentive to earning (Here's one for you nineteen for me)and removes money from circulation which is contractionary. That's just common sense.
The fact that you and so many others tend to view this through the prism of class warfare is unfortunate, and I might add, may well be acting as an obstacle to your own advancement.
Here's a flash. Rich people are not evil. They're not the enemy. There isn't a single social problem that wouldn't be helped if there were more rich people. Rich people pay their own way. They create jobs. They support the arts. They create foundations to fight diseases. Economic policies that help people build wealth are good. If more people attain financial independence, we won't have so much strain on social programs. There will be capital to invest in fighting global warming, if that is your wont.
The Bush tax cuts gave a 100% tax reduction to hundreds of thousands of low income earners.
Those are just mathematical facts. I get so tired of the left's continual reliance on distortion and falsehood to stir up the masses.
If you're looking for a villain in this episode, I might point you in the direction of Mr. Greenspan, whose overreaction to the 2001-02 downturn created a bubble in real estate. That's after tightening too much in 2000.
Since 1982, when Reagan first started cutting taxes, we've had twenty-five years of almost uninterrupted economic growth. The Dow has gone from 800 to (recently)14000. There has never been a record of economic success like it anywhere in history. More ordinary people have lived better, healthier and more prosperous lives than ever before. Hunger and want have virtually been eliminated from American life. Only in America are the poor obese!
Oh, I think the 'nitwits' have studied the Bush plan, they came to the conclusions they did armed with a wealth of historical and real time data. Supply Side economics is as scientifically unfounded as Creationism, they both ignore reality and ultimately don't stand up under analysis or in implementation.
Funny, I have never seen the rich marching on DC begging for tax relief, never seen them sitting on a street corner with a sign asking 'Buddy Can You Spare A Billion' or 'Won't Work For A Vacation In Aruba'. Your compassion for the rich is really Freudian, perhaps you should get that looked into.
I think the other 98% of Americans who have not shared in the 'Bush Boom' would share my sentiments rather than your misplaced loyalty to a tax bracket filled with old money underachievers, congenital idiots and overpaid sychophants.
Looks like I was pretty close to prescient about Countrywide, and perhaps a near term market bottom. Gawd, I'm good at this stuff. The takeunder by B of A is not quite as splashy as a bankruptcy, but it amounts to about the same thing.
Where do you do your economic research, Pravda? Economics is not an exact science, but even George Bush knows that tax cuts work. Not since the OJ Simpson trial has such a mountain of evidence been ignored.
So you can put up your funny videos of retarded stockbrokers all you want--but for twenty years I've survived by my wits--by understanding how this shit works and putting real people's money at work to benefit by it. I know what the fuck I'm talking about.
I've got a few rich people as clients. Not enough, but a few. What they are are people who work harder and smarter than most other people. They start businesses and create jobs. I don't have compassion for them, I have admiration for them. They're good people.
Buffalo's got more than its share of blue-blood losers, I'll give you that. I'm not talking about the idiot heirs, I'm talking about the guys who built the fortunes. People tend to find what they're looking for in life. You go around looking for rich assholes, you're going to find a few. But I've been fortunate in my life to have met some pretty cool people who have attained success. I think that's a good thing.
I could never understand why the left wastes so much energy trying to get the government to take what doesn't belong to them from someone else. Go seek your own fortune. It's a hell of a lot more rewarding.
You see, my problem with all this stuff is that none of you know what you're doing, it is as much by luck as judgement that you bumble through the day selling this, buying that in a herdlike frenzy of grubby self importance. It is a parasitic dance of the mutually delluded who pick about in the crumbs of the people and institutions who really do know what they're doing and can afford to lose a couple billion here or there, every now and again, as long as the curve continues to incrementally creep up.
Post a Comment