The Economy, stupid

[NorthSideSox72]

I wonder if they will get a separate stimulus bill to give back to New York City after they steal all this money away from them...

Steal? The government gave AIG $180B or something like that so far. This is just taking a very small slice back, which is ultimately the idea with most of that money anyway.

 

[lostfan]

Steal? The government gave AIG $180B or something like that so far. This is just taking a very small slice back, which is ultimately the idea with most of that money anyway.

Isn't the $180 actually a line of credit and AIG's actually only been given around 40B?

[lostfan]

I'm guessing the market's about stabilized now, and stopped bleeding.

[Balta1701]

Isn't the $180 actually a line of credit and AIG's actually only been given around 40B?

Significantly more than $40 billion has already been spent.

[Balta1701]

I'm guessing the market's about stabilized now, and stopped bleeding.

I'm guessing that there's a lot more in the pipe. Remember, with some volatility, the DJIA was basically fairly flat or even up a little bit from late November, when the $300 billion for Citigroup was announced through early Feb. when the winter earnings season started.

[kapkomet]

I wonder if AIG campaign contributions given to Dodd and Obama should be given back?

 

 

[Balta1701]

A question for anyone who has an answer...yesterday's rally was promoted in part by a significant surge in new housing starts. My question is...why was there a surge in housing starts? There's still a fairly large glut of housing on the market, prices are still falling significantly, credit is still tight. It seems like a surge in housing starts now is way ahead of the game even given that it takes a while to construct housing. We're sitting on an 11 month or so supply of housing at the last numbers I found, where a 6 month supply is typically normal.

 

The only reason I can figure for why there would be a surge in housing starts is if there was anomalously good weather throughout much of the country. Can anyone explain to me how else that makes sense? It seems like another pulse of construction will just wind up increasing the over-supply unless there's a huge surge in buying.

[kapkomet]

A question for anyone who has an answer...yesterday's rally was promoted in part by a significant surge in new housing starts. My question is...why was there a surge in housing starts? There's still a fairly large glut of housing on the market, prices are still falling significantly, credit is still tight. It seems like a surge in housing starts now is way ahead of the game even given that it takes a while to construct housing. We're sitting on an 11 month or so supply of housing at the last numbers I found, where a 6 month supply is typically normal.

 

The only reason I can figure for why there would be a surge in housing starts is if there was anomalously good weather throughout much of the country. Can anyone explain to me how else that makes sense? It seems like another pulse of construction will just wind up increasing the over-supply unless there's a huge surge in buying.

Actually, my first thought was exactly the same one... the weather was pretty temperate across most of the country, not to mention it's the first month in the south after "winter".

 

I also wonder if all the new FHA programs helped a little.

 

 

[Balta1701]

Actually, my first thought was exactly the same one... the weather was pretty temperate across most of the country, not to mention it's the first month in the south after "winter".

 

I also wonder if all the new FHA programs helped a little.

That was my other thought, but I didn't even mention it because I didn't figure anything could have hit yet, between the FHA, the stimulus plan's housing incentives, extra funds being pumped in to the GSE's, and so forth. And anyway, if those things were what drove them...wouldn't you expect housing purchases to pick up a bit before the construction starts?

[kapkomet]

That was my other thought, but I didn't even mention it because I didn't figure anything could have hit yet, between the FHA, the stimulus plan's housing incentives, extra funds being pumped in to the GSE's, and so forth. And anyway, if those things were what drove them...wouldn't you expect housing purchases to pick up a bit before the construction starts?

I can't remember, but I think the opposite is true. A "sale" isn't recorded until the house is signed over...

 

 

[Balta1701]

Oh, GOODIE.

Thomas Gober, a former Mississippi state insurance examiner who has tracked fraud in the industry for 23 years and served previously as a consultant to the FBI and the Department of Justice, says he believes AIG's supposedly solvent insurance business may be at least as troubled as its reckless financial-products unit. Far from being "healthy," as state insurance regulators, ratings agencies and other experts have repeatedly described the insurance side, Gober calls it "a house of cards." Citing numerous documents he has obtained from state insurance regulators and obscure data buried in AIG's own 300-page annual reports, Gober argues that AIG's 71 interlocking domestic U.S. insurance subsidiaries are in hock to each other to an astonishing degree.

 

Most of this as-yet-undiscovered problem, Gober says, lies in the area of reinsurance, whereby one insurance company insures the liabilities of another so that the latter doesn't have to carry all the risk on its books. Most major insurance companies use outside firms to reinsure, but the vast majority of AIG's reinsurance contracts are negotiated internally among its affiliates, Gober says, and these internal balance sheets don't add up. The annual report of one major AIG subsidiary, American Home Assurance, shows that it owes $25 billion to another AIG affiliate, National Union Fire, Gober maintains. But American has only $22 billion of total invested assets on its balance sheet, he says, and it has issued another $22 billion in guarantees to the other companies. "The American Home assets and liquidity raise serious questions about their ability to make good on their promise to National Union Fire," says Gober, who has a consulting business devoted to protecting policyholders. Gober says there are numerous other examples of "cooked books" between AIG subsidiaries. Based on the state insurance regulators' own reports detailing unanswered questions, the tally in losses could be hundreds of billions of dollars more than AIG is now acknowledging.

 

One early sign of trouble came when Christian Milton, AIG's vice president of reinsurance from 1982 to 2005, was convicted last year in federal district court of conspiracy, securities fraud, mail fraud and making false statements to the Securities and Exchange Commission. (Milton was sentenced in January; his lawyers have indicated plans to appeal.)

 

AIG spokesman Mark Herr took strong exception: "We strongly disagree with Mr. Gober's analysis, which lacks a fundamental understanding of our commercial insurance operations' inter-company risk sharing agreements or even the basics of statutory accounting.

Somehow, I just don't believe the AIG folks on this one just yet. Not sure why.

[StrangeSox]

AIG insured itself against its own risk.

 

Someone please explain why we need to retain these financial geniuses again?

[kapkomet]

You all are right. Every major investment firm is now dead as they once were. We just need to bury them, and have the government take it all over, since the "buck stops with Obama" now.

[kapkomet]

And one more thing. Barney Frank = Joseph McCarthy.

 

That is all.

 

[bmags]

You all are right. Every major investment firm is now dead as they once were. We just need to bury them, and have the government take it all over, since the "buck stops with Obama" now.

 

you are phenomenal at taking what people say, miss the point of everyone and extrapolate it to something else nobody, in the world has ever said.

[Cknolls]

A question for anyone who has an answer...yesterday's rally was promoted in part by a significant surge in new housing starts. My question is...why was there a surge in housing starts? There's still a fairly large glut of housing on the market, prices are still falling significantly, credit is still tight. It seems like a surge in housing starts now is way ahead of the game even given that it takes a while to construct housing. We're sitting on an 11 month or so supply of housing at the last numbers I found, where a 6 month supply is typically normal.

 

The only reason I can figure for why there would be a surge in housing starts is if there was anomalously good weather throughout much of the country. Can anyone explain to me how else that makes sense? It seems like another pulse of construction will just wind up increasing the over-supply unless there's a huge surge in buying.

 

 

You are correct. February had above normal temps, thus the increase in starts. This is the major problem in the economy. Until inventory declines fairly substantially, the problems will fester.

[Balta1701]

You are correct. February had above normal temps, thus the increase in starts. This is the major problem in the economy. Until inventory declines fairly substantially, the problems will fester.

SOB. CK and I just agreed on something.

[kapkomet]

you are phenomenal at taking what people say, miss the point of everyone and extrapolate it to something else nobody, in the world has ever said.

Really? I see examples of what you all say here every day. Yes, my evil plot is finally deployed!

 

I owe Balta a M2M post... I just finished my CPEs.

 

Balta, when do you leave?

 

[NorthSideSox72]

AIG insured itself against its own risk.

 

Someone please explain why we need to retain these financial geniuses again?

 

 

You all are right. Every major investment firm is now dead as they once were. We just need to bury them, and have the government take it all over, since the "buck stops with Obama" now.

 

Turn down the dial, man. Must every single thing you disagree with be turned into an absurd exaggeration? No one is saying anything of the sort.

 

I work in the financial industry, and generally tend to agree with people say that Congress and the government shouldn't get overly involved in it. However, in the case of AIG, they are waaaaaaaaaaaaaaay f***ed up, and yes, they may need to be taken over, split apart and recreated as some new companies, by the government (or with the help of the government). That's how bad things seem there.

 

But no one is suggesting we do this across the board, and I don't even like that we did it as much as we did with TARP.

 

[kapkomet]

Turn down the dial, man. Must every single thing you disagree with be turned into an absurd exaggeration? No one is saying anything of the sort.

 

I work in the financial industry, and generally tend to agree with people say that Congress and the government shouldn't get overly involved in it. However, in the case of AIG, they are waaaaaaaaaaaaaaay f***ed up, and yes, they may need to be taken over, split apart and recreated as some new companies, by the government (or with the help of the government). That's how bad things seem there.

 

But no one is suggesting we do this across the board, and I don't even like that we did it as much as we did with TARP.

You know, most people with common sense understand this. However, I'm not sure that the idiots running the White House do. Therein lies the problem.

 

Timothy "Boob" Geitner, for someone who was a GENIUS and HAD to have the job, is more incompetent then Paulson was, and that's saying a lot.

 

[NorthSideSox72]

You know, most people with common sense understand this. However, I'm not sure that the idiots running the White House do. Therein lies the problem.

 

Timothy "Boob" Geitner, for someone who was a GENIUS and HAD to have the job, is more incompetent then Paulson was, and that's saying a lot.

I've said Geithner was a mistake since before he was confirmed. Nothing I've seen has made me change my mind on that.

 

[BigSqwert]

I've said Geithner was a mistake since before he was confirmed. Nothing I've seen has made me change my mind on that.

They could have just hired an actual deer and shined headlights in its eyes instead of paying this idiot.

[lostfan]

They could have just hired an actual deer and shined headlights in its eyes instead of paying this idiot.

[NorthSideSox72]

Oh, GOODIE.

Somehow, I just don't believe the AIG folks on this one just yet. Not sure why.

I believe I said this weeks or months ago. The huge fall off in both capital AND reputation for AIG will absolutely havea big effect on the insurance business line. And if that, their most consistend revenue flow, collapses... they are headed for an epic fail. Like, bankruptcy will be too slow and not enough to stop a complete disaster type fail.

 

[southsider2k5]

They could have just hired an actual deer and shined headlights in its eyes instead of paying this idiot.

 

If only he hadn't of paid his taxes, or thrown up some other red flag...