Thread: A note of caution for those with deposits in US Banks

This is a nice summary of the situation by Carl Icahn:

"Companies Are Worse Than You Think," Says Icahn


"Carl Icahn is angry and when the Queens-born billionaire gets angry, he also gets rich.

From his infamous fight to break up RJR Nabisco to his current tussle with Yahoo! [YHOO 19.89 -0.93 (-4.47%) ], the world's most famous capitalist has amassed his fortune by punishing the actions of greedy, incompetent CEOs and unlocking value for shareholders in the process.

He's angry now because in his 47 years on Wall Street he's never seen wealth destroyed on a scale quite like this. The financial meltdown this month could have been prevented, he says.

Old-boy boards of financial firms collected checks and cozied up to CEOs while their companies took on greater and greater risks with no oversight. The result is the economic disarray and huge job losses unfolding before our very eyes.

“Companies are much worse than you think,” says Carl Icahn on Fast Money. I go to these board meetings and I don’t have to watch Saturday Night Live anymore because they’re so crazy. The boards are completely out of it.”


In other words ineptitude has led to company’s taking excessive risk. It’s a situation Icahn would find laughable, except the consequences are not funny. Lehman Brothers [LEH 0.2151 0.1631 (+313.65%) ] might be the quintessential example, “I know CEO Dick Fuld. How they heck did that guy get paid $17,000 an hour last year?”

Ichan feels that CEO’s have a lot in common with the guys who were president of the college fraternity. They were well liked but not particularly smart. Most were political animals afraid to be around smart guys who might show them up.

Well, those are the same guys who went to work in corporate America and as Ichan says, "eventually you end up with all morons running the company."

Icahn sure doesn't pull any punches"

Originally Posted by Spin

Originally Posted by Peter Schiff

Further, since I assume the plan will apply to all mortgage debt, U.S. taxpayers will also be on the hook to bail out foreign institutions that loaded up on the financial sludge

I'm doubting theres any truth in this. Anyone care to comment?

Losses at UBS in Switerland are losses at UBS in Switzerland surely?

We will have to wait and see - I will post full details on this thread as and when they are published.

I bet that Barclays get their slice of the pie though...

^ Barclays are the crown prince of worldwide banking cocksuckers, They dont deserve a dime. A couple of years ago they were making 20 billion pounds per quarter by raping the avergae uk businessman/individual. fcuk 'em!

^Yeah, but just think what they were *promised* for keeping up the property values on Wall Street by buying the Lehman building...

Originally Posted by bkkandrew

Originally Posted by Spin

Originally Posted by who

cost IORO $2TRILLION.

Maybe the US can get a refund on the Iraq war. That should square things up

Would GWB be able to find the Refunds Dept. thought?

I didn't make the post quoted. I don't know what IORO is.

I also don't know what the "Refunds Dept. thought" is.

Originally Posted by bkkandrew

Originally Posted by Spin

Like it or not, if the treasury backstop the whole fcuking shabang

That may now be part of the problem...

It might but it isn't.

Originally Posted by bkkandrew

^Paulson stated it IIRC.

What is IIRC ?

^^^IORO was a typo of ITRO - In The Region Of. Apologies - I type too fast sometimes!

Refunds Dept. is a department of the Iraqi Govenment that will deal with Bush's war refund.

Originally Posted by who

Originally Posted by bkkandrew

^Paulson stated it IIRC.

What is IIRC ?

If I Remember Correctly...

Originally Posted by Spin

Originally Posted by Peter Schiff

Further, since I assume the plan will apply to all mortgage debt, U.S. taxpayers will also be on the hook to bail out foreign institutions that loaded up on the financial sludge

I'm doubting theres any truth in this. Anyone care to comment?

Losses at UBS in Switerland are losses at UBS in Switzerland surely?

Peter Schiff assums quite a lot. The plan specifically states that it applies to "firms based in the US".

Icahn is mad because he lost a lot of money. Good. Unfortunately I did too. Bad.

Icahn getting burned, Hank Greenburg getting badly burned. Don't ya love it.

Originally Posted by Spin

^ Barclays are the crown prince of worldwide banking cocksuckers, They dont deserve a dime. A couple of years ago they were making 20 billion pounds per quarter by raping the avergae uk businessman/individual. fcuk 'em!

But they're going to make a bundle on the Lehman deal.

Originally Posted by bkkandrew

^^^IORO was a typo of ITRO - In The Region Of. Apologies - I type too fast sometimes!

Refunds Dept. is a department of the Iraqi Govenment that will deal with Bush's war refund.

Thank you.

Well the Iraqi gov't has plenty of money but I don't think that much. But one can hope.

^No, who - there is no Refund Dept. It was a joke! Bush is not going to get a refund for the Iraq war!

Originally Posted by who

Originally Posted by Spin

Originally Posted by Peter Schiff

Further, since I assume the plan will apply to all mortgage debt, U.S. taxpayers will also be on the hook to bail out foreign institutions that loaded up on the financial sludge

I'm doubting theres any truth in this. Anyone care to comment?

Losses at UBS in Switerland are losses at UBS in Switzerland surely?

Peter Schiff assums quite a lot. The plan specifically states that it applies to "firms based in the US".

Not according to the Treasury Department Fact Sheet on the proposals:

Troubled assets eligible for purchase should come from financial institutions with "significant operations" in the United States. But it said there could be an exemption to that condition by the Treasury secretary, in consultation with the Fed chairman, that broader eligibility is necessary to stabilize financial markets.

Obtained from:

Treasury keeps options open on asset purchases | Industries | Financial Services & Real Estate | Reuters&

Originally Posted by bkkandrew

^No, who - there is no Refund Dept. It was a joke! Bush is not going to get a refund for the Iraq war!

Thank you for your explanation.

My inplied question was in regard to your phrase "...Refunds Dept. thought?"

"It was a joke!"

Chohk Dee

Originally Posted by bkkandrew

Troubled assets eligible for purchase should come from financial institutions with "significant operations" in the United States. But it said there could be an exemption to that condition by the Treasury secretary, in consultation with the Fed chairman, that broader eligibility is necessary to stabilize financial markets.

well technically, foreign corporations with a US presence are usually US registered companies, so they deserve to be bailed out also. However I doubt those companies could import from their overseas operations the bad loans and ask money for it from the US government. I am sure some will try, but regulators will be looking at everything very carefully.

Originally Posted by bkkandrew

See my above post for evidence, but I guess you don't believe Paulson, Bernanke, Dodd, etc. either...

Your post above is not evidence, just authors expressing an opinion about the situation, and yes I do agree with what they say. The system didn't collapse as you predicted, that was another of your extrapolation.

Markets have a tendency to over-react mostly because of the role of speculators to create liquidity. This excessive reaction can create silly situations like we have now. It's not like there is 100% of default on those financial instruments, just that there is no market for trading them because the speculators have left the building. With reporting requirements asking financial institutions to report their positions as "marked to market", they have no choice but to unload them or take a charge for them, and these are huge. It doesn't mean the investment loss have been realized, just that they lost some type of book value and that needs to be reported. The public is always confused by this, and so are the speculators who more often than not have no "formal" education in understanding risk of complex financial instruments. They trade on short term technical inefficiencies that reverse eventually. The Bailout will create liquidity in those instruments, as speculators have all gone in panic mode for speculative reasons.

Originally Posted by Spin

Ichan feels that CEO’s have a lot in common with the guys who were president of the college fraternity. They were well liked but not particularly smart. Most were political animals afraid to be around smart guys who might show them up.

Well, those are the same guys who went to work in corporate America and as Ichan says, "eventually you end up with all morons running the company."

Icahn sure doesn't pull any punches"

He has a few good points, however Icahn is himself a bit of a nutcase, with very unreasonable demands from management and has been shown to be unstable in many instances when he lost his battles. He is a loose cannon. He wants management to "serve" the shareholders first, not their customers or the board. The problem is management is nominated through the board, not shareholders (unless there is a proxy war), so management have to report to the board first, before shareholders.

Here is Ron Paul (who's been prescient) talking about the current state of economic affair on September 18th, 2008.

Should we start a new "global downturn/correction" thread, or make a new "US downturn meltdown thread" or put everything here? What do posters think?

Anyway, here it is:

^Sorry MM, I have been away for a few days. Normal service will be resumed on this thread from Monday next week.

I note that the signs are now that the Mother-of-all-bailouts is too little, too late and doomed to failure. Those signs include the falling dollar, commodity pricing in dollars all over the place and financial stocks falling back to pre-MOAB levels.

There is now no doubt in my mind that the US financial system will collapse and, as the FED has now tied into so much of the system with their guarantees and direct funding, they will be dragged down too. These past 5 days (post MOAB announcement) have merely been a postponement and a false dawn.

Originally Posted by bkkandrew

^Sorry MM, I have been away for a few days. Normal service will be resumed on this thread from Monday next week.

I note that the signs are now that the Mother-of-all-bailouts is too little, too late and doomed to failure. Those signs include the falling dollar, commodity pricing in dollars all over the place and financial stocks falling back to pre-MOAB levels.

There is now no doubt in my mind that the US financial system will collapse and, as the FED has now tied into so much of the system with their guarantees and direct funding, they will be dragged down too. These past 5 days (post MOAB announcement) have merely been a postponement and a false dawn.

Well I must say you certainly don't seem to be afraid to go way out on a limb with your predictions (I count six). I hope that one of them turns out to be true.

^Which one?

Originally Posted by bkkandrew

^Which one?

I'll give you one guess and then tell you.

^As you are a disbeliever, I guess it is:

Normal service will be resumed on this thread from Monday next week.