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Discussion Starter · #1 ·
Lehman goes bankrupt and Merrill Lynch is sold to BOA (https://www.msnbc.msn.com/). AIG is in serious trouble, though they are said to have sufficient liquidity to weather a storm. As painful as this grim news is (especially for the people who will lose their jobs), my gut tells me it's a long-overdue market correction and a winnowing of the herd. I tend to agree with what Jim Cramer said this morning; once the dust settles, we'll end up with a smaller and stronger market.

I am by no means an expert on these matters, but I know several on the fora are. Can all of this be pinned on the mortgage crisis, weak dollar or another factor? I am curious as to what AAAC members think about the news.
 

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Sorry, I didnt see your post, so I wrote a similar one. Personally, I think that a number of bancrupcies will follow. The US situation is somewhat similar to the Swedish one in 1992. As a consequence, the state opened a so called "bank emergency" that was putting money into the banking system.
Some banks were taken over by the state in order to rescue them. Most of them are however privatized by now.
 

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I truly hope that the US government doesn't not take control of these banks. I hate the idea of socializing all these failing companies like Freddie and Fannie. If they can't sustain themselves then they should be allowed to fail. I think that same applies to the auto industry, if they can get a low rate loan then good for them, but they should not be given a hand out from the tax payers to keep them from failing. I love the free market system and it works well for a reason.
 

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Discussion Starter · #4 ·
I truly hope that the US government doesn't not take control of these banks. I hate the idea of socializing all these failing companies like Freddie and Fannie. If they can't sustain themselves then they should be allowed to fail. I think that same applies to the auto industry, if they can get a low rate loan then good for them, but they should not be given a hand out from the tax payers to keep them from failing. I love the free market system and it works well for a reason.
^+1. I, for one, am getting tired of picking up the tab for mis-managed companies.
 

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I am also against putting in money into badly managed companies.
In my country in 1992, al lot of tax payers money went into banks on the rim of bancrupcy.
I dont think they had any choice, the alternative would have been a total economic chaos (like Argentina in 2001). Still, a recession followed for several years.

Still, there are some differences. As I understand it, in the US you can just give the keys of your house to the bank, if you cannot pay the mortgage, and it will be the problem of your bank.

In Europe, if you cannot pay the mortgage, you will be indebted for life, but your bank will still be fine.
 

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pichao--

It varies from state to state. In California, for example, you can just walk away without any personal liability (if it's your primary residence, not an investment property). In my state you are personally liable for the unpaid debt in addition to losing the property.

Thus, in California you only are walking away from your down payment, and it becomes the bank's problem. Here, you are likely facing a money judgment against you personally of hundreds of thousands of dollars, and probably bankruptcy.

For some reason, the mortgage default rate in my state is much much lower than in California. . . .
 

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Anyone remember the collapse of Duke & Duke back in '83?

Now, that was an event!
Was Lehman trying to corner the FCOJ market? Serves them right.
 

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Was Lehman trying to corner the FCOJ market? Serves them right.
While I'm not a finance wizard, it does look like much of these corrections are the product of weak management or poor business models not being able to weather the global storm they're now under.

The Fed has also put themselves under a lot of pressure. They set a tone that the market likes yet isn't repeatable too many times. I think the Fannie/Freddie collapse was done right, but only if the Govt can sell the parts back to the industry, clean up the mess and let things get along.

-spence
 

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"He had on my Harvard tie. Like, oh sure! HE went to Harvard!"
Lehman should have hired Karl Rove to be their Clarence Beeks.
 
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