AIG getting more money, Fannie Mae on track to negative net worth

This is what happens when something is too big to fail - a bottomless pit that we can throw money into. It is also a good indicator of exactly how far into the red these companies were - every bank is in this deep, or deeper.

EDIT: Just saw the Bloomberg report on Fannie Mae going into negative net worth next quarter.

Bloomberg wrote:

Fannie slashed its net worth, or the difference between assets and liabilities, to $9.4 billion on Sept. 30 from $44.1 billion at Dec. 31. The company said today it may fall to negative net worth by the end of next quarter, requiring it to seek government funding. Fannie said today that it hadn't tapped any federal aid through Nov. 7.

I wonder if I could start my own bank with a couple billion dollars I don't have and get the government to bail me out, too.

Anyone want to open an account? I'm almost FDIC insured (so close).

Now that we're on the bailout path, we can't get off it anymore. At no time will we ever accept the short-term consequences of letting major companies fail: we will, instead, prop up failed business models at huge expense. This both drains our resources and makes the problems WORSE, not better, because new, correct business models can't compete against government-supported failed ones.

We are SO f*cked.

How else would they fund the next set of sales force performance get-aways?

Rupert, begin burying the gold in the backyard next to the bunker.

boogle wrote:

Rupert, begin burying the gold in the backyard next to the bunker.

If you bury it outside the bunker, the radioactive zombies will get it.

LobsterMobster wrote:
boogle wrote:

Rupert, begin burying the gold in the backyard next to the bunker.

If you bury it outside the bunker, the radioactive zombies will get it.

I've played fallout 3, we all know personal possessions, ammo and cash survive the apocalypse.

boogle wrote:

I've played fallout 3, we all know personal possessions, ammo and cash survive the apocalypse.

I'm starting a bottle cap collection.

*Legion* wrote:
boogle wrote:

I've played fallout 3, we all know personal possessions, ammo and cash survive the apocalypse.

I'm starting a bottle cap collection.

I hear this guy has the market cornered:

IMAGE(http://bert.spacecat.com/img/bertmug.gif)

Who makes RadAway? I'd like to store some in my shelter.

Remind me to plan an expedition to the Museum of history to get Lincoln's repeater.

Look for Potassium Iodide, preferably in tablet form. It saturates your thyroid so radioactive iodine can't collect in it.

On that note, I think we've made the allusion to Fallout 3 very clear. Can we move on?

I got this email earlier today. I support this idea!!!

I'm against the $85,000,000,000.00 bailout of AIG.

Instead, I'm in favor of giving $85,000,000,000 to America in a We Deserve
It Dividend.

To make the math simple, let's assume there are 200,000,000 bonafide U.S.
Citizens 18+.

Our population is about 301,000,000 +/- counting every man, woman and child.
So 200,000,000 might be a fair stab at adults 18 and up..

So divide 200 million adults 18+ into $85 billon that equals $425,000.00.

My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend.

Of course, it would NOT be tax free.

So let's assume a tax rate of 30%.

Every individual 18+ has to pay $127,500.00 in taxes.

That sends $25,500,000,000 right back to Uncle Sam.

But it means that every adult 18+ has $297,500.00 in their pocket.

A husband and wife team has $595,000.00.

What would you do with $297,500.00 to $595,000.00 in your family?

Pay off your mortgage - housing crisis solved.

Repay college loans - what a great boost to new grads

Put away money for college - it'll be there

Save in a bank - create money to loan to entrepreneurs.

Buy a new car - create jobs

Invest in the market - capital drives growth

Pay for your parent's medical insurance - health care improves

Enable Deadbeat Dads to come clean - or else

Remember this is for every adult U S Citizen 18+ including the folks who
lost their jobs at Lehman Brothers and every other company that is cutting
back. And, of course, for those serving in our Armed Forces.

If we're going to re-distribute wealth let's really do it...instead of
trickling out a puny $1000.00 ("vote buy") economic incentive that is being
proposed by one of our candidates for President.

If we're going to do an $85 billion bailout, let's bail out every adult U S
Citizen 18+!

As for AIG - liquidate it.

Sell off its parts.

Let American General go back to being American General.

Sell off the real estate.

Let the private sector bargain hunters cut it up and clean it up.

Here's my rationale. We deserve it and AIG doesn't.

Sure it's a crazy idea that can "never work."

But can you imagine the Coast-To-Coast Block Party!

How do you spell Economic Boom?

I trust my fellow adult Americans to know how to use the $85 Billion

We Deserve It Dividend more than do the geniuses at AIG or in Washington DC.

PASS IT ON. WHO KNOWS? IT MAY MAKE IT TO THE PRESIDENT!!!

A borrowed $85 billion, of course.

Is it just me, or does $85,000,000,000 divided by 200,000,000 = $425 not $425,000?

Edit: You would think you would double check your math before sending out an email like this.

Tkyl wrote:

Is it just me, or does $85,000,000,000 divided by 200,000,000 = $425 not $425,000?

Math has never been a utopian strongpoint.

That's a great plan except for one little thing;

So divide 200 million adults 18+ into $85 billon that equals $425,000.00.

No, it doesn't. It equals $425 per person.

85 trillion divided by 200 million equals 425 thousand.

Tkyl wrote:

Is it just me, or does $85,000,000,000 divided by 200,000,000 = $425 not $425,000?

Your simple math has no place here. Let's just make it an $85,000,000,000,000.00 (trillion) bailout instead. Problem solved. That or make it only 200,000 people (which is really what the bailout does, except the number is cut down to 2000 or 42.5 million per)

I assume that the guy behind the 'math' is German or French and fell victim to the good old 'billlion' mix-up. In Germany and France a billion happens to be 10^12, not 10^9. 85x10^12 / 200,000,000 = 425,000.

Math is tricksy!

LOL, I never actually did the math I'm just passing it along

Bear wrote:

LOL, I never actually did the math I'm just passing it along :)

You should reply-all with the correction. It kind of ruins his whole argument.

Serengeti wrote:

85 trillion divided by 200 million equals 425 thousand.

Dude, we're still early in this bailout thing. We're going to get to $85 trillion eventually. Trust Congress on this. They can do it. From a description of a mortgage bailout plan:

To qualify, borrowers would have to be at least three months behind on their home loans and would have to owe 90 percent or more than the home is worth. Investors who do not occupy their homes would be excluded, as would borrowers who have filed for bankruptcy.

Qualified borrowers would get help in several ways: The interest rate would be reduced so that they would not pay more than 38 percent of their gross income on housing expenses. Another option is for loans to be extended to 40 years from 30, and for some of the principal to be deferred, interest-free.

Can someone explain to me how they are going to set up a program where people who are less than 90 days delinquent won't see an advantage in just stopping their mortgage payment to qualify for better terms? Why won't this just drive up the delinquency rate?

Meanwhile, the AIG executives continue to live it up. Awesome.

Spunior wrote:

I assume that the guy behind the 'math' is German or French and fell victim to the good old 'billlion' mix-up. In Germany and France a billion happens to be 10^12, not 10^9. 85x10^12 / 200,000,000 = 425,000.

Wait... no. What? Really? Or a you just pulling our leg. Why would a billion be something different in Germany and France? Count up for me (in German and French):

hundreds, thousands, million, billion, trillion, kazillion (okay, maybe not (and skipping the intermediaries).

Funkenpants wrote:

Can someone explain to me how they are going to set up a program where people who are less than 90 days delinquent won't see an advantage in just stopping their mortgage payment to qualify for better terms? Why won't this just drive up the delinquency rate?

The one thing I can think of, despite the near-term advantage, is that if you are an on-time payer, if you go 90 days delinquent, you are going to screw your good credit rating, which will hurt you in all other aspects of life.

I read in an article recently that said it is suspected that even if you are on time, if your monthly income to house payment ratio is worse than 30-35%, banks may start renegotiating with you just to prevent you from going delinquent. If you are below 30%, though, you're probably still out of luck.

sheared wrote:
Spunior wrote:

I assume that the guy behind the 'math' is German or French and fell victim to the good old 'billlion' mix-up. In Germany and France a billion happens to be 10^12, not 10^9. 85x10^12 / 200,000,000 = 425,000.

Wait... no. What? Really? Or a you just pulling our leg. Why would a billion be something different in Germany and France? Count up for me (in German and French)

It's different because billion actually used to be 10^12 until the French briefly tried to change it. Which what got adopted by US English. British English apparently has both versions.

See http://en.wikipedia.org/wiki/Billion_(word)#History

sheared wrote:

Why would a billion be something different in Germany and France? Count up for me (in German and French):

hundreds, thousands, million, billion, trillion, kazillion (okay, maybe not (and skipping the intermediaries).

It is the billion used in some parts of Europe prior to the SI standardisation. The old billion was one million million, not one thousand million as it is under SI. I don't know if the old trillion was one thousand, million or billion billions.... illion.

sheared wrote:

I read in an article recently that said it is suspected that even if you are on time, if your monthly income to house payment ratio is worse than 30-35%, banks may start renegotiating with you just to prevent you from going delinquent. If you are below 30%, though, you're probably still out of luck.

It'll be interesting to see what occurs. There have been proposals from credit card companies to further tighten bankruptcy laws to require automatic garishing of wages to some level post bankruptcy. Probably going to be a lot more 'body attachments' too.

sheared wrote:

The one thing I can think of, despite the near-term advantage, is that if you are an on-time payer, if you go 90 days delinquent, you are going to screw your good credit rating, which will hurt you in all other aspects of life.

That's possible, but if you're already a little behind and looking to save thousands in interest payments over the next 30 years it sounds like a reasonable tradeoff to go all in. I expect financial advisers will be telling many clients, "Look, this deal might not last. You'll take the hit to your credit rating now, but if there's any chance you'll fall behind in the future this might not be there. So grab it before it goes." I won't be surprised to see headlines like, "Cost of mortage bailout skyrockets as demand far outstrips government estimates."

Not to mention that the general purpose of a good credit rating for most Americans is to accomplish two things: buying a car, and buying a house. If you already have those two things, saving a ton of money on mortgage payments and interest is going to seem like a really good deal.

Spunior wrote:
sheared wrote:
Spunior wrote:

I assume that the guy behind the 'math' is German or French and fell victim to the good old 'billlion' mix-up. In Germany and France a billion happens to be 10^12, not 10^9. 85x10^12 / 200,000,000 = 425,000.

Wait... no. What? Really? Or a you just pulling our leg. Why would a billion be something different in Germany and France? Count up for me (in German and French)

It's different because billion actually used to be 10^12 until the French briefly tried to change it. Which what got adopted by US English. British English apparently has both versions.

See http://en.wikipedia.org/wiki/Billion_(word)#History

It is amazing that I never knew this. I wonder how many mistakes have been made because of this difference?

I liked this from that article:

"It should be remembered that ["billion"] does not mean in American use (which follows the French) what it means in British. For to us it means the second power of a million, i.e. a million millions (1,000,000,000,000); for Americans it means a thousand multiplied by itself twice, or a thousand millions (1,000,000,000), what we call a milliard. Since billion in our sense is useless except to astronomers, it is a pity that we do not conform." [2]

That was apparently written in 1926. Now look how useless the word billion is.

As for the count up part - in Germany, France and some other countries in Europe: hundred, thousand, million, milliard, billion, trillion.