Stock Market Crash Expected In 2008 To Be Worse Than 1929

[nChrist]

Yes, this has been and still is the objective of those that are bringing about this economic collapse and resulting chaos. There may be a few that are ignorantly following along but I do believe that the majority of those in public office have actually planned this from the start. They have been like a hungry lion in wait, biding their time for just the right moment and the prey have willingly exposed themselves to the moment.

YES - the needed level of CHAOS and CRISIS is almost here, and those in power will make sure it arrives! That's what we are watching right now. This is also why we continually hear - HURRY - NO TIME - JUST SIGN IT! Don't worry - our government has everything under control! (NOT! - THEY MAKE THINGS WORSE BY EACH ACTION THEY TAKE!

[Barbara]

Amen, blackeyedpeas!!

Here's more world chaos:

The Wall Street Journal

Opinion, February 17, 2009

Japan's Downturn Is Bad News for the World

The US can't count on Japanese savers

by Michael Auslin

As Hillary Clinton visits Tokyo for her first trip as secretary of state, she will find a country in the midst of its worst recession in 50 years. Japan's economy is contracting across the board: Exports have cratered, industrial production is on track to plummet 30% from a year ago, and the Japanese government projects that GDP will drop 12% from last year. The world's second largest economy, Japan is also the largest holder of US Treasury bonds.

Recently, many economists and scholars in the US have been looking backward to Japan's banking disaster of the 1990's, hoping to learn lessons for America's current crisis. Instead, they should be looking ahead to what might occur if Japan goes into a full-fledged depression.

If Japan's economy collapses, supply chains across the globe will be affected and numerous economies will face severe disruptions, most notably China's. China is currently Japan's largest import provider, and the Japanese slowdown is creating tremendous pressure on Chinese factories. Just last week, the Chinese government announced that 20 million rural migrants had lost their jobs.

Closer to home, Japan may also start running out of surplus cash, which it has used to purchase US securities for years. For the first time in a generation, Tokyo is running trade deficits -- five months in a row so far.

The political and social fallout from a Japanese depression also would be devastating. In the face of economic instability, other Asian nations may feel forced to turn to more centralized -- even authoritarian -- control to try to limit the damage. Free-trade agreements may be rolled back and political freedom curtailed. Social stability in emerging, middle-class societies will be severely tested, and newly democratized states may find it impossible to maintain power. Progress toward a more open, integrated Asia is at risk, with the potential for increased political tension in the world's most heavily armed region.

This is the backdrop upon which the US government is set to expand the national debt by a trillion dollars or more. Without massive debt purchases by Japan and China, the US may not be able to finance the cost of the stimulus package, creating a trapdoor under the US economy.

So far, Japan's politicians have been unable to find a way out of this mess. while another $53 billion stimulus package works its way through parliament, fully one-third of Japan's prefectures have instituted emergency economic stabilization measures.

But the big issues eclude short-term solutions. Through Japan's leaders are currently cutting back on military expenditures and domestic services, they're unable to agree on budgets or reform plans. They have no strategic road map for reining in the yen, opening up to international competition, or taking an economic leadership role in Asia that will promote growth and strengthen democratic, market-oriented societies.

Things don't have to turn out this way. If Japan's leaders can craft a monetary policy that ends Japan's deflationary spiral by carefully expanding the money supply, recommit to structural reform, and halt the yen's rise, they can jump-start economic growth. They should also ignore the powerful domestic agriculture lobby and embrace a robust free-trade agenda, which would help them as well as the rest of Asia.

Mrs. Clinton's visit cannot be a simple photo opportunity. This trip needs to result in a clear US-Japan approach to restoring confidence and rebuilding a robust and open international system. Without action, Japan and America may go over the cliff together, dragging Asia and the world down with them.

(Mr. Auslin is a resident scholar at the American Enterprise Institute)

[Barbara]

And found still more after my husband heard Stuart Varney of FOX say Japan was now in a depression this morning:

Japan plunges into depression

Peter Martin
February 17, 2009 - 9:08AM

Australia's biggest and most reliable customer, Japan, has plunged into depression, with federal Treasurer Wayne Swan now warning of the worst global downturn "in our lifetimes".

-Japan among worst hit
-Businesses forecast losses
-Australian export fears

Japan's economy shrank an annualised 12.7 per cent over the December quarter, its worst result since the 1974 oil shock.

Japan is by far Australia's biggest export customer, accounting for one in every five container ships that leave Australia's shores.

The new figures put it among the worst-hit casualties of the global crisis.

The annualised contraction of 12.7 per cent, or 3.3 per cent in quarterly terms, dwarfs those of the United States and Europe and is much worse than anything that happened to Japan during its so-called "lost decade" of recession in the 1990s.

The collapse in growth fits the profile of a depression -- a deep recession in which annual GDP falls by 10 per cent or more.

Australia's other big customer, China, has had its growth rate almost halved from 13 to 6.8 per cent.

"These figures reveal just how serious the global recession is becoming." Mr Swan said. "They follow on the heels of the worst contraction in the euro area since records began in 1980.

"The last three months of 2008 are likely to have seen the sharpest synchronised downturn in the global economy in our lifetimes.

"It's a sobering backdrop for Australia as we seek to do everything we can to cushion the impact the global downturn will have here." Mr. Swan said.

A 14 per cent collapse in exports in the December quarter led Japan's plunge.

Toyata, Sony and Hitachi are forecasting losses and have begun firing thousands of workers, heightening the risk that a slump in domestic spending will deepen the downturn.

"At one time, it looked like Japan had escaped the brunt of the financial crisis," said Hideo Kumano, chief economist for the Dailchi Life Research Institute. "This shows how feeble Japan's economic fundamentals were in the first place."

Access Economics director Chris Richardson and Japan's plight showed there was "no place for Australia to hide".

"It is true that Japan's statistics are more dodgy and more volatile than those of other large nations, but this fits what know about the reach of the crisis," Mr Richardson said. "It is very big and very nasty."

"It is impossible for Australia to avoid a recession; perhaps not absolutely impossible, but it is incredibly hard for australia to hold against the tide, and the tide pulling us down is getting stronger every day."

"This is confirmation of what's facing us," said ANZ chief economist Saul Eslake. "Japan is a more important and more diversified export market than China.

"Australian GDP per person is already running backwards. What happens over the next few months will determine how bad things get."

The impact of the downturn in Asia was felt in Albury yesterday when 400 workers at cars company Drivetrain Systems International were stood down without pay.

The business was hit hard by last month's collapse of South Korean vehicle manufacturer SsangYong, a major customer.

Finance figures released on Monday suggest that Australians resumed borrowing in December in the wake of a further interest rate cut and the government's $8.7 trillion billion fiscal stimulus hand-outs.

New lending commitments climbed 3.5 percent. All forms of personal lending increased, including a solid 24 per cent lift in loans to buy new cars. But the bulk of the new loans were for refinancing or for ubgone31. Lending remains 27 per cent down over the year.

[Soldier4Christ]

California lawmakers approve long-awaited budget
Plan includes more than $12 billion in tax increases

Voting at dawn to end a three-month impasse, the California Legislature passed a budget package that addresses the state's massive deficit with billions of dollars in new taxes and program cuts after Democrats and Gov. Arnold Schwarzenegger reached a deal with a GOP holdout.

Sen. Abel Maldonado of Santa Maria provided the final Republican vote needed to pass a spending plan, which includes more than $12 billion in tax hikes. In exchange, Democrats agreed to rewrite election rules that Maldonado said had allowed the Capitol to become paralyzed by partisanship, leading the state to the brink of financial ruin.

The plan came together after midnight, following seven unsuccessful votes held throughout the day and into the night in the Capitol, which Senate President Pro Tem Darrell Steinberg (D-Sacramento) had locked down Tuesday, barring senators from leaving. California's financial state had deteriorated to the point where Schwarzenegger ordered layoffs of 10,000 state workers and the suspension of hundreds of public-works projects. Early income-tax refunds have been delayed, and public anger has grown.

"I'm very relieved for the people of California," Steinberg said. "There's not a lot of good news to come out of a $41-billion budget deficit, except that we in fact solved it."

The final plan includes most of the framework of the original budget compromise from Democratic and Republican leaders. There are billions of dollars in cuts to schools, healthcare institutions, higher education and programs for the poor. If signed by Schwarzenegger, who helped devise the package, it also would raise personal income taxes and the state sales tax, although a 12-cent-per-gallon increase in gasoline taxes was eliminated in the final hours. The gas tax would be replaced with federal economic stimulus money.

"This is a very difficult budget, but we have turned this crisis into an opportunity to make real, lasting reforms for California," Schwarzenegger said in a statement. He has long been a proponent of the election-law changes included in the final package. "Some special interests may not like this budget -- but like I always say, what's good for the people is not always good for special interests."

Schwarzenegger, who was initially swept into office as an anti-tax crusader, has come under attack from other Republicans for embracing tax hikes to solve the state's fiscal crisis. But despite intense lobbying by the governor, Senate Republicans had continued to hold out.

Soon after the spending plan passed, Schwarzenegger stepped outside his office and dismantled a debt clock he had installed that displayed how much money the state was losing each day the state failed to take action on the deficit.

Democrats initially said Maldonado's call for "open" primaries, in which voters could cross party lines and candidates of all parties would compete in the same primary, followed by a runoff of the top two vote-getters, was too substantial to be pushed through in a budget deal. But Maldonado said the current budget stalemate proved that California could not return to fiscal sanity without fundamental changes in the way it elects its representatives.

"Without an open primary, we're going to be here again and again and again, voting on budgets," he told reporters. "This system is broken and we need to reform it."

Modeled on election rules in Washington state, the change -- if approved by California's voters next year -- would undermine the influence of political parties. It was unpopular with Democrats, but their leaders pressed them to accept it as the price of ending the political logjam.

"My caucus understands we have to do some things we don't like," said Assembly Speaker Karen Bass (D-Los Angeles).

Wednesday had begun in uncertainty, with Dennis Hollingsworth of Murrieta elected as the new Republican leader in the state Senate shortly after a midnight coup unseated Dave Cogdill of Modesto. Hollingsworth promptly insisted that months of negotiations over how to close California's deficit budget talks begin anew and lawmakers abandon the sales, income and gas taxes hikes that were part of the fiscal package Cogdill helped negotiate.

"We should reopen negotiations and we should pass a no-tax budget," Hollingsworth said. "The majority of the Senate Republican caucus said we want to stand for a no-tax budget."

But they ultimately marginalized him and the 10 GOP senators who had already ruled out any new taxes. Democrats and the governor refocused their efforts away from the caucus leadership and on the small group of GOP dissidents who signaled they were prepared to vote for their budget package. Cogdill remained in support of it, as did Sen. Roy Ashburn of Bakersfield.

The Senate convened every few hours Wednesday, but the debate on the chamber floor was unproductive. Democrats read letters from constituents beseeching them to pass the budget so state services could resume. Republicans parried with correspondence from their backers decrying the imposition of higher taxes on already struggling families.

Behind the scenes, negotiators stayed focused on Maldonado and GOP Sen. Dave Cox of Fair Oaks, both of whom had indicated they might be persuaded to cross the aisle and vote with Democrats to pass the budget. Legislative leaders and Schwarzenegger's aides pored over wish lists from both senators.

After lunching on salmon and swordfish with Schwarzenegger at an Italian restaurant a few blocks from the Capitol, Maldonado emerged enthusiastic.

"The governor is on board with my constitutional amendments," Maldonado said, referring to his request that state election law be changed to help moderate politicians such as him and to penalize lawmakers when the state's budget is late.

"If everybody is happy with the drafts, we'll have a budget for the state of California," he said.

Maldonado's proposal did not go down well with many Democrats. Many lawmakers in both parties hold safe seats that would become competitive if Maldonado's request were enacted.

Others said they objected to rewriting California's fundamental rules of democracy in the middle of the night, all to secure a vote to keep the state from financial ruin. They also accused Maldonado, who is in his last term in the Senate, of trying to leverage his budget vote to make a future statewide run easier.

"I'm not here to worry about Abel's political future," said Sen. Gloria Romero (D-Los Angeles).

Maldonado denied such a motive, and the final version appeared to have little use for his aspirations for statewide office in 2010, because it would not take effect until 2012.

Democrats remained dubious.

"I'm open to discussion on the merits of the open primary," said Sen. Joe Simitian (D-Palo Alto). "But I'm hard-pressed to understand what on earth it has to do with solving the state budget deficit."

cont'd

[Soldier4Christ]

Sen. Denise Moreno Ducheny (D-San Diego) said Maldonado's suggestion that legislators' pay be docked whenever the state budget was not on time was "particularly offensive" and could give wealthy legislators inappropriate leverage in negotiations.

"You could have rich people telling everyone else, 'Vote now if you want to feed your family.' " Ducheny said. "I think it's unethical . . . to tie your pay to your vote."

Maldonado ultimately agreed to drop that measure out of the package. This morning, Democrats agreed to another provision pushed by Maldonado that would keep legislators from getting pay raises in years when the state ran a budget deficit.

Just before 5 a.m., the Senate approved the open-primary measure. Several Democrats were so resistant to the notion that the Senate had to recess while they were coaxed into giving their support. Near tears, Romero called it "a disgusting process" and "not good government" as she changed her vote to yes.

The sun had risen when the state Assembly passed the tax bill at 6:30 a.m. Assembly GOP leader Mike Villines of Clovis, Roger Niello of Sacramento and Anthony Adams of Hesperia provided the three GOP votes to put the measure over the top.

"Mark our words: There's not going to be any more taxes from this body," Villines said.

Dissenting Republicans -- who have been warning for years that California was spending recklessly -- told their colleagues that this budget also would develop holes.

The deal with Maldonado emerged Wednesday after negotiations with Cox deteriorated. Schwarzenegger and Democrats never agreed to Cox's call to postpone enactment of California's landmark law limiting greenhouse-gas emissions.

That law, which won Schwarzenegger international acclaim, is one of the governor's proudest achievements. But many business groups in California complain that it would be expensive to implement.

Democrats also did not budge on other Cox demands: to give employers more leeway in scheduling meal and rest breaks for their workers, and his insistence that legislators reduce some of the $14.4 billion in taxes contained in the budget package. Maldonado, however, incorporated that latter issue into his demand, and Democrats stripped out the gas taxes, worth about $2 billion.

The final version of the plan would raise the state sales tax by 1 percentage point and nearly double the vehicle license fee to 1.15%. It would also reduce the dependent credit Californians are allowed to claim on their taxes. The package would increase personal income tax rates by 0.25 of a percentage point.

"It's just plain wrong," Hollingsworth said just before the vote.

Ashburn took to the floor to recall Ronald Reagan's decision to raise taxes in 1967 as California governor. "As president of the United States, my hero, my role model, the person who I have looked at for inspiration, raised taxes three times," Ashburn said.

He said his fellow GOP senators had failed to understand the difference between being a politician and being an elected official.

"You know this deficit cannot be solved by cuts alone," he told them as they closed their eyes or looked away. "What would Ronald Reagan do? Ronald Reagan would vote yes."

After his speech, Democratic senators came over and hugged Ashburn, who had negotiated $100 million in tax credits to help home builders and tax breaks for horse-racing tracks.

All the taxes in the budget package would last for two years, but they would be extended another two years if voters approve a permanent spending cap that would be placed on the May 19 ballot as part of the complex deal worked out with Republican leaders over several months. That spending cap would prevent future legislators from hiking state spending when California's treasury is flush and instead deposit that money into a giant rainy-day fund for unexpected deficits. Only when that reserve exceeded an eighth of the state's revenues could legislators dip into it for other purposes.

The open-primary measure would go on the June 2010 ballot, giving opponents plenty of time to work up opposition. The rules would apply not only to state legislators but also to members of Congress, who may tap their ample war chests to defeat it.

Sen. Mark Leno (D-San Francisco) predicted: "It is going to get killed for sport."

[Soldier4Christ]

Stocks slide, Dow ends at lowest in 6 years
Outlook for economy, banking and corporate earnings dims

The Dow Jones industrial average tumbled to its lowest close in more than six years on Thursday as sharp declines in key financial shares led the market lower. The blue chips broke through a psychological barrier established in November to close at their lowest level since Oct. 9, 2002, the last bear market low.

The feeble performance marks a setback for many investors who hoped the Nov. 20 finish would mark the low point of the market's extended decline from its October 2007 highs.

The market's inability to rally also signals that investors see no immediate end for the recession, which is already 14 months old and one of the most severe in decades.
Story continues below ↓advertisement | your ad here

The Dow had been threatening to break through the November bottom since Tuesday, when the index tumbled 300 points on worries about the economy and the stability of banks in Eastern Europe. Stocks had barely held the November low on Tuesday and Wednesday.

On Thursday, persistent worries about financial and technology stocks weighed on the market, with steep dropoffs in financial bellwethers like Citigroup and Bank of America leading the way downward. Both stocks ended down about 14 percent.

The Dow lost 89.68, or 1.2 percent, to end at 7,465.95. It was the lowest finish since October 2002.

Broader indexes also fell. The Standard & Poor's 500 index ended down 9.48, or 1.20 percent, to 778.94, but finished above its Nov. 20 low of 752.44.

The technology-heavy Nasdaq composite index suffered the biggest hit Thursday after Hewlett Packard Co. tumbled 7.9 percent after posting worrisome results. The Nasdaq fell 25.15, or 1.71 percent, to 1,442.82.

News on the economic front was mixed, providing little guidance for a restless market.

[Soldier4Christ]

"We're in danger of having the worst banana in 45 years."

The D-word: Will recession become something worse?



A Depression doesn't have to be Great — bread lines, rampant unemployment, a wipeout in the stock market. The economy can sink into a milder depression, the kind spelled with a lowercase "d."

And it may be happening now.

The trouble is, unlike recessions, which are easy to define, there are no firm rules for what makes a depression. Everyone at least seems to agree there hasn't been one since the epic hardship of the 1930s.

But with each new hard-times headline, most recently an alarming economic contraction of 6.2 percent in the fourth quarter, it seems more likely that the next depression is on its way.

"We're probably in a depression now. But it's not going to be acknowledged until years go by. Because you have to see it behind you," said Peter Morici, a business professor at the University of Maryland.

No one disputes that the current economic downturn qualifies as a recession. Recessions have two handy definitions, both in effect now — two straight quarters of economic contraction, or when the National Bureau of Economic Research makes the call.

Declaring a depression is much trickier.

By one definition, it's a downturn of three years or more with a 10 percent drop in economic output and unemployment above 10 percent. The current downturn doesn't qualify yet: 15 months old, that 6.2 percent drop in output and 7.6 percent unemployment.

Another definition says a depression is a sustained recession during which the populace has to dispose of tangible assets to pay for everyday living. For some families, that's happening now.

Morici says a depression is a recession that "does not self-correct" because of fundamental structural problems in the economy, such as broken banks or a huge trade deficit.

Or maybe a depression is whatever corporate America says it is. Tony James, president of private equity firm Blackstone, called this downturn a depression during an earnings conference call last week.

The Great Depression retains the heavyweight crown. Unemployment peaked at more than 25 percent. From 1929 to 1933, the economy shrank 27 percent. The stock market lost 90 percent of its value from boom to bust.

And while last year in the stock market was the worst since 1931, the Dow Jones industrials would have to fall about 5,000 more points to approach what happened in the Depression.

Few economists expect this downturn will be the sequel. But nobody knows for sure, and nobody can say when or whether the downturn may deepen from a recession to a depression.

In his prime-time address to Congress last week, President Barack Obama acknowledged "difficult and trying times" but sought to rally the nation with an upbeat vow that "we will rebuild, we will recover."

The next day, Federal Reserve Chairman Ben Bernanke told the House Financial Services Committee that the "recession is serious, financial conditions remain difficult." He held out a best-case hope that it might end later this year, with "full recovery" in two to three years.

Despite the tempered optimism, the economic outlook remains grim. Consumer confidence has fallen off the table, stocks are at 12-year lows, layoffs come by the tens of thousands, and credit remains tight.

The current downturn has many of the 1930s characteristics, including being primed by big stock market and real estate booms that turned to busts, said Allen Sinai, founder of Boston-area consulting firm Decision Economics.

Policymakers and economists note there are safeguards in place that weren't there in the 1930s: deposit insurance, unemployment insurance and an ability by the government to hurl trillions of dollars at the problem, even if it means printing money.

Before the 1930s, any serious economic downturn was called a depression. The term "recession" didn't come into common use until "depression" became burdened by memories of the 1930s, said Robert McElvaine, a history professor at Millsaps College in Jackson, Miss.

"When the economy collapsed again in 1937, they didn't want to call that a new depression, and that's when recession was first used," he said. "People also use 'downward blip.' Alan Greenspan once called it a 'sideways waffle.'"

Most postwar U.S. recessions have come after the Fed has increased interest rates to cool down rapid economic growth and inflation. Later, the Fed lowers rates and helps restart the economy, with the housing and auto sectors — both sensitive to interest rates — leading the way.

This time is different: As Senate Banking Committee Chairman Chris Dodd, D-Conn., said, "Our housing and auto sectors are leading us not out of recession, but into it."

What's more, the Fed no longer has the ability to kick-start recovery by lowering interest rates. The central bank has already effectively lowered the short-term rates it controls to zero.

And there are no guarantees the massive economic stimulus package and series of bank bailouts will stave off a nightmare recession, or worse.

"It is certainly plausible that the kinds of policy measures that have been good enough to tame the business cycle are no longer adequate in a fast-moving, highly leveraged, highly networked economy," said Anirvan Banerji of the Economic Cycle Research Institute.

Today's economic indicators don't project a depression. But Banerji is cautious. Economic data in 1929 didn't show that the stock market crash was about to lead to years of economic misery, either.

"It did not look like the kind of plunge that would be a depression until after the recession began," Banerji said. "The Great Depression didn't start out as a depression. It started out as a recession."

The depression that consumed most of the 1870s and followed something called the Panic of 1873 makes a better comparison to what's happening now, said Scott Nelson, a history professor at the College of William and Mary.

Financial markets had become centrally located by the 1870s, notably in London. And nations had not yet enacted the protectionist trade policies that were in place by the 1930s.

The results were not exactly promising. Gangs of orphans roamed city streets as men moved west to pursue cattle industry jobs. Widows struggled to make money by serving unlicensed liquor. Thousands of workers, many Civil War veterans, became transients.

The downturn lasted more than five years, according to the economic research bureau — four times as long as what the United States has endured so far in this downturn.

Today's recession is already longer than all but two of the downturns since World War II. But for now, public officials are being extremely cautious about the D-word. Alfred Kahn, a top economic adviser to President Carter, learned that lesson in 1978 when he warned that rampaging inflation might lead to a recession or even "deep depression."

When presidential aides asked him to use another term, Kahn promised he'd come up with something completely different.

"We're in danger," he said, "of having the worst banana in 45 years."

[Rhys]

The older term of "Panic" would seem to be more appropriate to what is happening today. The stock market is panicking and selling off stock at a loss. Companies are panicking and requesting bailouts. The government is panicking and throwing money at the problem, with little apparent result.

[nChrist]

Hello Brother Rhys,

You have a good point, and I think that "panic" would be a good way of describing many kinds of problems. It would definitely apply to what many people believe to be beyond their control. It probably starts small and ends up being a chain reaction.

Brother, I think that one could put forth a great argument that stability and trust of systems are what maintains calm and prevents "panic". We are watching a system out of control with no "trust" involved at all. Greed, corruption, and ineffective reactions in our current situation fed the panic. The overall result is more than just "panic", rather loss and suffering. In this case, much of the greed and corruption responsible for the problems were started by government. Numerous levels of greed and corruption kept the problems hidden until massive amounts of money vanished. It's revolting to consider how many layers and levels either filled their pockets, ignored it, or both. Obviously, government did a very poor job of policing itself, and government went looking for others to blame. It's sad that the government response was so poor and inept that they added to the "lack of trust" and uncertainty. Subsequent attempts to address the problems were even worse, and the confidence/trust is approaching zero.

Brother, I think we all know that better things could have been done. Now, it's almost obvious that there are other agendas at play than trying to fix the economy. Most are beginning to see that government is using the crisis for change they would NEVER have been able to do otherwise. In other words, the people are now being exploited for worse purposes. It will be things like this that help to usher in the Tribulation Period.

[Soldier4Christ]

2 corporate credit unions taken over by government
Regulators take over 2 big wholesale credit unions, seek to stabilize corporate credit unions


Federal regulators on Friday seized control of two large institutions that provide wholesale financing for U.S. credit unions, a move they say was needed to stabilize the credit union system.

The National Credit Union Administration said it has taken over and put into conservatorship the two corporate credit unions, U.S. Central Federal Credit Union, based in Lenexa, Kan., and Western Corporate Federal Credit Union, in San Dimas, Calif. U.S. Central has about $34 billion in assets while Western Corporate, known as WesCorp, has an estimated $23 billion in assets.

A conservatorship enables the government to operate a financial institution. Corporate credit unions provide financing and investment services to the much larger population of retail credit unions. Some of the 28 corporate credit unions in the U.S. have sustained steep losses on paper from the depressed value of the mortgage-linked securities they hold.

The NCUA, which oversees some 7,800 federally insured credit unions, said it "will continue to take any and all steps necessary to preserve a well-functioning system of corporate credit unions and to protect the assets of (retail credit unions) and their members during the ... financial market dislocation."

The financial services provided by the two corporate credit unions "will continue uninterrupted" and there will be no direct impact on the 90 million members of retail credit unions nationwide, the NCUA said in a news release.

It said retail credit unions, which are cooperatives owned by their members, remain financially strong -- with net worth exceeding 10 percent of assets, and sustained growth in assets and membership despite the deep recession.

The NCUA staff recently completed a "stress test" of the mortgage- and other asset-backed securities held by all corporate credit unions, including U.S. Central and WesCorp, and found that "an unacceptably high concentration of risk" was contained in those two institutions, the agency said Friday. Securities held by the two have continued to lose value since late January, reducing their available cash and worsening a "loss of confidence" on the part of their member credit unions, the NCUA said.

In January, the NCUA injected $1 billion of capital into U.S. Central. At the same time, the agency moved to guarantee tens of billions of dollars in uninsured deposits at corporate credit unions overall, the latest in a series of actions to shore them up in the face of financial stress.

The NCUA said it would automatically guarantee uninsured deposits at all corporate credit unions through February and then on a voluntary basis through Dec. 31, 2010.

The agency's insurance fund is financed by fees paid by credit unions. As is the case with banks and thrifts, regular deposit accounts in federally insured credit unions are covered up to $250,000.

In December, the agency made more than $40 billion available to support several corporate credit unions with a new borrowing from the Treasury Department and provided another $2 billion to help struggling homeowners.

The NCUA also has proposed restructuring the corporate credit union system with an eye to enhancing its stability.

U.S. Central has said it expected to report a substantial loss for 2008, due to around $1.2 billion in charges for impairments in its holdings of mortgage-backed securities.

[Soldier4Christ]

AIG value drop of $214 billion draws lawsuit
'Freedom Watch will not rest until justice is done'

A lawsuit has been filed by a public interest law firm, Freedom Watch USA, on behalf of shareholders of American International Group who have watched the value of the company plummet by some $214 billion.

The class action lawsuit filed in federal court in Los Angeles is a "wide reaching" claim that will do what Congress cannot, said Freedom Watch USA founder Larry Klayman.

"Today, the American people, not the compromised ruling elite in Washington, D.C., have begun a second American Revolution to take the country back from the con men on Wall Street, and on Pennsylvania Avenue – who under successive administrations played a central role in the meltdown of the U.S. financial system and economy," Klayman said.

"Freedom Watch will not rest until justice is done and it won't come from the Obama administration, bent on deceiving the U.S. taxpayer that it intends to clean up this corruption, all the while lining the pockets of its friends at AIG with government bailout money, who gave handsomely to have the president elected," he said.

The lawsuit seeks the return from the company directors of the "millions in illicit bonuses, dividends and other perks they paid out to themselves and other officials who destroyed the company's' financial standing."

The lawsuit also aims to recover from the directors the shareholders' losses over the last years and to make AIG whole under new leadership, without the use of government money.

The lawsuit alleges the defendants, including Richard Holbrooke and Martin Feldstein of the Obama administration, "have seriously undermined and damaged AIG's financial health and valuable past reputation by systematically causing and/or permitting the company to engage in a litany of highly risky, detrimental and reckless business dealings, activities and transactions that have caused the company to verge on bankruptcy and which have required in excess of $190 billion dollars to date of government provided monies."

The company, in December 2000, "had a market value of approximately $217 billion dollars. Today it has a market value of approximately $3.5 billion, a net decline of $214.5 billion based on the market capitalization rate formula," the suit alleges.

AIG used "financially unsound" credit default swap derivative contracts and collateralized debt obligations to expose the company to "enormous risk," the suit says.

"After AIG posted a record breaking $62 billion dollar loss for the 4th quarter of 2008, the defendants, each and every one of them, incredibly paid out $165 million dollars in bonuses to its executives in March of 2009 and $55 million dollars in December of 2008 for this poor performance, and also paid out dividends when this was not reasonable or warranted under the circumstances," Klayman's case alleges.

Klayman said 400 workers each received between $1,000 and $6.5 million, and seven executives in the unit responsible for many of the losses each got more than $3 million.

"The bonuses were allegedly for retention, in part, and also performance based, but it has become clear that this was not the reason for the bonuses; rather looting of shareholder and government assets was the motivation," the case alleges.

It continues, "During this time of unprecedented wealth destruction for AIG shareholders, each of the defendants were compensated generously by way of handsome salaries and exorbitant bonuses and dividends, among other benefits and perks, despite their misconduct."

WND recently reported a poll indicated three in four Americans want members of Congress to return money they got from AIG for their political campaigns.

The poll from The O'Leary Report by Brad O'Leary and Zogby International showed 73 percent of Americans think politicians, including President Obama and Sen. Chris Dodd, D-Conn., should not have profited from AIG and should return the money.

Obama and Dodd were the top recipients of campaign largesse from AIG over the past two years, with Obama getting $104,332 and Dodd taking in $103,900. Others received money, too, but in smaller amounts. All together, AIG donated $644,218 to federal politicians.

According to the Washington Post, Federal Reserve Chairman Ben Bernanke recently confirmed that he had wanted to sue AIG to stop the company from paying out about $165 million in bonuses, but Fed lawyers advised against the litigation.

AIG CEO Edward Liddy told Congress last week that the Fed signed off on the bonuses before they became public. The company also has said some of the employees have promised to return the bonuses voluntarily.

[inspektorgadget007]

Hello everybody!
Stock market was a suit that never fitted me. Just a question. I have 10 000 GM shares. According to the latest GM restructuring plan,
"...The aggregate amount of GM common stock to be issued to the U.S. Treasury (or its designee)
pursuant to the U.S. Treasury debt conversion and to the new VEBA pursuant to the VEBA
modifications would represent approximately 89 percent of the pro forma GM common stock
(assuming full participation in the exchange offers), with the final allocation between the U.S.
Treasury (or its designee) and the new VEBA to be determined in the future. Of the remaining
pro forma outstanding GM common stock, noteholders would represent approximately 10
percent, and existing GM common stockholders would represent approximately 1 percent. We
determined the foregoing GM common stock allocations following discussions with the U.S.
Treasury where the U.S. Treasury indicated that it would not be supportive of higher allocations
to the holders of notes or to existing GM common stockholders...."

If I understood it right after all this pushy-pushy by Barack O'Bama and his bosses, the existing common stockholders will get 1 % ?!

1% of what?

How this will translate to my 10 000 shares?

Thank you for your answers.

[nChrist]

Hello Inspecktorgadget007,

I see this is your first post, so WELCOME!

I wish that I could help you with your question, but I don't have a clue. Everything you said was way over my head, even though I do have a 401k. I don't know the status of my own 401k because I don't want to know. I told my broker before all of this started that I wanted to be very conservative on about 80% of my little nest egg. As it turns out, there isn't anything conservative these days, so I have no idea what's left of what I paid into for so many years. I wasn't left with any smart choices except to leave it alone and see if part of it might recover. I suspect that many people are doing the same thing. If you cash it out with cents on the dollar, you still have to pay taxes on top of that, so it's a lose - lose unless things recover.

I'll guess that it will be some time before anyone with GM stocks know how they stand because of the bankruptcy proceedings. A court or numerous courts will probably be involved, all of the lawyers will be paid, and the judge will determine how to divide up what's left. That's the best I can tell you. I would suggest that you talk with a broker.

Back to a more pleasant topic:  I hope that you enjoy Christians Unite, and I look forward to having fellowship with you.

Love In Christ,
Tom

 

[Soldier4Christ]

Hello everybody!

1% of what?

Hello and welcome to the forum.

Based on what some experts "think" the 1% that is being spoken of here is a percentage of the overall common stock owned by various people. 10% of the stock will be owned by creditors and 89% will be owned by the government and the union. This will make the government and the union the primary owners of the company. Your 10,000 shares will be a minute drop in the bucket in comparison to the overall shares owned by the government.

To fully understand what impact this will have on your shares it would be necessary to know the percentages of stock owned by whom before this happened. As Brother Tom said this also hinges on what happens in the courts.

I'll guess that it will be some time before anyone with GM stocks know how they stand because of the bankruptcy proceedings. A court or numerous courts will probably be involved, all of the lawyers will be paid, and the judge will determine how to divide up what's left. That's the best I can tell you. I would suggest that you talk with a broker.

I am far from being an expert in the area either but I have done some research and study into stocks. What you said is precisely what even the "experts" are doing ... guessing. It may be somewhat of an educated guess but it is still a guess. Much of what the stock market is about is basically nothing more than gambling on what they "think" each company will do in profits. If a company does poorly then stocks go down, if it does well the stock shares go up. No one can know for sure just exactly what these businesses will do from one day to the next.