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Home » Discuss » Archives » General Discussion: Presidential (Through Nov 2009) Donate to DU
 
abumbyanyothername Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Oct-11-08 07:31 PM
Original message
From the bowels of the mortgage finance system
I worked creating mortgage finance derivatives for over 20 years and here is the core question at the root of this bailout:

Are we better off without JP Morgan, and by extension, the Federal Reserve Bank?

What that means is that every dime of money you currently "own" would be potentially worth nothing and you and your fellow citizens would be forced to start all over again developing a barter and/or money system. Or perhaps our government could just print its own bills (instead of having the Federal Reserve Bank print them) and some kind of transition/exchange rules could be worked out.

Anytime any of our banking institutions threatens to fall and take JPM with it, the government steps in. If not (LEH) then it is allowed to fall.

You don't have to worry about understanding Credit Default Swaps, or FNMA/FHLMC or subprime mortgages. Just know that any time the government is rescuing any institution here, the trail points back to JP Morgan.
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flamingdem Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Oct-11-08 07:43 PM
Response to Original message
1. JPM is going to get the biggest hit from the Lehman failure
correct?
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abumbyanyothername Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Oct-11-08 07:45 PM
Response to Reply #1
2. They may
But if true, the exposure was not enough to threaten their solvency.

(As opposed to Bear Stearns or AIG.)

Morgan Stanley is next.
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flamingdem Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Oct-11-08 07:51 PM
Response to Reply #2
3. I heard a rumor on Friday
.. that another big bank might fail. But that's not a stretch at any time now!
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abumbyanyothername Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Oct-11-08 07:55 PM
Response to Reply #3
4. I don't think that any big commercial deposit bank
is in trouble now.

But MS and GS need capital -- and at the same time Hank Paulson announces that Treasury will make equity investments in banks.
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flamingdem Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Oct-11-08 07:58 PM
Response to Reply #4
5. hmmmm....
and meanwhile the CEOs of banks are shorting their own stock!
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soothsayer Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-12-08 05:38 AM
Response to Original message
6. I'd like to see Goldman go down. Seems like the root of the problem. All the crooks are from there
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