NationStates Jolt Archive

After multiple important banks going into default, being bought up or declaring bankruptcy and international stock exchanges falling rapidly are we looking at something similar to the global recession following world war one? If so why? and if not why not?

Does your "we" mean Canada, the USA or the world in general?

Personally I've never been in the part of the population that does good, so personally I couldn't give a ****. :tongue:

There are a lot of precautions against a the type of crises of the great depression. Added to that, banks outside the USA are typically a bit more regulated, so while they get some fall-out from US investments and loans, they don't typically have the same problems themselves.
I doubt the US economy will crash and burn 20's style, but they're not taking us with them if they do.

Does your "we" mean Canada, the USA or the world in general?

Personally I've never been in the part of the population that does good, so personally I couldn't give a ****. :tongue:

lol world in general . . . .but good call lmao.

There are a lot of precautions against a the type of crises of the great depression. Added to that, banks outside the USA are typically a bit more regulated, so while they get some fall-out from US investments and loans, they don't typically have the same problems themselves.
I doubt the US economy will crash and burn 20's style, but they're not taking us with them if they do.

solid ty.

Added to that, banks outside the USA are typically a bit more regulated, so while they get some fall-out from US investments and loans, they don't typically have the same problems themselves.
That's not actually true. The "unregulated" banks were the straight investment banks, and if you look at the European ones, they're no better than the Americans. The leverage is similarly high, and they took the same massive write-downs as the Americans from subprime and derivative stuff. The difference is that they have retail funding in the form of main street bank branches or high net worth clients that allowed them to survive the hits. But they're not out of the shit yet either - and their European governments aren't actually big enough to bail them out should they need it.

The normal retail banks in the US are regulated in basically the same manner as all retail banks, there is little significant difference. The reason those are wobbly in the US is because the home loans they issued are falling to pieces with all these people defaulting. The reason retail banks from other countries aren't looking just as bad isn't because they're better regulated, or better managed, but because their home loans are in markets that aren't in free fall. With perhaps the exception of the UK, and lo and behold, banks have been collapsing there too.

It's a pandora's box for sure. Frankly, the banks weren't regulated enough to keep shoddy loaning practices from occuring. The banks and lending agencies basically got too greedy and overextended themselves. And what really annoys me is the fact that the House Republicans still want a Free Market system with little regulation, and tax breaks on them. Are they mad? It's this little regulation that caused this problem in the first place, and why should my tax dollars go to bail out rich CEO's or give a tax brake to them. I heard that the CEO of WAMU still gets a millions of dollars in severence pay and a signing bonus, and he only served for three weeks. THREE WEEKS! For holy shits, this is an outrage.

I heard that the CEO of WAMU still gets a millions of dollars in severence pay and a signing bonus, and he only served for three weeks. THREE WEEKS! For holy shits, this is an outrage.
That's how severance pay (if he is indeed let go, JPM might keep him) and signing bonuses work though. It's incidental that this happened right after he arrived on the job.

If it makes you any happier, remember that at least this guy wasn't at fault.

On a personal note, I find it weird how I react to the whole CEO pay issue. I know it's wrong, and if I could change it I would - but I don't feel emotionally about it at all. I don't get angry about it, and everybody else does. Weird.

Extremely high severance pay (especially those that occur in the event of a takeover) are usually created for the purpose of discouraging takeovers rather than rewarding the CEO.

That's how severance pay (if he is indeed let go, JPM might keep him) and signing bonuses work though. It's incidental that this happened right after he arrived on the job.

If it makes you any happier, remember that at least this guy wasn't at fault.

On a personal note, I find it weird how I react to the whole CEO pay issue. I know it's wrong, and if I could change it I would - but I don't feel emotionally about it at all. I don't get angry about it, and everybody else does. Weird.

*sighs* I suppose if I was fired....I'd want those perks as well. But... it feels like this guy is getting rewarded for something he couldn't fix and that gives a mixed impression to quite a few people. Woopie the company went the way of the dinosaur but he still gets his money. In a lot of minds, that's like awarding a sexual deviant for raping someone.

*sighs* I suppose if I was fired....I'd want those perks as well. But... it feels like this guy is getting rewarded for something he couldn't fix and that gives a mixed impression to quite a few people. Woopie the company went the way of the dinosaur but he still gets his money. In a lot of minds, that's like awarding a sexual deviant for raping someone.
Well, in his case it really is more coincidence than anything. Three weeks ago, WAMU had problems, but Lehman hadn't blown up yet and we weren't staring down the abyss.

He was probably someone known for crisis management, so they got him to repair the firm's mortgage portfolio somehow. They offered him a "normal" CEO contract, which includes things like severance pay (and you get the same in many other professional positions as well). A week into the job, he wouldn't even have finished meeting all the key people in the company yet, and then Lehman blows up and shit hits the fan and lands all over WAMU. So I suspect he wouldn't have gotten a lot of sleep during this time, calling people, trying to find ways of raising capital, of finding an investor willing to buy into the firm or someone who'd pick up a few of its bonds. And then the ratings agencies start slashing the firm's rating with every day interbank lending seizes up until they reach junk bond status and the FDIC calls him and says "Sorry, dude, we're shutting you guys down."

He certainly doesn't deserve all this money in that he didn't really work to earn it yet - but at the same time you can't really blame him for the way his career in the position turned out. These things were really largely beyond his control and more the fault of whoever his predecessor was. And with the politics of this being as they are, chances are that legal proceedings will end up clawing back a lot of pay and bonuses from a lot of people on the basis that they were paid while the companies were insolvent.

By the way, I know people who know people who worked for Lehman Brothers. Apparently they're not sure they'll actually get their final paycheck. And those aren't millionaire CEOs by a long shot - they've just started their careers, on decent but not spectacular salaries. They still have to worry about mundane things like rent.

I have no doubt that just like FDR did in 1929, the winner of the next election will go on TV and tell us . . .

Oh, wait.

By the way, I know people who know people who worked for Lehman Brothers. Apparently they're not sure they'll actually get their final paycheck. And those aren't millionaire CEOs by a long shot - they've just started their careers, on decent but not spectacular salaries. They still have to worry about mundane things like rent.

People often over look this. These are largish organizations where the majority of people are not making mega-bucks. IBs did have a disproportionate amount of whale like earners, but there were also a lot of people for whom it was just a regular paycheck and they still have mortgages and rent to pay. And it sucks because it is a bad job market.

At the other end of the spectrum, I am hearing rumors of top lehman managers making airport plays. If that happens I will die laughing.

Just in time though, the SEC said it is going to end its oversight of IBs. Could this get any funnier.

Dow below 9,000 by the end of the year. Maybe January, depending upon congress.