September 16 2008

Wall Street In Crisis

Even though I have been in business for over 22 years now, I will never claim to understand all the trappings of high finance. What I will say is that all of these people involved with some of the stupid mistakes made on behalf of companies like Lehman Brothers and AIG could do with going back to their most basic business classes.

I have sat back watching this whole debacle unfold, and I am just dumbfounded by some of the things I have learned were going on that led to this whole slide into oblivion for these companies.  Apparently there was some form of loan I had never heard of before named “No Income, No Job, (and) no Assets”, or N.I.N.J.A. loans, where, as the name implies, apparently you can get a loan without a blasted thing going for you in the positive corner.

What idiot came up with this idea?  How can anyone with a modicum of intelligence even begin to think that making loans to someone with no assets is a bright idea?

As I see it, you had companies who were already incredibly rich and just got greedier for even more money, and how do you make that money in an over saturated market?  Well, you just give money to anyone who walks in!

So, I honestly was just going to let this whole thing pass without much thought, but when I heard the news tonight that the government is loaning $85 billion dollars to bail out AIG, well, it kind of becomes the business of every US citizen doesn’t it?  Now it appears if you’re big enough, and run your company into an iceberg, the government will come and pick you up, dust you off, and say “now you behave”.  However, if you’re a small business, you’re screwed and too bad.

Remember that old saying about “the rich just get richer…”?  Yeah, seems to be true doesn’t it?

Again, I am no economic expert, but this current crisis feels to me like it was all brought on by greed of slap happy executives who thought that the mere fact they were loaning money would keep the good times rollin’, and basic business sense be damned.  Yes, these companies crashing is bad for economies, and I would say it would be worth to let them rot, but then no one ever seems to learn from any company falling apart, so why bother?

I guess I am writing this more out of a bewilderment than having my own conclusion because nothing about this whole mess makes the least bit of sense to me how any group of people could be collectively this stupid.

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  • Wow. I can’t believe they really have a NINJA loan. Don’t get me wrong, I knew AIG had shady and illegal practices but NINJA loans is just straight plain retarded.

    The dumbest part about all these bailouts is that it will only make the economy worse. We’ve just announced to every big company that they don’t even need to work for their dollar anymore or play it safe, they can do whatever the eff they want and if they fail Big Brother will help them out. In other words, we’re actually encouraging more shenanigans from these big corporations.

    It really makes my brain cells hurt. I can feel them dying from trying to comprehend this situation. In the end, the only thing that reassures me is that these people are simple criminals and will get what they deserve somewhere down the line.

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  • Jo

    What’s happened to AIG happened to Fannie and Freddie, the housing situation, going back to what you said about No Money? Get a Loan for Free! idea put out by the Clinton administration. AIG is more than just loans and holdings, but insurance. The stable portion of AIG, the insurance division, would fail if the whole umbrella company did. The loan as I see it is going to keep one division from collapsing and bringing down the whole. We had some seriously nervous customers yesterday, but our company has a huge insurance policy with AIG and we weren’t going to move it. Thing is, its a loan … from what I understand, Freddie and Frannie were bailed out with a give me from our tax dollars.

  • Still, a loan to failing companies is just the sort of logic that got us into this mess. We’re giving loans to companies who can’t afford them because they gave loans to people who couldn’t afford them. It’s just an endless circle!