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louis c

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Gender: Male
Hometown: Boston
Home country: USA
Current location: Boston
Member since: Fri May 14, 2004, 05:52 PM
Number of posts: 8,652

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Here's a little history lesson for those who think voting Republican is a good idea

When ever I enter a discussion about President Obama, I like to have a starting point. The facts are tremendous allies of ours in this debate, yet everyone discounts them.

Gas prices were $4.09 a gallon in June of 2008, before the start of the Great Bush Recession. It's less than $3.00 a gallon now. For the first time in over 40 years, America is energy independent. The stock market, which was in free fall and into which much of the middle class pension funds and 401k investments are in has risen about 250% under Obama and over 9,000 points. We have had 54 consecutive months of positive job growth for the first time in modern memory. The unemployment rate is under 6% from a Bush high of nearly 10%. Our country is safe, even as Republicans continue to play the "fear card" on every issue they can think of (except guns).

Here's what I tell my friends who disdain Obama, "go back and Google Sept. 15th and 16th, 2008, and then come back and talk to me about the President."

This Day in Crisis History: Sept. 15-16, 2008
Paul Vigna

—Wall Street Journal
This September, MoneyBeat will take a daily look back at the developments surrounding the collapse of Lehman Brothers and the financial crisis that followed. Each day, we will recap the events of the corresponding day in 2008, as the worst crisis in 80 years built to its terrible climax.

Sept. 15, 2008

After one of the most momentous and tumultuous weekends in Wall Street history, investors awoke to a rapidly intensifying financial crisis.

Lehman Brothers had filed for bankruptcy protection Monday morning and Merrill Lynch had sold itself to Bank of America BAC +0.23%. By the end of the day, investors had turned their focus to insurance giant AIG, which was tottering, needing to raise billions in capital or face collapse.

The Dow fell 504.48 points on Monday, Sept. 15, its biggest percentage drop in more than six years. Prices on Treasurys rose as investors fled to safety; and the cost of insuring the debt of investment grade companies against default jumped.

The weekend had begun with U.S. government convening a meeting of Wall Street CEOs Friday night. Their task for the weekend, the government said: Find a solution to Lehman, but there would be no government bailout.

By the afternoon of Sunday, Sept. 14, Lehman CEO Dick Fuld was essentially out of options.

Without government aid, a deal in principle for Barclays to buy Lehman had fallen apart. Bank of America, considered the most likely buyer earlier in the week, had informed Lehman it could not do a deal after concluding that firm’s real-estate portfolio was worse than expected.

Desperate to avoid steering his 25,000-person company into bankruptcy proceedings, Mr. Fuld kept calling Bank of America CEO Ken Lewis. His call wasn’t returned. Unbeknownst to Mr. Fuld, Bank of America was in secret talks with Merrill Lynch. By Sunday night, the two firms had struck a deal, and there was only one option left for Lehman.

As a meeting of Lehman directors wrapped up around 10 p.m. Sunday night, Mr. Fuld leaned back in his chair. “I guess this is goodbye.”

Stocks headed south from the opening bell Monday. For much of the day, however, they held up better than many had expected and traders marveled at the market’s resilience. Then in the final hour, a wave of selling swept through the market, driven by concerns about the stability of AIG, whose stock had dropped 60%.

Sept. 16, 2008

Uncle Sam didn’t take long to change his mind.

One day after watching the market fallout from its decision to let Lehman fail, the government did a complete roundabout, and saved AIG, which, it deemed, was truly too big to fail. The government lent the company’s $85 billion in exchange for a 79.9% stake, capping off 10 days of frantic maneuvering that would reshape the world of finance.

The decision was arrived at after a series of what by now were becoming regular affairs: the emergency meeting. Mr. Paulson and Mr. Bernanke met with Congressional leaders. What had them truly worried was that a failure at AIG could spiral into seemingly safe investments like, into stocks and bonds and derivatives, and send the credit crisis spiraling out of control.

It wasn’t just the travails at AIG. Earlier on Tuesday, a money-market fund, the $62 billion Reserve Primary Fund, did something that wasn’t supposed to happen in money-market funds: It “broke the buck,” meaning its net asset value fell below $1 a share. A number of money-market funds had investments in both Lehman and AIG, and AIG was also a big insurer of the funds.

AIG was downgraded on the 15th, forcing it to post $14.5 billion in collateral – more than it had in liquid assets. Not being able to post the collateral would spell a collapse for the firm, and the domino effect of that collapse would be “catastrophic,” the government determined, with staffers from the Fed and Treasury working through the night of the 15th to come up with a plan for the 16th. The president was briefed, and AIG’s board agreed to the deal on the evening of the 16th.
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