Meltdowns

How AIG FP Brought Down the World  “I guess the message of Lewis’s piece (in Vanity Fair) is that FP caused the global financial crisis, even if it didn’t necessarily cause the complete downfall of AIG — that AIG ended up buying in to the bubble created by FP, just companies like Citigroup and Bear Stearns did. Or, to put it another way, FP brought down the financial markets, and the crashing financial markets brought down AIG.”    Seeking Alpha  7/02/09

General Electric: Genuine Risk of Collapse?  “The virtual crash in its stock price indicates that there is something seriously wrong with GE. The stock reached $53 at its peak in 2000. It closed below $17 this past week, the lowest level since the mid-1990s. CEO Jeffrey Immelt, who took over from icon Jack Welch in 2001, has made his mark by managing the company to a 68% decline in its stock price. You will not see anyone on CNBC take a hard look at GE’s financial statements or ask the CEO tough questions, because Mr. Immelt signs their paychecks. While shareholders have taken a bath, Mr. Immelt, a Harvard MBA, raked in $72.2 million of compensation between 2002 and 2007. A company that is known for its pay for performance mantra evidently does not hold its CEO to the same standards.  Seeking Alpha  11/17/08

Venture Capitalists Have Flashbacks as Institutions Dump Stakes  “Universities and pension managers are dumping their holdings in venture-capital funds, depressing values by as much as 50 percent as the financial crisis extends to private companies. Investors have venture-capital stakes valued at more than $2 billion up for sale, double the $800 million this time last year, said Hans Swildens, principal at Industry Ventures LLC, a San Francisco-based firm that buys venture stakes.  The glut may lead to a chilling in the venture-capital industry that rivals the slowdown between 2000 and 2003, when investments fell 81 percent.

 

The next meltdown: Credit card debt “The troubles sound familiar. Borrowers falling behind on their payments. Defaults rising. Huge swaths of loans souring. Investors getting burned. But forget the now-familiar tales of mortgages gone bad. The next horror for beaten-down financial firms is the $950 billion worth of outstanding credit-card debt—much of it toxic.”  Business Week  10/09/08

 

Mean Street: GM = Government Motors

Wilbur Ross Says GM Bankruptcy Filing Would Be a `Total Mess’ -`Doesn’t Add Up’  “GM, Ford and Chrysler have asked for $25 billion in bridge loans to support their operations while they weather the worst automotive market in 17 years.   Such legislation is being crafted by Democratic Senator Carl Levin and Representative Barney Frank, respectively of Michigan and Massachusetts. The Bush administration opposes tapping the $700 billion financial-rescue package for automakers. ‘It doesn’t add up that they are letting GE and American Express to become banks to get aid, but they won’t save the car industry,’ said Ross.”   Bloomberg  11/15/08

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