Power And Dollar

Where Do Mccain And Obama Want To Go With This?

Lehman was still crying about loss of the Korean (KDC, sold at SEO, not in any of the US exchanges) sale last Friday.  And now, poof, gone!  Merrill is now a subsidiary of Bank of America!  Certainly buying Merrill is a smarter buy when one compares the balance sheets.  However, what about the management cost to make the transition?  What kind of clienteles do they have in common?  Of course, Bank of America may just want to buy the asset portfolio and client list and start cost elimination (layoffs).  However, this event is more than Merrill, more than Merrill and Lehman, more than the whole today’s S&P.  Lehman and Merrill have become a political issue in this election year.  It has been given its own life and it will take to all sorts to directions.  Its political impact will probably exceed Katrina or Ike and Katrina combined.  

 

The non political impacts are obvious: oldest brands in the investment banking world are gone (who will do my next merger deal?); financial consequences are global (where to park my money?); confidence in the America investment banking is immediate; confidence in the financial industry is also weaken (Countrywide, Freddie and Fannie, Merrill, Lehman, AIG.  Anyone left?). 

 

The political impacts are very unpredictable:  Republicans are calling regulation overhaul; Democrats are taking shots at the McCain’s subscribed philosophy.  

 

Are the Republicans are talking about a reform in mortgage underwriting?  Or retail banking? Investment banking? Hedge fund?  Speculative commodity trading?  Or accounting practices so that nothing is off the balance sheet?  Or are the Republicans talking about payday loans?

 

Are the Democrats talking about getting rid of exchanges?  McCain’s POW philosophy (if there is such a thing)?  

 

The candidates are so vague not only because they need to have the flexibility, but also they are clueless of what is going on.  You may laugh.  But that is the dangerous part.  Any piece of the finance industry is now part of a tighter regulation cycle.  This situation is no different than FDR’s power grab. 

 

Mortgage companies were in trouble.  Now, investment banks.  The connection is not “Wall Street” industry.  The connection here is the work flow.  The problem started out from the mortgages, the product.  Next, the buyers of these mortgage investment products.  Bond underwriters and the like are obviously the first one in line to take a hit.  However, the next ones are insurance companies, especially re-insurance companies.  AIG is the best exchange.  UK’s Lloyd is another one.  These companies are no different than multi-line banks: making money out of interest rate spread.  These insurance companies employ similar financial products to make their money.  

 

We may want to think about what kind of creative regulations politicians can think of.  However, the more myopic question is: where does it end?

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September 15, 2008 - Posted by | banking, Barack Obama, business, Current Events, Democrats, election, Election 2008, John McCain, mccain, Money, obama, opinion, Palin, politics, Republican, Sarah Palin, wordpress-political-blogs

5 Comments »

  1. New York Times:
    “…his temporary yielding of the gavel is an urgent necessity for a Democratic Congress elected
    two years ago on promises of an ethical housecleaning. The villa dealings only add momentum to the investigations of two earlier controversies — Mr. Rangel’s favored treatment in occupying four rent-stabilized apartments in Manhattan, and his improper use of official letterheads to solicit support from charities and corporations for an academic center to memorialize his career in public service.
    “…If Mr. Rangel refuses a temporary hiatus from his chairmanship, Ms. Pelosi should remove him permanently.” (09/15/2008)

    And Obama says the Democrates want to be different, Yea Right!! Same ole group of don’t do as I do do as I say. Palin for President!!!!

    Comment by Bill Hodges | September 15, 2008 | Reply

  2. Dropping Rangel on Obama is just what McCain would do and I can see you’re cut from the same cloth. It’s really weird when even a Rove & O’Reilly have to tell the GOP, “Hey, people put the fangs away.”

    People are going to vote DEM this year because even after 8 years, McBush can’t erase one fact.

    This is how the DEMS exited the White House:

    FROM MONDAY, 15 JANUARY, 2001

    “PRESIDENT BILL CLINTON WILL LEAVE OFFICE WITH THE LONGEST BOOM IN US HISTORY STILL INTACT.— MR CLINTON ALSO LEAVES THE LEGACY OF A HUGE AND GROWING BUDGET SURPLUS, the product of years of bitter battles between Republicans and Democrats.¬¬¬¬¬_— During the eight years of [his] presidency, the economy expanded by 50% in real terms, and BY THE END OF HIS TENURE THE US HAD A GROSS NATIONAL PRODUCT OF $10,000BN – ONE QUARTER OF THE ENTIRE WORLD ECONOMIC OUTPUT.__— The booming US economy has brought economic benefits right across the income spectrum. The unemployment rate has dropped by half, to 4%, a 40-year-low, while the economy has created some 15 million jobs. THE BOOMING ECONOMY AND STRICT CONTROLS OVER GOVERNMENT SPENDING HAS MEANT THAT MR CLINTON ALSO LEAVES OFFICE WITH THE PUBLIC FINANCES IN THEIR STRONGEST SHAPE FOR DECADES. The Office of Management and Budget is projecting a surplus of $5,000bn over the next 10 years, ENOUGH TO PAY OFF THE ENTIRE FEDERAL DEBT AND FUND SOCIAL SECURITY, THE STATE PENSION SCHEME, FOR SEVERAL MORE DECADES. ___But that position has been reached after a long political struggle.”

    -(Democrat) Bill Clinton’s Economic Legacy
    By BBC News Online’s Steve Schifferes

    Comment by really_imo | September 15, 2008 | Reply

  3. […] Where Do Mccain And Obama Want To Go With This? Sep 15, 2008 […]

    Pingback by aaaproxy » Blog Archive » than merrill | September 20, 2008 | Reply

  4. […] Where Do Mccain And Obama Want To Go With This? Sep 15, 2008 […]

    Pingback by » than merrill » than merrill | September 20, 2008 | Reply

  5. […] Where Do Mccain And Obama Want To Go With This? Sep 15, 2008 […]

    Pingback by investing-finance.info- » than merrill | September 20, 2008 | Reply


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