Bailout Spreading Beyond Banks

15 years ago

You can add Prudential, The Hartford, & MetLife to the growing list of financial (insurers) institutions requiring help from the TARP program. It seems obvious that the $700-$800B won't be adequate to squash the systemic risk to our economy caused by the housing debacle. Also in the article is a discussion of National City's failure.

Note in the article that annuities are only guaranteed up to $100K. Wow, I wonder how many senior citizens are relying on annuities? In the spring of '06, we had a maturing CD & since we're nearing retirement almost dropped $250K into an annuity...so glad we decided it wasn't a good idea. We stayed in cash.

For good news, DH told me mortgage apps have been up a bit the past week. Surprised me. Could be a fluke...too soon to know.

/tricia

Here is a link that might be useful: Rescue of Insurance Companies

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Comments (6)

fandlil
15 years ago
There will definitely be more bad news on the financial front in the coming weeks and months. This thing is not over yet. The biggest risk is that, as the crisis deepens just when people thought that the bailout package was supposed to "fix" it, then gloom and pessimism will take over and feed on itself. It's already started to happen, and may continue for a while.

I do not think we've hit a bottom yet.
qdognj
15 years ago
Hey T,
Beware of Lucy reading this thread and admonishing you about your 250k pile of cash..Don't you know people are losing their jobs/homes ;)
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Oh, gdogni. I tried to make this short, but it can't be said in a few sound bites. Who was doing the jobs before the illegals came? They were being done. Have we been quick to buy the idea that Americans don't want to do these jobs because we, ourselves, wouldn't want to do them? Americans have done jobs for many years I wouldn't want to have to do. I would do anything I could do, if necessary, but I do have my 'druthers. I wish you could have talked with the young woman I just spent time with the other day. She was almost in tears because she was pretty sure she was going to loose her jobs because the company had just brought in a new group of illegals. She commuted 60 miles - one way - to work on the assembly line of a chicken processing plant. I've been just in the office of a processing plant and my stomach lurched from the smell. It's a job I don't want to have to do - but others have for many years. She said, in a shakey voice, 'I've just got to have this job.' The shocking thing she told me is, if this company lays someone off, not fired for reason, but laid off because of slowdowns, etc., they will only rehire you one time. That means you can be rehired, but if laid off again (because a batch of illegals come in) you are no longer 'qualified' to work for that company. By way of their hiring practices, they are creating 'unqualified' workers in the area. People know to not apply for the job again. So when the news media goes to the spokesman for that company he/she can say things like 'we just can't find qualified workers', or 'we just haven't had any applicants' or the old stand by 'no one wants to do these kinds of jobs'. Neither they nor the media are going to tell you they fixed the situation. When you see jobs being filled by illegals - the only thing that means is they have the job. It means absolutely nothing else. We don't know how many others applied for the job, and didn't get it. One thing you have to realize is that in many areas, people are aware that only illegals will be hired, and they don't even apply. I saw illegals building the houses that got built in the frenzy of the last few years. Can we assume that Americans no longer wanted to do carpentry, dry walling, electrical,plumbing, bricklaying?? I don't think so. I know a lot who wanted the jobs. They are a bargain to employers because the employers have no responsibility. They don't have to comply with overtime laws, collect and match taxes, worry about OSHA regulations, workman's comp. If one gets hurt, they are taken to the hospital and the taxpayers pay for it. The media and the politicians are not giving out the true story on this. Now the reason I mentioned illegals was the fact they are working here. Americans already are competing with them for jobs, and if things get bad, it will be even more so. There is nothing wrong with mowing lawns and bussing tables, but that is not the only jobs they are doing. We will be hampered by the fact employers will have to work within the labor laws when hiring Americans, so given the choice, they will take illegals. The illegals are also getting benefits that are going to be needed for American families who loose their jobs. Again, just because Americans aren't doing the jobs, don't assume they won't or don't want to - now - but especially in the future.
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jakkom
15 years ago
There's still a lot of hedge fund deleveraging that has to go on, so I wouldn't expect things to get better until such forced selling tapers off. Such selling is apparently one of the contributing factors to the emerging markets sell-off and commodity faltering: hedge funds were extensively invested in both areas.

Since hedge funds severely limit redemptions, the selling will take several months, probably at least a couple of quarters, to work itself out.

You'd have to expect insurers to apply for handouts; they are a major part of the financial markets and always have been. It's not like they take in insurance premiums and then stash them in a vault somewhere, LOL.

Believe me, they put that money to work aggressively. CIGNA used to have a "zero floor" for their individual divisions (there were 5 of them) and each year, the dept. budgets would be a "zero + X%" the division had to earn in the marketplace.

It took my old boss about three years to dig down and finally get an actuary to confess that the "zero floor", which supposedly covered basic admin and op overhead, also contained a good-sized percentage based on what the company made on average from its investments in the markets and RE development. This "zero floor" percentage was 17% - meaning each division had to earn way more than that every year, to be more profitable than what CIGNA earned just from investing premiums.
dreamgarden
15 years ago
qdog-"Hey T,
Beware of Lucy reading this thread and admonishing you about your 250k pile of cash..Don't you know people are losing their jobs/homes ;)"

At least you weren't dumb enough to get sucked into a sub-prime loan from a crooked lender who could have cared less if you actually qualified or not. Right? ;)

And God bless those CEO's of Lehmans, Nat City, etc who will be walking away with huge (unearned) bonus's while their employees look forward to the unemployment lines this winter.

I'm sure it wouldn't be hard to find a way to blame these employees for being in the wrong place at the wrong time either. Hmm?!
qdognj
15 years ago
Keep dreaming,dreamgarden ;)

I have a HUGE problem with those who blame those or admonish those who may or may not be better off then them...And i am not saying the CEO's you mention are innocent and shouldn't be held accountable...and for the record,i am not wealthy,but feel people should not blame the rich for their problems...
lyfia
15 years ago
I have to agree with qdognj - We're not rich, but I sure realize when I get myself in trouble it is my fault and not others. Just like I think all the CEO's and other key figures involved in the mess should be held accountable I also think people shouldn't just get a free ride out of this mess either.

Also somebody tried to suck me into a sub-prime and I just went elsewhere. I do think people have to be somewhat held responsible for looking at what their options are when buying a home. I knew nothing about mortgages when I bought my first home, but I went and did a lot of reading and learning about it before choosing along with asking lots of questions.

I just hope what comes out of this mess is some learning on all levels and I know it is farfetched, but I'd sure like to see some of the entitlement that people seem to feel they have about things, money, houses, cars etc. will become one more of respect for being able to have/do what they do have instead.

Bailout Spreading Beyond Banks

Comments (6)

fandlil

qdognj

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dreamgarden

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