Financial News: ANOTHER MICHIGAN INSTITUTION ASKS FOR BAILOUT

Financial News: ANOTHER MICHIGAN INSTITUTION ASKS FOR BAILOUT

Submitted by StateandMain on November 18th, 2008 at 3:48 PM

ANN ARBOR - November 16, 2008 - As legislators prepare for the impending debate in the lame-duck Congressional session over a potential bailout package for the Big Three US automakers, another of Michigan's foundational and once-proud organizations is preparing to ask Congress for assistance. The state's flagship university, the University of Michigan, has watched its biggest investment, its football team, falter in recent weeks and come dangerously come to default. The potential collapse of the winningest program in college football history does not bode well for the already-beleaguered and depressed state.

Most blame the program's devaluation to a risky credit default swap that the university's athletic director, Bill Martin, executed last December. Martin swapped the risk that existing coach Lloyd Carr would experience a losing season in the coming years, which Carr has never experienced, for the risk that Appalachian-born coach Richard Rodriguez, who has had 4 losing seasons in his career, would not lead the program into depths that it has never experienced. Unfortunately, the unregulated 'swap' did not pan out for Martin and UM, as the program has now sunk to a subterranean-level akin to the depth of the coal mines in Rodriguez's native state. Rodriguez's previous firm, a boiler room known as West Virginia University, was known not only for it's 'spread option' offensive attack, but also for introducing the world to such future rainmakers as Chris Henry and Adam Jones. Before WVU, Rodriguez's other executive positions were as the 'Gordon Gecko' of Glenville State University and Salem College, which folded after Rodriguez's first season at the helm where he went 2-8.

Market watchers now worry that Michigan might experience a similar fate if they are unable to unload one enormous toxic asset. UM recently agreed to pay $2.5 million (US) per year for the next six years, for an asset that many are valuing somewhere close to a sub-prime loan. Like a sub-prime loan, some market analysts say the application for this pay-out was woefully inadequate and the university failed to do their due diligence in investigating the potential beneficiary. "State Street got drunk," President Bush recently commented, "and now Main Street is paying for it," referring to the real possibility that errors in decision-making occurring in UM's State Street athletic offices are most drastically felt by UM fans who flock to Michigan Stadium on Main Street.

Nonetheless, Rodriguez claims that the "fundamentals of the spread option are strong." When pressed to explain the recent woes, Rodriguez blamed the weather, the fact that games are played on Saturday instead of Tuesday, and particularly that the NCAA does not allow Rodriguez to submit statistics from UM's intra-squad scrimmages for its official record books. Rodriguez remains firm in his convictions: "I believe in the free market offense, a.k.a the spread." "The spread is the answer, not the problem," Rodriguez continued from the film room where he was watching a highlight reel of dimunitive freshman wide receiver Martavious Odoms make spectacular catches, all for 5 yard losses. "I suppose I could just run the ball, but's that kind of like a treasury bond, it's not exciting," Rodriguez commented. "Plus, it's very un-spread-like."

UM fans are prepared to ask Congress for an un-precedented 'do over': a nullification of the $2.5 million 6-year liability and a forced executive restructuring. Proponents of the proposal claim the government will be repaid with a return to some semblance of comfort and familiarity in the Big Ten and future assurances that this American institution will not bolster the status of French-Canadian quarterbacks who represent weaker firms. (Insert CJ Bacher picture) Former VP candidate Sarah Palin told reporters that "this is just an example of what happens when you try to spread the wealth around" in the 40th interview of the week to be conducted in her kitchen.

Meanwhile, the Michiganders who are hardest-hit by UM's recent plunge are wondering what they will do during this year's bowl season. Some claim that because they are so accustomed to travelling to watch UM in a bowl game, they might leave their homes out of involuntary habit. Some are planning to set up a "Martin-ville" shanty towns just outside Pioneer High School, others plan to don fedoras and trench coats and wait in long beer-lines at local sports bars in hopes to catch a glimpse of other teams playing in bowl games. "It's not about winning and losing," one long-time Wolverine fan commented, "It's about the humiliation of saying 'we need help.'"

(Note: This is a joke - don't call Martin's office about a future credit default swap.)

Some people named Freddie and Fanny destroy us

Some people named Freddie and Fanny destroy us

Submitted by rlc on July 12th, 2008 at 2:00 AM
I can't claim to know too much about this, but basically here is what I have discerned (please correct me if I am wrong). A couple companies who sell bonds backed by the US government, base those bonds off mortgages. They bought a whole bunch of overextended ARM mortgages (and in general other unqualified mortgages), and now the value of those is way less than the bonds they sold. So either our government (tax dollars) bail them out, or the government will be forced to pay the bonds and get what they can from the mortgages (reduce the value of the dollar). So basically the whole country pays for these companies because they are government backed, but there was no over sight to tell them not to buy candy from a van down by the river?