US involvement in F1: How US bailed out some sponsors of F1

[TauToadmiester]

http://theweek.com/article/index/209948 ... y-happened

Please NO FLAMES, just for your Info!

** Just to let everyone know that the USA is MORE involved in F1 than you would imagine! Via sponsors of F1 **

The USA Federal Reserve gave short term loans to many institutions (21,000 transactions), about $9 Trillion total! (that's 9,000 Billion, or 9 Million-Million, $9,000,000,000,000 for the number challenged)

Guess who got some of these loans, NON USA institutions (some F1 sponsors):

'Under a program called the Commercial Paper Funding Facility, Swiss bank UBS borrowed $74.5 billion — more than twice as much as the top American recipient, Citigroup. Britain's Barclays got $47.9 billion through another loan program, and France's BNP Paribas borrowed $41.6 billion. The European Central Bank and other national banks also turned to the Federal Reserve for help'

In addition to above, of course do not forget the AIG (USA taxpayer loaned $189 Billion) pay out to recipients (some F1 sponsors):

$11.9B Societe Generale (4.1/6.9/0.9)
$11.8B Deutsche Bank (2.6/2.8/6.4)
$8.5B Barclays (0.9/0.6/7.0)
$5.0B UBS (0.8/2.5/1.7)
$4.9B BNP Paribas (0.0/0.0/4.9)
$1.1B Bank of Montreal (0.2/0.9/0.0)
$1.0B Deutsche Zentral-Genossenschaftsbank (0.0/1.0/0.0)
$0.8B Rabobank (0.5/0.3/0.0)
$0.7B Royal Bank of Scotland (0.2/0.5/0.0)
$0.7B DZ Bank (0.7/0.0/0.0)
$0.3B Banco Santander
$0.4B Dresdner Bank AG (0.0/0.4/0.0)
$0.4B Credit Suisse (0.0/0.0/0.4)
$3.5B HSBC Bank (0.2/0.0/3.3)

etc.

For some of us in the USA, the whole wallstreet bailout is still a VERY sore subject...

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[Just_a_fan]

S'funny, but as the country that basically caused the whole banking crisis of the last year, I can't help but feel that the US should be helping out other countries/institutions etc.

Let's not forget that other governments have also been propping up the banking sector too - it's a sore subject with many here in Britain, for example.

Of course, we'd have more money to spend on helping people through it all were we not still involved in the "war on terror" that followed the "search for WMD" started by the previous US President and followed, puppy-like, by the previous two UK Prime Ministers...

The fact that our money is being used to help protect one of the richest countries in the world - Saudi Arabia - whilst they control the oil market to their massive financial benefit isn't lost on some either.

It's a good job we've all kept our sense of humour through it all...

[mep]

I don't really get what you want to say.
Do you want to say that USA (you as tax payer) give money to Europe (us) and that we should be thankful now?
Never forget that USA caused the current crisis.

I also don't get how you can make a connection between loans and F1 sponsorship?
Don't even think about that USA is involved in F1 just because of that.
The interconnection of different banks and the whole financial sector became so difficult and complex that maybe nobody really understands it. However F1 does not play any role in it. Don't overrate F1, it has no relevance on the world.
Also don't think the USA rescues the whole world.

In one point I have to agree with you the people in charge should show responsibility for their actions. This goes for politicians, banker, executives...
I can understand why people started revolutions some hundred years ago. If it continues like this we might get new revolutions but the people only start this when they really can’t exist anymore.

[sknguy]

Much of those loans were intended to services a system that began breaking down years ago. The history of those loans goes back before the proverbial $*@t hit the fan. In seeking to protect the US economy, the Federal Reserve was simply trying to jumpstart a financial system which began stalling years ago.

But the issue is way more complex than the reporting of what's been laid it out in the media, and which had nothing to do with Formula One. That loans program was simply about systems maintenance, and like it or not, our economies are global. While mom and pops may have lost retirement savings, the only people for whom the financial crisis was simply business-as-usual were the rich. For the "Joe the Plumbers" out there... it was anything but.

The world financial casino system has nothing to do with Formula One. To the rich, it's merely a distraction. As for the bail outs, they were simply about damage control and nothing to do with actually fixing the system. The whole system is really quite vulnerable and rest assured, there will be more economic crisis in the future. Maybe it'll be a nanotech, or an envirotech, or some other economic bubble bursting. But it'll likely happen because we do like to speculate (read gamble).

On an aside, I think we should be concerned that western nations are trying to get emerging economies like China to capitulate and accept our financial standards. We have nothing to teach these countries. After all, lol, the Chinese invented money.

[strad]

I can't believe you blame the USA for your sick financial intitutions and greedy ways.
Look at Canada,,they didn't get sucked in cause they didn't play.
You made your own messes. You may have greedily copied us but nobody forced you to follow the path.

[aterren]

TauToadmiestenr,

Your anger is understandable however I find it offensive that you think executives who were obeying the law and furthering the public policies set forth by our Congress (Barney Frank et al) to expand home ownership should be murdered or commit suicide. There is plenty of blame to go around. For every executive that was involved in this mess there are hundreds, or thousands, of people who lied about their income to get a mortgage. Where's the outrage against them? What about the rage against politicians who crafted policies and laws to expand home ownership that proved to have massive unintended consequences (Fanny, Freddie, etc)?

The 'bail out' averted a huge risk of a global economic collapse and depression. Things are bad, but they could have been much worse. The article purports to explain what really happened in 5 paragraphs and it fails. Here's a bit of a different perspective:

TALF is going to turn a profit for the US tax payer and benefited many people (indirectly) who wanted to buy or sell a house. As of September 30, 2010, more than 60 percent of the TALF loans have been repaid in full, with interest, ahead of their legal maturity dates. All loans that have not been repaid are current in their payments of principal and interest and no collateral has been surrendered in lieu of repayment.

The Fed provided overnight loans to help ensure firms had operating liquidity. These are not what the general population thinks of a a loan. Borrow at 4 PM and return the money the next morning. These "loans" happen every day and are critical to the smooth operating of many firms and a common requirement for meeting regulatory requirements that govern banks and brokerage firms. The way these loan amounts were totaled is misleading. If I borrowed $1 overnight each day for a year it would be reported as $365 in loans even though only $1 was at risk.

Our financial system is global and each "non-us" firm has a legal presence in the US. They employ US citizens and pay US taxes. Citigroup, I believe has more non-US employees than US employees. Is it a US company just because it started here?

AIG - This could have been a very expensive one for the US and I'm not sure we made the right decision to prop it up. However, once we made that decision, we really couldn't choose which 'insurance policies' on credit ratings (Credit Default Swap) we could honor. Many of the firms buying the insurance were global banks. Treasury Secretary Timothy Geithner testified in December that the government (tax payer) will have a positive return on its AIG investment.

Citigroup - The US taxpayer is expected to make 9 to 12 billion in profit from investments in Citi.

The overall 'bailout' should turn a profit -- excluding the auto industry.

[Just_a_fan]

I can't believe you blame the USA for your sick financial intitutions and greedy ways.
Look at Canada,,they didn't get sucked in cause they didn't play.
You made your own messes. You may have greedily copied us but nobody forced you to follow the path.

Umm, "we" didn't do anything - the international financial institutions (in bed we each other and up each others' fundaments) did it all by themselves. Then, once they messed it up they expected (and received) help from various governments.

The public in the US, UK, Europe etc. all caught a cold when it went wrong; sure, they benefitted from accessible mortgages etc., but those loans only existed to help the financial centres make more money for themselves.

[Richied76]

The whole financial "system" is a joke. There numbers grabbed from the air half the time i swear! If it aint in my pocket a cant spend it. If it is, i can save it. And if i LEND someone money i dont expect to profit from it..

Greed is what got us here..people spending what they couldnt afford. People borrowing what they couldnt pay back.. And people paying over the odds for items that are numerous time more exensive that there material values

[strad]

nobody had to lie about their income to get a home loan. that was the problem.
No money down loans...interest only loans....adjustable rate mortgages,,,dumb stuff
Admittedly anybody stupid enough to have done it deserves what they got///but I find it interesting that you want to blame them and not the banks.

[Pup]

Actually, the problem wasn't the loans themselves, but the fact that they were used as the basis for all the gambling schemes the banks invented on top of them.

But strad is correct that this wasn't just a US problem. All of these banks were on the edge of collapse, and had been for some time. And they're all playing the same game in China right now, just in case you guys think this is all over with.

AutoG, it's all part of the alien invasion coverup - and don't for a second think we don't know about your involvement.

[TauToadmiester]

(not an indictment against non USA banks but just some of the facts - unknown to many, NOR a desire to accuse)

The (obvious I thought) point of my post was:

If not for the 'generous' help from the USA Fed bank, some of these 'SPONSORS' of F1 would be NO MORE, or at least NOT sponsoring F1 teams resulting in the possible loss of a team or 2,etc.

This is obviously in conjunction with the escalation (snowball effect) of failures this likely did prevent. And even NON bank sponsors of F1 may or would have failed or cease sponsorship, or sponsor a race(s), etc! (unless rescued by others)

Thus the so-called 'involvement' of USA in F1 sponsors as stated.

I thought this was fairly obvious, the 'cascading effect' of this immense amount of money and the failures likely without 'cash flow' overnight or more long term, and (much resented by some in USA) AIG's 100% (not some less % which is typical of extreme situations) payoffs to Banks and institutions holding CDO's, CDS's, and other 'creative' (what some are so proud of?), all effectively insurance policies.

Also know that these CDO's (created in 1987) and CDS's (created in 2001) and other instruments 'insured' by AIG also were also held by retirement funds, governments and even general public (directly and indirectly via stocks and other vehicles) thus it really was/is a VERY cascading 'save' by the USA FedBank of 'F1 sponsors'. (original premise)

To summarize: FedBank saves AIG, AIG saves/helps lots of banks, FedBank 'covers' cash short institutions for overnight and short-term loans, thus 'saving' F1 sponsors, and many others directly and indirectly.

In short, just maybe NO F1 as we know and appreciate it w/o USA Fedbank and AIG involvement.

PS: Even 'Bernie', the Billionaire, might not could have saved F1 (w/o the above 'rescue'), but then Bernie is pretty savvy

Where is HDTV+ Bernie??

[Just_a_fan]

(The (obvious I thought) point of my post was:

If not for the 'generous' help from the USA Fed bank, some of these 'SPONSORS' of F1 would be NO MORE, or at least NOT sponsoring F1 teams resulting in the possible loss of a team or 2,etc.

The point is that the US precipitated the problem in the first place.

The Fed's "generous help" is akin to a man offering you a towel to mop up your blood after his mate has beaten you in the face...

[LionKing]

If you can (and still allowed to ) create money out of thin array (printing or better yet using key strokes on machines), it does not take much for United States to provide the loans....

Nothing much is right about today's banking system; financial engineering, derivatives, flash trading, etc ... I see it as a big world casino and the house always wins...

I believe that the actions taken by the Bernanke and his gang is just helping the rich get richer but not help the general public at all. They support the share prices, but creates inflation (food, metals, assets )...In the future, if the time come for options be traded for drinking water, that is when we are really screwed....

[aterren]

nobody had to lie about their income to get a home loan. that was the problem.
No money down loans...interest only loans....adjustable rate mortgages,,,dumb stuff
Admittedly anybody stupid enough to have done it deserves what they got///but I find it interesting that you want to blame them and not the banks.

You are right, the money was easy and the loan standards were almost nonexistent. There were also people who lied which contributed the problem, if only in a small way. But that's not my point and I'm not trying to lay blame at J.Q. Public's feet. I find it sensationalist and lopsided, at best, to suggest that executives should be murdered or commit suicide when they didn't break laws. By contrast individual borrowers are clean and have zero culpability. The execs did what they were paid to do by their bosses and what our public policy encouraged. They also made horrid business decisions and public policy/good meant we didn't let them feel the full pain of those decisions.

Let's just hope we've learned a bit from this adventure.

[nipo]

After all, lol, the Chinese invented money.

But the Jews invented loans!

I see it as a big world casino and the house always wins...

Actually the house lost but grandfather decided to help the house out.

OK back to the point. Is the purpose of this topic to actually reflect on the fact that F1 has benefitted from the US bail-outs? What's the point? I think Mosley was aware of this and hence planned to axe the overspending of some of the teams to make it a more sustainable sport (by lowering its dependency on the health of the global economy). We saw RBS pulling out as an example of this dependency. But make no mistake, "lowering" is completely different from "removing" so F1 is still at risk, only a smaller one after the cost-cuts.

About the crisis. [...] The concept that businesses being sustained by overnight loans is both simple and bizarre at the same time. Loans charging interest is another one of these concepts. Better still, the risk-free rate concept, the mother of all financial models, should have become questionable by now. But it is still there, safe and sound, and will probably remain that way for a long long time.

If you really have a feeling for the suffering caused by failures like this one, we should think about how we take stance on terms such as "finance", "investment", "wealth management" and "retirement planning". We are all a part of the economy and we take so many things for granted from it. We all have a part to play.

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