Obama admin just perpetuating what Roubini has already characterized...
The USSRA (United Socialist State Republic of America) is indeed alive and well in America; but this is socialism for the rich, the well connected and Wall Street. A socialism where profits are privatized and losses are socialized with the US tax-payer.
98% of Americans has better get a new dream and fast !
Great rant on previous thread by Dan W. on US Financial state of affairs HaloScan.com - Comments
NET NET: Trust in the US banking system is all but dead.
I just got a letter from Washington Mutual yesterday asking me if I am interested in a refi or a cash out refi. They'll even send their own appraiser to appraise my crib.
OT, but I just finished last week's Barrons, which included the "expert" round table, and they actually had a worse stock picker than Abby Jeebus Cohen. Art McCallister had one pick from last year that was down 22%, and his other six were down between 59-82%. Lets invite him back!
Marc Faber was the only one who had anything right. One of his calls for this year is to short treasuries, and with some asshats at Pimpco chiming in that treasuries are overvalued, it seems like a plan for me. I don't think Ben can buy enough to make up for the lack of foreign demand and the amount of rollovers coming up.
I like gold, though not more than 15% of my wealth.
These losses will be shared among banks and investors worldwide, so probably less than half of the losses will be for U.S. banks. However U.S. banks will also suffer losses on overseas loans.
CR, with the implementation of this plan isn't more accurate to say that these losses will be borne by US taxpayers. I'm not sure how any U.S. banks suffer any of these losses at all if the whole idea is to transfer them to the government (you and me). What's the point of sticking it to the taxpayer if the banks still have to take the loss? How does that help anybody? How do 2 parties take the same loss? Isn't that double counting?
Sorry to appear so dumb, but I did name myself 'clueless' !!
The shareholders are already wiped out for the most part. I agree that the rest of the equity should be worth zero, too, but I see way too many comments that imply the shareholders are being made whole by these bailouts- they aren't.
The bondholders are the ones being bailed out. And the absolute worst thing I have seen proposed is to have the government buy out the equity and become responsible for the debt.
Ilargi: On Monday, Martin Luther King Day, US stock markets will be closed. The next day, Obama will be inaugurated as the 44th President of the USA. And the markets will be open on that day. Obviously, the expectations are that the optimism involved will lead to solid market gains. But today, after Bank of Americas new US government funding, and Citi's announced break-up -which will enable it to dump toxic assets, while there were some profits in the morning, bank stocks started plummeting around noon. There may be optimism, but there certainly is no confidence. Or belief for that matter. Looking out over the rapidly deteriorating financial landscape, and the newly reported giant bank bail-outs, I doubt I'm the only one to start considering the possibility that Obama may wind up going into the history books as the man who bankrupted America.
If Bank of America gets a $120 billion government guarantee against their toxic asset losses, on top of Citis almost $300 billion guarantee last year, it is becoming increasingly evident that losses will be far bigger than that. Why else would such provisions be provided? There's only one answer: because these losses are real, and they are so today, not some time tomorrow. Which in turn indicates that when tomorrow comes, more guarantees will be needed. There is no way that Bank of America has only $120 billion in potential or even already incurred losses on and off its sheets.
All of which points to a development that is devastating for the American public . While nobody requires to see how big the losses are, or even demands to see the paper they come from, there is a silent move towards transferring the colossal losses to the public purse from the corporate one. The new approach, which gains popularity fast, is called a 'bad bank' or an 'aggregator bank'. Once its established, in one form or another, we won't find out about Wall Streets losses until the next bail-out. And that will be just another incomplete number as well.
This process, if it occurs at all, which is a very bad idea to start with, should at least play out in absolutely transparent circumstances. The reason that doesn't happen is clear: if people knew what was going on, what sort of debts are being unloaded upon them, none of it would not be accepted. And apparently, this is not the end; in fact we haven't seen anything yet. Bloomberg reports: "President-elect Barack Obamas advisers see an increasingly grave banking crisis and are considering proposals far more sweeping than any steps that have been taken so far". Yeah, just check your wallet. This one too is on you.
"...discussing a plan to create a government bank that would buy up the bad investments and loans that are behind the huge losses that U.S. banks continue to report, say government officials."
Foregoing the mandatory rant vis Constitutionality I have the following comment.
Where is the wiping out of shareholders? This makes a mockery of everything we claim to represent. There exist no reasons why shareholders should be preserved. None. I go further and suggest that by not wiping out shareholders we ultimately make things worse. I understand the rationale behnd preserving shareholder equity; to prevent capital flight. That logic is faulty. The reason they fear capital flight is that it would make banks technically insolvent. Well duh. That's materially different from the current situation how?
And here I was just thinking I might be better off moving back home. Maybe I should keep going east... I am in Germany on business this week, things seem better here than my adopted home at the moment.
We're out of the woods, then. But why pay for the toxic assets? Why not just let the banks literally dump them in the bad bank? Or are they actually worth something? To whom? When?
The proper way would be that the Fed plays pawn shop, Buy their crap then banks have to buy back the bad debt over a long period of time at the bad value given to the Fed plus interest. The Taxpayer should eat nothing at all.
Some how I doubt this will happen. The American Sucker is on the hook again. I see no change here from OB.
There exist no reasons why shareholders should be preserved. None.
The credible argument is that wiping equity will escalate the collapse of other entities (e.g. insurance, pension funds) in the same way that the FRE/FNM equity wipeout led to billions in losses for banks holding their stock.
I agree socialism is not biting enough but fascism too strong....I think the right characterization is a mixture of as plutocracy/kleptocracy where American taxpayers pick up the tab.
But why pay for the toxic assets? Why not just let the banks literally dump them in the bad bank? Or are they actually worth something? To whom? When?
According to the Gov, these are toxic in the sense that they are illiquid, not that they are worthless. Sell the assets to the gov, get cash in return, and the gov gets BlackRock or PIMPco to service the loans.
I agree Yancey. The equity holders (of last year) are essentially wiped out but I want all the equity wiped out. Bond holders next. Only then might I be grudingly willing to be the useful idiot (aka US taxpayer) holding the rest of the systemic risk bag.
will this cause Conjure's depression clock to click backwards? RockyR | 01.17.09 - 1:59 pm | # Damn! It's a good thing it is too early to KNURD else you'd owe me a new keyboard.
2009 will go down in history as the first truly global recession of the modern economy.
Driven by the confluence of post-bubble shakeouts and increasingly robust global linkages, this recession is likely to be the worst of the post-World War II era. That means it could be more severe than the sharp downturns of the mid-1970s and early 1980s. Back then, it was the aggressive anti-inflation resolve of central banks that led to deep recessions. This time, an implosion of bubble-dependent global imbalances has done the trick.
But dont count on a vigorous (V-shaped) rebound from the post-bubble global recession of 2009. With no other major consumer likely to step up and fill the void left by the United States, a lopsided, bubble-distorted world will experience an anemic recovery at best. It will be a long time before global growth returns to the nearly 5 percent rate of the four and a half years that ended in mid-2007. Post-bubble shakeouts are lethal for any individual economyto say nothing for the world as a whole.
I am considering talking to my landlord about a lease option. 1700 sq ft. overlooking a lake in so cal. zillo puts it at 200k today. nice place, my wife likes the house and her family is near.(reason #1, right?)
I really think this move makes working hard in America to "climb the latter" or accumulate wealth a thing of the past. Who is who was "short vanity, long free-time"? I'm stating to like that approach A LOT.
I agree socialism is not biting enough but fascism too strong....I think the right characterization is a mixture of as plutocracy/kleptocracy where American taxpayers pick up the tab. km4 | 01.17.09 - 2:00 pm | #
Dude. Google the definition of "economic socialism" and pick a site you think you can trust. I think you'll quickly see that fascism is an apt moniker for this. I'd send you a link, but I don't know my sources well enough to stand behind them.
I am considering talking to my landlord about a lease option. 1700 sq ft. overlooking a lake in so cal. zillo puts it at 200k today. unhappyCakeEater | 01.17.09 - 2:02 pm | #
A "lake?" Not a retention pond or some other not-lake? And surely not "Lake Los Angeles."
Lake Arrowhead has a long, long way to fall. Lake Elsinore worse. I'm drawing a blank as to any real lakes in SoCal worth the effort.
Not without the banks' books completely opened and remaining so in the future. Also an acceptance of regulation. Banking as a utility, much like our other utilities, gas, electricity, water.
The thing is: In the era of CDOs, are there any 'good' assets left? This Good Bank/Bad Bank thing works great as long as you can scrutinize your credit card (or car loan etc.) portfolio and pick the 20% most likely to default. But if you've packaged it up in a CDO, the whole thing is bad.
As the French say, "if you put a spoonful of wine in a barrelful of shit, you've got shit. If you put a spoonful of shit in a barrelful of wine, you've got shit."
Functionally, I don't see how this is different than the original TARP. The problem is that there is no way to resolve A) buying assets at prices that will keep banks solvent, and B) buying assets at prices that keep taxpayers from shouldering the burden.
All private capital should be wiped out before we, the tax payers spend a nickle.
Then we need a Public Central Bank. The privately owned and operated Federal Reserve has proven time and time again it will use tax payer risk to line the pockets of its shareholders, the Member Banks.
Don't you think (politically speaking here) they will try to at least get the fiscal stimulus done before they do a bad bank? They can't do a bad bank without an appropriation, and given how unpopular the TARP was....
"The problem is all inside your head", Bernanke said to me The answer is easy if you take it logically I'd like to help you in your struggle to pay fees There must be fifty ways to repay your banker
He said it's really not my habit to intrude Furthermore, I hope my meaning won't be lost or misconstrued But I'll repeat myself, at the risk of being crude There must be fifty ways to pay your banker Fifty ways to pay your banker
You just roll out the TARP, Garp Make a new cram plan You don't need to be coy, Roy Just pay the penalty fee Spend for the bus, Gus You don't need to deposit much Just send a few C's, Lee And set their yachts free...
If existing shareholders are diluted even further ,how low can the shares of Shittybank and Prank on America go ? Warren Buffet bough a billion dollars worth of BofA when it was $40 a share. Will this impact BKH stock?
I guess the key to screwing up and getting away with it is to screw up badly enough that you have to be bailed out.
This way you get to rob everybody twice.
The genius behind it is that the first time nobody realizes what's going on, the second time they willingly hand over their money because you've rigged the place up with explosives.
Don't think for a second this won't happen again...
All private capital should be wiped out before we, the tax payers spend a nickle.
Then we need a Public Central Bank. The privately owned and operated Federal Reserve has proven time and time again it will use tax payer risk to line the pockets of its shareholders, the Member Banks.
Thats the only way out at this point but they won't do it because it would mean acknowledging that they've been wrong all along in how they've gone about dealing with this problem.
This process, if it occurs at all, which is a very bad idea to start with, should at least play out in absolutely transparent circumstances. The reason that doesn't happen is clear: if people knew what was going on, what sort of debts are being unloaded upon them, none of it would not be accepted."
you are right, imho , about everything you said
but check this out
no matter how much money you or i have saved in the bank or stashed away in a mattress
no matter what our net worth
you, me, almost no one
would want to live on a planet where there is a total collapse of the financial and econommic system
that is the present risk
a complete break down...worse, much worse than the "great depression"
so to all i say put down your adam smith, put down your john keynes, put down your chicago school or your nyu sloan school thinking, and start bailing cause if the ship sinks we are all going down
btw, ac, and others for whom i have much respect but with whom i politely disagree (on some issues)
yes yes, i know , how can we cure the evils of debt with more debt
not all debt is created equal
the bad debt was incurred to make paper profits shuffling stuff around, swapping, speculating, charging fees...etc etc
mis-allocation of capital
after halting the financial hemorrhaging (if we can and its not a sure thing)
then we must spend and incur debt making investments that realize substantial productivity gains as opposed to paper profits
Last night I rented some movies and the clerk said I was entitled to a free tub of popcorn. I said, "free?" and he said it would actually bring my total purchase down. So I grabbed the tub and when he scanned it, my total dropped a bit.
They PAID me to take merchandise off their hands. That gave me pause for thought.
as to the view, i can sit on the patio and stare at big bear. not bad unhappyCakeEater | 01.17.09 - 2:13 pm | #
No problem. Suspected as much. I stare at the Topa Topas all day long. Should be tax deductible as a medical wellness expense. May not take 3 years at Lake Elsinore. We may start bouncing along a replacement cost bottom as early as Q4 '10.
From the Times article:
"the incoming Obama administration and the Federal Reserve are discussing a range of options, reported to include a government bank that would buy up toxic assets"
Time will tell, but I don't see this happening unless equity holders are wiped out entirely, with haircuts or worse for bondholders.
You never can tell who is leaking what in these articles. I'm willing to bet one of Morocco's lentil-sized testes that we get something closer to the Swedish model once the Bushites are removed from power.
Our problem is an unholy alliance of the delusional and the deplorable. A lot of people are just not willing or able to face the magnitude of the disaster and so they actually believe that if the gov sits on these assets for a few years everything will be OK. Remember, housing only goes up and stocks are your safest long-term assets!
The deplorable are using the desperation of these delusional types to offload the bad assets for huge gains for themselves.
Reading between the lines, the "Bad Bank" will not need an appropriation.
I think the plan is to put $200b of TARP money into the vehicle as equity. That money has already been appropriated.
But $200b is not enough, so the "BadBanc, Inc" will borrow. Not from depositors, but from the Fed. The Fed will easily kick in a trillion, making BadBanc "well capitlized", in the eyes of the FDIC.
The Fed, of course, needs no appropriation from Congress. Nor are they really accountable -- in a democratic way -- to taxpayers.
There's a mistaken impression that the Fed is an arm of government. It is, sort of, but not in a way that matters. Unlike government obligations, taxpayers can avoid being on the hook for Fed liabilities. How, you may as? Why, its just as simple and easy as selling your dollars for better-managed currencies or hard assets.
I am happy to support your bank holiday in exchange for a derivatives dismantling.
I am resigned to funding all of this for the rest of my taxpaying days, but it would be nice to have some assurance that there will be an end to this colossal waste of public money and that nothing on this scale can happen again.
And every month, another 1 percent of just-scraping-by Americans (or is that number too low) think: Why the hell should I keep paying every bill every month and then having just $4 left over? Screw Uncle Sam, he can roll my credit card bills into his Aggregator Bank, or whatever he's calling it, because I'm not paying it anymore.
Is it just me, or are we basically giving banks money today so the money we think is in our accounts will be there tomorrow?
That is to say, our accounts are worthless now. There's just a magic number tied to our name. So we can either zero out our accounts and start saving, or borrow the money elsewhere, stick it in our banks, and pay back the loan in taxes over 30 year.
We chose option 2. So we're paying taxes to refill our bank accounts?
Same conversation with my burnt out hiipy mom yesterday. F it she says to me, I gotta feed ME, NOW. Tax man not nearly as scary as he used to be. This from a woman who preaches FDR and Great Society sermon in her sleep.
Hey poor, Obama voting, peace now types: The tax revolts start with YOU!!
Reconcile that with your worldview and values system and get back to me.
Things get REALLY interesting when control mechanisms breakdown don't they.
You never can tell who is leaking what in these articles. I'm willing to bet one of Morocco's lentil-sized testes that we get something closer to the Swedish model once the Bushites are removed from power.
Gary | 01.17.09 - 2:24 pm | #
Yes, after the regime change on Tuesday perhaps we'll start seeing proposals that don't have Hank's fingerprints on it - the ones that protect the bankers at all costs. I think they should start off with indictments.
Perhaps liquidation is a better solution. GDP and aggregate debt are unsupportable. The losses are already there. The issue is who eats them and what is the most time and cost effective resolution.
The govi could go in and blow away the managements, separate the good from the crap, and force existing investors to take losses. Propping up incompetent managements, unsecured debt holders and even the common is foolish.
What the heck is with Atlanta and Georgia bank-wise, FFDIC??? lawyerliz | 01.17.09 - 2:20 pm | #
Atlanta had a huge housing bubble. I lived for a few years ('04-'06). The housing situation was untennable. NE pricing in a city that is basically very poor (think Detroit, pre-crash) propped up by a resurgence of white-collar corporate jobs. I wasn't bullish on the long-term prospects for the place when I was there. I still am not.
Atlanta had a huge housing bubble. I lived for a few years ('04-'06). The housing situation was untennable. NE pricing in a city that is basically very poor (think Detroit, pre-crash) propped up by a resurgence of white-collar corporate jobs.
That, and the crappiest and most corrupt state banking regulators in the entire Union.
Re: "What exactly do you think McCain would be doing now"
Not to go off-topic, but I wonder if McCain would have attempted to fill the Bush leadership vacuum as Obama has: would we have had McCain standing behind an "Office of the President-Elect" sign?
Perhaps liquidation is a better solution. GDP and aggregate debt are unsupportable. The losses are already there. The issue is who eats them and what is the most time and cost effective resolution....
i half agree
agregate demand is unsupportable where the consumption component is heavier than the investment component
in other words we CAN support the debt and gdp if the right capital investment s are made
as for your ideas about wiping out the guilty and new management...i entirely agree
im the guy who keeps sayin i wanna see perp walks... and, hell some of these robber barons have committed acts tantamount to treaso
That, and the crappiest and most corrupt state banking regulators in the entire Union. Anonymous | 01.17.09 - 2:38 pm | #
How does that happen? Do a buch of bankers of dubious ethics get together and say "Let's move to Atlanta!" or is it indicitve of the native local banks?
One of the things I comment on from time to time is the delusional state of most Americans and the delusional state of a majority of a lot of the commenters even here at one of the very best financial blogs there is.
Yes, the banks, bondholders, and now business corporations are being bailed out, but the more fundamental truth is that the actual people being bailed out includes everyone that holds paper financial assets in one form or another, and that includes just about every American citizen and every citizen in the developed world. This is the real reason politicians bend over so readily for banks and whatnot- they know the voters are amongst those that lose in outright defaults on debt.
To follow up, a close read of the Times article and the Bloomberg piece (no WSJ subscription) yields absolutely NO suggestion that anyone from the Obama camp is floating this turd.
In Bloomberg it is "according to people familiar with the matter".
The clip from WSJ implies that this is being floated by Bush admin officials . . . the current, outgoing government.
The Times article is not sourced at all.
And the Bloomberg article elsewhere sources something to "an Obama advisor", which implies that the turd, or bad bank, is coming from a different source.
We will see what happens soon enough, but this heaping spoonful of shit for the punchbowl is being offered up not by Obama's people, but by Bush admin officials.
I don't think it's going to happen as described at all.
Haloscan weird again. Atlanta just couldn't have been more bubblicious than South Florida, and our banks aren't failing--yet. Won't be surprised if they fail in a general melt down. So why is Ga singled out as being an outlier?
I am happy to support your bank holiday in exchange for a derivatives dismantling.
I am resigned to funding all of this for the rest of my taxpaying days, but it would be nice to have some assurance that there will be an end to this colossal waste of public money and that nothing on this scale can happen again.
j marston
~~~~~
We need a Public Central Bank that profits from the credit we tax payers underwrite. We need a Public Central Bank to regulate private bankers that use tax payer credit to underwrite their business. We need a Public Central Bank that will limit credit creation to a certain percent every year so that we don't end up with hundreds of trillions of bogus bets again.
SomeArmchairEconomist writes:
...Is it just me, or are we basically giving banks money today so the money we think is in our accounts will be there tomorrow?...
Sounds like the definition of a "circular Ponzy scheme" ?
The losses are already there. The issue is who eats them and what is the most time and cost effective resolution.
The govi could go in and blow away the managements, separate the good from the crap, and force existing investors to take losses. Propping up incompetent managements, unsecured debt holders and even the common is foolish.
Allen C
~~~~
Yep, take out the stock and bond holders first ... then maybe in the future the message will be clear that they will have to lay in their own bed, alone.
So we all become serfs in their new feudal system? I wonder how they will tweak the corporate hierarchy titles to convey the new power they will wield?
The appointing of a federal government chief performance officer was a big red flag for me. Started noticing state treasurers have morphed into now being called CFOs. Seeing a corporate state forming. Worried.
I'm not sure why Obama bashing is so popular with so many commenters on this board, but clearly I hope he and his administration are a rousing success. sportsfan | 01.17.09 - 2:48 pm | #
That is kind of funny to me as I wish that W had not been quite the fuck-up. There were plenty of good reasons for going in to Iraq, but WMD was not one of them. The inital execution of that effort was totally brillaisn though the overall plan for the post Saddam Iraq is an embarrassment.
No child left behind, had it's merits, but once iplemented it was pretty much left for dead.
The cronyism was the worst though, as abject loalty was put ahead of any kind of competence. This of course would lead to Hariet Myers and Katrina.
I am no fan of either party in power but O' gives me some level of hope in a COMPETENT administration. I am ashamed the bar is set so low.
Try to see corporate power as a balance to statist power. You see, it's a balance of power that is good for the citizen! Now pay your taxes, buy our products,pay that interest, obey your spouse and kids, and tithe to your church, oh eunuch!
"What exactly do you think McCain would be doing now that would be so radically different than what is being reported?
sportsfan | 01.17.09 - 2:36 pm | # "
That is the big question. I doubt anybody voted for McCain (no conservative or Republican I know thought McC was a good choice)but really voted against Obama. The winner of this prize walks into the buzz saw. Winner OB.
The entire flow is restrained since Aug 2007. I think this is the elephant in the room as far as the stimulus plan goes, not to mention all the funding problems accumulated over the last 4 months.
I am absolutely convinced that the incoming administration is aware of this and plan to find the funds domestically by revamping 401ks and IRAs at some point. Obama said we all have to have "skin in the game", and I feel certain this is what he meant.
Take ten minutes and read this testimony from Greenspan, circa 2001. It will blow your mind.
Greenspan projected ZERO federal debt by 2010.
The fed is a sham. They are absolutely detached from reality. They exist to serve the wealthy and provide unearned revenue streams (inflation) for the government.
President Obama is being too lenient in forgiving the 8 years of disrespect shown the citizenry. We need to see someone punished for the hardship coming down the pike. If he fails to provide this very basic need then we will create our own.
The French revolution was terrifying in the respect that the populace grew to love the guillotine and found many innocents to feed the blade. Better for the system to provide the entertainment then the citizenry take a hand.
I'm not sure why Obama bashing is so popular with so many commenters on this board, but clearly I hope he and his administration are a rousing success.
sportsfan | 01.17.09 - 2:48 pm | #
Futility of our system of government bashing. Anger at a corrupt power/assencion system that spent over a billion this year in a presidential election bashing.
Care less about the person, but the depravity of a system and the mindless zombies that wander around bumping into walls with a t-shirt of their "guy" on it.
What ever we had is gone, ne'er to return, and we are all trying to preserve our past.
and i would abolish the fed, at least as presently constituted
mmckinl has it right when talking about a bank owned by the country that charges interest accrued to the taxpayers for credit extended to banks and other corporations
The system is utterly corrupt and the citizen must take the modern day equivalent of the guillotine to deadhead the corruption. If a few good blooms get snipped, hey they shouldn't have stuck their neck out!
If Obama does not hold the Wall St crooks accountable ( including jail time for top people ) and simply continues the Paulson plan then he has sold out American taxpayers.
The Lint Age
When Ben Bernanke gave his speech to the London School of Economics on Tuesday, our reporter was on the scene. Terry Easton put a tough question to Americas central banker: arent your interventions just making the situation worse, he wanted to know. Amid the blah...blah...blah...of Bernankes response was this: The tendency of financial systems to boom and bust ...is a very long-standing problem... but I think its very important for us to try to put out the fire...then you think about the fire code.
In his 1988 book, The Collapse of Complex Societies, Joseph Tainter argued that all societies like all organisms are doomed. Tainter studied ancient Rome as well as the Mayan civilization. He noticed that problems always blaze up. Each one whether climatic, political or economic rings the firehall bell. And each solution and readers may substitute the word bailout for solution brings more challenges and takes more resources. Finally, the available resources are worn out. Tainter observes that when the costs become high enough, people seem to give up. By the end of Roman era, for example, the burdens of empire were so heavy that people sold themselves into slavery to get free of them. So many people did so at one point that the authorities had to come up with another solution; they outlawed the practice. Henceforth, Roman citizens were required by law to remain free!
And that is the crux of the 2005 Bankruptcy Act. You will be required to pay your debts whether or not you can eat even though we lent you the money knowing you couldn't repay
I'm not sure why Obama bashing is so popular with so many commenters on this board, but clearly I hope he and his administration are a rousing success.
sportsfan | 01.17.09 - 2:48 pm | #
I wonder if his press secretary will start bad mouthing the previous admin, you know, make up shit that isn't true, but the media loves to write about. Also, if catastrophe hits 9 months after office, he can still blame Bush, since that's the grace period W got. And any congress critters that don't vote for his plan need to be branded as 'un-American' and helping the terrorists.
But he really should put a bunch of those Bushites in jail. They'll all get a pardon this weekend though...bought and paid for.
In the early eighties, Greenspan headed a task force that recommended raising FICA taxes. His recommendation was implemented and resulted in the biggest tax increase ever. Then, in a classic bait and switch swindle, the Gov't spends the surplus FICA money on a yearly basis.
But it gets worse, Greenspan then recommends that the Gov't cut income & capital gains taxes for the wealthy, rather than cutting the FICA taxes.
What a sham. Raise taxes for the lower 4.5 quintiles, watch the gov't spend money on pork and cut taxes for the rich while ballooning our unfunded liabilities.
What a crock. The above rip off was planned. Greenspan sold out main street. Paulson is only adding insult to injury.
Another day, another PLAN. Well, at least those former Russian 5-year plan committee members do now have new jobs in America. Hopefully, they'll get overtime pay too.
Obama said we all have to have "skin in the game", and I feel certain this is what he meant.
Yancey Ward
The bottom 80-90% have nothing but skin in this game. It's the top 10 or 20% that don't. Lift the cap on SS/Medicare, money managers pay income taxes like the rest of us not cap gains alone. That's how I percieved his statement. He also said strengthening Main st. eventually strengthens Wall st. Who knows. Give it 3-6 months and much will be clearer
I am considering talking to my landlord about a lease option. unhappyCakeEater | 01.17.09 - 2:02 pm | #
Monthly payment in excess of the prevailing rental rate can be considered as a down payment contribution if it's addressed in the contract. You'll need a current appraisal which includes rental value.
Km4,
I hope he's laying low for a reason, and does not continue this Paulson bullshit. But we'll need to see it relatively soon, not weeks from now but days from now. I voted for him but I won't be an apologist for his bad decisions, unlike talk radio's love affair with Bush right over the cliff.
mmckinl has it right when talking about a bank owned by the country that charges interest accrued to the taxpayers for credit extended to banks and other corporations
mock turtle
~~~~~
The tax payer takes the loss, why not share in the gain ?
A Public Central bank could also limit credit creation so we don't get trillions in derivatives every year. We have over $500 trillion in derivatives according to the BIS ( bank of international settlements).
In this way credit is priced to market, not to imaginary, uneconomic leveraged bets.
OB has no clue what to do. He is no more an economist then me. He is a BS'er and will be manipulated on the subject by the people around him. No different the the last two administrations. Hang on to your Arse!
None of those measures, even take together, come close to funding the needed borrowing. There is actually only one method that even approaches being politically viable and large enough, and it is only viable because of the recent pounding of the stock market (and gets even more viable if the market continues to decline)- and that is to turn all private, tax advantaged retirement accounts into government-bond only vehicles.
However, Broward Horne's instincts are spot on, as usual.
would want to live on a planet where there is a total collapse of the financial and econommic system mock turtle | 01.17.09 - 2:22 pm | #
I'm reminded of that line from the first of the stupid star wars series (not the immortal classics from the 70s and 80s): "so this is how freedom dies, with a whimper"... or some such derivative of that quote
"Eighty-three of the nation's 100 largest corporations, including Citigroup, Bank of America and News Corp., had subsidiaries in offshore tax havens in 2007, and some of the companies received federal bailout funding, a government watchdog said Friday.
The Government Accountability Office released a report that said Bank of America Inc., Citigroup Inc. and Morgan Stanley all had more than 100 units in countries that maintain low or no taxes. The three financial institutions were included in the $700 billion financial bailout approved by Congress.
Insurance giant American International Group Inc., which has received about $150 billion in bailout money, had 18 subsidiaries. JPMorgan Chase & Co. had 50 units and Wells Fargo & Co. had 18; both financial institutions received government bailout money."
There have been essentially no tax hikes in modern American history. Everything has been a tax shift. If Angry Saver is paying more, that is because someone is paying less. If you do a survey of countries that cut back to pay down their debt, you would know what a tax hike looks like.
Although I do not like the heritage institute, it had the easiest already made charts. The white house and CBO budget documents intentionally avoid pre-1970.
I thought the "skin in the game" comment sounded very unpresidential.
Just my opinion...the taxpayer, mortgage holder, credit card user, employee that is un-employed...well, they all already have skin in the game..
If what he is saying is that taxpayers are going to have to shoulder an increasing burden, maybe give up some retirement funds...whatever he meant..so that the IB's, GM's, Chryslers will get more...I couldn't disagree more with that...of course he didn't exactly say what he meant...so we will just have to see what kind of fresh Hell is waiting for us..
Economist Moe Howard 3SU writes:
OB has no clue what to do. He is no more an economist then me. He is a BS'er and will be manipulated on the subject by the people around him.
he's got some good ideas and some good advisers, and some i dont particularly like...but
sounds like you dont agree with much of any of his ideas and rather than critique...
its just easier to call him "clueless bs-er"
BOH will make many mistakes...try policies that wil or will not work
economics is a fuzzy discipline at best...but he's gonna try
any suggestion except lets just give up and collapse into the economic dark ages is welcomed
There have been essentially no tax hikes in modern American history. Everything has been a tax shift. If Angry Saver is paying more, that is because someone is paying less.
Don't forget the inflation tax.
At 4%/year, the inflation tax is > $560 billion.
Inflation and interest never sleep. They don't get tired, they don't complain, they are reliable, they are the greatest sources of wealth in America.
And that is the crux of the 2005 Bankruptcy Act. You will be required to pay your debts whether or not you can eat even though we lent you the money knowing you couldn't repay \t mmckinl | 01.17.09 - 3:44 pm | #
Right, they will make you a new loan with teaser rates so you can't claim inability to pay.
You think Congress (with few noted exceptions**) is any better ?
You might browse in the archives of the congressional committees (wider scope than just the FED) and look there for the video recordings of these hearings. They do include the Q&As which are far more interesting than the "publicised" statements, which alas, only contain the "formal" statements, rarely the Q&As.
**Look for instance for the "dialogs" between Ron Paul and Greenspan. Interesting.
But, in general, I can't see why Congress is any better than the FED.
Barclays loses billions off its share value - Times Online
Barclays loses billions off its share value
Stock plunges after ban on short-selling ends
Barclays lost a quarter of its stock market value last night, just hours after the ban on the short-selling of banking shares was lifted.
If Obama can be trusted to do the right thing, and I'm hoping for the best, then there's no reason he should mind accountability provisions written into the release of the second half of the TARP funds. Rather than just give verbal promises to key legislators like Dodd, Obama should have no problem writing them down on paper and seeing them pass Congress, right? Because if he does have a problem with codifying his promises, perhaps he's not that committed to them.
Sometimes its hard to believe that well see the spring again, Mr. Biden said, speaking to shivering supporters who had been waiting for hours at the rally, which took on the feeling of a campaign event. But Ill tell you: spring is on the way with this new administration.
Now, it falls to us to carry forward that American story and to make it our own, Mr. Obama said. Now, it falls to us to ensure that everyone in this country can make it if they try. Now, it falls to us to pick ourselves up, to reach for the promise of a better day, and to do the hard work of perfecting our union once more.
They don't get tired, they don't complain, they are reliable, they are the greatest sources of wealth in America.
Angry Saver | 01.17.09 - 4:11 pm | #
The FED and the banks with their fiat currency are geniuses aren't they? You have to respect a simple theory that in practice is so insidious to be invisible to the majority.
sorry for the snark, just wanted to put in my 2 cents worth on this site...You'all are so far above me in knowledge and experience, that I spend most of my time reading others comments...
But why pay for the toxic assets? Why not just let the banks literally dump them in the bad bank? Or are they actually worth something? To whom? When? slack jaw | 01.17.09 - 1:55 pm | #
It's the same old problem: the Banksters are counting these "assets" as positives on their balance sheets at mark-to-fantasy values. They can only survive selling them if they receive greater than market value for them. They can't just give them away. There is no way to remove them from the balance sheets otherwise.
Anonymous(Unrated) writes: \t** IMPORTANT ** There have been essentially no tax hikes in modern American history. Anonymous | 01.17.09 - 4:02 pm | # Ummmm.... Okay. It isn't like nearly every class of taxation being increased hasn't been joined by entirely new ways to tax.
I think they should do this during Superbowl week so no one in America is paying attention, we get a huge market rally based on it, everyone at the Superbowl parties talks about how its a "great time to buy stocks" and we will be back to business as usual.
I'm hoping Dick Sporting Goods goes BK next. I want to buy some guns and ammo at liquidation prices.
politico writes:
Starting now, let's take up in our own lives the work of perfecting our union,"
ok, i'm on record today saying Obama is the last president of this union.
Another year of what we have and the union is Toast!
politico | 01.17.09 - 4:12 pm | #
been saying that for about two weeks now. This gets a little better on mainstreet in the next two months, or it gets real bad, real quick. People can't bounce along on the bottom for too long, or they start getting ideas in their heads that they don't need the gov't, as they don't provide them what they have dearly paid for.
People around me are waking up to the fact that they are a whole lot poorer than they thought, and come April 15th, I think we see tax revenue crash, gov't borrowing severely stifled and a loss of the ability to fund daily operations.
The FED and the banks with their fiat currency are geniuses aren't they? You have to respect a simple theory that in practice is so insidious to be invisible to the majority.
It really is an amazingly amazing swindle.
Here's the part I like best: The majority actually believe that inflation is a natural occurrence and that the fed controls inflation rather than causes inflation.
You won't find ammo at liquidation prices...I have just bought some that was damned hard to find for a handgun safety course...ammo is in very short supply.
slack jaw writes:
Now, it falls to us to carry forward that American story and to make it our own, Mr. Obama said. Now, it falls to us to ensure that everyone in this country can make it if they try. Now, it falls to us to pick ourselves up, to reach for the promise of a better day, and to do the hard work of perfecting our union once more.
slack jaw | 01.17.09 - 4:13 pm
"Now, it falls to us to put you to sleep with empty rhetoric."
The choices are pretty clear. Use your own Occam's razor.
Start seriously paying down those current and future liabilities plus bailout debts, something like 50-60 trillion. That would mean 50-60 percent income tax, just for starters. 30 percent VAT everywhere plus thousands of other fees and taxes going up a lot. Then maybe after 5-7 years of this things might start looking better.
obamas continued support for tim geithner is a mistake and just plain wrong
any guy who fills out his tax return committing this kind of gross error (whether he had a preparer or not) is either too dishonest or too stupid to be treas sec
The banks are very healthy. The accounting doesn't represent the true economic picture," said John von Seggern, chief executive of the Council of Federal Home Loan Banks, which represents the network in Washington. He said the banks want regulators to change the rules.
Everyone wants to know when the eCONomy will recover.
Here's the gig. When households thought they were wealthy, so did the banks. Now that households are realizing they are broke, so are the banks. The eCONomy won't recover until household balance sheets recover and that won't be soon.
given debt levels and incomes.
In our debt money system, someones liabilities are someones assets and someones assets are someones liabilities.
The bad bank scam won't help households. In fact, it will allow inflation to take hold and will end up hurting households further.
"We have over $500 trillion in derivatives according to the BIS"
I don't know how to make sense of the notional value, since it includes double-counting as well as contracts that in all likelihood pose relatively little risk. We don't know the true dollar amount of troubled contracts and that troubles me.
What really bothers me, though, is not knowing how the derivatives are going to affect the "bad bank" plan. Are they static or dynamic? If static, then whatever the losses are, they get tallied and moved over as part of the toxic assets.
But what if the derivatives are dynamic, by which I mean that after we tally and transfer, the very act of moving the toxic assets triggers a new round of derivative exposure and loss? It is one thing to have to revisit the bailout because the economy has headed further into recession; it is quite another thing to allow side bets to go in the middle of a bailout when the side bets themselves are exacerbating the need for further bailouts.
So... anyone willing to weigh in: static or dynamic?
Bruce in Tennessee :
You approach taxation with a party affiliation bias apparently.
Are you truly trying to convince us that tax rates didn't increase between the JFK and Carter years?
The increase was short, and if you would look at the chart the receipts as % of GDP as incredibly stable when you think of all the big PR shows they put on about taxes.
I think not...marginal rates were cut by Reagan enormously...his mistake was not cutting spending, but that is another topic.
Yes, increasing spending at the fastest rate in history other than WWII or GWB Jr is well represented by the comment "not cutting spending".
Wasn't a shift, rates were increased..
I used the word effectively. Disturbances do occur, but the taxation rate is stable across party lines.
You need to re-read the first post. If you were paying more, that is because someone else is paying less. Whether it be through unindexed levels like the AMT, new loopholes, or change in treatment of different classes of income.
The best example of that is the high corporate tax rate on paper, which after all deductions and loopholes is competitive with a 20% rate. Tax income used to be split evenly amongst corporations and individuals, but if you click the link in the first post you would see that corporate contributions have not increased with inflation -- rather it has been personal income taxes which have carried the load for both groups alone.
The biggest change to balance the budget will be to cut spending by an unimaginable amount. Even today I doubt more than 15% of Americans would support the actions that are necessary.
"I have just bought some that was damned hard to find for a handgun safety course...ammo is in very short supply."
Bruce in Tennessee | 01.17.09 - 4:20
Bruce,
WalMart has been stocked pretty good here locally in Florida. I picked up all the .38 WWB they had in stock last week. I can spare some 7.62 and .223 for a fellow blogger here but I see you need handgun stuff.
A gunshop made me a deal on a bulk purchase 7 years ago. I'll never use it all...maybe.
I agree that the rational reaction would be to spend in response to "printing" but since when has the response of the consumer been anywhere near rational.
Bondholders only take haircuts one of two ways... buybacks and bankruptcy. Buybacks don't work(GMAC). Bankruptcy will cause the collapse we all fear.
I seems the bankers were the ones prcticing mutual assured destruction.
BondsOfSteel
~~~~~
It's the Bond Holders turn my friend ... Bonds are just more unservicable debt ...
Taking out bond holders may just get them to demand real reform, maybe bond holders on boards of directors by law. Bond holders that handle the audits and the books.
We have seen what revolving door regulators are about.
Well, we no longer need to worry much about complying with President Kennedy's words... asking what we can do for our country because we will be paying for this country's banking crisis the rest of our lives. I believe that will be enough.
My sister is a dog groomer. In response to the NYT story about people relying on themselves for services... got some news for ya: people who go into entrepreneurial service jobs like dog grooming, landscaping and the like, are not quite as helpless as, say, a highly-educated, hugely indebted young employee in the financial services industry. These people often left the corporate world of their own free will and have engaged in various enterprises, knowing full well that they are vulnerable to economic downturns and even changes in fad and fashion.
A lot of them will lose their jobs or businesses. Some will have been smart about their finances, others will not have been so smart. But you'll find that a lot of them (if not) most won't see it as the end of the world, but will pick up and start over again surviving some other way.
It's the spoon-fed professionals who are in the most trouble.
Wasn't changing the regulations for percentage of reserve holdings one of the first steps tried? Wasn't the argument that the market wasn't accurately pricing the lvl 3 assets to explain this action?
Haven't this been tried and disproved?
The banks own America and will squeeze until they feel they have been made whole. I can't even imagine that level of power or the immorality.
But, in general, I can't see why Congress is any better than the FED.
Werner
~~~~~
Congress can be voted out ... the Fed can't. The privately owned and operated Federal Reserve answers to its shareholders the very Member Banks it is supposed to regulate.
At least with a Public Central Bank credit creation can be a money maker for the tax payer. If the tax payer is on the hook for the loss then they should be getting the profit.
The presidents already ARE Caesars, Anonymous. They became Caesars when Congress gave them nearly unlimited power to make war - whenever, wherever, however.
I would use Argentina as an example of hair cutting bonds. It is not pretty, you are right on that, but it is possible.
There is however room to be more elegant. Roosevelt unilaterally cram downed changes that struck out the option for bond holders to be paid in gold.
It's fun to discuss all this, but by now everyone here should see exactly the strategies committed to. There is no eject button, and so all we can do is see the strategy through to completion.
\tI'll go on record that after obama gets the blame for the coming collapse, jeb bush will be elected and become the first american ceaser. Anonymous | 01.17.09 - 4:34 pm | #
I know you meant Caeser, but ceaser (one who ceases, or perhaps causes ceasing) is definitely more appropriate.
The banks are very healthy. The accounting doesn't represent the true economic picture," said John von Seggern, chief executive of the Council of Federal Home Loan Banks, which represents the network in Washington. He said the banks want regulators to change the rules.
FFDIC
~~~~~
I'm shocked ! A liar in the banking industry .... a shocking turn of events !
Congress can be voted out ... the Fed can't. The privately owned and operated Federal Reserve answers to its shareholders the very Member Banks it is supposed to regulate.
At least with a Public Central Bank credit creation can be a money maker for the tax payer. If the tax payer is on the hook for the loss then they should be getting the profit.
4:35 pm
"The banks are very healthy. The accounting doesn't represent the true economic picture,"
Now I get it. Osama Suicide Bomber Accountant Squad (OSBAS) did it! They put assets into liabilities! Much more easier and cost effective than piloting perfectly good planes into buildings.
Now I get it. Osama Suicide Bomber Accountant Squad (OSBAS) did it! They put assets into liabilities! Much more easier and cost effective than piloting perfectly good planes into buildings.
supafly73 4:46 pm
Blackhalo writes:
A gunshop made me a deal on a bulk purchase 7 years ago. I'll never use it all...maybe.
Cobradriver | 01.17.09 - 4:30 pm | #
How long is it good for?
Blackhalo | 01.17.09 - 4:32 pm
I have a cartridge for a Spencer 7-shot repeating rifle from the Civil War. I've always been afraid to shoot the damn thing. Rifle too since I don't want to damage it.
Whats happening here?
The government is a bright light
And Im the deer.
Frozen in the fear of what America has become
A country without remorse
Living beings that simply move
On someone elses predestined course
Where the end swallows you whole
Like a shark swimming underneath
The pigmen start to weave
A tangled web of deceit
Stealing the childrens future
By securing their own
While we wallow in a cesspool
Surrounded by a fence
Caged like an animal
Waiting for our daily meal
They take
They destroy
Lives of the innocent
Crying for hope
Their tears turn to rivers damned by the rich
While canals suck us dry
A little bit at a time
How could this happen
What did we miss?
Or were we watching
Was Ignorance bliss?
Devils wrapped up in suits
Preying on everyones dreams
Debt is the way to feed
So the populace eats
Then slowly bleed
Death becomes familiar
Bankers and Wall Street need
The poor to breathe .
So they can sleep
With their destructive greed
Wishing for a revolution is the fountain of my youth I will toss another coin and watch it drift down where it will lay next to other coins immersed in its brackish water
was looking at a bank-owned property today that could be a seven cap with possible land upside.
Realtor told me that there house economist said that our area will bottom in July and recover back to the peak within three years. Like they had a crystal ball or something.
I then asked why many of the wealthy are now taking possession of physical gold/silver and what that meant to her.
She then asked why anyone would need silver.
Seriously. That's how clueless 90 percent of all Americans are right now. They don't even know where a dollar comes from.
That it is printed out of thin air backed by nothing.
Reading through more than 300 comments here, I ask: "where are the grown-ups?" So many who post here are quick to criticize any solution that is proposed yet are bereft of any proposed solutions of their own. We are in unchartered waters, people, and those of you who think that you as taxpayers do not want to take on any financial responsibility are viewing this financial implosion through the eyes of children. It you do not get how serious this is then, I beg, stand off to the sides and let those who do attempt their best to lead us through the unchartered waters in which we find ourselves. It is high time we stop dividing among ourselves and find the courage and faith to unify toward some way out. And if you have nothing to contribute but all of the reasons why nothing will work, then I ask you to get off the ship.
the supply of gold and silver are increasing at a geometric rate due to the new alchemy that adds protons and neutrons to other elements.Just as the diamond supply is factory made so is the new gold and silver.
Question to accountants
Are there taxes on goodwill?
What about government cash injections? Could an enterprising lawyer sue over the recording of income as 'loans'?
taxpayers can avoid being on the hook for Fed liabilities. How, you may as? Why, its just as simple and easy as selling your dollars for better-managed currencies or hard assets. David Pearson | 01.17.09 - 2:25 pm | #
Hello! Those will be confiscated later. There is no escape.
"irresponsible and hate filled comment
mock turtle"
Irresponsible and hate-filled poster.
I am not happy with Obama's opening moves on the economy, but it's hard not to enjoy watching the train ride from Philly.
The joy of his inaugural may trump next weeks dire econ news.
Anonymous writes:
the supply of gold and silver are increasing at a geometric rate due to the new alchemy that adds protons and neutrons to other elements.Just as the diamond supply is factory made so is the new gold and silver.
I first heard of this being successfully done years ago. Lead into gold. But the "gold" was radioactive. Have they solved that problem yet?
mmckinl writes:
But, in general, I can't see why Congress is any better than the FED.
Werner
Werner and mm: Congress IS the Fed. As explained over and over by the late Arthur Burns, "The Federal Reserve is a creature of the Congress. We will do whatever the Congress demands."
The Fed sees itself as an extension of the congressional power to coin money, etc. It has no direct attachment to the Executive Branch and none to the Judicial branch. It is a congressional creature, pure and simple.
Congress loves the Fed because by having this agency at its beck and call it can place all the blame and its chairmen can be hauled before various committees and toasted or lambasted, as the case may be, for doing great work or for sins of omission and commission. It's called passing the buck, at which Congress excels.
Speaker Pelosi, if she wanted to, could initate legislation to liquidate the Fed and set up a monetary office in the Capitol run by her staff. Then Congress would be running the money supply (and big-bank regulation) directly, instead of stealthily, as it does today.
"I have a cartridge for a Spencer 7-shot repeating rifle from the Civil War. I've always been afraid to shoot the damn thing. Rifle too since I don't want to damage it."
SilentThunder | 01.17.09 - 4:55 pm |
My limit is probably ~50 years old on the ammo side. I have a few Mosin Nagants I picked up cheap(60$). The 7.62x54r ammo for those is in a sealed tin can from ww2. Heck,the Nagants were made at the turn of the century. I don't mind shooting them because they really are not that rare or special...But cival war stuff is getting out there.
Speaker Pelosi, if she wanted to, could initate legislation to liquidate the Fed and set up a monetary office in the Capitol run by her staff. Then Congress would be running the money supply (and big-bank regulation) directly, instead of stealthily, as it does today.
This will never happen because phony lambasting is what the congress is all about.
slack jaw writes:
Anonymous writes:
the supply of gold and silver are increasing at a geometric rate due to the new alchemy that adds protons and neutrons to other elements.Just as the diamond supply is factory made so is the new gold and silver.
I first heard of this being successfully done years ago. Lead into gold. But the "gold" was radioactive. Have they solved that problem yet?
Werner and mm: Congress IS the Fed. As explained over and over by the late Arthur Burns, "The Federal Reserve is a creature of the Congress. We will do whatever the Congress demands."
~~~~~
Hogwash, just look at the Fed's Charter.
The Federal reserve is a privately owned and operated corporation whose shareholders are the banks they regulate. The Member Banks are even entitled to a 6% dividend every year. The whole operation of the Fed is for the profit of its Member Banks based on the tax payer underwriting their risk.
Yes, as tax payers we must pay these debts. So let's put them in perspective.
Let's say we want to pay down the debt by 1 trillion dollars. That's 10 to the 12th if I'm not mistaken.
Let's say we want to pay down the debt at the rate of 1 million dollars per hour.
Now there are 24 hours in a day and 365.25 days in a year. So there are (8,766) 8.766 x 10 to the 3rd hours per year.
So we divide 10 to the 12th by 8.766 x 10 to the 3rd and we get 114 years.
Yes at 1 million per hour, it takes 114 years to pay off 1 trillion.
Yes, I know there are 350 million Americans so 1 million $/hr is only about 28 cents per person per hour, but if we raise it to $1/person/hour it is still 40+ years to pay off 1 trillion.
The numbers do make you blink a bit.
"It is high time we stop dividing among ourselves and find the courage and faith to unify toward some way out."
Well, this is one of those episodes in which Dr. House says in the end, "That's it. I am sorry."...
There is no solution for this except bad ones. Are you willing to give 50-60 percent of your income every month for years to come and trust these Congress Clowns to solve this financial crisis?
Gold is a stable product of the radioactive decay of a slightly heavier element (not sure which one). Heavy elements like gold require one or more supernova explosions to fuse intermediately heavy elements together. I believe that Iron (Fe) requires in the ballpark of 3 supernova cycles to create.
the president must choose a fed reserve chair from amongst the list of members of the federal reserve board as per the banking act of 1913 passed by congress
If Congress and the people do not take back our right to create currency and credit we will always be their indentured servants.
mmckinl | 01.17.09 - 5:17 pm | #
Hello! That's my point. Congress can do it any time they choose. The "ownership" of the Fed by the regional reserve banks is a myth perpetuated by conspiracy enthusiasts. Don't buy into it. The Board of Governors is a Federal agency created by Congress. The banks are lagniappe and could easily be liquidated because their principal function over the years has beenprocessing checks.
"I'm not sure why Obama bashing is so popular with so many commenters on this board, but clearly I hope he and his administration are a rousing success.
sportsfan "
Do you really think that the USG is going to pay back it's debt in today's value? Or the consumers for that matter? Default or devalue is the only outcome at this stage.
If you cannot foresee that this is a global Ponzi scheme on the brink of collapse you need to catch up.
Or go drink some beers with Conjure one night before the clock strikes 12:00.
Sebastian and his Wright Model B cannot help us at this point
Your sentiments are exactly the problem, blind trust to authority and an inability to effectively take care of yourself. So you shirk your responsibility to someone you deem more worthy to define your future. How sad it must be to be so scared all the time, and constantly worried about what will come without any skill or direction or even basic knowledge of human freedom or history.
On a brighter note, you probably have a high fat content and are full of protein and life sustaining Omega-3's.
Its ok, you are probably just a product of "American Exceptionalism" that it pervasive here, in America.
Wrong, the Member Banks are shareholders in the Federal Reserve System ...
Bernanke has committed over 9 trillion in guarantees without Congressional approval. So much for answering to Congress.
mmckinl:
just because you write something in bold doesn't make it true. If you start from the position that the FRS operates outside of the government, then of course, all conclusions you make are true.
Sort of like if one believes that God created the earth 6000 years ago...
The ferry arrived to save all of the passengers from flight 1549. One passenger didn't wait, and swam his way back to shore, where doctors tended to him
Do you really think that the USG is going to pay back it's debt in today's value? Or the consumers for that matter? Default or devalue is the only outcome at this stage.
~~~~~
The US Government can pay its obligations if it takes the proper steps ... The consumer and many businesses, especially banks can not ...
What is happening is that private debt is being put on the governments balance sheet, especially bad bank debt.
The situation can be salvaged but I'm pessimistic because Washington is in the bankers pocket ... But ! if we scream loud enough and long enough maybe something decent will come of it ...
To all who are concerned about a CDS implosion, I suggest a few moments with this wiki article, with particular reference as to how they are settled. It doesn't look like the numbers support the fear factor. 1) they expire. 2) they are settled normally. 3) they are 'auctioned' to the highest bidder, often for fractions of a penny on the dollar. In no case does it appear that the taxpayers are on the hook. As a matter of fact, it appears that the creation of a so-called 'bad bank' might even reduce CDS exposure. Take a look.
mmckinl writes:
...The dollar is backed by the governments ability to tax and take a persons money or property or even liberty ...
Well, I am not so sure. The United States Department of Treasury says :
"Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything. This has been the case since 1933. The notes have no value for themselves, but for what they will buy. In another sense, because they are legal tender, Federal Reserve notes are "backed" by all the goods and services in the economy."
(see : 404 Not Found
It's a bit different from what you say, because clearly there is no "obligation" of redeemability and no backing, so the dollars worth is just what you get for it, and that's all.
This does not exclude governments willingness to tax, etc. , but that's just good will of the government, no obligation.
It's a bit different from what you say, because clearly there is no "obligation" of redeemability and no backing, so the dollars worth is just what you get for it, and that's all.
This does not exclude governments willingness to tax, etc. , but that's just good will of the government, no obligation.
Werner
~~~~~
The dollar is the ability to keep what you have, call it insurance against the taking of money, property or liberty ...
But that's the value of any currency in a society, the ability to pay debt, and taxes are a debt thrust upon you by threat of legal confiscation. Gold can not relieve debt legally in court ...
subfly
werner remains oblivous to Germany's problems, but is there nothing happening in Finland? Finland is an outlier, not really a Scando country, and is virtually never reported on here. Is there nothing of interest to report?
I'm not sure why Obama bashing is so popular with so many commenters on this board sportsfan | 01.17.09 - 2:48 pm | #
They thought he was the tooth fairy who would sprinkle magic pixy dust and make this financial nightmare go away.
Unfortunately, he is just a politician. The pool of talent to staff his administration is drawn from the DC-NY-Boston nomenklatura so it will be the same games only the teams will change jerseys from green to blue. This is causing serious cognitive dissonance which is expressed as bitching, moaning, gnashing of teeth, and trash talking anyone who pretends to be in charge.
As a matter of fact, it appears that the creation of a so-called 'bad bank' might even reduce CDS exposure. Take a look.
~~~~
LOL, yeah explain that to AIG ... We've already spent over a hundred billion there ...
With the bad bank concept we'd be on the hook for all of it . The good bets would be kept by the banks and all their junk tossed into the "bad bank" to be paid for by tax payers.
Anonymous writes:
...because phony lambasting is what the congress is all about...
Well, they saw to it that all this subprime-crisis stuff (and the comming CDSs) was all legal and that the regulatory agencies all locked the other way! More than just lambasting (which they probably just love as their public hobby).
They were active, indispensible participants in this mess.
"Finland is an outlier, not really a Scando country, and is virtually never reported on here. Is there nothing of interest to report?"
Well, we did have our economic depression already back in early 90's. That is why this all sounds so familiar except the facts are even much worse for USA than it was back then.
Because of that 90's depression, both Finland and Sweden are somewhat better prepared for this global crisis. Export sectors in both countries are taking huge hits at the moment, just like everywhere else.
The comments regarding CDS show how sensationaltic and unsophisticated people on regarding CDS. Believe it or not, the ultimate purpose of CDS - spreading and hedging credit risk - is done efficiently and generally successfully by the marketplace. The problems with CDS are that the regulators never should have let the market get as big as it is without a centralized clearing house (a la the futures markets) and pricing transparency needed to be enforced. The big banks and dealers didn't want this because they felt it would decrease bid-ask spreads/improve liquidity and therefore hurt their profitability.
The story of 2006-08 is that the banks that were true hedgers, like JPM, and savvy firms like Goldman, who both hedged their risk and took a big bet on housing, were the systematic buyers of protection while dummies like AIG and synthetic CDO deals were the sellers. Firms like ML, Citi, UBS were also big sellers. JPM and GOldman are survivors because they used CDS for all the right reasons. AIG/ML/UBS/Citi were just one-way speculation, basically betting the entire equity of the institution on a model that had no track record whatsoever. The real issue here is that the USG has dumped billions into firms like AIG and we'll NEVER, EVER get that money back - it's gone, imbedded in CDS deals backed by BBB subprime that are worth zero. While the Fed may lose some money with their various money market and bond facilities, at least there is a semblence of economic value and justification to those programs. The "investment" the U.S. made in AIG is nothing but a travesty. It was done simply to pay AIG's CDS counterparties and keep them from going down - kind of like the phone call you'd get from a bookie if you lost money to him, and wouldn't pay it, while he had to pay off the house that he had laid off your bet to (at slightly better odds,no doubt). He thought he had made a little vig but was now facing ruin. Prepare to be knee-capped!
Federal government revenue from all sources is about $2.5 trillion a year. Government debt is now $10 trillion and rising, for a debt-to-income ratio of 4:1. I'm not sure how high that ratio can get. The press can continue to emphasize the debt-to-GDP ratio instead, but I think something has to be done to hide this bailout.
I suggest the government swap all the bailout assets for the social security "surplus". Future social security and medicare benefits can be paid out of the income earned from those assets. In one fell swoop the bailout is turned into "privatizing social security" and the system can be considered to be fully funded.
Now, on the off chance that those assets don't yield enough, we should raise taxes a bit as well. I suggest we start with the people who caused the current mess:
all bailouts should be recorded as capital gains. The government won't tax those gains, but they will offset any future capital losses. This way the next time a bailout recipient makes a stupid investment, they won't get a tax credit for the capital loss.
Forget about interest deductions, interest payments should be taxed. Since it is pretty clear that borrowing money eventually leads to expensive bailouts, let's make the borrowers pay some of the taxes that will eventually be used to bail out their lenders.
My inside source who works at FDIC says he was told this week that they should expect six (6) bank failures next Friday. He only was informed in advance of 1 of the 2 failures that happened yesterday.
It's exactly the other way around .... the bankers control Congress and usurp our Constitutional right to create our own currency and credit.
exactly - how many congressman sat there slack-jawed when Uncle Greenspan spewed his cockamanie fluff at all of those hearings throughout his tenure? Did anyone have the nerve to challenge him?
supafly73 writes:
...Werner and I will be discussing this for years to come ...
supafly73, need a squadron of Stukas for help ?
Don't worry, just be careful. There are a few truly heinous characters around here (cough cough). But with time you will come to love them. Belive me! Just hold your course and maybe phrase it a bit more politely.
P.S. They actally do know in what deep dodo they are. Had the same missconception about them in my beginning.
And if you have nothing to contribute but all of the reasons why nothing will work, then I ask you to get off the ship. think, people | Homepage | 01.17.09 - 5:01 pm | #
I think it is pretty clear what the consesus view is about what should happen. The investment banks and thier bretheren should go BK. They will be replaced in thier function by the sound institutions that remain. Homeowners who borrowed more than they can afford should be evicted and go BK.
Once that has been resolved and the median price for housing is 2.5-3x average income, then it is time for the stimulus and bailouts to begin. Delaying the inevitable only increases the duration of the pain.
The jibes toward any action that is not in this sensible direction seems well founded, as congress and the bankers they represent fail in a spectacular manner, to sensibly address the problem.
As to the sentiment that, if one has nothing positive to say, keep quiet, FUCK YOU!
001,
I believe his name is Ladke, from Cali, who crushed a few dealers with cds trades. As was mistakenly quoted at CR previously, CDS is not zero sum.
First
Ugh.
Swedish Model anyone? I mean I like moral hazzard as much as the next guy, but come on already.
Er, Anonymous at 1:40 was me.
Obama admin just perpetuating what Roubini has already characterized...
The USSRA (United Socialist State Republic of America) is indeed alive and well in America; but this is socialism for the rich, the well connected and Wall Street. A socialism where profits are privatized and losses are socialized with the US tax-payer.
98% of Americans has better get a new dream and fast !
Great rant on previous thread by Dan W. on US Financial state of affairs
HaloScan.com - Comments
NET NET: Trust in the US banking system is all but dead.
Tarpe Diem.
Tarpe Diem.
Now that was good!
I just got a letter from Washington Mutual yesterday asking me if I am interested in a refi or a cash out refi. They'll even send their own appraiser to appraise my crib.
One Witty Hot Chick,
LMAO! Bravo!
Swedish model worked fine in 1991-94, but today Sweden has a moral Hazard and is in for an even bigger loss in the Balticum.
I'm sure the wiping out of the equity holders and the haircut of the bond holders of these insolvent banks are coming any day now. Right? Right...?
OT, but I just finished last week's Barrons, which included the "expert" round table, and they actually had a worse stock picker than Abby Jeebus Cohen. Art McCallister had one pick from last year that was down 22%, and his other six were down between 59-82%. Lets invite him back!
Marc Faber was the only one who had anything right. One of his calls for this year is to short treasuries, and with some asshats at Pimpco chiming in that treasuries are overvalued, it seems like a plan for me. I don't think Ben can buy enough to make up for the lack of foreign demand and the amount of rollovers coming up.
I like gold, though not more than 15% of my wealth.
Well, that sure is change you can believe in. This plan is an enormous change over the first Paulson plan.
Yancey Ward | 01.17.09 - 1:47 pm |
Yeah REAL change from Obama...
Praise From Paulson
Obama Financial Rescue May Revive Effort to Resolve Bad Assets - Bloomberg.com
Is there anybody who knows how this works?
I just don't get it.
So we buy all the bad assets, presumably at above market rates so that we can keep the banks solvent.
So now the banks are solvent and go on their merry way.
and then the taxpayers just eat all the losses?
or is there some mystical way that the govt will recoup at least some of the costs?
and why is this better than overt nationalization of the entire system? wouldn't getting the good AND the bad be better for the taxpayer?
or is that the point again?
I'm feeling stupid today.
These losses will be shared among banks and investors worldwide, so probably less than half of the losses will be for U.S. banks. However U.S. banks will also suffer losses on overseas loans.
CR, with the implementation of this plan isn't more accurate to say that these losses will be borne by US taxpayers. I'm not sure how any U.S. banks suffer any of these losses at all if the whole idea is to transfer them to the government (you and me). What's the point of sticking it to the taxpayer if the banks still have to take the loss? How does that help anybody? How do 2 parties take the same loss? Isn't that double counting?
Sorry to appear so dumb, but I did name myself 'clueless' !!
SilentThunder,
The shareholders are already wiped out for the most part. I agree that the rest of the equity should be worth zero, too, but I see way too many comments that imply the shareholders are being made whole by these bailouts- they aren't.
The bondholders are the ones being bailed out. And the absolute worst thing I have seen proposed is to have the government buy out the equity and become responsible for the debt.
Ilargi: On Monday, Martin Luther King Day, US stock markets will be closed. The next day, Obama will be inaugurated as the 44th President of the USA. And the markets will be open on that day. Obviously, the expectations are that the optimism involved will lead to solid market gains. But today, after Bank of Americas new US government funding, and Citi's announced break-up -which will enable it to dump toxic assets, while there were some profits in the morning, bank stocks started plummeting around noon. There may be optimism, but there certainly is no confidence. Or belief for that matter. Looking out over the rapidly deteriorating financial landscape, and the newly reported giant bank bail-outs, I doubt I'm the only one to start considering the possibility that Obama may wind up going into the history books as the man who bankrupted America.
If Bank of America gets a $120 billion government guarantee against their toxic asset losses, on top of Citis almost $300 billion guarantee last year, it is becoming increasingly evident that losses will be far bigger than that. Why else would such provisions be provided? There's only one answer: because these losses are real, and they are so today, not some time tomorrow. Which in turn indicates that when tomorrow comes, more guarantees will be needed. There is no way that Bank of America has only $120 billion in potential or even already incurred losses on and off its sheets.
All of which points to a development that is devastating for the American public . While nobody requires to see how big the losses are, or even demands to see the paper they come from, there is a silent move towards transferring the colossal losses to the public purse from the corporate one. The new approach, which gains popularity fast, is called a 'bad bank' or an 'aggregator bank'. Once its established, in one form or another, we won't find out about Wall Streets losses until the next bail-out. And that will be just another incomplete number as well.
This process, if it occurs at all, which is a very bad idea to start with, should at least play out in absolutely transparent circumstances. The reason that doesn't happen is clear: if people knew what was going on, what sort of debts are being unloaded upon them, none of it would not be accepted. And apparently, this is not the end; in fact we haven't seen anything yet. Bloomberg reports: "President-elect Barack Obamas advisers see an increasingly grave banking crisis and are considering proposals far more sweeping than any steps that have been taken so far". Yeah, just check your wallet. This one too is on you.
The Automatic Earth: January 16 2009: The man who bankrupted America
km4,
This is not socialism, this is fascism.
Read this: Fascism - Wikipedia, the free encyclopedia
Fascists used the mantra of private profits, and common losses. Socialism is different - it shares good and bad.
"...discussing a plan to create a government bank that would buy up the bad investments and loans that are behind the huge losses that U.S. banks continue to report, say government officials."
Foregoing the mandatory rant vis Constitutionality I have the following comment.
Where is the wiping out of shareholders? This makes a mockery of everything we claim to represent. There exist no reasons why shareholders should be preserved. None. I go further and suggest that by not wiping out shareholders we ultimately make things worse. I understand the rationale behnd preserving shareholder equity; to prevent capital flight. That logic is faulty. The reason they fear capital flight is that it would make banks technically insolvent. Well duh. That's materially different from the current situation how?
We need an FDR Bank Holiday ...
The Good Bad/ Bank Model is a ripoff of tax payer money.
And here I was just thinking I might be better off moving back home. Maybe I should keep going east... I am in Germany on business this week, things seem better here than my adopted home at the moment.
We're out of the woods, then. But why pay for the toxic assets? Why not just let the banks literally dump them in the bad bank? Or are they actually worth something? To whom? When?
There are now at least 15 Atlanta area banks expected to close unless they find buyers which is unlikely.
The proper way would be that the Fed plays pawn shop, Buy their crap then banks have to buy back the bad debt over a long period of time at the bad value given to the Fed plus interest. The Taxpayer should eat nothing at all.
Some how I doubt this will happen. The American Sucker is on the hook again. I see no change here from OB.
There are now at least 15 Atlanta area banks expected to close unless they find buyers which is unlikely.
\t
FFDIC | 01.17.09 - 1:55 pm | #
What? You said "15" because "all" was too hard to type?
Those f**kers have crossed the line of sanity.. this concept is bad, not just morally.. it violates rationality, common sense and decency..
There exist no reasons why shareholders should be preserved. None.
The credible argument is that wiping equity will escalate the collapse of other entities (e.g. insurance, pension funds) in the same way that the FRE/FNM equity wipeout led to billions in losses for banks holding their stock.
will this cause Conjure's depression clock to click backwards?
So this is good news right? It's all priced in - the market will be up Tuesday for sure...
Matt | 01.17.09 - 1:53 pm |
I agree socialism is not biting enough but fascism too strong....I think the right characterization is a mixture of as plutocracy/kleptocracy where American taxpayers pick up the tab.
RockyR writes:
will this cause Conjure's depression clock to click backwards?
Unlikely. If anything it ticks closer to midnight.
But why pay for the toxic assets? Why not just let the banks literally dump them in the bad bank? Or are they actually worth something? To whom? When?
According to the Gov, these are toxic in the sense that they are illiquid, not that they are worthless. Sell the assets to the gov, get cash in return, and the gov gets BlackRock or PIMPco to service the loans.
I agree Yancey. The equity holders (of last year) are essentially wiped out but I want all the equity wiped out. Bond holders next. Only then might I be grudingly willing to be the useful idiot (aka US taxpayer) holding the rest of the systemic risk bag.
will this cause Conjure's depression clock to click backwards?
RockyR | 01.17.09 - 1:59 pm | #
Damn! It's a good thing it is too early to KNURD else you'd owe me a new keyboard.
A Lethal Shakeout
By Stephen S. Roach
January/February 2009
Foreign Policy: A Lethal Shakeout
2009 will go down in history as the first truly global recession of the modern economy.
Driven by the confluence of post-bubble shakeouts and increasingly robust global linkages, this recession is likely to be the worst of the post-World War II era. That means it could be more severe than the sharp downturns of the mid-1970s and early 1980s. Back then, it was the aggressive anti-inflation resolve of central banks that led to deep recessions. This time, an implosion of bubble-dependent global imbalances has done the trick.
But dont count on a vigorous (V-shaped) rebound from the post-bubble global recession of 2009. With no other major consumer likely to step up and fill the void left by the United States, a lopsided, bubble-distorted world will experience an anemic recovery at best. It will be a long time before global growth returns to the nearly 5 percent rate of the four and a half years that ended in mid-2007. Post-bubble shakeouts are lethal for any individual economyto say nothing for the world as a whole.
ot:
I am considering talking to my landlord about a lease option. 1700 sq ft. overlooking a lake in so cal. zillo puts it at 200k today. nice place, my wife likes the house and her family is near.(reason #1, right?)
no water, bad soil, but it backs wilderness.
offer at todays price, or 3 years away price?
This is not the Swedish model--it's the Enron model.
Let's see:
$1.1 trillion residential mortgages
$390 billion corporate loans & bonds
$234 billion commercial real estate,
$226 billion from credit cards
$133 billion from auto loans
$2.083 trillion. Heh.
Change you can make believe in!
I really think this move makes working hard in America to "climb the latter" or accumulate wealth a thing of the past. Who is who was "short vanity, long free-time"? I'm stating to like that approach A LOT.
El Cliffo writes:
This is not the Swedish model--it's the Enron model.
Let's see:
$1.1 trillion residential mortgages
$390 billion corporate loans & bonds
$234 billion commercial real estate,
$226 billion from credit cards
$133 billion from auto loans
$2.083 trillion. Heh.
Change you can make believe in!
You're missing the derivatives tied to those assets. Multiply by 50 and you'd be close...
Where is the wiping out of shareholders?
~~~~
And the Bond Holders as well ...
Then just maybe bond holders will squawk when regs get ignored ... or too much risk is allowed ...
I agree socialism is not biting enough but fascism too strong....I think the right characterization is a mixture of as plutocracy/kleptocracy where American taxpayers pick up the tab.
km4 | 01.17.09 - 2:00 pm | #
Dude. Google the definition of "economic socialism" and pick a site you think you can trust. I think you'll quickly see that fascism is an apt moniker for this. I'd send you a link, but I don't know my sources well enough to stand behind them.
Go look for yourself.
Unlikely. If anything it ticks closer to midnight.
Mike in Long Island | 01.17.09 - 2:01 pm | #
I thought he wanted to nationalize the banks and expunge the bad debt. Does this not do that?
RockyR | 01.17.09 - 2:06 pm
Look...you have your version of semantics and I have mine.
Damn! It's a good thing it is too early to KNURD else you'd owe me a new keyboard.
Rob Dawg | Homepage | 01.17.09 - 2:02 pm | #
HAHAHA! Sorry, Dawg. I guess that is a solid "NO" from you
I am considering talking to my landlord about a lease option. 1700 sq ft. overlooking a lake in so cal. zillo puts it at 200k today.
unhappyCakeEater | 01.17.09 - 2:02 pm | #
A "lake?" Not a retention pond or some other not-lake? And surely not "Lake Los Angeles."
Lake Arrowhead has a long, long way to fall. Lake Elsinore worse. I'm drawing a blank as to any real lakes in SoCal worth the effort.
Bank of the United States
BUS
quit messin around and
get on the BUS
Hello, gummint?
I have this 401k account, fully valued as of January 2008, for sale at only full price, no markup. Call me.
Not without the banks' books completely opened and remaining so in the future. Also an acceptance of regulation. Banking as a utility, much like our other utilities, gas, electricity, water.
The thing is: In the era of CDOs, are there any 'good' assets left? This Good Bank/Bad Bank thing works great as long as you can scrutinize your credit card (or car loan etc.) portfolio and pick the 20% most likely to default. But if you've packaged it up in a CDO, the whole thing is bad.
As the French say, "if you put a spoonful of wine in a barrelful of shit, you've got shit. If you put a spoonful of shit in a barrelful of wine, you've got shit."
I thought he wanted to nationalize the banks and expunge the bad debt. Does this not do that?
RockyR
~~~~
This would try to unwind bad debt ....
but as mike in long island says the amount of derivatives is 50 times the face amounts...
There could be and probably would be trillions in losses above and beyond the 2.1 trillion ...
Look...you have your version of semantics and I have mine.
km4 | 01.17.09 - 2:07 pm | #
:-) Fair enough.
lake elsinore. im thinking 3 years too. thx Dawg
as to the view, i can sit on the patio and stare at big bear. not bad
Re: There could be and probably would be trillions in losses above and beyond the 2.1 trillion ...
In an earlier thread I suggested a "game over" ruling and subsequent settlement for all derivatives. Went nowhere.
Would a derivative jubilee be a better suggestion?
Do these loss estimates include the derivative impact of declining economic output?
Functionally, I don't see how this is different than the original TARP. The problem is that there is no way to resolve A) buying assets at prices that will keep banks solvent, and B) buying assets at prices that keep taxpayers from shouldering the burden.
There is just no way to resolve this.
Somebody pick A or B and get on with it. Please.
We need an FDR Bank Holiday ....
All private capital should be wiped out before we, the tax payers spend a nickle.
Then we need a Public Central Bank. The privately owned and operated Federal Reserve has proven time and time again it will use tax payer risk to line the pockets of its shareholders, the Member Banks.
Hot, I loved tarpe diem.
Tarp was a clue in the newpaper Crossword puzzle yesterday. As was Bernacke.
Don't you think (politically speaking here) they will try to at least get the fiscal stimulus done before they do a bad bank? They can't do a bad bank without an appropriation, and given how unpopular the TARP was....
Crape diem
"The problem is all inside your head", Bernanke said to me
The answer is easy if you take it logically
I'd like to help you in your struggle to pay fees
There must be fifty ways to repay your banker
He said it's really not my habit to intrude
Furthermore, I hope my meaning won't be lost or misconstrued
But I'll repeat myself, at the risk of being crude
There must be fifty ways to pay your banker
Fifty ways to pay your banker
You just roll out the TARP, Garp
Make a new cram plan
You don't need to be coy, Roy
Just pay the penalty fee
Spend for the bus, Gus
You don't need to deposit much
Just send a few C's, Lee
And set their yachts free...
If existing shareholders are diluted even further ,how low can the shares of Shittybank and Prank on America go ? Warren Buffet bough a billion dollars worth of BofA when it was $40 a share. Will this impact BKH stock?
Socialize the losses on steroids.
I guess the key to screwing up and getting away with it is to screw up badly enough that you have to be bailed out.
This way you get to rob everybody twice.
The genius behind it is that the first time nobody realizes what's going on, the second time they willingly hand over their money because you've rigged the place up with explosives.
Don't think for a second this won't happen again...
It's the perfect crime.
Would a derivative jubilee be a better suggestion?
j marston
~~~~
Until we have a Bank Holiday to open the books, we don't know do we ?
The whole idea of the Bank Holiday is open up ALL the books so that we have an idea what we are facing.
They haven't even accounted for the TARP money!
So now the banks are solvent and go on their merry way.
and then the taxpayers just eat all the losses?
Yep, world's biggest shit sandwich. Oh, and the banks will have taken all the bread. Bon appetit!
What the heck is with Atlanta and Georgia bank-wise, FFDIC???
mmckinl writes:
We need an FDR Bank Holiday ....
All private capital should be wiped out before we, the tax payers spend a nickle.
Then we need a Public Central Bank. The privately owned and operated Federal Reserve has proven time and time again it will use tax payer risk to line the pockets of its shareholders, the Member Banks.
Thats the only way out at this point but they won't do it because it would mean acknowledging that they've been wrong all along in how they've gone about dealing with this problem.
Fabulous parody, Dawg.
mmckinl wrote in part
This process, if it occurs at all, which is a very bad idea to start with, should at least play out in absolutely transparent circumstances. The reason that doesn't happen is clear: if people knew what was going on, what sort of debts are being unloaded upon them, none of it would not be accepted."
you are right, imho , about everything you said
but check this out
no matter how much money you or i have saved in the bank or stashed away in a mattress
no matter what our net worth
you, me, almost no one
would want to live on a planet where there is a total collapse of the financial and econommic system
that is the present risk
a complete break down...worse, much worse than the "great depression"
so to all i say put down your adam smith, put down your john keynes, put down your chicago school or your nyu sloan school thinking, and start bailing cause if the ship sinks we are all going down
btw, ac, and others for whom i have much respect but with whom i politely disagree (on some issues)
yes yes, i know , how can we cure the evils of debt with more debt
not all debt is created equal
the bad debt was incurred to make paper profits shuffling stuff around, swapping, speculating, charging fees...etc etc
mis-allocation of capital
after halting the financial hemorrhaging (if we can and its not a sure thing)
then we must spend and incur debt making investments that realize substantial productivity gains as opposed to paper profits
Last night I rented some movies and the clerk said I was entitled to a free tub of popcorn. I said, "free?" and he said it would actually bring my total purchase down. So I grabbed the tub and when he scanned it, my total dropped a bit.
They PAID me to take merchandise off their hands. That gave me pause for thought.
This happens, and Obama get reduced to the term "government", nothing more, nothing less, just meet new boss, same as old boss.
Does anybody get the idea somebody grabbed him hard by the elbow and told him how thing "really are"?
Good lord, Menem is looking like Raygun compared to these piss poor decisions.
"Oh, and the banks will have taken all the bread."
That sums it up rather accurately. I considered stating nicely, but...
lake elsinore. im thinking 3 years too. thx Dawg
as to the view, i can sit on the patio and stare at big bear. not bad
unhappyCakeEater | 01.17.09 - 2:13 pm | #
No problem. Suspected as much. I stare at the Topa Topas all day long. Should be tax deductible as a medical wellness expense. May not take 3 years at Lake Elsinore. We may start bouncing along a replacement cost bottom as early as Q4 '10.
Where is mmckinl?
From the Times article:
"the incoming Obama administration and the Federal Reserve are discussing a range of options, reported to include a government bank that would buy up toxic assets"
Time will tell, but I don't see this happening unless equity holders are wiped out entirely, with haircuts or worse for bondholders.
You never can tell who is leaking what in these articles. I'm willing to bet one of Morocco's lentil-sized testes that we get something closer to the Swedish model once the Bushites are removed from power.
Our problem is an unholy alliance of the delusional and the deplorable. A lot of people are just not willing or able to face the magnitude of the disaster and so they actually believe that if the gov sits on these assets for a few years everything will be OK. Remember, housing only goes up and stocks are your safest long-term assets!
The deplorable are using the desperation of these delusional types to offload the bad assets for huge gains for themselves.
Bond Girl,
Reading between the lines, the "Bad Bank" will not need an appropriation.
I think the plan is to put $200b of TARP money into the vehicle as equity. That money has already been appropriated.
But $200b is not enough, so the "BadBanc, Inc" will borrow. Not from depositors, but from the Fed. The Fed will easily kick in a trillion, making BadBanc "well capitlized", in the eyes of the FDIC.
The Fed, of course, needs no appropriation from Congress. Nor are they really accountable -- in a democratic way -- to taxpayers.
There's a mistaken impression that the Fed is an arm of government. It is, sort of, but not in a way that matters. Unlike government obligations, taxpayers can avoid being on the hook for Fed liabilities. How, you may as? Why, its just as simple and easy as selling your dollars for better-managed currencies or hard assets.
@mmckinl | 01.17.09 - 2:19 pm
I am happy to support your bank holiday in exchange for a derivatives dismantling.
I am resigned to funding all of this for the rest of my taxpaying days, but it would be nice to have some assurance that there will be an end to this colossal waste of public money and that nothing on this scale can happen again.
mock turtle,
Quick!! You need to take your meds!!
It's a brave new world bud, sink or swim. How bout we just get to that sinking or swimming part already and quit f*&cking around.
Dibs on your shoes!!
Good, now we can get back to living beyond our means.
And every month, another 1 percent of just-scraping-by Americans (or is that number too low) think: Why the hell should I keep paying every bill every month and then having just $4 left over? Screw Uncle Sam, he can roll my credit card bills into his Aggregator Bank, or whatever he's calling it, because I'm not paying it anymore.
If only Obama would appoint Bird to the Fed and Fortune to the treasury...
Until we have a Bank Holiday to open the books, we don't know do we ?
The whole idea of the Bank Holiday is open up ALL the books so that we have an idea what we are facing.
mmckinl | 01.17.09 - 2:19 pm | #
Don't you thing the Treasury and the Fed have seen the books by now? Why else would they be shelling out all this money?
Damn, I took too long to compose that post, in the meantime multiple posts from mmckinl!
Bid low, Cake, and work your way up. There person who cares the least in a negotiation wins.
"A Lethal Shakeout
By Stephen S. Roach"
Roach predicted our situation now maybe four years ago - don't recall exactly.
Is it just me, or are we basically giving banks money today so the money we think is in our accounts will be there tomorrow?
That is to say, our accounts are worthless now. There's just a magic number tied to our name. So we can either zero out our accounts and start saving, or borrow the money elsewhere, stick it in our banks, and pay back the loan in taxes over 30 year.
We chose option 2. So we're paying taxes to refill our bank accounts?
"Also under consideration is an additional and giant government guarantee of banks' assets against further losses."
Does that mean they can liquidate just about every company with even slightest of payment difficulties and get the losses back from government?!
That's Ballgame Comrades,
Same conversation with my burnt out hiipy mom yesterday. F it she says to me, I gotta feed ME, NOW. Tax man not nearly as scary as he used to be. This from a woman who preaches FDR and Great Society sermon in her sleep.
Hey poor, Obama voting, peace now types: The tax revolts start with YOU!!
Reconcile that with your worldview and values system and get back to me.
Things get REALLY interesting when control mechanisms breakdown don't they.
Rob Dawg,
Very, very funny parody!
Fair Economist,
A shit sandwich without the bread? Loved it! The joke, that is.
"So we're paying taxes to refill our bank accounts?"
And pay massive bonuses. To retain the talent, of course.
You never can tell who is leaking what in these articles. I'm willing to bet one of Morocco's lentil-sized testes that we get something closer to the Swedish model once the Bushites are removed from power.
Gary | 01.17.09 - 2:24 pm | #
Yes, after the regime change on Tuesday perhaps we'll start seeing proposals that don't have Hank's fingerprints on it - the ones that protect the bankers at all costs. I think they should start off with indictments.
mock turtle,
Perhaps liquidation is a better solution. GDP and aggregate debt are unsupportable. The losses are already there. The issue is who eats them and what is the most time and cost effective resolution.
The govi could go in and blow away the managements, separate the good from the crap, and force existing investors to take losses. Propping up incompetent managements, unsecured debt holders and even the common is foolish.
Hey poor, Obama voting, peace now types: . . . . get back to me.
What exactly do you think McCain would be doing now that would be so radically different than what is being reported?
Senorito On-Topico writes:
mock turtle,
Quick!! You need to take your meds!!
ummm ok
do you recommend the red pill, the green ones or the blue
just to avoid drug interactions, i should report im under a doctors order to drink heavily
What the heck is with Atlanta and Georgia bank-wise, FFDIC???
lawyerliz | 01.17.09 - 2:20 pm | #
Atlanta had a huge housing bubble. I lived for a few years ('04-'06). The housing situation was untennable. NE pricing in a city that is basically very poor (think Detroit, pre-crash) propped up by a resurgence of white-collar corporate jobs. I wasn't bullish on the long-term prospects for the place when I was there. I still am not.
Don't you thing the Treasury and the Fed have seen the books by now? Why else would they be shelling out all this money?
Ed - Mtn View
~~~~
No I don't think the Fed and the Treasury have seen the books ...
Don't ask, don't tell ... that way they have deniability about the banks solvency ...
As I said before they haven't even accounted for the TARP money they gave the banks.
Atlanta had a huge housing bubble. I lived for a few years ('04-'06). The housing situation was untennable. NE pricing in a city that is basically very poor (think Detroit, pre-crash) propped up by a resurgence of white-collar corporate jobs.
That, and the crappiest and most corrupt state banking regulators in the entire Union.
Just kicking the can down the road. The problem
Is the road is now impassable.
Re: "What exactly do you think McCain would be doing now"
Not to go off-topic, but I wonder if McCain would have attempted to fill the Bush leadership vacuum as Obama has: would we have had McCain standing behind an "Office of the President-Elect" sign?
Allen C writes:
mock turtle,
Perhaps liquidation is a better solution. GDP and aggregate debt are unsupportable. The losses are already there. The issue is who eats them and what is the most time and cost effective resolution....
i half agree
agregate demand is unsupportable where the consumption component is heavier than the investment component
in other words we CAN support the debt and gdp if the right capital investment s are made
as for your ideas about wiping out the guilty and new management...i entirely agree
im the guy who keeps sayin i wanna see perp walks... and, hell some of these robber barons have committed acts tantamount to treaso
That, and the crappiest and most corrupt state banking regulators in the entire Union.
Anonymous | 01.17.09 - 2:38 pm | #
How does that happen? Do a buch of bankers of dubious ethics get together and say "Let's move to Atlanta!" or is it indicitve of the native local banks?
SomeArmChairEconomist,
Yes, pretty much what you described.
One of the things I comment on from time to time is the delusional state of most Americans and the delusional state of a majority of a lot of the commenters even here at one of the very best financial blogs there is.
Yes, the banks, bondholders, and now business corporations are being bailed out, but the more fundamental truth is that the actual people being bailed out includes everyone that holds paper financial assets in one form or another, and that includes just about every American citizen and every citizen in the developed world. This is the real reason politicians bend over so readily for banks and whatnot- they know the voters are amongst those that lose in outright defaults on debt.
To follow up, a close read of the Times article and the Bloomberg piece (no WSJ subscription) yields absolutely NO suggestion that anyone from the Obama camp is floating this turd.
In Bloomberg it is "according to people familiar with the matter".
The clip from WSJ implies that this is being floated by Bush admin officials . . . the current, outgoing government.
The Times article is not sourced at all.
And the Bloomberg article elsewhere sources something to "an Obama advisor", which implies that the turd, or bad bank, is coming from a different source.
We will see what happens soon enough, but this heaping spoonful of shit for the punchbowl is being offered up not by Obama's people, but by Bush admin officials.
I don't think it's going to happen as described at all.
Haloscan weird again. Atlanta just couldn't have been more bubblicious than South Florida, and our banks aren't failing--yet. Won't be surprised if they fail in a general melt down. So why is Ga singled out as being an outlier?
I am happy to support your bank holiday in exchange for a derivatives dismantling.
I am resigned to funding all of this for the rest of my taxpaying days, but it would be nice to have some assurance that there will be an end to this colossal waste of public money and that nothing on this scale can happen again.
j marston
~~~~~
We need a Public Central Bank that profits from the credit we tax payers underwrite. We need a Public Central Bank to regulate private bankers that use tax payer credit to underwrite their business. We need a Public Central Bank that will limit credit creation to a certain percent every year so that we don't end up with hundreds of trillions of bogus bets again.
McCain is probably the happiest man on the planet these days.
"senorito-coprophagio" has a nice ring to it.
SomeArmchairEconomist writes:
...Is it just me, or are we basically giving banks money today so the money we think is in our accounts will be there tomorrow?...
Sounds like the definition of a "circular Ponzy scheme" ?
j marston writes:
Re: "What exactly do you think McCain would be doing now"
Phil Gramm as Paulson's replacement for starters. Finishing reading Greenspan's book as he looked for guidance
The losses are already there. The issue is who eats them and what is the most time and cost effective resolution.
The govi could go in and blow away the managements, separate the good from the crap, and force existing investors to take losses. Propping up incompetent managements, unsecured debt holders and even the common is foolish.
Allen C
~~~~
Yep, take out the stock and bond holders first ... then maybe in the future the message will be clear that they will have to lay in their own bed, alone.
Japan Set to Miss Goal of Balancing Budget by 2011 (Update1) - Bloomberg.com
Japan Set to Miss Goal of Balancing Budget by 2011
I have pulled out my calculator, and I think there is a chance we here in the US may not get our budget balanced by 3011...
So we all become serfs in their new feudal system? I wonder how they will tweak the corporate hierarchy titles to convey the new power they will wield?
The appointing of a federal government chief performance officer was a big red flag for me. Started noticing state treasurers have morphed into now being called CFOs. Seeing a corporate state forming. Worried.
Rob Dawg,
LMAO! You are truly on a roll today!
)
Lie to Me - Go Ahead and Lie to Me
by One Pissed Off Liberal
Daily Kos: Lie to Me - Go Ahead and Lie to Me
This person is very liberal and if he's pissed off then it's going to get really ugly for the Dems.
I'm not sure why Obama bashing is so popular with so many commenters on this board, but clearly I hope he and his administration are a rousing success.
sportsfan | 01.17.09 - 2:48 pm | #
That is kind of funny to me as I wish that W had not been quite the fuck-up. There were plenty of good reasons for going in to Iraq, but WMD was not one of them. The inital execution of that effort was totally brillaisn though the overall plan for the post Saddam Iraq is an embarrassment.
No child left behind, had it's merits, but once iplemented it was pretty much left for dead.
The cronyism was the worst though, as abject loalty was put ahead of any kind of competence. This of course would lead to Hariet Myers and Katrina.
I am no fan of either party in power but O' gives me some level of hope in a COMPETENT administration. I am ashamed the bar is set so low.
Nothing like scrolling through a CR thread to pick up my spirits. Now, back to bed.
Try to see corporate power as a balance to statist power. You see, it's a balance of power that is good for the citizen! Now pay your taxes, buy our products,pay that interest, obey your spouse and kids, and tithe to your church, oh eunuch!
"What exactly do you think McCain would be doing now that would be so radically different than what is being reported?
sportsfan | 01.17.09 - 2:36 pm | # "
That is the big question. I doubt anybody voted for McCain (no conservative or Republican I know thought McC was a good choice)but really voted against Obama. The winner of this prize walks into the buzz saw. Winner OB.
Bruce in TN,
The entire flow is restrained since Aug 2007. I think this is the elephant in the room as far as the stimulus plan goes, not to mention all the funding problems accumulated over the last 4 months.
I am absolutely convinced that the incoming administration is aware of this and plan to find the funds domestically by revamping 401ks and IRAs at some point. Obama said we all have to have "skin in the game", and I feel certain this is what he meant.
All,
Take ten minutes and read this testimony from Greenspan, circa 2001. It will blow your mind.
Greenspan projected ZERO federal debt by 2010.
The fed is a sham. They are absolutely detached from reality. They exist to serve the wealthy and provide unearned revenue streams (inflation) for the government.
FRB: Testimony, Greenspan -- Outlook for the federal budget and implications for fiscal policy
-- January 25, 2001
President Obama is being too lenient in forgiving the 8 years of disrespect shown the citizenry. We need to see someone punished for the hardship coming down the pike. If he fails to provide this very basic need then we will create our own.
The French revolution was terrifying in the respect that the populace grew to love the guillotine and found many innocents to feed the blade. Better for the system to provide the entertainment then the citizenry take a hand.
km4 wrote
I voted for Obama because McCain would have been a disaster but
Obama selling out to Wall Street has really pissed me off
Salon News - Salon.com index.html
hey
the article you cite is an opinion piece, not a news article ok!
sirota is an interesting guy, and dynamic but his views are not always on target
its a little soon to state as FACT that anybody has sold out
Practical question:
what is the proper term for those pulldown-metal-rolling-security-things for big windows and doors?
think i'm gonna get some for my shop for their birthday.
This "solution" does seem quite Fascist, see this NYTimes article:
- NY Times
Is a plurality of approaches really so wrong?
plan to find the funds domestically by revamping 401ks and IRAs at some point
I would enjoy a confirmation of my belief that 401Ks are just another tax.
.
I'm not sure why Obama bashing is so popular with so many commenters on this board, but clearly I hope he and his administration are a rousing success.
sportsfan | 01.17.09 - 2:48 pm | #
Futility of our system of government bashing. Anger at a corrupt power/assencion system that spent over a billion this year in a presidential election bashing.
Care less about the person, but the depravity of a system and the mindless zombies that wander around bumping into walls with a t-shirt of their "guy" on it.
What ever we had is gone, ne'er to return, and we are all trying to preserve our past.
Weare all "Conservatives" now.
angry saver
i agree
and i would abolish the fed, at least as presently constituted
mmckinl has it right when talking about a bank owned by the country that charges interest accrued to the taxpayers for credit extended to banks and other corporations
The system is utterly corrupt and the citizen must take the modern day equivalent of the guillotine to deadhead the corruption. If a few good blooms get snipped, hey they shouldn't have stuck their neck out!
mock turtle | 01.17.09 - 3:38 pm |
Actions speak louder than words
If Obama does not hold the Wall St crooks accountable ( including jail time for top people ) and simply continues the Paulson plan then he has sold out American taxpayers.
I hope we see Obama step up...
Greenspan projected ZERO federal debt by 2010
Greenspan could be right. The FedGovt still have 345 days to default.
.
I hope we see Obama step up...
You mean like his stance on the gasoline tax?
[Obama] has taken the idea of increasing gasoline taxes off the table, saying that Americans had enough economic burdens at the moment.
Energy Wire: PostGlobal on washingtonpost.com
The Lint Age
When Ben Bernanke gave his speech to the London School of Economics on Tuesday, our reporter was on the scene. Terry Easton put a tough question to Americas central banker: arent your interventions just making the situation worse, he wanted to know. Amid the blah...blah...blah...of Bernankes response was this: The tendency of financial systems to boom and bust ...is a very long-standing problem... but I think its very important for us to try to put out the fire...then you think about the fire code.
In his 1988 book, The Collapse of Complex Societies, Joseph Tainter argued that all societies like all organisms are doomed. Tainter studied ancient Rome as well as the Mayan civilization. He noticed that problems always blaze up. Each one whether climatic, political or economic rings the firehall bell. And each solution and readers may substitute the word bailout for solution brings more challenges and takes more resources. Finally, the available resources are worn out. Tainter observes that when the costs become high enough, people seem to give up. By the end of Roman era, for example, the burdens of empire were so heavy that people sold themselves into slavery to get free of them. So many people did so at one point that the authorities had to come up with another solution; they outlawed the practice. Henceforth, Roman citizens were required by law to remain free!
The Automatic Earth
And that is the crux of the 2005 Bankruptcy Act. You will be required to pay your debts whether or not you can eat even though we lent you the money knowing you couldn't repay
I'm not sure why Obama bashing is so popular with so many commenters on this board, but clearly I hope he and his administration are a rousing success.
sportsfan | 01.17.09 - 2:48 pm | #
I wonder if his press secretary will start bad mouthing the previous admin, you know, make up shit that isn't true, but the media loves to write about. Also, if catastrophe hits 9 months after office, he can still blame Bush, since that's the grace period W got. And any congress critters that don't vote for his plan need to be branded as 'un-American' and helping the terrorists.
But he really should put a bunch of those Bushites in jail. They'll all get a pardon this weekend though...bought and paid for.
unhappy cake eater,
Search foreclosures in CA 92532 | RealtyTrac.com
click on show map on left below zip and # of properties, remove check marks on for sale by owner etc..
use + on map to get closer to street view as their are 2 many repos to show...when you get down to that level. scream!
buying in elsinore is not for fainthearted...think meth cookers next to a lake ugly area
u are one crazy son of a gun
worth 100k max
check your own area by changing the zipcode in link above example zipcode=00000
rock it with queensryche..
is their anybody listening
YouTube - Queensryche - Anybody Listening?
Here's some more Greenspan bullsh%t.
In the early eighties, Greenspan headed a task force that recommended raising FICA taxes. His recommendation was implemented and resulted in the biggest tax increase ever. Then, in a classic bait and switch swindle, the Gov't spends the surplus FICA money on a yearly basis.
But it gets worse, Greenspan then recommends that the Gov't cut income & capital gains taxes for the wealthy, rather than cutting the FICA taxes.
What a sham. Raise taxes for the lower 4.5 quintiles, watch the gov't spend money on pork and cut taxes for the rich while ballooning our unfunded liabilities.
What a crock. The above rip off was planned. Greenspan sold out main street. Paulson is only adding insult to injury.
Another day, another PLAN. Well, at least those former Russian 5-year plan committee members do now have new jobs in America. Hopefully, they'll get overtime pay too.
Obama said we all have to have "skin in the game", and I feel certain this is what he meant.
Yancey Ward
The bottom 80-90% have nothing but skin in this game. It's the top 10 or 20% that don't. Lift the cap on SS/Medicare, money managers pay income taxes like the rest of us not cap gains alone. That's how I percieved his statement. He also said strengthening Main st. eventually strengthens Wall st. Who knows. Give it 3-6 months and much will be clearer
I am considering talking to my landlord about a lease option.
unhappyCakeEater | 01.17.09 - 2:02 pm | #
Monthly payment in excess of the prevailing rental rate can be considered as a down payment contribution if it's addressed in the contract. You'll need a current appraisal which includes rental value.
Don't set yourself up for failure.
Km4,
I hope he's laying low for a reason, and does not continue this Paulson bullshit. But we'll need to see it relatively soon, not weeks from now but days from now. I voted for him but I won't be an apologist for his bad decisions, unlike talk radio's love affair with Bush right over the cliff.
mmckinl has it right when talking about a bank owned by the country that charges interest accrued to the taxpayers for credit extended to banks and other corporations
mock turtle
~~~~~
The tax payer takes the loss, why not share in the gain ?
A Public Central bank could also limit credit creation so we don't get trillions in derivatives every year. We have over $500 trillion in derivatives according to the BIS ( bank of international settlements).
In this way credit is priced to market, not to imaginary, uneconomic leveraged bets.
"its a little soon to state as FACT that anybody has sold out"
Obama's begging for TARP has given the failed Bush bailout a big stamp of approval. What an utter moron.
make up shit that isn't true,
That's a good thing about the Bush admin., you don't have to make anything up
OB has no clue what to do. He is no more an economist then me. He is a BS'er and will be manipulated on the subject by the people around him. No different the the last two administrations. Hang on to your Arse!
Anonymous,
None of those measures, even take together, come close to funding the needed borrowing. There is actually only one method that even approaches being politically viable and large enough, and it is only viable because of the recent pounding of the stock market (and gets even more viable if the market continues to decline)- and that is to turn all private, tax advantaged retirement accounts into government-bond only vehicles.
However, Broward Horne's instincts are spot on, as usual.
you, me, almost no one
would want to live on a planet where there is a total collapse of the financial and econommic system
mock turtle | 01.17.09 - 2:22 pm | #
I'm reminded of that line from the first of the stupid star wars series (not the immortal classics from the 70s and 80s): "so this is how freedom dies, with a whimper"... or some such derivative of that quote
NYT points out the obvious.
Outsourced Chores Come Back Home - NY Times
anonymous writes:
I hope we see Obama step up...
You mean like his stance on the gasoline tax?
later not now
the entire economy is in free fall
Almost all eCONomists are shams. Tarot card readers make more accurate predictions.
American finance has become a total sham too. It cannot exist in its current form without massive unearned income (inflation).
TARP recipients have overseas tax dodges ...
"Eighty-three of the nation's 100 largest corporations, including Citigroup, Bank of America and News Corp., had subsidiaries in offshore tax havens in 2007, and some of the companies received federal bailout funding, a government watchdog said Friday.
The Government Accountability Office released a report that said Bank of America Inc., Citigroup Inc. and Morgan Stanley all had more than 100 units in countries that maintain low or no taxes. The three financial institutions were included in the $700 billion financial bailout approved by Congress.
Insurance giant American International Group Inc., which has received about $150 billion in bailout money, had 18 subsidiaries. JPMorgan Chase & Co. had 50 units and Wells Fargo & Co. had 18; both financial institutions received government bailout money."
Business Week Online > File Not Found
So we the public should bail out banks that legally cheat on their taxes?
F'em ...
squeezed wrote
Obama's begging for TARP has given the failed Bush bailout a big stamp of approval. What an utter moron.
squeezed | 01.17.09 - 3:50 pm | #
---so uh it doesnt matter to you WHAT he spends the money on???
so it doesnt matter to you if there is accountability and oversight this time????
where there was none before under bush
i get it...its the same old meme..."they are all the same...or they all did it"
ive seen the loosing party use this argument before wheen ever a hand is caught in the cookie jar
helps to confuse and conflate
How appropriate:
From The Reader Mail Bag - Dealbreaker - A Wall Street Tabloid - Business News Headlines and Financial Gossip
** IMPORTANT **
There have been essentially no tax hikes in modern American history. Everything has been a tax shift. If Angry Saver is paying more, that is because someone is paying less. If you do a survey of countries that cut back to pay down their debt, you would know what a tax hike looks like.
http://www.heritage.org/research/features/BudgetChartBook/images/fed-rev-spend-2008-boc-P7-Tax-Burden-Is-Rising-to-Highest.gif
from: 401 Authorization Required
Although I do not like the heritage institute, it had the easiest already made charts. The white house and CBO budget documents intentionally avoid pre-1970.
Thank God Obama chose Geithner. Now my faith is restored. All things Albany are as pure as the driven snow.
No need to guillotine the banks. Just forgive all taxpayer debt to all banks. THEN we move on in some fashion.
The Supreme Court on Friday agreed to decide whether state officials are barred from investigating the lending practices of national banks.
- NY Times
Anyone want to bet on how this gets ruled on? I'll give you a 1000 to 1 odds.
thanks max fischer! rotfl!
sorry, not the ideal chart to link to
http://www.heritage.org/research/features/BudgetChartBook/images/fed-rev-spend-2008-boc-R1-Current-Federal-Tax-Receipts-Near.gif
Total Federal Government Receipts as a Percentage of GDP, 19452008
Yancey:
I thought the "skin in the game" comment sounded very unpresidential.
Just my opinion...the taxpayer, mortgage holder, credit card user, employee that is un-employed...well, they all already have skin in the game..
If what he is saying is that taxpayers are going to have to shoulder an increasing burden, maybe give up some retirement funds...whatever he meant..so that the IB's, GM's, Chryslers will get more...I couldn't disagree more with that...of course he didn't exactly say what he meant...so we will just have to see what kind of fresh Hell is waiting for us..
The Supreme Court on Friday agreed to decide whether state officials are barred from investigating the lending practices of national banks
The war of northern agression settled this 144 years ago!
Economist Moe Howard 3SU writes:
OB has no clue what to do. He is no more an economist then me. He is a BS'er and will be manipulated on the subject by the people around him.
he's got some good ideas and some good advisers, and some i dont particularly like...but
sounds like you dont agree with much of any of his ideas and rather than critique...
its just easier to call him "clueless bs-er"
BOH will make many mistakes...try policies that wil or will not work
economics is a fuzzy discipline at best...but he's gonna try
any suggestion except lets just give up and collapse into the economic dark ages is welcomed
mock turtle,
hitting the juice a little early, are we?
Your poor spelling is atrocious!!!
By the way I tip my glass to you! Self-medication is always better than suicide or shopping!!!
Its after 6pm somewhere in the world!
rotflmao
There have been essentially no tax hikes in modern American history. Everything has been a tax shift. If Angry Saver is paying more, that is because someone is paying less.
Don't forget the inflation tax.
At 4%/year, the inflation tax is > $560 billion.
Inflation and interest never sleep. They don't get tired, they don't complain, they are reliable, they are the greatest sources of wealth in America.
Starting now, let's take up in our own lives the work of perfecting our union,"
ok, i'm on record today saying Obama is the last president of this union.
Another year of what we have and the union is Toast!
And that is the crux of the 2005 Bankruptcy Act. You will be required to pay your debts whether or not you can eat even though we lent you the money knowing you couldn't repay
\t
mmckinl | 01.17.09 - 3:44 pm | #
Right, they will make you a new loan with teaser rates so you can't claim inability to pay.
Angry Saver writes:
...The fed is a sham...
You think Congress (with few noted exceptions**) is any better ?
You might browse in the archives of the congressional committees (wider scope than just the FED) and look there for the video recordings of these hearings. They do include the Q&As which are far more interesting than the "publicised" statements, which alas, only contain the "formal" statements, rarely the Q&As.
**Look for instance for the "dialogs" between Ron Paul and Greenspan. Interesting.
But, in general, I can't see why Congress is any better than the FED.
Barclays loses billions off its share value - Times Online
Barclays loses billions off its share value
Stock plunges after ban on short-selling ends
Barclays lost a quarter of its stock market value last night, just hours after the ban on the short-selling of banking shares was lifted.
If Obama can be trusted to do the right thing, and I'm hoping for the best, then there's no reason he should mind accountability provisions written into the release of the second half of the TARP funds. Rather than just give verbal promises to key legislators like Dodd, Obama should have no problem writing them down on paper and seeing them pass Congress, right? Because if he does have a problem with codifying his promises, perhaps he's not that committed to them.
"Severe hostility"
Daily Kos: "Severe hostility"
Sometimes its hard to believe that well see the spring again, Mr. Biden said, speaking to shivering supporters who had been waiting for hours at the rally, which took on the feeling of a campaign event. But Ill tell you: spring is on the way with this new administration.
Now, it falls to us to carry forward that American story and to make it our own, Mr. Obama said. Now, it falls to us to ensure that everyone in this country can make it if they try. Now, it falls to us to pick ourselves up, to reach for the promise of a better day, and to do the hard work of perfecting our union once more.
They don't get tired, they don't complain, they are reliable, they are the greatest sources of wealth in America.
Angry Saver | 01.17.09 - 4:11 pm | #
The FED and the banks with their fiat currency are geniuses aren't they? You have to respect a simple theory that in practice is so insidious to be invisible to the majority.
mock turtle,
sorry for the snark, just wanted to put in my 2 cents worth on this site...You'all are so far above me in knowledge and experience, that I spend most of my time reading others comments...
But why pay for the toxic assets? Why not just let the banks literally dump them in the bad bank? Or are they actually worth something? To whom? When?
slack jaw | 01.17.09 - 1:55 pm | #
It's the same old problem: the Banksters are counting these "assets" as positives on their balance sheets at mark-to-fantasy values. They can only survive selling them if they receive greater than market value for them. They can't just give them away. There is no way to remove them from the balance sheets otherwise.
Anonymous(Unrated) writes:
\t** IMPORTANT **
There have been essentially no tax hikes in modern American history.
Anonymous | 01.17.09 - 4:02 pm | #
Ummmm.... Okay. It isn't like nearly every class of taxation being increased hasn't been joined by entirely new ways to tax.
Troll, nothing more.
KPMG offers staff unpaid leave or four-day weeks - Times Online
KPMG offers staff unpaid leave or four-day weeks
Mock still believes. I respect and envy him for that. He might even be right.
If you disagree be respectful. How hard is it?
Anonymous:
Are you truly trying to convince us that tax rates didn't increase between the JFK and Carter years?
I think not...marginal rates were cut by Reagan enormously...his mistake was not cutting spending, but that is another topic.
Wasn't a shift, rates were increased..
I think they should do this during Superbowl week so no one in America is paying attention, we get a huge market rally based on it, everyone at the Superbowl parties talks about how its a "great time to buy stocks" and we will be back to business as usual.
I'm hoping Dick Sporting Goods goes BK next. I want to buy some guns and ammo at liquidation prices.
Angry Saver
Don't forget the inflation tax.
At 4%/year, the inflation tax is > $560 billion.
Inflation and interest never sleep. They don't get tired, they don't complain, they are reliable, they are the greatest sources of wealth in America.
Very astute point. I'm young, foolish, and grew up knowing a central bank that was among the first to target inflation.
Unemployment will last so long that the people will yearn for some purpose, for something larger than themselves, for a world at war.
politico writes:
Starting now, let's take up in our own lives the work of perfecting our union,"
ok, i'm on record today saying Obama is the last president of this union.
Another year of what we have and the union is Toast!
politico | 01.17.09 - 4:12 pm | #
been saying that for about two weeks now. This gets a little better on mainstreet in the next two months, or it gets real bad, real quick. People can't bounce along on the bottom for too long, or they start getting ideas in their heads that they don't need the gov't, as they don't provide them what they have dearly paid for.
People around me are waking up to the fact that they are a whole lot poorer than they thought, and come April 15th, I think we see tax revenue crash, gov't borrowing severely stifled and a loss of the ability to fund daily operations.
Remember, tax revolts start with YOU!!
I'm sure propping up the banks will make consumer want to spend:
Exports
The FED and the banks with their fiat currency are geniuses aren't they? You have to respect a simple theory that in practice is so insidious to be invisible to the majority.
It really is an amazingly amazing swindle.
Here's the part I like best: The majority actually believe that inflation is a natural occurrence and that the fed controls inflation rather than causes inflation.
You won't find ammo at liquidation prices...I have just bought some that was damned hard to find for a handgun safety course...ammo is in very short supply.
Doesn't matter when they announce the bad news anymore. The market will go up and the people will go on.
Until it doesn't and they don't. Everything ends, usually badly.
"Government bank for bad assets" equals bailout. These MBAs are so clever with words.
Stock plunges after ban on short-selling ends
FFDIC | 01.17.09 - 4:13 pm | #
Those damn shorts, they ruin it for everybody.
slack jaw writes:
Now, it falls to us to carry forward that American story and to make it our own, Mr. Obama said. Now, it falls to us to ensure that everyone in this country can make it if they try. Now, it falls to us to pick ourselves up, to reach for the promise of a better day, and to do the hard work of perfecting our union once more.
slack jaw | 01.17.09 - 4:13 pm
"Now, it falls to us to put you to sleep with empty rhetoric."
The choices are pretty clear. Use your own Occam's razor.
Now which option is more likely in the US?
Now, it falls to us to pick ourselves up, to reach for the promise of a better day, and to do the hard work of perfecting our union once more
uhhh , you want us to service the debt of the aristocrats? O, ya stumped on change, my brotha!
Everyone keeps talking about 'haircuts' for bondholders like it's a trivial thing to do.
Bondholders only take haircuts one of two ways... buybacks and bankruptcy. Buybacks don't work(GMAC). Bankruptcy will cause the collapse we all fear.
I seems the bankers were the ones prcticing mutual assured destruction.
Now which option is more likely in the US?
supafly73 | 01.17.09 - 4:23 pm | #
Don't you have to give sovereign default as a possibility? My personal favorite!
anonymous at 402
i agree
obamas continued support for tim geithner is a mistake and just plain wrong
any guy who fills out his tax return committing this kind of gross error (whether he had a preparer or not) is either too dishonest or too stupid to be treas sec
Now which option is more likely in the US?
supafly73
~~~~~~~~~~
Write off debt ... it has to be the first choice ... There won't be any inflation for years ... just devaluation ....
Federal Mortgage Banks Show Stress - washingtonpost.com
Federal Mortgage Banks Show Stress
Some Branches of System May Have to Borrow From Taxpayers
The banks are very healthy. The accounting doesn't represent the true economic picture," said John von Seggern, chief executive of the Council of Federal Home Loan Banks, which represents the network in Washington. He said the banks want regulators to change the rules.
Everyone wants to know when the eCONomy will recover.
Here's the gig. When households thought they were wealthy, so did the banks. Now that households are realizing they are broke, so are the banks. The eCONomy won't recover until household balance sheets recover and that won't be soon.
given debt levels and incomes.
In our debt money system, someones liabilities are someones assets and someones assets are someones liabilities.
The bad bank scam won't help households. In fact, it will allow inflation to take hold and will end up hurting households further.
supafly73,
You forgot what I think is the more likely outcome:
Inflation takes time. Deflation not so much.
"Don't you have to give sovereign default as a possibility? My personal favorite!"
Don't you know, USA does not torture and does not do defaults.
"We have over $500 trillion in derivatives according to the BIS"
I don't know how to make sense of the notional value, since it includes double-counting as well as contracts that in all likelihood pose relatively little risk. We don't know the true dollar amount of troubled contracts and that troubles me.
What really bothers me, though, is not knowing how the derivatives are going to affect the "bad bank" plan. Are they static or dynamic? If static, then whatever the losses are, they get tallied and moved over as part of the toxic assets.
But what if the derivatives are dynamic, by which I mean that after we tally and transfer, the very act of moving the toxic assets triggers a new round of derivative exposure and loss? It is one thing to have to revisit the bailout because the economy has headed further into recession; it is quite another thing to allow side bets to go in the middle of a bailout when the side bets themselves are exacerbating the need for further bailouts.
So... anyone willing to weigh in: static or dynamic?
Bruce in Tennessee :
You approach taxation with a party affiliation bias apparently.
Are you truly trying to convince us that tax rates didn't increase between the JFK and Carter years?
The increase was short, and if you would look at the chart the receipts as % of GDP as incredibly stable when you think of all the big PR shows they put on about taxes.
I think not...marginal rates were cut by Reagan enormously...his mistake was not cutting spending, but that is another topic.
Yes, increasing spending at the fastest rate in history other than WWII or GWB Jr is well represented by the comment "not cutting spending".
Wasn't a shift, rates were increased..
I used the word effectively. Disturbances do occur, but the taxation rate is stable across party lines.
You need to re-read the first post. If you were paying more, that is because someone else is paying less. Whether it be through unindexed levels like the AMT, new loopholes, or change in treatment of different classes of income.
The best example of that is the high corporate tax rate on paper, which after all deductions and loopholes is competitive with a 20% rate. Tax income used to be split evenly amongst corporations and individuals, but if you click the link in the first post you would see that corporate contributions have not increased with inflation -- rather it has been personal income taxes which have carried the load for both groups alone.
The biggest change to balance the budget will be to cut spending by an unimaginable amount. Even today I doubt more than 15% of Americans would support the actions that are necessary.
"I have just bought some that was damned hard to find for a handgun safety course...ammo is in very short supply."
Bruce in Tennessee | 01.17.09 - 4:20
Bruce,
WalMart has been stocked pretty good here locally in Florida. I picked up all the .38 WWB they had in stock last week. I can spare some 7.62 and .223 for a fellow blogger here but I see you need handgun stuff.
A gunshop made me a deal on a bulk purchase 7 years ago. I'll never use it all...maybe.
Chris
politico
ok, i'm on record today saying Obama is the last president of this union.
Another year of what we have and the union is Toast!
| 01.17.09 - 4:12 pm | #
cut and run?
"In fact, it will allow inflation to take hold "
I agree that the rational reaction would be to spend in response to "printing" but since when has the response of the consumer been anywhere near rational.
Bondholders only take haircuts one of two ways... buybacks and bankruptcy. Buybacks don't work(GMAC). Bankruptcy will cause the collapse we all fear.
I seems the bankers were the ones prcticing mutual assured destruction.
BondsOfSteel
~~~~~
It's the Bond Holders turn my friend ... Bonds are just more unservicable debt ...
Taking out bond holders may just get them to demand real reform, maybe bond holders on boards of directors by law. Bond holders that handle the audits and the books.
We have seen what revolving door regulators are about.
A gunshop made me a deal on a bulk purchase 7 years ago. I'll never use it all...maybe.
Cobradriver | 01.17.09 - 4:30 pm | #
How long is it good for?
Well, we no longer need to worry much about complying with President Kennedy's words... asking what we can do for our country because we will be paying for this country's banking crisis the rest of our lives. I believe that will be enough.
My sister is a dog groomer. In response to the NYT story about people relying on themselves for services... got some news for ya: people who go into entrepreneurial service jobs like dog grooming, landscaping and the like, are not quite as helpless as, say, a highly-educated, hugely indebted young employee in the financial services industry. These people often left the corporate world of their own free will and have engaged in various enterprises, knowing full well that they are vulnerable to economic downturns and even changes in fad and fashion.
A lot of them will lose their jobs or businesses. Some will have been smart about their finances, others will not have been so smart. But you'll find that a lot of them (if not) most won't see it as the end of the world, but will pick up and start over again surviving some other way.
It's the spoon-fed professionals who are in the most trouble.
I'll go on record that after obama gets the blame for the coming collapse, jeb bush will be elected and become the first american ceaser.
FFDIC | 01.17.09 - 4:28 pm | #
Wasn't changing the regulations for percentage of reserve holdings one of the first steps tried? Wasn't the argument that the market wasn't accurately pricing the lvl 3 assets to explain this action?
Haven't this been tried and disproved?
The banks own America and will squeeze until they feel they have been made whole. I can't even imagine that level of power or the immorality.
Calvinball. More erosion of trust.
But, in general, I can't see why Congress is any better than the FED.
Werner
~~~~~
Congress can be voted out ... the Fed can't. The privately owned and operated Federal Reserve answers to its shareholders the very Member Banks it is supposed to regulate.
At least with a Public Central Bank credit creation can be a money maker for the tax payer. If the tax payer is on the hook for the loss then they should be getting the profit.
Anonymous(Unrated) writes:
\tI'll go on record
Anonymous | 01.17.09 - 4:34 pm | #
Uh, huh?
The presidents already ARE Caesars, Anonymous. They became Caesars when Congress gave them nearly unlimited power to make war - whenever, wherever, however.
Obama is just the latest God-Emperor.
BondsOfSteel
I would use Argentina as an example of hair cutting bonds. It is not pretty, you are right on that, but it is possible.
There is however room to be more elegant. Roosevelt unilaterally cram downed changes that struck out the option for bond holders to be paid in gold.
It's fun to discuss all this, but by now everyone here should see exactly the strategies committed to. There is no eject button, and so all we can do is see the strategy through to completion.
LOL blackhalo
Anonymous | 01.17.09 - 4:34 pm | #
Ballsy. Why aren't I laughing at this possibility?
So many people are concerned with maintaining their lifestyles. But aren't they crap lifestyles?
\tI'll go on record that after obama gets the blame for the coming collapse, jeb bush will be elected and become the first american ceaser.
Anonymous | 01.17.09 - 4:34 pm | #
I know you meant Caeser, but ceaser (one who ceases, or perhaps causes ceasing) is definitely more appropriate.
good point mal
I'll go on record that after obama gets the blame for the coming collapse, jeb bush will be elected and become the first american ceaser.
Anonymous
~~~~
Should Obama not get his act together and together quick this could well be the case.
"How long is it good for?"
Blackhalo | 01.17.09 - 4:32 pm | #
I bought a couple of cases of Russian corrosive 7.62 that was packaged in the 60's. Still shoots fine. As long as you keep it dry,basically forever.
Chris
Anonymous writes:
mock turtle,
hitting the juice a little early, are we?....(spelling etc)
later
sorry for the snark, just wanted to put in my 2 cents worth on this site..
hey anonymous
i was NOT offended...good snark
btw, im notsosmart (that was my handle here more than 2 years ago when i was even dumber than today)
im tryin to make some sense here but realize im frequently wrong
thats why i value very much the criticism from people like ac and ffdic and rob dawg and many others...
because while we have somewhat different ideas, like you, they make me think, and are often right!
The banks are very healthy. The accounting doesn't represent the true economic picture," said John von Seggern, chief executive of the Council of Federal Home Loan Banks, which represents the network in Washington. He said the banks want regulators to change the rules.
FFDIC
~~~~~
I'm shocked ! A liar in the banking industry .... a shocking turn of events !
well done, r-dawg.
but you didn't use my favorite line in that song
"uuh...I appreciate that"
Calvinball.
anon | 01.17.09 - 4:35 pm | #
How do I get from the "taxpayers lose thier shirt," zone to the "Bankers take it up the ass." Zone?
The privately owned and operated Federal Reserve answers to its shareholders the very Member Banks it is supposed to regulate.
The FR banks are owned by the member banks, but the FRB is an independent government agency (like the FTC) that answers to Congress, FWIW.
So... anyone willing to weigh in: static or dynamic?
j marston
~~~~
More and more derivatives will go bad as the economy worsens... these are leveraged bets that move up or down multiples of the economy.
These are the Level 3 assets of the banks ... known in the trade as "Mark to Make Believe".
Another Saturday morning screaming into the abyss. Time to enjoy the late afternoon.
Change is coming in all of it's glory. Hang on kicking and screaming or with a knowledgeable smile that you knew what was coming. Regardless, hold on.
Love when people use irregardless. Now that always makes me smile. Good day.
mmckinl wrote
Congress can be voted out ... the Fed can't. The privately owned and operated Federal Reserve answers to its shareholders the very Member Banks it is supposed to regulate.
At least with a Public Central Bank credit creation can be a money maker for the tax payer. If the tax payer is on the hook for the loss then they should be getting the profit.
4:35 pm
i salute you, and i agree
New ad for the american taxpayer from your friendly banker YouTube - The worlds funniest commercial
"The banks are very healthy. The accounting doesn't represent the true economic picture,"
Now I get it. Osama Suicide Bomber Accountant Squad (OSBAS) did it! They put assets into liabilities! Much more easier and cost effective than piloting perfectly good planes into buildings.
The FR banks are owned by the member banks, but the FRB is an independent government agency (like the FTC) that answers to Congress, FWIW.
Max Fischer
~~~~~
Wrong, the Member Banks are shareholders in the Federal Reserve System ...
Bernanke has committed over 9 trillion in guarantees without Congressional approval. So much for answering to Congress.
@Senorito On-Topico:
Can you repeat your comment about the "cemex" (Comex?) going BK next week? Any detail to the rumors?
mmckinl writes:
...Congress can be voted out ... the Fed can't...
mmckinl, I fully agree with your post. I just wantet to point out that :
a) the "problem is a bit larger than just the FED, and
b) that the videos of the respective hearings do contain additional, more interesting information than what is contained in the "transcripts".
supafly wrote
Now I get it. Osama Suicide Bomber Accountant Squad (OSBAS) did it! They put assets into liabilities! Much more easier and cost effective than piloting perfectly good planes into buildings.
supafly73 4:46 pm
irresponsible and hate filled comment
Blackhalo writes:
A gunshop made me a deal on a bulk purchase 7 years ago. I'll never use it all...maybe.
Cobradriver | 01.17.09 - 4:30 pm | #
How long is it good for?
Blackhalo | 01.17.09 - 4:32 pm
I have a cartridge for a Spencer 7-shot repeating rifle from the Civil War. I've always been afraid to shoot the damn thing. Rifle too since I don't want to damage it.
Whats happening here?
The government is a bright light
And Im the deer.
Frozen in the fear of what America has become
A country without remorse
Living beings that simply move
On someone elses predestined course
Where the end swallows you whole
Like a shark swimming underneath
The pigmen start to weave
A tangled web of deceit
Stealing the childrens future
By securing their own
While we wallow in a cesspool
Surrounded by a fence
Caged like an animal
Waiting for our daily meal
They take
They destroy
Lives of the innocent
Crying for hope
Their tears turn to rivers damned by the rich
While canals suck us dry
A little bit at a time
How could this happen
What did we miss?
Or were we watching
Was Ignorance bliss?
Devils wrapped up in suits
Preying on everyones dreams
Debt is the way to feed
So the populace eats
Then slowly bleed
Death becomes familiar
Bankers and Wall Street need
The poor to breathe .
So they can sleep
With their destructive greed
Wishing for a revolution is the fountain of my youth I will toss another coin and watch it drift down where it will lay next to other coins immersed in its brackish water
was looking at a bank-owned property today that could be a seven cap with possible land upside.
Realtor told me that there house economist said that our area will bottom in July and recover back to the peak within three years. Like they had a crystal ball or something.
I then asked why many of the wealthy are now taking possession of physical gold/silver and what that meant to her.
She then asked why anyone would need silver.
Seriously. That's how clueless 90 percent of all Americans are right now. They don't even know where a dollar comes from.
That it is printed out of thin air backed by nothing.
Werner writes:
a) the "problem is a bit larger than just the FED, and
~~~~
Never said it wasn't. That's why I would have the FDIC call for an FDR Bank Holiday ...
Until the books are audited no one knows how bad the situation really is ...
Reading through more than 300 comments here, I ask: "where are the grown-ups?" So many who post here are quick to criticize any solution that is proposed yet are bereft of any proposed solutions of their own. We are in unchartered waters, people, and those of you who think that you as taxpayers do not want to take on any financial responsibility are viewing this financial implosion through the eyes of children. It you do not get how serious this is then, I beg, stand off to the sides and let those who do attempt their best to lead us through the unchartered waters in which we find ourselves. It is high time we stop dividing among ourselves and find the courage and faith to unify toward some way out. And if you have nothing to contribute but all of the reasons why nothing will work, then I ask you to get off the ship.
the supply of gold and silver are increasing at a geometric rate due to the new alchemy that adds protons and neutrons to other elements.Just as the diamond supply is factory made so is the new gold and silver.
yearning to learn
"I just don't get it."
This is a Ponzi scheme. Just keep it going by whatever means possible.
Get it?
I though Obama won the election. Wasn't this McCain's plan?
Question to accountants
Are there taxes on goodwill?
What about government cash injections? Could an enterprising lawyer sue over the recording of income as 'loans'?
taxpayers can avoid being on the hook for Fed liabilities. How, you may as? Why, its just as simple and easy as selling your dollars for better-managed currencies or hard assets.
David Pearson | 01.17.09 - 2:25 pm | #
Hello! Those will be confiscated later. There is no escape.
"irresponsible and hate filled comment
mock turtle"
Irresponsible and hate-filled poster.
I am not happy with Obama's opening moves on the economy, but it's hard not to enjoy watching the train ride from Philly.
The joy of his inaugural may trump next weeks dire econ news.
They don't even know where a dollar comes from.
That it is printed out of thin air backed by nothing.
Quincy k
~~~~~
" backed by nothing."
A popular misconception promoted by bankers ...
The dollar is backed by the governments ability to tax and take a persons money or property or even liberty ...
Underneath the ability to tax is the economic ability to produce ...
But, dollars are not printed out of thin air, they are debts that we must pay as tax payers.
Mock,
sorry, should have been clearer...agreed with your sentiments re the subfly poster.
The hudson thru manhattan to be called Sully's Sluice
Anonymous writes:
the supply of gold and silver are increasing at a geometric rate due to the new alchemy that adds protons and neutrons to other elements.Just as the diamond supply is factory made so is the new gold and silver.
I first heard of this being successfully done years ago. Lead into gold. But the "gold" was radioactive. Have they solved that problem yet?
mmckinl writes:
But, in general, I can't see why Congress is any better than the FED.
Werner
Werner and mm: Congress IS the Fed. As explained over and over by the late Arthur Burns, "The Federal Reserve is a creature of the Congress. We will do whatever the Congress demands."
The Fed sees itself as an extension of the congressional power to coin money, etc. It has no direct attachment to the Executive Branch and none to the Judicial branch. It is a congressional creature, pure and simple.
Congress loves the Fed because by having this agency at its beck and call it can place all the blame and its chairmen can be hauled before various committees and toasted or lambasted, as the case may be, for doing great work or for sins of omission and commission. It's called passing the buck, at which Congress excels.
Speaker Pelosi, if she wanted to, could initate legislation to liquidate the Fed and set up a monetary office in the Capitol run by her staff. Then Congress would be running the money supply (and big-bank regulation) directly, instead of stealthily, as it does today.
What's not to like about that prospect?
Is there a way to make the haloscan comments font bigger on the iPhone/itouch or the page narrower?
"I have a cartridge for a Spencer 7-shot repeating rifle from the Civil War. I've always been afraid to shoot the damn thing. Rifle too since I don't want to damage it."
SilentThunder | 01.17.09 - 4:55 pm |
My limit is probably ~50 years old on the ammo side. I have a few Mosin Nagants I picked up cheap(60$). The 7.62x54r ammo for those is in a sealed tin can from ww2. Heck,the Nagants were made at the turn of the century. I don't mind shooting them because they really are not that rare or special...But cival war stuff is getting out there.
Chris
Speaker Pelosi, if she wanted to, could initate legislation to liquidate the Fed and set up a monetary office in the Capitol run by her staff. Then Congress would be running the money supply (and big-bank regulation) directly, instead of stealthily, as it does today.
This will never happen because phony lambasting is what the congress is all about.
These are NOT "uncharted waters", this has all happened before several times. The answers are very easy. Implementing them is hard.
Our leaders must be liars at this point.
slack jaw writes:
Anonymous writes:
the supply of gold and silver are increasing at a geometric rate due to the new alchemy that adds protons and neutrons to other elements.Just as the diamond supply is factory made so is the new gold and silver.
I first heard of this being successfully done years ago. Lead into gold. But the "gold" was radioactive. Have they solved that problem yet?
Goldbugs need to get a geiger counter.
JohnR(VA) writes:
Werner and mm: Congress IS the Fed. As explained over and over by the late Arthur Burns, "The Federal Reserve is a creature of the Congress. We will do whatever the Congress demands."
~~~~~
Hogwash, just look at the Fed's Charter.
The Federal reserve is a privately owned and operated corporation whose shareholders are the banks they regulate. The Member Banks are even entitled to a 6% dividend every year. The whole operation of the Fed is for the profit of its Member Banks based on the tax payer underwriting their risk.
How many ways can you say bailout?
The half-life of gold is part of the govt conspiracy to do away with goldbugs.
Yes, as tax payers we must pay these debts. So let's put them in perspective.
Let's say we want to pay down the debt by 1 trillion dollars. That's 10 to the 12th if I'm not mistaken.
Let's say we want to pay down the debt at the rate of 1 million dollars per hour.
Now there are 24 hours in a day and 365.25 days in a year. So there are (8,766) 8.766 x 10 to the 3rd hours per year.
So we divide 10 to the 12th by 8.766 x 10 to the 3rd and we get 114 years.
Yes at 1 million per hour, it takes 114 years to pay off 1 trillion.
Yes, I know there are 350 million Americans so 1 million $/hr is only about 28 cents per person per hour, but if we raise it to $1/person/hour it is still 40+ years to pay off 1 trillion.
The numbers do make you blink a bit.
dogface writes:
I though Obama won the election. Wasn't this McCain's plan? @ 504pm
wasnt what mccains pla
"It is high time we stop dividing among ourselves and find the courage and faith to unify toward some way out."
Well, this is one of those episodes in which Dr. House says in the end, "That's it. I am sorry."...
There is no solution for this except bad ones. Are you willing to give 50-60 percent of your income every month for years to come and trust these Congress Clowns to solve this financial crisis?
Another Fed Myth ...
The President choses the Chairman of the Federal Reserve ...
The president may be given a list to choose from or No choice at all ...
Bush had No choice but to name Bernenke. The same can probably be said of Obama's appointment of Geithner to Treasury ...
If Congress and the people do not take back our right to create currency and credit we will always be their indentured servants.
Gold is a stable product of the radioactive decay of a slightly heavier element (not sure which one). Heavy elements like gold require one or more supernova explosions to fuse intermediately heavy elements together. I believe that Iron (Fe) requires in the ballpark of 3 supernova cycles to create.
the president must choose a fed reserve chair from amongst the list of members of the federal reserve board as per the banking act of 1913 passed by congress
If Congress and the people do not take back our right to create currency and credit we will always be their indentured servants.
mmckinl | 01.17.09 - 5:17 pm | #
Hello! That's my point. Congress can do it any time they choose. The "ownership" of the Fed by the regional reserve banks is a myth perpetuated by conspiracy enthusiasts. Don't buy into it. The Board of Governors is a Federal agency created by Congress. The banks are lagniappe and could easily be liquidated because their principal function over the years has beenprocessing checks.
"I'm not sure why Obama bashing is so popular with so many commenters on this board, but clearly I hope he and his administration are a rousing success.
sportsfan "
Agreed. Its my country after all.
You want Congress to appoint the Fed Chairman? Just convince Pelosi (and Reid) and it's a done deal.
mmckini-
Do you really think that the USG is going to pay back it's debt in today's value? Or the consumers for that matter? Default or devalue is the only outcome at this stage.
If you cannot foresee that this is a global Ponzi scheme on the brink of collapse you need to catch up.
Or go drink some beers with Conjure one night before the clock strikes 12:00.
Sebastian and his Wright Model B cannot help us at this point
supafly73.
you're full of bad vibes. is finland so dead that there is absolutely nothing there of any interest?
think, people,
You get eaten first.
Your sentiments are exactly the problem, blind trust to authority and an inability to effectively take care of yourself. So you shirk your responsibility to someone you deem more worthy to define your future. How sad it must be to be so scared all the time, and constantly worried about what will come without any skill or direction or even basic knowledge of human freedom or history.
On a brighter note, you probably have a high fat content and are full of protein and life sustaining Omega-3's.
Its ok, you are probably just a product of "American Exceptionalism" that it pervasive here, in America.
Good luck.
McCain said he'd buy up mortgages. yes he did. Now Obama says he's going to buy up non-performing assests. Ok. Not exact equivalence but damn close.
Ok, over the line. I apologize.
In an earlier thread I suggested a "game over" ruling and subsequent settlement for all derivatives. Went nowhere.
Would a derivative jubilee be a better suggestion?
j marston | 01.17.09 - 2:13 pm | #
Criminalization, like internet gambling, would be better.
Wrong, the Member Banks are shareholders in the Federal Reserve System ...
Bernanke has committed over 9 trillion in guarantees without Congressional approval. So much for answering to Congress.
mmckinl:
just because you write something in bold doesn't make it true. If you start from the position that the FRS operates outside of the government, then of course, all conclusions you make are true.
Sort of like if one believes that God created the earth 6000 years ago...
The ferry arrived to save all of the passengers from flight 1549. One passenger didn't wait, and swam his way back to shore, where doctors tended to him
there's a least one in every bunch
"you're full of bad vibes. is finland so dead that there is absolutely nothing there of any interest?"
Yes, so very boring with bad vibes and all. You instead are so fascinating instable species! Future very much unknown.
Werner and I will be discussing this for years to come
Quincy k writes:
mmckini-
Do you really think that the USG is going to pay back it's debt in today's value? Or the consumers for that matter? Default or devalue is the only outcome at this stage.
~~~~~
The US Government can pay its obligations if it takes the proper steps ... The consumer and many businesses, especially banks can not ...
What is happening is that private debt is being put on the governments balance sheet, especially bad bank debt.
The situation can be salvaged but I'm pessimistic because Washington is in the bankers pocket ... But ! if we scream loud enough and long enough maybe something decent will come of it ...
To all who are concerned about a CDS implosion, I suggest a few moments with this wiki
article, with particular reference as to how they are settled. It doesn't look like the numbers support the fear factor. 1) they expire. 2) they are settled normally. 3) they are 'auctioned' to the highest bidder, often for fractions of a penny on the dollar. In no case does it appear that the taxpayers are on the hook. As a matter of fact, it appears that the creation of a so-called 'bad bank' might even reduce CDS exposure. Take a look.
mmckinl writes:
...The dollar is backed by the governments ability to tax and take a persons money or property or even liberty ...
Well, I am not so sure. The United States Department of Treasury says :
"Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything. This has been the case since 1933. The notes have no value for themselves, but for what they will buy. In another sense, because they are legal tender, Federal Reserve notes are "backed" by all the goods and services in the economy."
(see : 404 Not Found
It's a bit different from what you say, because clearly there is no "obligation" of redeemability and no backing, so the dollars worth is just what you get for it, and that's all.
This does not exclude governments willingness to tax, etc. , but that's just good will of the government, no obligation.
dogface
ok good point
i agree that there are some elements of both mccains and obamas policy proposals that are similar or the same
It's a bit different from what you say, because clearly there is no "obligation" of redeemability and no backing, so the dollars worth is just what you get for it, and that's all.
This does not exclude governments willingness to tax, etc. , but that's just good will of the government, no obligation.
Werner
~~~~~
The dollar is the ability to keep what you have, call it insurance against the taking of money, property or liberty ...
But that's the value of any currency in a society, the ability to pay debt, and taxes are a debt thrust upon you by threat of legal confiscation. Gold can not relieve debt legally in court ...
subfly
werner remains oblivous to Germany's problems, but is there nothing happening in Finland? Finland is an outlier, not really a Scando country, and is virtually never reported on here. Is there nothing of interest to report?
I'm not sure why Obama bashing is so popular with so many commenters on this board
sportsfan | 01.17.09 - 2:48 pm | #
They thought he was the tooth fairy who would sprinkle magic pixy dust and make this financial nightmare go away.
Unfortunately, he is just a politician. The pool of talent to staff his administration is drawn from the DC-NY-Boston nomenklatura so it will be the same games only the teams will change jerseys from green to blue. This is causing serious cognitive dissonance which is expressed as bitching, moaning, gnashing of teeth, and trash talking anyone who pretends to be in charge.
As a matter of fact, it appears that the creation of a so-called 'bad bank' might even reduce CDS exposure. Take a look.
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LOL, yeah explain that to AIG ... We've already spent over a hundred billion there ...
With the bad bank concept we'd be on the hook for all of it . The good bets would be kept by the banks and all their junk tossed into the "bad bank" to be paid for by tax payers.
mmckinl and JohnR(VA) :
Could we agree that Congress makes the laws and thus dominates/controls the FED.
Anonymous writes:
...because phony lambasting is what the congress is all about...
Well, they saw to it that all this subprime-crisis stuff (and the comming CDSs) was all legal and that the regulatory agencies all locked the other way! More than just lambasting (which they probably just love as their public hobby).
They were active, indispensible participants in this mess.
mmckinl and JohnR(VA) :
Could we agree that Congress makes the laws and thus dominates/controls the FED.
Werner
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It's exactly the other way around .... the bankers control Congress and usurp our Constitutional right to create our own currency and credit.
"Finland is an outlier, not really a Scando country, and is virtually never reported on here. Is there nothing of interest to report?"
Well, we did have our economic depression already back in early 90's. That is why this all sounds so familiar except the facts are even much worse for USA than it was back then.
Because of that 90's depression, both Finland and Sweden are somewhat better prepared for this global crisis. Export sectors in both countries are taking huge hits at the moment, just like everywhere else.
what is the proper term for those pulldown-metal-rolling-security-things for big windows and doors
anonymous | 01.17.09 - 3:38 pm | #
Try window security shutters or gates.
Under the bad bank scenario, do the bank stocks benefit b/c they are now relieved of the bad assets?
The comments regarding CDS show how sensationaltic and unsophisticated people on regarding CDS. Believe it or not, the ultimate purpose of CDS - spreading and hedging credit risk - is done efficiently and generally successfully by the marketplace. The problems with CDS are that the regulators never should have let the market get as big as it is without a centralized clearing house (a la the futures markets) and pricing transparency needed to be enforced. The big banks and dealers didn't want this because they felt it would decrease bid-ask spreads/improve liquidity and therefore hurt their profitability.
The story of 2006-08 is that the banks that were true hedgers, like JPM, and savvy firms like Goldman, who both hedged their risk and took a big bet on housing, were the systematic buyers of protection while dummies like AIG and synthetic CDO deals were the sellers. Firms like ML, Citi, UBS were also big sellers. JPM and GOldman are survivors because they used CDS for all the right reasons. AIG/ML/UBS/Citi were just one-way speculation, basically betting the entire equity of the institution on a model that had no track record whatsoever. The real issue here is that the USG has dumped billions into firms like AIG and we'll NEVER, EVER get that money back - it's gone, imbedded in CDS deals backed by BBB subprime that are worth zero. While the Fed may lose some money with their various money market and bond facilities, at least there is a semblence of economic value and justification to those programs. The "investment" the U.S. made in AIG is nothing but a travesty. It was done simply to pay AIG's CDS counterparties and keep them from going down - kind of like the phone call you'd get from a bookie if you lost money to him, and wouldn't pay it, while he had to pay off the house that he had laid off your bet to (at slightly better odds,no doubt). He thought he had made a little vig but was now facing ruin. Prepare to be knee-capped!
Federal government revenue from all sources is about $2.5 trillion a year. Government debt is now $10 trillion and rising, for a debt-to-income ratio of 4:1. I'm not sure how high that ratio can get. The press can continue to emphasize the debt-to-GDP ratio instead, but I think something has to be done to hide this bailout.
I suggest the government swap all the bailout assets for the social security "surplus". Future social security and medicare benefits can be paid out of the income earned from those assets. In one fell swoop the bailout is turned into "privatizing social security" and the system can be considered to be fully funded.
Now, on the off chance that those assets don't yield enough, we should raise taxes a bit as well. I suggest we start with the people who caused the current mess:
My inside source who works at FDIC says he was told this week that they should expect six (6) bank failures next Friday. He only was informed in advance of 1 of the 2 failures that happened yesterday.
It's exactly the other way around .... the bankers control Congress and usurp our Constitutional right to create our own currency and credit.
exactly - how many congressman sat there slack-jawed when Uncle Greenspan spewed his cockamanie fluff at all of those hearings throughout his tenure? Did anyone have the nerve to challenge him?
Can anyone take a stab at what happens to the common shareholders of banks that participate?
supafly73 writes:
...
...Werner and I will be discussing this for years to come
supafly73, need a squadron of Stukas for help ?
Don't worry, just be careful. There are a few truly heinous characters around here (cough cough). But with time you will come to love them. Belive me! Just hold your course and maybe phrase it a bit more politely.
P.S. They actally do know in what deep dodo they are. Had the same missconception about them in my beginning.
And if you have nothing to contribute but all of the reasons why nothing will work, then I ask you to get off the ship.
think, people | Homepage | 01.17.09 - 5:01 pm | #
I think it is pretty clear what the consesus view is about what should happen. The investment banks and thier bretheren should go BK. They will be replaced in thier function by the sound institutions that remain. Homeowners who borrowed more than they can afford should be evicted and go BK.
Once that has been resolved and the median price for housing is 2.5-3x average income, then it is time for the stimulus and bailouts to begin. Delaying the inevitable only increases the duration of the pain.
The jibes toward any action that is not in this sensible direction seems well founded, as congress and the bankers they represent fail in a spectacular manner, to sensibly address the problem.
As to the sentiment that, if one has nothing positive to say, keep quiet, FUCK YOU!
FFDIC:
WTF-This is (or should be) busy season for auditors. They usually twiddle their thumbs in May and June after the audit and tax season.
Could we agree that Congress makes the laws and thus dominates/controls the FED.
Thank you, but of course, Congress would rather pass the blame to other bogeymen...
Perhaps term limits are in order.
Also, he said they were told the 09 forecast for failures as of 2 weeks ago was
001,
I believe his name is Ladke, from Cali, who crushed a few dealers with cds trades. As was mistakenly quoted at CR previously, CDS is not zero sum.