Trial balloon apparently made of lead...if this means that within the administrationthey are having active debate about what should be done that is a good thing.
Does the new proposal no longer contain a "bad bank" (or as I call it, a shitfunnel down the throat of the American taxpayer) provision or does the plan just now contain a provision that would serve the same function as the "bad bank" but just be called by a different name?
Bottom line, the taxpayer will still end up eating all the stupid, immoral decisions made by greedy billionaire bankers over the last decade....
THAT is how you save the financial system, folks. An all-nighter. \t Comrade Byzantine_Ruins | Comrade Byzantine_Ruins | Homepage | 02.09.09 - 5:25 pm | #
a commercial mtg that I'm finishing the foreclosure of had a pharmacist who ran a Pharmacy for 11 years, then bought the property, and may have bought more property, and now is pretty much losing everything. I'm the plaintiff for once on this one. I had a receiver appointed and the owner soon to be ex-owner told the receiver she was too busy to see him.
My daughter still has her job as an architect. Sez no one is hiring. Sez the stuff that got cut was stuff that could have helped her firm. Hopes her project will get funded. . . but everythings getting cancelled.
And wanted to know why the bankers always got all the money?
Whatever their new plan is, I want nothing of it, considering that it was probably scribbled on a cocktail napkin at the bar 5 minutes ago after they decided that the bad bank idea might actually be political suicide.
Oh crap, they really ARE making this up as they go along.
Of course they are. But they do have a general architecture and concept of their goals.
It's very interesting to watch. I've built enough systems and wrecked enough stuff to put myself into their shoes.
I've built things which worked but didn't scale, things that didn't work, things that were over-engineered, things which came out well.
The Feds have a general architecture, that I'm pretty sure of. The key to a good architecture is that it's general enough to omit details. A lot of details are pluggable if your system is abstract enough.
The Free Marketeers drive me crazy because they just really have NO CONCEPT of what it takes to make something complicated work.
"Oh, just toss to the free market, the magic hand will do it".
Incredible lack of understanding, really laziness and moral abandonment.
The Feds have a system which has inherent structural flaws (the credit cycle) which mandate a certain failure mode. They're trying to re-engineer the thing around that now. Fifty years ago it seemed okay because it created a certain orderliness and predictability but now, since Greenspan, they're seeing the limitations and failure points of the structure and trying to rework on the fly.
.
Maybe they watched the Dr. Doom and Black Swan video and we'll get partial or temp nationalization tomorrow. But wait, didn't the CEO of BOA say his company was doing just fine just last week?
The "bad bank" was too simple; it would be too easy for ordinary people to understand what was going on.
What they are seeking is a structure where they can gift trillions of dollars to wealthy private investors, but in a sufficiently complex way that the average Joe and Jane do not understand what is happening.
An insurance scheme providing "limited losses, unlimited gains" for private equity should cover it.
Question:
How can you tell the difference between a leaked detail, a trial balloon, a ploy to shape public opinion, and a media report that just plain got things wrong?
Answer:
Most of the time you can't discern between these things until after the fact, when the real plan is announced and some concrete information comes to light about the earlier stages.
Caveat:
Not one story on this business has cited a named source. Set BS detector on High.
Caveat #2:
Three of the major reporting sources have been CNBC, Bloomberg, and WSJ. And the fourth has been the Yellowcake and Aluminum Tubes NYT. Set BS detector on extra-high when no sources are named.
Now scream and scream because there is no plan and Obama=Epic Fail and all that stuff . . . but remember that no 3 page plan was delivered as an overnight ultimatum (see Paulson and Bush) and also that the longer delay allows more devastating information to come out and circulate about the banksters.
The longer the delay, the more possible and likely nationalization becomes. The more and more that all alternatives are examined and discarded, the more isolated nationalization becomes as the best and only workable solution.
Now rant and rave, and remember that we are all=Epic Fail because none of us fixed this, either.
I think there's a plan to announce that they're forming a task force to appoint a czar to formulate a plan to cobble together a plan. \t Eric | \t \t \t \t02.09.09 - 5:23 pm |
I believe the next step in the derivative chain is a plan for an announcement committee.
I think they should take all of the ideas floated in trial balloons over the past two weeks, write them on a big wheel, and open tomorrow's press conference by spinning it.
And indeed there will be time\t
To wonder, Do I dare? and, Do I dare?\t
Time to turn back and descend the stair,\t
With a bald spot in the middle of my hair
[They will say: How his hair is growing thin!]\t
My morning coat, my collar mounting firmly to the chin,\t
My necktie rich and modest, but asserted by a simple pin\t
[They will say: But how his arms and legs are thin!]\t
Do I dare
Disturb the universe?\t
In a minute there is time\t
For decisions and revisions which a minute will reverse.
Broward, I think the problem is that these guys are smart enough to know that their general architecture is fatally flawed, but they're not brave enough to start again. So they keep adding on to it and - voila! - Vista!
Of course they are. But they do have a general architecture and concept of their goals.
It's very interesting to watch. I've built enough systems and wrecked enough stuff to put myself into their shoes.
Broward Horne | Homepage | 02.09.09 - 5:32 pm | #
Thank God, an actual adult in the room. There is no advance plan for something like this: there is a goal, and there should be a set of criteria for success. If they don't have that, they're effed. The plan is what you make as you discover what works and what doesn't. And as you, through experience, leave behind the that preconceptions you didn't know you had.
As far as I'm concerned, this administration is right on schedule; ahead of schedule, actually.
Bond Girl writes:
Whatever their new plan is, I want nothing of it, considering that it was probably scribbled on a cocktail napkin at the bar 5 minutes ago
Best memory...
Yacht contract on a bar napkin, couldn't beleive it!
Until you have one you'll never know
Google his name and memo, maybe someone cached it. It was wild, he admitted to all kinds of fraud while working for various mortgage companies...I'm searching now, the pdf page is taken down but there should be a copy out there somwhere.
"An insurance scheme providing "limited losses, unlimited gains" for private equity should cover it."
Yep..that's what they'll do. Making any "loan" in the process non-recourse because we have to be able to explain it to people without identifying that the loss flows back to the Treasury.
I'm still at a loss (no pun intended) as to what the actual triggering mechanism is going to be for these "insured assets" to force payment. We've already had input pricing on these piles of crap so may be I'm just not seeing something here.....
Bond Girl writes:
Whatever their new plan is, I want nothing of it, considering that it was probably scribbled on a cocktail napkin at the bar 5 minutes ago
"As far as I'm concerned, this administration is right on schedule; ahead of schedule, actually.
Bob Dobbs"
Bob, I'm hoping the same. Really. Personally, unlike Conjure, I like to think they are making a calculated approach. However, if they are not, like Conjure, I am filling up my underground diesel storage tank.
Geithner, the point man on this plan, gave Citi about 150 billion worth from the taxpayer, overnight, without any kind of authorization, solely to avoid a government takeover. We are talking a man who has already moved heaven and earth to avoid the most-justified government takeover of any money center bank.
I agree nationalization is, in the end, the only way out. But it will happen only when it's forced down Geithner's and Summers' throats, against all the resistance they can muster.
Oh crap, they really ARE making this up as they go along. Snaff | 02.09.09 - 5:23 pm | #
The only glimmer of hope we have is they admit they don't have a plan and are keeping an 'open mind'...
If I thought they thought they really had A PLAN I'd be doubly paranoid. The fact that they are making it all up 'on the fly' and arguing internally up to the last minute and beyond gives me hope that at least SOME BODY has thought about this stuff and has some doubts... 'cause I got plenty of doubts no matter what is suggested and I'm not smarter or more observant than they are.
Hmm, Kristina, I think I may have read it; but it was so much part of my everyday experience, trying not to be dragged into any muck, whilst earning a living, that I guess it didn't make so much of an impression on me, as it might to others who don't have such a front row seat.
Geithner wants private investment in the new bank bailout. Won't that mean marking the toxic waste to market? - since private money isn't as stupid as taxpayer money.
1) They can't do anything, this debt bomb took decades to build.
2) It takes time for bad debt to die rotting on the vine.
3) They have to act like they're doing something.
4) So just act like they're doing something: eg. : call a pork laced spending bill a "stimulus bill".
5) People think something's happening and bullet 2 happens and then recovery.
6) So ... hurry up and wait.
Geithner wants private investment in the new bank bailout. Won't that mean marking the toxic waste to market? - since private money isn't as stupid as taxpayer money.
Doesn't that mean the banks go bankrupt?
Speed | 02.09.09 - 5:47
Geithner wants private investment in the new bank bailout. Won't that mean marking the toxic waste to market? - since private money isn't as stupid as taxpayer money.
The Free Marketeers drive me crazy because they just really have NO CONCEPT of what it takes to make something complicated work. Broward Horne | Homepage | 02.09.09 - 5:32 pm | #
Actually, (rational) free marketeers do understand that something that complicated can't be managed by some know-it-all in govt., and even less so by a govt. buearacracy. That said, it seem inevitable that just about any market can find an unacceptable point of equilibrium, such as was the case with US Steel, Standard Oil, etc. Thus, govt. intervention is necessary to guarantee the efficient operation of the "free market". The key is to keep the demand component of the market in operation, and avoid a demand economy a la the communist regimes of the lst century. Surely there must be a way for liberals and conservatives to agree on that. And please, no remarks about (rational) free marketeer being an oxymoron.
...gives me hope that at least SOME BODY has thought about this stuff and has some doubts... 'cause I got plenty of doubts no matter what is suggested and I'm not smarter or more observant than they are.
dryfly
.
We aren't going to be invited to be flies on the wall, but the constant leakage and trial ballooning is pretty close to a front row seat, with all its horsetrading and backscratching.*
What I would like to know, is whether the blogosphere is being read in the inner circles. Is CR, etc., having an effect on the Obamaoids and Congress?
"financial system no longer includes creating a "bad bank""
All it means is that the Obama administration (like the Bush administration before it) have determined that the system is "too big to bail", so that the only hope is stop-gap measures, guarantees, and leveraging taxpayer funds in the hopes that things will turn around. I'll bet that Nassim Taleb has a good side bet on things not quite working out with a rescue.
You just wrote:
I agree nationalization is, in the end, the only way out. But it will happen only when it's forced down Geithner's and Summers' throats, against all the resistance they can muster.
Fair Economist | Homepage | 02.09.09 - 5:45 pm | #
You made a similar argument a few days ago on a thread about BAC, and I responded there.
Geithner and Summers are not the President, and advisors do not necessarily indicate the drift of a President's decisions, especially not this President.
Evidence A: Obama's trip to Iraq and interaction with Gen Petreus. Obama is not a General and never served in the military, but he told Gen Petreus that as President he would set the strategy and the mission, not Petreus.
Evidence B: Hillary Clinton tried to beat Obama in the primaries by smearing him for his willingness to talk with all international adversaries. Well, guess who is Sec of State now, and look at who is talking with Iran.
Obama is President. He calls the shots.
That doesn't mean that Obama will nationalize next week or next month or next year. But it does mean that if he doesn't nationalize it won't be just because Geithner and Summers told him not to do it.
Last, remember that no one could successfully push through nationalization just now. No one. Look at how close the stimulus bill is, and remember the degree of Repub opposition to mere compensation caps for bank execs.
Nationalization can only happen as the result of a process or a catastrophe, or most likely a combination of the two.
Not one story on this business has cited a named source. Set BS detector on High. joe shmoe | 02.09.09 - 5:33 pm | #
I've heard it said that when a reporter says "sources close to Sec. X", that's NEWSspeak for Sec. X told them, but it has insisted on keeping it off the record.
What I would like to know, is whether the blogosphere is being read in the inner circles. Is CR, etc., having an effect on the Obamaoids and Congress? scone | 02.09.09 - 5:51 pm | #
My guess is 'yes' but not at the cabinet level.... but at the thirty something policy wonk level absolutely some of these 'memes' are sneaking into the inner circle.
"As far as I'm concerned, this administration is right on schedule; ahead of schedule, actually.
Bob Dobbs"
Bob, I'm hoping the same. Really. Personally, unlike Conjure, I like to think they are making a calculated approach. However, if they are not, like Conjure, I am filling up my underground diesel storage tank. Elvis | 02.09.09 - 5:45 pm | #
As well you should. If indeed the administration shows signs that it isn't learning from experience or is only listening to an ideologically narrow coterie of advisors -- well, I also have an emergency fallback position or two that I might ready.
But I'm hoping that this a problem that sane men with open minds can solve, eventually. And that some of those people actually inhabit the White House.
What I would like to know, is whether the blogosphere is being read in the inner circles. Is CR, etc., having an effect on the Obamaoids and Congress? scone | 02.09.09 - 5:51 pm | #
My guess is 'yes' but not at the cabinet level.... but at the thirty something policy wonk level absolutely some of these 'memes' are sneaking into the inner circle. dryfly | 02.09.09 - 5:55 pm | #
Pity the poor interns who have to read all this stuff and "pre-screen" for their masters.
Nemo writes:
There is one thing I want to know first about any proposed plan:
Will the bondholders of the banks take a haircut of any kind?
"The plan does not directly address the value of any bonds. The eventual effect on the various stakeholders of each bank will depend on the prices paid by private firms for the currently illiquid assets and on the future performance of the remaining assets of the bank."
I agree nationalization [for Citi] is, in the end, the only way out. But it will happen only when it's forced down Geithner's and Summers' throats, against all the resistance they can muster. Fair Economist | Homepage | 02.09.09 - 5:45 pm | #
I suspect that it's essentially a done deal for Citi. I think that they're just buying time to find a way to keep all the triggering events from bringing everything down at once.
So if we have a drinking game for the eventual release & Obama press conference... what do I have to do if the Big O himself actually utters the word 'nationalization'... down a whole bottle of Canadian Club?
Obama is an honest guy, and works by consensus. He has never said, or even hinted that nationalization is in the cards.
He is not currently considering it. If he starts, we will know.
The question is whether Obama himself is intensely and ideologically opposed to nationalization, as all his advisors are, or whether he doesn't have an opinion on it. This is an open question, and of great future import. If the latter, we may get a planned and well-executed nationalization as the need for nationalization seeps into the mind of the public. If the former, we'll only get it as a result of a major catastrophe like an international run, Treasury default, or the like.
But I'm hoping that this a problem that sane men with open minds can solve, eventually. And that some of those people actually inhabit the White House.
Bob Dobbs
.
There have been great teams of people in power before, and they got crunched by history just the same, e.g. 'the best and the brightest.' I don't think any power on earth can stop this. The stimulus is like trying to sew a parachute together after you jump out of the plane.
I'm surprised that this stuff is leaking out ahead of the President's news conference this evening, which is supposed to be about the "stimulus" pork bill only. People are going to get confused.
Fair Economist writes:
Obama is an honest guy, and works by consensus. He has never said, or even hinted that nationalization is in the cards.
He is not currently considering it. If he starts, we will know.
--
hmm. I think the opposite is more likely to be true - namely, the tighter their lips on the subject of nationalization, the more likely it is being considered quite seriously.
If there had been a leak about nationalization, the Repubs and some Dems would be coming on the Administration like a ton of bricks, and the banksters would pull out all stops. The stimulus bill would be in deep troubles, etc.
You need to pick your battles and, like investments, you need to time them. Same in warfare. Attack too soon and you are toast.
Silence on nationalization while all other alternatives are exposed to the light of day and shown to be decrepit......my reading is that nationalization is becoming more of an option, rather than less.
Of course, some might wish for the certitudiness and moral clarity of the Bush year.......
"If federal officials fail to get a consensual agreement to change their position regarding repayment, they have the option to force the companies into bankruptcy as a condition of more bailout aid. The government would finance the bankruptcy with a so-called âdebtor in possession" or DIP loan, a lender status that gives the U.S. priority over other creditors, said Don Workman, a partner at Baker & Hostetler LLP. âThey are negotiating to see if they can reach an agreement," said Workman, a bankruptcy lawyer based in Washington. âIf not, they are saying âWe are pretty darn sure that a bankruptcy judge will allow us'" to be first in line for repayment." BK them...and move forward.
So what do people on this board really want to hear tomorrow?
Me:
-- No more TARP funds for insolvent institutions
-- Retain mark-to-market and force transparency
-- Insolvent banks go under. Shareholders wiped out, bondholders get haircut
-- TARP funds finance a RTC type bad-bank to absorb the assets of the failed institutions, provide DIP financing to allow the viable parts of the banks to be spun back to private investors once value is established
-- Government assisted financing for hedge funds that want to purchase assets. But hedge funds take the losses. This ensures fair market pricing of assets, without overshooting to the downside and punishing institutions due to liquidity constraints.
Even the $350B is not even close to sufficient for this plan. But it would be a start.
Appreciate feedback on this "plan" which took me 10 minutes.
Actually lawn grass, seems like there's enough dungeon masters on CR to play AD&D. Nevermind the backgammon, I've got to go dig out my elf with the great constitution.
I've argued earlier that nationalization of a single bank cannot work.
Here is why: the single nationalized bank would instantly become a super-bank. It would hoover up deposits from other teetering banks.
In our current climate of financial nervousness, the existence of a nationalized bank has the possibility of destabilising all other banks.
Therefore, a) the solution is to support the banking system as a whole (the current plan) or b) have a bank holiday and reboot the entire banking system (technically impossible).
A little rule of thumb. When a client or fellow atty or whatever was about to go under, in my estimation, they would always survive another 18 months. I started to wonder about going under in Oct 2007, so that takes us to this March or end of April.
At the time I was just thinking about banking. I started wondering about the end of Everything a few months later, so maybe we have as much as another 7-8 months.
I don't count a stock mkt crash as the end of everying. So far, we have had a very slow motion crash.
Depending on the different types of collateral, investors will get roughly $100 of lending for every $5 to $16 of cash they put up to invest... The loans the Fed makes to investors are nonrecourse, meaning investors can't lose any more than the money they put upfront on the security. If a hedge fund defaults to the Fed, its collateral is the securities themselves. There also are no margin calls, meaning the Fed can't demand additional payments of cash from borrowers if the underlying securities fall in value.
Back to Denninger
...nowhere is The Fed authorized to make loans not backed by collateral or to take ownership of assets with the exception of Treasuries and other agency securities backed by The Full Faith and Credit of The United States Government - even under exigent circumstances!
...
Without recourse if The Fed miscalculates the haircut required to be protected since losses at The Fed flow back to Treasury this is an unallocated spending of taxpayer dollars, which is explicitly unconstitutional (all spending bills must originate in The House).
So, how can any of these bank plans be pushed through without Congressional approval?
hmm. I think the opposite is more likely to be true - namely, the tighter their lips on the subject of nationalization, the more likely it is being considered quite seriously.
Obama has never taken a major position without copious trial balloons. He's never moved in opposition to his policy team either.
Note that even in Iraq - where originally he was pushing for a fast withdrawal - nothing has happened yet. And that's in a field where he's been publicly saying for five years where we should get out as fast as possible.
There have been great teams of people in power before, and they got crunched by history just the same, e.g. 'the best and the brightest.' I don't think any power on earth can stop this. The stimulus is like trying to sew a parachute together after you jump out of the plane. scone | 02.09.09 - 6:00 pm | #
After Kennedy was assassinated, LBJ of course inherited Kennedy's "team," the 'best and the brightest,' all those Ivy League boys. A couple of months in, LBJ was talking to Sam Rayburn, House Speaker, in awed tones about how brilliant and learned these guys were.
"Maybe," Rayburn answered. "But I'd feel better if just one of them had ever run for county sheriff." In other words, there's bright, and then there's savvy.
I don't think anything can "stop" this thing either. But it can be handled "better" or "worse;" a recovery that takes five or ten years and leaves all impoverished; or one that takes two or three years, leaves us poorer but ready and able to begin rebuilding; or something else.
And some of it's luck. And some of it's brains. But a lot of it is savvy.
Yeah, they needed the weekend to make the plan convoluted enough so that you can't explain it in less than 12 words, therefore, incomprehensible to the general public. A "bad bank that buys bad assets" was too easy.
Howls of DL,
the administration is still searching for the magic reset button.
They haven't called me yet, but their 100 days is starting to look pretty panic stricken.
If they want to find me, I am available.
After all, they are the government.
Why not offer something simple- want to stay in your house- you now pay a 4% simple interest mortgage.
Want to walk away, fine no federal mortage money for you for five years.
This dinking around with the banks is a waste of time. It is becoming apparent that the entire rotting edifice of housing finance needs to be blown up, and replaced. Wall street will no longer be participating.
When I hear stuff like that, then we are turning the corner.
The fed has been violating the law for a long time.... IMO that's one reason the bloomberg FOIA request is stalled
Why isn't the press asking about that? Fucking nitwits... I wish they had actually tried questioning bush at least once during the last 8 years... those clowns are largely responsible for the iraq debacle
My guess is 'yes' but not at the cabinet level.... but at the thirty something policy wonk level absolutely some of these 'memes' are sneaking into the inner circle.
dryfly | 02.09.09 - 5:55 pm | #
Have a friend in a government agency who gets paid to watch television stations all day. Agency is always watching broadcasts. Content is summarized and kicked up the ladder...
this is from dailybail's site. i'll say that upfront, but he's got a picture of the Wall Street Bull statue Tea-Bagging paulson's forehead with his big brass balls.
Unfortunately, none of these economists works for the Obama administration, which has rejected nationalization for ideological reasons:
Explicit nationalization of financial companies has little support among key Obama officials, sources said. Treasury Secretary Timothy F. Geithner and top White House economic adviser Lawrence Summers think governments make poor bank managers and cannot efficiently manage a vast number of institutions, according to some of their associates.
What's as troubling as the big rip-off of taxpayer money is that what Obama's attempting on the side of rebuilding the real economy could founder on the public backlash against what looks like a very misguided way to get a handle on the banking crisis.
"Government capital is a last resort, and wherever possible, we want to catalyze the private sector to take responsibility for a situation that in many ways was created in the private sector," National Economic Council Director Lawrence Summers said on CNN.
See? It's all private money. The private sector will take responsibility. See?
I agree it's great that the leaks are public. There will never be restored confidence when big deals are made behind closed doors.
Some big corporations will at least be Bernankrupted soon. Avoiding bankruptcy means all that free cheese is never realized. A hero profit-maximizer plays the bust-out card every 25 years.
Somehow this is worse than a bad bank. Hard to tell how bad without the specifics, but one hint is that taxpayers will be handing out loans based on quality of "collateral". So not only are taxpayers paying 60% over market price for bad assets, we'll also be loaning out more money based on questionable assets - likely overvalued, AND we'll be backstopping it all if any of it should fail.
I am looking forward to Obama's presser, but am concerned that the press won't ask probing, follow-up questions. I think that Obama could handle such questions -- in the sense that it would give us some insight into what we're into -- but the question is whether the press will ask those questions. So, if the press conference is a failure in any sense, I think that it will be the press' failure, not Obama's. Of course, the opening statement, which is Obabma's responsibility may -- should be expected to -- set the tone of the presser. But it's been so long since we've had an informative press conference that I don't know what to think.
Well the FDIC did just increase it's credit line with the Treasury....
No matter what they do it all flows back to the treasury. This is how they are going to get away with it and the Congress can just say "well WE didn't authorize this".....
I wondered why Morgan, and Goldman just (last week) puked out debt that was not backed by the FDIC..when prior issues have been.
The Free Marketeers drive me crazy because they just really have NO CONCEPT of what it takes to make something complicated work.
Only a free market and free choice can respond to a massively complex system. It is beyong the ability of central planners to devise a "solution". Please see "The Uses of Knowledge in Society" by Hayek for further thinking on the issue.
Appreciate feedback on this "plan" which took me 10 minutes.
Gav,
IMO, all of your points require some sort of valuation of assets that currently defy valuation.
Here's what I mean: Imagine some sort of cheesy sci-fi movie where we could shoot the banks with a time-suspending ray gun and the banking system would stay frozen in time while the rest of the economy recovered. We would work out our unemployment issues and the fact that people have stopped buying so much stuff (out of work, loss of "wealth effect," etc.) and all of the other economic issues that aren't immediately tied to our banking troubles. At the end of this period, we unfreeze the banks and discover that their capital is worth 10% or 20% less than what they had on their books. Shareholders, bondholders, and perhaps taxpayers all cooperate to eat the loss and life goes on.
We don't have a time-suspension ray gun, of course, so in addition to unemployment and loss of consumer activity, we are also experiencing a failure spiral wherein banks' asset values suffer, which drags down the economy, which causes further write-downs at the banks , which slows the economy even more...
I do not know how to establish a static value for bank assets during a dynamic failure spiral.
All I can come up with is freezing the banks (nationalization, Buiter's good/new bank proposal, etc.) and then Treasury would have to run a quasi-bank to perform the frozen banks' clearing, settlement, and lending functions while the economy recovers. This would cost $5 to $10 trillion up front, though much of that could be recouped when the economy recovers and the banking system is unfrozen.
Yeah, we responded all right. . . We responded by competing by racing to the bottom in mtg finance, and seeing who could spend the most money on worthless trifles.
Which would be fine if only the banksters, fraudsters and foolish paid for their mistakes, but it doesn't work that way.
Oh, well we could be peasants with lords fox hunting or warring over our not yet harvested fields.
They've been working on rebranding the idea from Bad Bank and Bailout to something happier too. Watch for that. Geithner's going to kick it off tomorrow - any ideas?
I can't think of one thing they can announce* that will cause the market to tank. When it does it simply won't be because of anything that comes out of any perceived plan.
I'm awfully surprised that Mr. Bondy has not already announced anything that this (or the last admin.) could have put forth as an abject failure. Today was a great opp. for the player's in bondoland to really make a statement. I really want to know what is (mechanically and systemically) keeping this portion of market alive. Other than the obvious daily BS rhetoric.....mind you.
Where can I find a schedule of upcoming bond auctions and their size? Treasury direct has the auction dates and types, but does not list the size of the auctions.
What they need is a Bazooka see, an economic bazooka, not to use it, just to let everyone know they got it, see. That's what they need to announce tomorrow.
No, I'm being silly, nobody would talk like that in high office, besides that would just be "more of the same" and Obama is about "change" as you all know. Still though, a bazooka type metaphor seems needed tomorrow as a reminder of how far we've come and all the changes and sacrifices we've made to get there since Bush and Paulson were swept from office and the Great Reformation of our economy and society was begun by Abraham Obama. Now let's have one hell of a friggin speech tomorrow Timmy, Hoorah.
No, I will not take up bandwidth discussing something so complex - I would have to explain the sacramental theology of the Church, which I am not even qualified to do - and do it in a venue completely irrelevant to it. I would also have to know about the inner administrative workings of the curia, both in theory and in current practice, and the history of SSPX and its relations with the Vatican over time.
You have read the Pope's denunciations of the opinions of the SSPX bishop and his reaffirmation of Vatican II re the Jewish people and the Shoah.
If that is not enough, please write me privately and I'll try to find someone who can answer your questions expertly and thoroughly.
This is how Obama should handle negotiations with the banks.
Schedule a 6 am meeting. They complain, promise them breakfast.
When they get there there is only bagels and cream cheese, with coffee.
When the first opposition member reaches for the cream cheese, slap it out of the hand and throw the cream cheese in the trash.
When they go to have coffee, they'll spit it out surprised at its lukewarm temperature.
When the first one bites into a bagel, they'll chip a tooth on the month old stale piece of dough.
When they ask you what you plan on having for breakfast because the cream cheese is in the trash, the bagels are rock hard, and the coffee is cold: "I'm looking at my breakfast, let's get to work. No one leaves the room without the FDIC shutting their bank down, no less than 4 DOJ lawsuits being placed against their business and their person, and the IRS seizing all assets all within 10 minutes of you walking out the door."
kinda found it. Treasury Direct doesn't list the sizes next to the upcoming announcements, you have to go into the PDFs of all the auctions... what a pain.
Broward Horne: The Free Marketeers drive me crazy because they just really have NO CONCEPT of what it takes to make something complicated work.
Exactly. Especially when the already over-complicated, out-of-date, poorly regulated, skewed to the needs of Wall Street 'system' (subway train) must be kept running while new track is layed with wider rails and 20-30% of the country wants you to fail and is working toward that objective.
Obama has never taken a major position without copious trial balloons. He's never moved in opposition to his policy team either.
Note that even in Iraq - where originally he was pushing for a fast withdrawal - nothing has happened yet. And that's in a field where he's been publicly saying for five years where we should get out as fast as possible.
--
Now that just is not true.
Obama never said we should get out of Iraq as fast as possible. He set a 16-18 month withdrawal plan, and said repeatedly that the US should be as careful getting out of Iraq as we were careless getting in.
He talked down Petreus and still kept him as his head general in Central Asia.
Now if you want to talk about atroubling inconsistency, we can do so. See the DOJ's adherence to Bush Admn invocations of state secrets in regard to lawusits brought for torture.
We will see how that plays out. It could be serious reneging on pledges. It could be delaying for time to review and process information at DOJ, where the new Atty Gen just got confirmed. We will see, and I will hold Obama's feet to the fire on that.
I think we can add wall street bonuses to the growing list of government entitlement spending. And we never cut entitlements, they are a one way street. This is the biggest swindle in history.
I can't stand Geithner either. His schtick tomorrow is going is really going to set me off. GRRRRRR!
I'm apologizing here and now (in advance) because tomorrow I'll be in total rant mode.
I can't see 'No Drama Obama' going for something like nationalization, at this time. It's too big and scary, and they don't think they can get buy-in. I'm thinking the package will look like a patchwork of stuff designed to appeal to particular Congresspeople. It won't be terribly coherent, but it has to get political support from the major stakeholders, somehow.
OTOH, it may be that some of the administration don't think the package will work, but feel they must do some sort of handwaving to calm the waters. If that's true, the plan will be utterly incoherent, because it's only purpose is to 'be there.' Or, as my father used to say, 'do something, even if it's wrong.' So, either a mishmash of semi-ok stuff, or a total dog's breakfast.
Simply put the system wants to nationalize "hold and hope"...delaying any (and all) price discovery.
That's why I said it would take 10 minutes to solve it but quite a different time period to recover.
The system's problem is that it has all it's capital in basically one place...depreciating assets. If they had another vehicle to achieve yield then this wouldn't be such a huge problem. They don't...so it is. Inflating assets is the only thing they are going to do (being successful at it is another entirely different argument) to "try" and get out of this. Look at the Fed..they are enacting many polices that cause deflation and inflation at the same time. It's as if they are just spinning a roulette wheel daily.
If you bet red and black at the same time you eventually run out of money.
They're doing everything possible to create a public outcry for bank nationalization - "Nationalize Now" picketers in Washington. Then they'll give it to us. And won't we be happy.
I'll do a little compare and contrast between two sets of comments. I'll put a calendar reminder to revisit the comments in about a month to see who wrote something intelligent, accurate, thoughtful or . . . not.
Here goes.
Set #1
"They're scurrying around like cockroaches when the lights are turned on."
-Comrade Terry | 02.09.09 - 5:23 pm
"Holy shit. More evidence they truly have no clue what to do."
- That's Ballgame Comrades | 02.09.09 - 5:27 pm
"Whatever their new plan is, I want nothing of it, considering that it was probably scribbled on a cocktail napkin at the bar 5 minutes ago after they decided that the bad bank idea might actually be political suicide."
- Bond Girl | Homepage | 02.09.09 - 5:32 pm
Set # 2
Three of the major reporting sources have been CNBC, Bloomberg, and WSJ. And the fourth has been the Yellowcake and Aluminum Tubes NYT. Set BS detector on extra-high when no sources are named.
Now scream and scream because there is no plan and Obama=Epic Fail and all that stuff . . . but remember that no 3 page plan was delivered as an overnight ultimatum (see Paulson and Bush) and also that the longer delay allows more devastating information to come out and circulate about the banksters.
The longer the delay, the more possible and likely nationalization becomes. The more and more that all alternatives are examined and discarded, the more isolated nationalization becomes as the best and only workable solution.
Now rant and rave, and remember that we are all=Epic Fail because none of us fixed this, either.
- joe shmoe | 02.09.09 - 5:33 pm
Thank God, an actual adult in the room. There is no advance plan for something like this: there is a goal, and there should be a set of criteria for success. If they don't have that, they're effed. The plan is what you make as you discover what works and what doesn't. And as you, through experience, leave behind the that preconceptions you didn't know you had.
As far as I'm concerned, this administration is right on schedule; ahead of schedule, actually.
They're kind of deciding these things last minute it seems. In other words, they still don't have a solid sense of direction.
There were too many powerful rich people thrusting risks onto the American people that were neither necessary nor beneficial in order to take advantage of them. The whole regime needs to be shaken out of the trees. But it is like a saavy monkey that can hang on with its tail when its claws are pried loose.
"Insolvent banks go under. Shareholders wiped out, bondholders get haircut"
Devil's Advocate (I actually like the plan), but wouldn't that give us another "Lehman" situation (except much worse)?
Again, not that the issue won't come up eventually, but perhaps that's one of the reasons that the PTB are balking at that course of action (again, the "too big to bail" issue?)
We can't nationalize people. Our banks are too big to save. Putting out little fires and hoping the wind stops whipping is our only hope. Get real. Don't you think they would have ended this madness if they could?
it's really meaningless because they don't break down the portion of it that is snapped up with the indirect bid. Unless they changed it from the last time I looked at it.....
It's too big and scary, and they don't think they can get buy-in. I'm thinking the package will look like a patchwork of stuff designed to appeal to particular Congresspeople. It won't be terribly coherent, but it has to get political support from the major stakeholders, somehow. scone | 02.09.09 - 6:43 pm | #
If they're not asking for more TARP money, they don't have to suck any Congressional dick.
I really don't expect anything. When I conceived the size of the thing, back in fall, 07, I concluded within 10 minutes that there wasn't enough money in the world to solve it.
Make it the approximate size of the thing. You can't conceive of the size of the thing without having read a little Astronomy. Hence the Larry Niven comment is not entirely OT.
And I think the pope only yelled at the bad bishop after public opinion and some very important people pointed out loudly how idiotic this was. Both in and out of the Vatican.
When I'm not fuming at him, I'm feeling sorry for him 'cause he's a clueless old man. And then I'm evilly happy, 'cause he's making the Church go down faster.
'cause I got plenty of doubts no matter what is suggested and I'm not smarter or more observant than they are. dryfly | 02.09.09 - 5:45 pm | #
That's the essence. Whenever I see the word stupid bandied regarding the key policy makers, I can happily ignore the poster from that point on because he/she is a simpleton.
The complexity here is not only that the objectives of the project are not clearly defined but that it is just about impossible to come up with non contradictory objectives that satisfy 60% of the Senate.
To then define requirements in a field of contradictory and even rapidly shifting objectives because of political trade winds is a magnitude more complex. Anybody who has implemented complex systems knows how high the failure rate of such a project will be and this is before any solution is even proposed.
There really is only one way to approach such a task and it is along the lines of the software implementation methodology prototyping/evolutionary design which by definition assumes multiple failures along its implementation path.
Any implementation based on political objectives cannot be efficient nor effective simply because the opposition, in order to get elected, has to torpedo the perception of success. Democracy as a system has a high failure rate built in which means it can only meander to its eventual destination. It uses its failures to build consensus.
I expect not much tomorrow, and I think delay is better than either bad plan or blowing all of one's political capital on a suicide mission.
The right kind of delay would be the best step tomorrow, and by that I mean a dragging out of the issue that enables more bad news about the banks and banksters to come to light, and to circulate under conditions of public opinion that will make a big majority of the country furious at the banks....
Then and only then can the right kinds of solutions be implemented.
Inferno Engulfs Beijing Tower "A massive fire apparently destroyed a tower in the soon-to-be completed headquarters complex of China's national TV broadcaster." Seems the Chinese have figured out the solution to CRE oversupply...
If they're not asking for more TARP money, they don't have to suck any Congressional dick.
Eric
.
That's not the way the game is played. Every thing they do is a complex calculation of favors and paypacks. Getting a Congressperson's vote always involves giving something in return. Just getting them to a meeting is a victory with costs and ritual obligations. The same type of horsetrading goes on inside the Cabinet. That's politics.
It is and will be simply another method to remove money from taxpayers and place it in the pockets of the wealthiest, who will then continue to outsource, offshore, and live overseas when the mess they made turns sour.
There is more brewing than just economic disaster.
"Whenever I see the word stupid bandied regarding the key policy makers, I can happily ignore the poster from that point on because he/she is a simpleton."
Expressing outrage by labeling someone stupid (and there are many candidates) gets a label of simpleton???
There are stupid actions and stupid things said. I hope you really realize the difference.....or you won't be reading too much here.
"There have been great teams of people in power before, and they got crunched by history just the same, e.g. 'the best and the brightest.' I don't think any power on earth can stop this. The stimulus is like trying to sew a parachute together after you jump out of the plane."
I'll see your Robert McNamara and raise you a George C. Marshall/Dwight Eisenhower.
Fascists - bad, tough problem. And yet, holy shit, we didn't get crunched by history.
Not saying we'll find people the stature of those two this time, but Jesus Christ, enough with the drama queen hissy fits.
Have any of you people ever been in a tough spot and made it through? Or are you all pissing your pants and rocking?
Is it going to be bad? Yeah probably. But how bad? Civil War bad? WWII bad? Lost my job but there's a social safety net this time bad? U6 is up, but hey, traffic sure is light bad?
Pavel, I thank you for your answer, although I do not really understand it .
What has the unholiness of un-excommunicating Holocoust-deniers to do with sacramental theology ?
And, there are plenty of shocked people who, without any knowledge about the inner administrative workings of the curia, both in theory and in current practice, can clearly see the unholiness of this action .
Pavel, you know that in Germany, Holocoust-denial is illegal !!
It almost looks like the "Bundesrepublik Deutschand" is holier than the Catholic Church ? At least they are doing something against Holocoust-deniers instead of associating with them .
So, do not hide behind the curia and theology etc. in trying to explain :
"What is holy in someone who un-excommunicates Holocoust-deniers ??"
And why does the Catholic Church associate with Holocoust-deniers while Germany made Holocoust-denying illegal?
RE,
What people are labeling stupid is the attempt to keep bailing out failing institutions.
We must face up to the fact that banks and Wall Street have failed to adequately allocate capital to productive uses, and instead have turned into ponzi style machines using regulatory loopholes to fleece the public. The sooner we smash the paradigm, the faster we begin to make progress to a new solution that works in getting money to folks to buy houses, and a new finance structure to keep people from walking away when their economic incentive is currently screaming at them to take a hike.
Now, A new nationalization of Fannie and Freddie to finance owner occupied housing. Financed by selling government guaranteed bonds.
4% financing as a result of this to all who qualify (Gee, like the old fashioned financial inquisition financing), with higher rates corresponding to lower down payments.
(Gee- 20% down 4%, 15% down 4.5%, 10% down, 5%- with a special 5% down with 5% FHA style guarantee) Lie on you application, and you lose the house and your down payment if you were an investor hiding in the owner system.
And lose your tax deduction- now does anyone really want to cheat in that system?
4% refis to everyone underwater- with a special unemployment provision to allow an underwater borrower who loses employment to walk away.
The 4% refi would cram down the current 1st and 2nd to the current value of the property in proportion plus 10%. They eat their losses.
No more YSP- no more hidden kickbacks, investors must have 10% down cash, and the free market can operate in the investment category.
Any idea if those containers are safe for storing food?
No idea... I'm going to ask the guy what he put in them. If it's something noxious, I'll use them as compost rotators. If it's something reasonable, I'll use 'em for dried beans, barley, and oats. Throw in a little silica, dry ice, and a few dollar bills for a laugh and I'm set.
Is the nationalization talk tied to TARP pt2 $350bn?
I don't see the Treasury increasing planned Treasury issues in advance. If/when they go over the limit it will be through re-timing stimpack spending, new short notice treasury sales, and unsanitized money creation if necessary.
So as far as the current plan is concerned, it would have to at least appear to fit within the $350bn.
I figure they will do as much heavy lifting out of the limelight as possible [Fed's $2tn balance sheet of undisclosed quality and $500bn of MBS purchases, lowering reserve requirements of banks and insurers (or accounting changes to that effect), etc]
"We must face up to the fact that banks and Wall Street have failed to adequately allocate capital to productive uses, ..."
Outrageous! Simply outrageous. That anyone or any organization should presume that it has the right or responsibility to "allocate capital" is, well, outrageous!
and what does "And why does the Catholic Church associate with Holocoust-deniers while Germany made Holocoust-denying" or any other similar issues have to do with this topic?
Comrade de Chaos(Unrated) writes: \twhere is Chuck Norris when our Senators need him? He would simply kick the bail out in submission, or even better cut it in a half. Comrade de Chaos | 02.09.09 - 7:05 pm | #
You can find him here, but I don't think you're going to like it LOL
Just like Japan 15 years ago, banks will not sell their bad assets at the prices buyers will offer. Private equity will offer at 20% of the banks current book value. The bank lending system will remain frozen until the government bites the bullet and nationalizes the bad banks.
5 Foot 3 Pablo Picasso
.
The quality of trolling has really declined on this blog recently. At one time, the trolling was insightful, witty, and deserving of hard-hitting counter-troll flame wars. Now, it's not even argument, just contradiction.
"Last November he made the following observation of massive new government investment in the banking sector: These (injections of capital to the banking and financial system) should be good investments, since so much of the crisis is psychological, and values will rebound when confidence is restored. (How Obama Can Fix the Economy, November 12th, 2008, Wall Street Journal). I hope the paper didnt make your doorstep that day."
Did anybody else notice that the "bad bank" rumor/trial balloon was officially renounced only after the Senate barely passed its version of the stimulus bill?
I suspect the administration needed to "keep hope alive" for all those bank lobbyists until it was too late for them to stop the bill...
Maybe the president's team more shrewd than some here give them credit for.
There are stupid actions and stupid things said. I hope you really realize the difference.....or you won't be reading too much here. MS | 02.09.09 - 6:56 pm | #
Unless one fully and in depth understands the complexity of a situation, it is impossible to develop an understanding of a problem. It might look really simple from 10,000 feet but once inspected with a microscope it reveals a completely different structure.
It is people who quickly jump to judgment that generally don't want to understand nor involve themselves in the grueling details that reveal the real complexity of a situation. It is mostly these folks that jump to conclusions, i.e. call people stupid. I think they deserve to be called simpletons.
Somebody with a proper appreciation for complexity will choose a term like disagree and then lay out reasons.
"There really is only one way to approach such a task and it is along the lines of the software implementation methodology prototyping/evolutionary design"
And that, then is the problem. On the one hand we are too prototype and try different methods until we find one that "works", and on the other hand we have calls to "do something and do it NOW", else we are going to face (yet again) financial Armageddon.
It's hard to prototype when the software is required for air traffic control today.
In other words, evolutionary design is all fine and dandy when you actually have time to do it. If you NEED to prototype and follow evolutionary design, but don't have the time to do it, well, you are kind of screwed.
And that's where we are at.
So when they tell us that "we need to do this", or that "this will fix this part of the problem", forgive us for calling their BS.
Comrade de Chaos writes:
...and what does "And why does the Catholic Church associate with Holocoust-deniers while Germany made Holocoust-denying" or any other similar issues have to do with this topic?...
Nothing, but it would just be one of manny manny manny O/T discussions here.
So, don't hide behind O/T or bandwith, etc.
It is an extremely important issue, and trying to look the other way will not (!) make it go away.
P.S. How manny accusations about the Holocoust and the Nazies did I (as a German) get to hear on this blog.
All O/T of course, but I never claimed O/T !
This is not very complex.......arriving at a sane solution that is. There have been many put forth here over the last several years. It's getting to the point of fatigue......just caution painting people with the same brush that's all.
Gil Hamilton. I can see the nanny state nerfing humanity, leaving us vulnerable to the first crackpot despot to put 2 and 2 together. Also I can see the whole body bank thing happen when the boomers get old and use thier political numbers to postpone mortality, any way possible.
Nationalization can only happen as the result of a process or a catastrophe, or most likely a combination of the two. joe shmoe | 02.09.09 - 5:52 pm | #
joe, your posts are getting better and better as the days go by.
I can't figure out if it's because you're brilliant or just because I agree with everything you say. )
Actually I think the Schrödinger analogy makes sense. The assets have some fuzzy value as long as the investors don't look at them. As soon as an investor observes them, their value collapses.
If we can just maintain sufficient uncertainty until... until... OK not sure how to finish this part.
"There really is only one way to approach such a task and it is along the lines of the software implementation methodology prototyping/evolutionary design"
Another software development methodology would define requirements, then design, then implement. And then, yes, test.
"Comrade de Chaos writes:
...and what does "And why does the Catholic Church associate with Holocoust-deniers while Germany made Holocoust-denying" or any other similar issues have to do with this topic?...
Nothing, but it would just be one of manny manny manny O/T discussions here.
So, don't hide behind O/T or bandwith, etc. "
Werner, we definitely have many OT discussions on this blog. Some of them continue, some of them don't.
Normally though, when someone has been asked 5 times on the same thread to drop a topic, it gets dropped.
Plan? What PLan?
Someday this war's gonna end...
First
LOL, awesome.
Nope...looks like second at best.
its a good thing they know exactly what to do to fix this! since thats what they're hired to do and all...
Plan? What PLan?
Citizen AllenM | Homepage | 02.09.09 - 5:21 pm | #
I think there's a plan to announce that they're forming a task force to appoint a czar to formulate a plan to cobble together a plan.
Trial balloon apparently made of lead...if this means that within the administrationthey are having active debate about what should be done that is a good thing.
Oh crap, they really ARE making this up as they go along.
They're scurrying around like cockroaches when the lights are turned on.
They're absolutely clueless about which way to go.
Good cop bad cop is still okay for movies however??
I still say Nationalization is coming..soon.
hahahahahahahahahahaha... oh crap.
So do we get a "Bad Insurance Company" instead?
hey, after this huge rally, everything's fixed anyway!
We don't know what we're doing yet, but we're having a presser for it at 11:45am tomorrow morning.
THAT is how you save the financial system, folks. An all-nighter.
How will the markets react tomorrow?
Frankly, I'm encouraged that they realized the bad bank was a bad idea.
It is looking more and more like they are not willing to make the final decision to monetize everything.
Sounds more like deflation than inflation to me at this juncture.
I wonder.
Does the new proposal no longer contain a "bad bank" (or as I call it, a shitfunnel down the throat of the American taxpayer) provision or does the plan just now contain a provision that would serve the same function as the "bad bank" but just be called by a different name?
Bottom line, the taxpayer will still end up eating all the stupid, immoral decisions made by greedy billionaire bankers over the last decade....
I gotta tell ya, they don't inspire confidence with all this crap. Unbelievable.
What the hell. They better come up with something good.
If we aren't careful, the problem won't be "bad bank"...it will be "bad country."
THAT is how you save the financial system, folks. An all-nighter.
\t Comrade Byzantine_Ruins |
Comrade Byzantine_Ruins | Homepage | 02.09.09 - 5:25 pm | #
Hey, it worked in grad school:)
Everything from this admin should have an asterisk *
It's like trying to figure out fourier the day before the big test
Frankly, I'm encouraged that they realized the bad bank was a bad idea.
Elvis | 02.09.09 - 5:25 pm | #
I just wonder why they KEEP bringing it up.... SIV, SuperSIV, MLEC, TARP.......
"One Trick Pony"
isn't the fed already the bad bank?
Holy shit. More evidence they truly have no clue what to do.
Dow down 300+ tomorrow.
President Obama "Explain to me why we want a bad bank again?"
Economic Advisor "I really can't."
President Obama "Explain to me why I made you my advisor."
Economic Advisor "I really can't."
"I just wonder why they KEEP bringing it up.... SIV, SuperSIV, MLEC, TARP.......
"One Trick Pony"
"
They keep bringing it up because they keep hoping the bond market will just yawn.
Unfortunately (for them) everytime they bring it up the bond market barfs.
The Treasury Department said there would be a media briefing tomorrow at 1145 EST.
We also know Geithner will speak at 1100 EST.
Everything else is from well placed "sources," just as before.
The more things change . . . .
I'll wait for tomorrow.
Im beginning to think Joe Schmoe is right. All roads lead to nationalization.
My god if they don't get the bailout and stimulus bills passed the market is gonna crash and we're gonna have a depression.
Oh wait...
did volker finally get to talk to obama?
Dow down 300+ tomorrow.
That's Ballgame Comrades | 02.09.09 - 5:27 pm | #
NFW. Most probably a green day, no way is it down more than a hundo.
If the conjure clock were still ticking, it would have just fast-forwarded a full hour.
Or maybe stopped in mid-tick, like during the Exorcist.
It's like trying to figure out fourier the day before the big test
Have a Great Depression! | 02.09.09 - 5:27 pm | #
(Non-nerds should skip to the next comment.)
The problem is we need a LaPlace Transform - this is new territory, not a repeating function. I hope.
In my front row seat at the End of the World. . .
a commercial mtg that I'm finishing the foreclosure of had a pharmacist who ran a Pharmacy for 11 years, then bought the property, and may have bought more property, and now is pretty much losing everything. I'm the plaintiff for once on this one. I had a receiver appointed and the owner soon to be ex-owner told the receiver she was too busy to see him.
My daughter still has her job as an architect. Sez no one is hiring. Sez the stuff that got cut was stuff that could have helped her firm. Hopes her project will get funded. . . but everythings getting cancelled.
And wanted to know why the bankers always got all the money?
This administration has more leaks than a halftime crowd at the Super bowl.
Didn't we just have a bubble in bad banks?
Elvis writes:
President Obama "Explain to me why we want a bad bank again?"
Economic Advisor "I really can't."
President Obama "Explain to me why I made you my advisor."
Economic Advisor "I really can't."
Elvis | 02.09.09 - 5:28 pm | #
I hope that is the dialogue President Obama is having. Otherwise, it's "Who's on first?"
YouTube - Who's On First
C'mon, Washington, a little certainty please. This ad hoc approach won't work.
Whatever their new plan is, I want nothing of it, considering that it was probably scribbled on a cocktail napkin at the bar 5 minutes ago after they decided that the bad bank idea might actually be political suicide.
timmay is tied to a post being beaten by tarpy with a cat o'nine tails:
timmay: oh tarpy, i like it when we play bad bank!
Oh crap, they really ARE making this up as they go along.
Of course they are. But they do have a general architecture and concept of their goals.
It's very interesting to watch. I've built enough systems and wrecked enough stuff to put myself into their shoes.
I've built things which worked but didn't scale, things that didn't work, things that were over-engineered, things which came out well.
The Feds have a general architecture, that I'm pretty sure of. The key to a good architecture is that it's general enough to omit details. A lot of details are pluggable if your system is abstract enough.
The Free Marketeers drive me crazy because they just really have NO CONCEPT of what it takes to make something complicated work.
"Oh, just toss to the free market, the magic hand will do it".
Incredible lack of understanding, really laziness and moral abandonment.
The Feds have a system which has inherent structural flaws (the credit cycle) which mandate a certain failure mode. They're trying to re-engineer the thing around that now. Fifty years ago it seemed okay because it created a certain orderliness and predictability but now, since Greenspan, they're seeing the limitations and failure points of the structure and trying to rework on the fly.
.
Maybe they watched the Dr. Doom and Black Swan video and we'll get partial or temp nationalization tomorrow. But wait, didn't the CEO of BOA say his company was doing just fine just last week?
psst : (sotto voice) they are making it up on the fly. Don't panic. Please don't panic because we don't have a contingency for that. Yet.
President Obama "Explain to me why I made you my advisor."
Economic Advisor "I really can't."
I wish. Oh, I wish. (with most - Volcker can stay).
The "bad bank" was too simple; it would be too easy for ordinary people to understand what was going on.
What they are seeking is a structure where they can gift trillions of dollars to wealthy private investors, but in a sufficiently complex way that the average Joe and Jane do not understand what is happening.
An insurance scheme providing "limited losses, unlimited gains" for private equity should cover it.
Question:
How can you tell the difference between a leaked detail, a trial balloon, a ploy to shape public opinion, and a media report that just plain got things wrong?
Answer:
Most of the time you can't discern between these things until after the fact, when the real plan is announced and some concrete information comes to light about the earlier stages.
Caveat:
Not one story on this business has cited a named source. Set BS detector on High.
Caveat #2:
Three of the major reporting sources have been CNBC, Bloomberg, and WSJ. And the fourth has been the Yellowcake and Aluminum Tubes NYT. Set BS detector on extra-high when no sources are named.
Now scream and scream because there is no plan and Obama=Epic Fail and all that stuff . . . but remember that no 3 page plan was delivered as an overnight ultimatum (see Paulson and Bush) and also that the longer delay allows more devastating information to come out and circulate about the banksters.
The longer the delay, the more possible and likely nationalization becomes. The more and more that all alternatives are examined and discarded, the more isolated nationalization becomes as the best and only workable solution.
Now rant and rave, and remember that we are all=Epic Fail because none of us fixed this, either.
How about we just stop the f'n mortgage fraud for once:
How Crooked "Flipper" Made $275,000 in One Day | News10.net | Sacramento, California | News
Jill--saying you are fine is meaning you are absolutely not fine.
I think there's a plan to announce that they're forming a task force to appoint a czar to formulate a plan to cobble together a plan.
\t Eric | \t \t \t \t02.09.09 - 5:23 pm |
I believe the next step in the derivative chain is a plan for an announcement committee.
I think they should take all of the ideas floated in trial balloons over the past two weeks, write them on a big wheel, and open tomorrow's press conference by spinning it.
Damn I wish I knew how to draw...
And indeed there will be time\t
To wonder, Do I dare? and, Do I dare?\t
Time to turn back and descend the stair,\t
With a bald spot in the middle of my hair
[They will say: How his hair is growing thin!]\t
My morning coat, my collar mounting firmly to the chin,\t
My necktie rich and modest, but asserted by a simple pin\t
[They will say: But how his arms and legs are thin!]\t
Do I dare
Disturb the universe?\t
In a minute there is time\t
For decisions and revisions which a minute will reverse.
-- T.S. Eliot's Lovesong of J. Alfred Prufrock
Broward, I think the problem is that these guys are smart enough to know that their general architecture is fatally flawed, but they're not brave enough to start again. So they keep adding on to it and - voila! - Vista!
Thanks lawyerliz. I have so much to learn.
Nemo, you are one of my gods, but that is the most brilliant thing you've ever said. Thanks.
LOL nemo, hopefully Eric will pick your idea up and run with it...
I believe the next step in the derivative chain is a plan for an announcement committee.
1 currency sooner [yogi] | 02.09.09 - 5:34 pm | #
I think there's a special 2nd assistant to the under-secretary of the treasury who handles leaking that information.
@Elvis | 02.09.09 - 5:28 pm
BUSTED: you're true identity is Tom Toles.
Nemo's right.
"Bad bank" has a negative-50 approval rating, as a term.
I think I'll celebrate by seeing an screening of Gomorrah on Valentine's Day
Gomorrah Movie
The streets will be painted red tomorrow.
Bulls will become steers.
Kudlow will jump from a highrise window.
SRS=$73.50
B B B BOOYAH!!!
We need a Leak Czar !
It's a scheme so I suspect it will be complex.
Let's just get to 5000 Dow and get it over with.
Thanks econo, I love Elliot. Maybe I will have lots of time to read him, after I give up my seat at the End of the World.
Ooooohh, I would love to have been a fly on various walls. Ooooooh, the screaming and yelling.
A wise paralegall once said to me:
If it weren't for the last minute, nothing would ever be done at all.
Democracy, sausage factories etc. Shouldn't watch either if you want to keep you ideals/eat sausage.
Or, per Groucho:
A 4 year-old child could nationalize these banks.
Run out and get me a 4 year-old child.
Elvis | 02.09.09 - 5:28 pm |
Right on! +10
I wonder if this Lead Zeppelin will play music?
crispy, that's the guy that posted that long memo to his companies website last week.
The memo has been yanked but he basically ratted out the entire industry in that memo...
"BUSTED: you're true identity is Tom Toles.
Anonymous"
Cool. I won a Pulitzer Prize. Always thought I deserved one, but never knew I got one.
Broward, on "making it up as they go along:
Of course they are. But they do have a general architecture and concept of their goals.
It's very interesting to watch. I've built enough systems and wrecked enough stuff to put myself into their shoes.
Broward Horne | Homepage | 02.09.09 - 5:32 pm | #
Thank God, an actual adult in the room. There is no advance plan for something like this: there is a goal, and there should be a set of criteria for success. If they don't have that, they're effed. The plan is what you make as you discover what works and what doesn't. And as you, through experience, leave behind the that preconceptions you didn't know you had.
As far as I'm concerned, this administration is right on schedule; ahead of schedule, actually.
When was it GS and others said they would pay back the TARP money
Is this negotiations spilling over into the public arena?
Or is this contained to within the political sphere
Thanks Kristina...I missed a few stories last week during my hiatus
Memo Kristina?
Have been trying to work, so missed a day at CR and therefore am a year behind in the financial news.
Bond Girl writes:
Whatever their new plan is, I want nothing of it, considering that it was probably scribbled on a cocktail napkin at the bar 5 minutes ago
Best memory...
Yacht contract on a bar napkin, couldn't beleive it!
Until you have one you'll never know
Mark-to-market rules will be "temporarily" suspended, this will cause a short major rally. Just my two cents.
The program's code name:
Super-duper-pooper-scooper SIV
I once enforced a contract on a slip of paper that said:
I O U $XXXX.00.
Sammmy Smithe.
There is one thing I want to know first about any proposed plan:
Will the bondholders of the banks take a haircut of any kind?
What are the odds someone in the press bothers to ask? My guess is zero.
Google his name and memo, maybe someone cached it. It was wild, he admitted to all kinds of fraud while working for various mortgage companies...I'm searching now, the pdf page is taken down but there should be a copy out there somwhere.
"An insurance scheme providing "limited losses, unlimited gains" for private equity should cover it."
Yep..that's what they'll do. Making any "loan" in the process non-recourse because we have to be able to explain it to people without identifying that the loss flows back to the Treasury.
I'm still at a loss (no pun intended) as to what the actual triggering mechanism is going to be for these "insured assets" to force payment. We've already had input pricing on these piles of crap so may be I'm just not seeing something here.....
Or may be I am....
Ciao
MS
Bond Girl writes:
Whatever their new plan is, I want nothing of it, considering that it was probably scribbled on a cocktail napkin at the bar 5 minutes ago
I would have guessed a sanitary napkin.
"As far as I'm concerned, this administration is right on schedule; ahead of schedule, actually.
Bob Dobbs"
Bob, I'm hoping the same. Really. Personally, unlike Conjure, I like to think they are making a calculated approach. However, if they are not, like Conjure, I am filling up my underground diesel storage tank.
In terms of getting nationalization -
Geithner, the point man on this plan, gave Citi about 150 billion worth from the taxpayer, overnight, without any kind of authorization, solely to avoid a government takeover. We are talking a man who has already moved heaven and earth to avoid the most-justified government takeover of any money center bank.
I agree nationalization is, in the end, the only way out. But it will happen only when it's forced down Geithner's and Summers' throats, against all the resistance they can muster.
Oh crap, they really ARE making this up as they go along.
Snaff | 02.09.09 - 5:23 pm | #
The only glimmer of hope we have is they admit they don't have a plan and are keeping an 'open mind'...
If I thought they thought they really had A PLAN I'd be doubly paranoid. The fact that they are making it all up 'on the fly' and arguing internally up to the last minute and beyond gives me hope that at least SOME BODY has thought about this stuff and has some doubts... 'cause I got plenty of doubts no matter what is suggested and I'm not smarter or more observant than they are.
This is good news. I've yet to see a bad bank plan that:
1) Addresses moral hazard
2) Is large enough to matter
3) Affordiable
4) Works
Bad banks only make sense after the whole bank is in recivership and the goverment wants to create a good bank to sell.
There is one thing I want to know first about any proposed plan:
Will the bondholders of the banks take a haircut of any kind?
Nemo | Homepage | 02.09.09 - 5:44 pm | #
Of course not.
Bill Gross is hosting this party.
Insurance companies are getting hammered in the after-hours, led by PFG, which announced bad earnings, -22%.
Hmm, Kristina, I think I may have read it; but it was so much part of my everyday experience, trying not to be dragged into any muck, whilst earning a living, that I guess it didn't make so much of an impression on me, as it might to others who don't have such a front row seat.
Geithner wants private investment in the new bank bailout. Won't that mean marking the toxic waste to market? - since private money isn't as stupid as taxpayer money.
Doesn't that mean the banks go bankrupt?
1) They can't do anything, this debt bomb took decades to build.
2) It takes time for bad debt to die rotting on the vine.
3) They have to act like they're doing something.
4) So just act like they're doing something: eg. : call a pork laced spending bill a "stimulus bill".
5) People think something's happening and bullet 2 happens and then recovery.
6) So ... hurry up and wait.
"Doesn't that mean the banks go bankrupt?
Speed"
No, I think it means the rupts go ruptbank.
Geithner wants private investment in the new bank bailout. Won't that mean marking the toxic waste to market? - since private money isn't as stupid as taxpayer money.
Doesn't that mean the banks go bankrupt?
Speed | 02.09.09 - 5:47
may the fed is insolvent too by now??
I would have guessed a sanitary napkin.
Ehh... Depends
Geithner wants private investment in the new bank bailout. Won't that mean marking the toxic waste to market? - since private money isn't as stupid as taxpayer money.
De Nile isn't just a river in Egypt.
Personally, I think Obama is listening to me and leaning heavily toward bulldozing. He is a good man.
They're welcome to use my table, royalty-free. They have to supply their own d20.
1 - 3: Bad Bank
4 - 10: Private Investment
11-15: Recapitalization
16 - 19: Nationalization
20: Devaluatio
"First do no harm" as the physicans say.
De Nile isn't just a river in Egypt.
Fair Economist
its the 51st State of the USA. The State of Denial ( from Vonnegut R.I.P.)
The Free Marketeers drive me crazy because they just really have NO CONCEPT of what it takes to make something complicated work.
Broward Horne | Homepage | 02.09.09 - 5:32 pm | #
Actually, (rational) free marketeers do understand that something that complicated can't be managed by some know-it-all in govt., and even less so by a govt. buearacracy. That said, it seem inevitable that just about any market can find an unacceptable point of equilibrium, such as was the case with US Steel, Standard Oil, etc. Thus, govt. intervention is necessary to guarantee the efficient operation of the "free market". The key is to keep the demand component of the market in operation, and avoid a demand economy a la the communist regimes of the lst century. Surely there must be a way for liberals and conservatives to agree on that.
And please, no remarks about (rational) free marketeer being an oxymoron.
It really depends on how they are defining "private money".....
The fed is "private"....
Sounds like a new insurance company is about to be spawned......
Ciao
MS
...gives me hope that at least SOME BODY has thought about this stuff and has some doubts... 'cause I got plenty of doubts no matter what is suggested and I'm not smarter or more observant than they are.
dryfly
.
We aren't going to be invited to be flies on the wall, but the constant leakage and trial ballooning is pretty close to a front row seat, with all its horsetrading and backscratching.*
What I would like to know, is whether the blogosphere is being read in the inner circles. Is CR, etc., having an effect on the Obamaoids and Congress?
"financial system no longer includes creating a "bad bank""
All it means is that the Obama administration (like the Bush administration before it) have determined that the system is "too big to bail", so that the only hope is stop-gap measures, guarantees, and leveraging taxpayer funds in the hopes that things will turn around. I'll bet that Nassim Taleb has a good side bet on things not quite working out with a rescue.
@ Fair Econ,
You just wrote:
I agree nationalization is, in the end, the only way out. But it will happen only when it's forced down Geithner's and Summers' throats, against all the resistance they can muster.
Fair Economist | Homepage | 02.09.09 - 5:45 pm | #
You made a similar argument a few days ago on a thread about BAC, and I responded there.
Geithner and Summers are not the President, and advisors do not necessarily indicate the drift of a President's decisions, especially not this President.
Evidence A: Obama's trip to Iraq and interaction with Gen Petreus. Obama is not a General and never served in the military, but he told Gen Petreus that as President he would set the strategy and the mission, not Petreus.
Evidence B: Hillary Clinton tried to beat Obama in the primaries by smearing him for his willingness to talk with all international adversaries. Well, guess who is Sec of State now, and look at who is talking with Iran.
Obama is President. He calls the shots.
That doesn't mean that Obama will nationalize next week or next month or next year. But it does mean that if he doesn't nationalize it won't be just because Geithner and Summers told him not to do it.
Last, remember that no one could successfully push through nationalization just now. No one. Look at how close the stimulus bill is, and remember the degree of Repub opposition to mere compensation caps for bank execs.
Nationalization can only happen as the result of a process or a catastrophe, or most likely a combination of the two.
depends on how they are defining "private money"
I thought of that too. Fred/Fanny - or maybe FDIC!
Not one story on this business has cited a named source. Set BS detector on High.
joe shmoe | 02.09.09 - 5:33 pm | #
I've heard it said that when a reporter says "sources close to Sec. X", that's NEWSspeak for Sec. X told them, but it has insisted on keeping it off the record.
Speed --
Geithner wants private investment in the new bank bailout. Won't that mean marking the toxic waste to market?
Gov't will insure that the private investors do not lose too much money.
So no, it will not be marked to market. That would defeat the whole purpose...
If we aren't careful, the problem won't be "bad bank"...it will be "bad country."
excellent idea, put all these toxic assets in NY CA and FLA.
Dust Bowling for Dollars writes:"
They're welcome to use my table, royalty-free."
Rolling a "20" should let them roll again for "double damage", or a "surprise backstab".
Do the taxpayers get a saving throw?
What I would like to know, is whether the blogosphere is being read in the inner circles. Is CR, etc., having an effect on the Obamaoids and Congress?
scone | 02.09.09 - 5:51 pm | #
My guess is 'yes' but not at the cabinet level.... but at the thirty something policy wonk level absolutely some of these 'memes' are sneaking into the inner circle.
"As far as I'm concerned, this administration is right on schedule; ahead of schedule, actually.
Bob Dobbs"
Bob, I'm hoping the same. Really. Personally, unlike Conjure, I like to think they are making a calculated approach. However, if they are not, like Conjure, I am filling up my underground diesel storage tank.
Elvis | 02.09.09 - 5:45 pm | #
As well you should. If indeed the administration shows signs that it isn't learning from experience or is only listening to an ideologically narrow coterie of advisors -- well, I also have an emergency fallback position or two that I might ready.
But I'm hoping that this a problem that sane men with open minds can solve, eventually. And that some of those people actually inhabit the White House.
These are all just leaks. Geithner's real plan is The Money Hole
.
I say we give Arizona, Guantanamo and Puerto Rico back to Mexico if they stop invading us.
Do the taxpayers get a saving throw?
Nemo | Homepage | 02.09.09 - 5:55 pm | #
Sure, just has a -20 modifier...
What I would like to know, is whether the blogosphere is being read in the inner circles. Is CR, etc., having an effect on the Obamaoids and Congress?
scone | 02.09.09 - 5:51 pm | #
My guess is 'yes' but not at the cabinet level.... but at the thirty something policy wonk level absolutely some of these 'memes' are sneaking into the inner circle.
dryfly | 02.09.09 - 5:55 pm | #
Pity the poor interns who have to read all this stuff and "pre-screen" for their masters.
Nemo writes:
There is one thing I want to know first about any proposed plan:
Will the bondholders of the banks take a haircut of any kind?
"The plan does not directly address the value of any bonds. The eventual effect on the various stakeholders of each bank will depend on the prices paid by private firms for the currently illiquid assets and on the future performance of the remaining assets of the bank."
Or something like that.
I agree nationalization [for Citi] is, in the end, the only way out. But it will happen only when it's forced down Geithner's and Summers' throats, against all the resistance they can muster.
Fair Economist | Homepage | 02.09.09 - 5:45 pm | #
I suspect that it's essentially a done deal for Citi. I think that they're just buying time to find a way to keep all the triggering events from bringing everything down at once.
61 yeas 36 nays with motion of reconsideration...
So if we have a drinking game for the eventual release & Obama press conference... what do I have to do if the Big O himself actually utters the word 'nationalization'... down a whole bottle of Canadian Club?
Rolling a "20" should let them roll again for "double damage", or a "surprise backstab".
Tim Geithner's Mom | Homepage | 02.09.09 - 5:54 pm | #
Critical Hit: Bond Crash!
Obama is an honest guy, and works by consensus. He has never said, or even hinted that nationalization is in the cards.
He is not currently considering it. If he starts, we will know.
The question is whether Obama himself is intensely and ideologically opposed to nationalization, as all his advisors are, or whether he doesn't have an opinion on it. This is an open question, and of great future import. If the latter, we may get a planned and well-executed nationalization as the need for nationalization seeps into the mind of the public. If the former, we'll only get it as a result of a major catastrophe like an international run, Treasury default, or the like.
Pity the poor interns who have to read all this stuff and "pre-screen" for their masters.
Bob Dobbs | Homepage | 02.09.09 - 5:57 pm | #
There are worse jobs for interns - ask Monica about that.
o nationaliztion
no bad banks
just stumble forward piecemeal
Should be good for 400+ on the DOW tomorrow, last hour of trading. If not, good night, switch off the lights at the NYSE after I leave the floor.
But I'm hoping that this a problem that sane men with open minds can solve, eventually. And that some of those people actually inhabit the White House.
Bob Dobbs
.
There have been great teams of people in power before, and they got crunched by history just the same, e.g. 'the best and the brightest.' I don't think any power on earth can stop this. The stimulus is like trying to sew a parachute together after you jump out of the plane.
I wish someone would pay me to read cr!
Can you imagine going thru haiku evening to summarize for the boss??
"what do I have to do if the Big O himself actually utters the word 'nationalization'... down a whole bottle of Canadian Club?
dryfly"
a 1/5th of moonshine should suffice.
Are we there yet?
Fair Economist writes:
Obama is an honest guy, and works by consensus. He has never said, or even hinted that nationalization is in the cards.
If he was honest, why would he appoint a lying treasury secretary?
Good grief.
These are all just leaks. Geithner's real plan is The Money Hole.
Speed
great.. i say The Onion Network is more credible than CNBC...
thread music??
YouTube - Traffic in the Sky - Jack Johnson
I'm surprised that this stuff is leaking out ahead of the President's news conference this evening, which is supposed to be about the "stimulus" pork bill only. People are going to get confused.
But hell, I'm confused most of the time.
"lawyerliz writes:
I wish someone would pay me to read cr!"
Just get hired by the NSA. My guess is they follow Jaswant's every move.
I just read somewhere that board and parlor games were popular during the depression. Time for some backgammon.
Fair Economist writes:
Obama is an honest guy, and works by consensus. He has never said, or even hinted that nationalization is in the cards.
He is not currently considering it. If he starts, we will know.
--
hmm. I think the opposite is more likely to be true - namely, the tighter their lips on the subject of nationalization, the more likely it is being considered quite seriously.
If there had been a leak about nationalization, the Repubs and some Dems would be coming on the Administration like a ton of bricks, and the banksters would pull out all stops. The stimulus bill would be in deep troubles, etc.
You need to pick your battles and, like investments, you need to time them. Same in warfare. Attack too soon and you are toast.
Silence on nationalization while all other alternatives are exposed to the light of day and shown to be decrepit......my reading is that nationalization is becoming more of an option, rather than less.
Of course, some might wish for the certitudiness and moral clarity of the Bush year.......
"The key is to keep the demand component of the market in operation, and avoid a demand economy a la the communist regimes of the lst century. "
I've seen how one 'communist' regime worked. Under a command economy no one was in a position to demand anything except vodka, bread and cigarettes.
As for such a regime in the 1st century, would those have been the Olmecs?
"parlor games"
I think that is what the kids used to call sex back them. Better do some ab crunches.
General Motors, Chrysler May Be Placed in Bankruptcy to Protect U.S. Loans
"If federal officials fail to get a consensual agreement to change their position regarding repayment, they have the option to force the companies into bankruptcy as a condition of more bailout aid. The government would finance the bankruptcy with a so-called âdebtor in possession" or DIP loan, a lender status that gives the U.S. priority over other creditors, said Don Workman, a partner at Baker & Hostetler LLP. âThey are negotiating to see if they can reach an agreement," said Workman, a bankruptcy lawyer based in Washington. âIf not, they are saying âWe are pretty darn sure that a bankruptcy judge will allow us'" to be first in line for repayment."
BK them...and move forward.
So what do people on this board really want to hear tomorrow?
Me:
-- No more TARP funds for insolvent institutions
-- Retain mark-to-market and force transparency
-- Insolvent banks go under. Shareholders wiped out, bondholders get haircut
-- TARP funds finance a RTC type bad-bank to absorb the assets of the failed institutions, provide DIP financing to allow the viable parts of the banks to be spun back to private investors once value is established
-- Government assisted financing for hedge funds that want to purchase assets. But hedge funds take the losses. This ensures fair market pricing of assets, without overshooting to the downside and punishing institutions due to liquidity constraints.
Even the $350B is not even close to sufficient for this plan. But it would be a start.
Appreciate feedback on this "plan" which took me 10 minutes.
Actually lawn grass, seems like there's enough dungeon masters on CR to play AD&D. Nevermind the backgammon, I've got to go dig out my elf with the great constitution.
I just read somewhere that board and parlor games were popular during the depression. Time for some backgammon.
lawn grass | 02.09.09 - 6:03 pm | #
They didn't have the internet back then, but they would sit glued to their seats waiting for their favorite radio drama to come on at night.
lawn grass
I hear the number of games of bridge played has been growing in conjunction with the decline of Wall St
I've argued earlier that nationalization of a single bank cannot work.
Here is why: the single nationalized bank would instantly become a super-bank. It would hoover up deposits from other teetering banks.
In our current climate of financial nervousness, the existence of a nationalized bank has the possibility of destabilising all other banks.
Therefore, a) the solution is to support the banking system as a whole (the current plan) or b) have a bank holiday and reboot the entire banking system (technically impossible).
"Just get hired by the NSA. My guess is they follow Jaswant's every move."
Jas would be delighted, but I doubt that anyone is tasked to do it. What for?
No, we are not there yet.
A little rule of thumb. When a client or fellow atty or whatever was about to go under, in my estimation, they would always survive another 18 months. I started to wonder about going under in Oct 2007, so that takes us to this March or end of April.
At the time I was just thinking about banking. I started wondering about the end of Everything a few months later, so maybe we have as much as another 7-8 months.
I don't count a stock mkt crash as the end of everying. So far, we have had a very slow motion crash.
Looks like th Blue Dawgs are stirrin' up trouble....
hope that link works-
Don't know if anyone read this Denninger piece
.
From WSJ
Depending on the different types of collateral, investors will get roughly $100 of lending for every $5 to $16 of cash they put up to invest... The loans the Fed makes to investors are nonrecourse, meaning investors can't lose any more than the money they put upfront on the security. If a hedge fund defaults to the Fed, its collateral is the securities themselves. There also are no margin calls, meaning the Fed can't demand additional payments of cash from borrowers if the underlying securities fall in value.
Back to Denninger
...nowhere is The Fed authorized to make loans not backed by collateral or to take ownership of assets with the exception of Treasuries and other agency securities backed by The Full Faith and Credit of The United States Government - even under exigent circumstances!
...
Without recourse if The Fed miscalculates the haircut required to be protected since losses at The Fed flow back to Treasury this is an unallocated spending of taxpayer dollars, which is explicitly unconstitutional (all spending bills must originate in The House).
So, how can any of these bank plans be pushed through without Congressional approval?
There are worse jobs for interns - ask Monica about that.
dryfly | 02.09.09 - 5:59 pm | #
That was no ordinary job ! (oh, the Tonight Show from 1998 called. They want this joke back )
"Jas would be delighted, but I doubt that anyone is tasked to do it. What for?
Pavel Chichikov"
Good point indeed.
I like Geitner's tax plan : just pay half your payroll tax.
hmm. I think the opposite is more likely to be true - namely, the tighter their lips on the subject of nationalization, the more likely it is being considered quite seriously.
Obama has never taken a major position without copious trial balloons. He's never moved in opposition to his policy team either.
Note that even in Iraq - where originally he was pushing for a fast withdrawal - nothing has happened yet. And that's in a field where he's been publicly saying for five years where we should get out as fast as possible.
There have been great teams of people in power before, and they got crunched by history just the same, e.g. 'the best and the brightest.' I don't think any power on earth can stop this. The stimulus is like trying to sew a parachute together after you jump out of the plane.
scone | 02.09.09 - 6:00 pm | #
After Kennedy was assassinated, LBJ of course inherited Kennedy's "team," the 'best and the brightest,' all those Ivy League boys. A couple of months in, LBJ was talking to Sam Rayburn, House Speaker, in awed tones about how brilliant and learned these guys were.
"Maybe," Rayburn answered. "But I'd feel better if just one of them had ever run for county sheriff." In other words, there's bright, and then there's savvy.
I don't think anything can "stop" this thing either. But it can be handled "better" or "worse;" a recovery that takes five or ten years and leaves all impoverished; or one that takes two or three years, leaves us poorer but ready and able to begin rebuilding; or something else.
And some of it's luck. And some of it's brains. But a lot of it is savvy.
Yeah, they needed the weekend to make the plan convoluted enough so that you can't explain it in less than 12 words, therefore, incomprehensible to the general public. A "bad bank that buys bad assets" was too easy.
somebody-
That's where the term "exigent circumstances" is applied beyond it's real meaning. It's loosely defined for a reason.
Ciao
MS
Howls of DL,
the administration is still searching for the magic reset button.
They haven't called me yet, but their 100 days is starting to look pretty panic stricken.
If they want to find me, I am available.
After all, they are the government.
Why not offer something simple- want to stay in your house- you now pay a 4% simple interest mortgage.
Want to walk away, fine no federal mortage money for you for five years.
This dinking around with the banks is a waste of time. It is becoming apparent that the entire rotting edifice of housing finance needs to be blown up, and replaced. Wall street will no longer be participating.
When I hear stuff like that, then we are turning the corner.
Someday this war's gonna end...
backseat writes:
Are we there yet?
NO! And if you ask again, so help my GOTT, I will pull over to the side of the road and socialize your assets!
The fed has been violating the law for a long time.... IMO that's one reason the bloomberg FOIA request is stalled
Why isn't the press asking about that? Fucking nitwits... I wish they had actually tried questioning bush at least once during the last 8 years... those clowns are largely responsible for the iraq debacle
Thank god for blogs
Holy cow,
While doing some reading-up, I came across the following (in : Pavel Chichikov | 02.08.09 - 2:07 am | #) :
"As the Holy Father wrote recently..."
What is holy in someone who un-excommunicates Holocoust-deniers ??
Pavel ??
I just read somewhere that board and parlor games were popular during the depression.
Yahoo! Maybe I'll get to play some of the ones sitting on my shelf...
Bored games?
My guess is 'yes' but not at the cabinet level.... but at the thirty something policy wonk level absolutely some of these 'memes' are sneaking into the inner circle.
dryfly | 02.09.09 - 5:55 pm | #
Have a friend in a government agency who gets paid to watch television stations all day. Agency is always watching broadcasts. Content is summarized and kicked up the ladder...
"I started wondering about the end of Everything a few months later, so maybe we have as much as another 7-8 months."
Something like a high-orbit long period comet coming at us from within a few degrees of the sun's direction?
Sadly, I think we're going to grind away resources until political forces are aligned for drastic change.
Unfortunately, getting to that point may require even larger unemployment, and further volatility in our equity and bond markets.
My friends and neighbors are concerned and somewhat angry. But this still feels like NYC and DC problem to them.
crispy, i got your back.
Monopoly was invented then, right?
this is from dailybail's site. i'll say that upfront, but he's got a picture of the Wall Street Bull statue Tea-Bagging paulson's forehead with his big brass balls.
pretty much priceless.
Bailout: $9.7 Trillion Yes I Said $9.7 Trillion. Did I already mention $9.7 Trillion? - Home - The Daily Bail
a few other gems as well...enjoy
Bob Dobbs | Homepage | 02.09.09 - 6:10 pm | #
Excellent.
"Monopoly was invented then, right?
lawyerliz"
Same with the Flying Buttress position.
Lawyerliz, that sounds to me like merely a promise. Where was the consideration?
Read Lucifer's Hammer, Pavel???
dailyflail at it agai
"What is holy in someone who un-excommunicates Holocoust-deniers ??"
Werner, this is so completely off-topic, and also off-base (if you know the expression).
Please communicate with me privately if you want my reaction. Excommunication doesn't mean what you seem to think it means.
Best diary on Daily Kos
Krugman, Stiglitz, Roubini, Taleb, Baker Agree: Nationalize
Daily Kos: Krugman, Stiglitz, Roubini, Taleb, Baker Agree: Nationalize
Unfortunately, none of these economists works for the Obama administration, which has rejected nationalization for ideological reasons:
Explicit nationalization of financial companies has little support among key Obama officials, sources said. Treasury Secretary Timothy F. Geithner and top White House economic adviser Lawrence Summers think governments make poor bank managers and cannot efficiently manage a vast number of institutions, according to some of their associates.
What's as troubling as the big rip-off of taxpayer money is that what Obama's attempting on the side of rebuilding the real economy could founder on the public backlash against what looks like a very misguided way to get a handle on the banking crisis.
Just do it Obama !
I liked pre-privatization, myself.
"Read Lucifer's Hammer, Pavel???"
Years and years ago. Got me turning the pages.
Lay it on thick:
"Government capital is a last resort, and wherever possible, we want to catalyze the private sector to take responsibility for a situation that in many ways was created in the private sector," National Economic Council Director Lawrence Summers said on CNN.
See? It's all private money. The private sector will take responsibility. See?
Bob Dobbs(Excellent) writes:
But I'm hoping that this a problem that sane men with open minds can solve, eventually.
It could be solved in an afternoon.
Just bad government.
The pope had to (somewhat) recant--denier had to deny his denial.
This is of course, not theology. And you certainly can be un-excommunicated.
To lure in private investors, the bank could be allowed to issue debt backed by the Federal Deposit Insurance Corp.
Ah, there's the FDIC. Knew it.
Max writes:
crispy, i got your back.
Max | Homepage | 02.09.09 - 6:15 pm | #
???
I am falling behind today.
GH
"government assisted financing for hedge funds..."
Right! Subsidize the hedge funds. What a concept.
"solved in an afternoon"
How about 10 minutes?
Now the fallout? Well that's going to take quite some time no matter what is done (or not).
Ciao
MS
Yeah, people make comments to my comment and then I can't remember what I said. Old age.
Read Lucifer's Hammer, Pavel???
lawyerliz | 02.09.09 - 6:17 pm | #
Uh nummies..... first some D&D... now a Niven thread? I've died and gone to heaven.....
Inferno. The Ringworld series. Ahhh.
I agree it's great that the leaks are public. There will never be restored confidence when big deals are made behind closed doors.
Some big corporations will at least be Bernankrupted soon. Avoiding bankruptcy means all that free cheese is never realized. A hero profit-maximizer plays the bust-out card every 25 years.
The Ringworld is unstable!
Pavel Chichikov writes:
...Please communicate with me privately...
No, I want this subject discussed in public !!
And it would not be the first O/T subject discussed in this blog.
So, I repeat my question :
"What is holy in someone who un-excommunicates Holocoust-deniers ??"
Somehow this is worse than a bad bank. Hard to tell how bad without the specifics, but one hint is that taxpayers will be handing out loans based on quality of "collateral". So not only are taxpayers paying 60% over market price for bad assets, we'll also be loaning out more money based on questionable assets - likely overvalued, AND we'll be backstopping it all if any of it should fail.
Superb!
I am looking forward to Obama's presser, but am concerned that the press won't ask probing, follow-up questions. I think that Obama could handle such questions -- in the sense that it would give us some insight into what we're into -- but the question is whether the press will ask those questions. So, if the press conference is a failure in any sense, I think that it will be the press' failure, not Obama's. Of course, the opening statement, which is Obabma's responsibility may -- should be expected to -- set the tone of the presser. But it's been so long since we've had an informative press conference that I don't know what to think.
Well the FDIC did just increase it's credit line with the Treasury....
No matter what they do it all flows back to the treasury. This is how they are going to get away with it and the Congress can just say "well WE didn't authorize this".....
I wondered why Morgan, and Goldman just (last week) puked out debt that was not backed by the FDIC..when prior issues have been.
Remember SUPER DUPER Bonds???
Big Gay Al gonna run it for them...
Ciao
MS
Government Insurance = Tax Payer Bailout ... Hedge Fund largesse and further economic crash ...
But the banks must be saved ... NOT!
Nationalize ...
Inferno. The Ringworld series. Ahhh.
lawyerliz | 02.09.09 - 6:25 pm | #
The newer book in Known Space are "ok", but the older ones are classic.
Has anyone leaked that the time of the announcement has changed? It's changed a coupla times already, right?
test
rally, rally, rally
crap, now i have to cut my gains short & run, run, run
p.s. I am glad this idea didn't materialize, though.
run, run, run, run around the hill ...wait wait wait
hm duh go rare metals of platinum group!!!
go baby go!!!
They need to put the final touches on it so that it can all start off by dropping a marble at the end of a lever.
The Free Marketeers drive me crazy because they just really have NO CONCEPT of what it takes to make something complicated work.
Only a free market and free choice can respond to a massively complex system. It is beyong the ability of central planners to devise a "solution". Please see "The Uses of Knowledge in Society" by Hayek for further thinking on the issue.
@Gavshire Hathaway | 02.09.09 - 6:05 pm
Appreciate feedback on this "plan" which took me 10 minutes.
Gav,
IMO, all of your points require some sort of valuation of assets that currently defy valuation.
Here's what I mean: Imagine some sort of cheesy sci-fi movie where we could shoot the banks with a time-suspending ray gun and the banking system would stay frozen in time while the rest of the economy recovered. We would work out our unemployment issues and the fact that people have stopped buying so much stuff (out of work, loss of "wealth effect," etc.) and all of the other economic issues that aren't immediately tied to our banking troubles. At the end of this period, we unfreeze the banks and discover that their capital is worth 10% or 20% less than what they had on their books. Shareholders, bondholders, and perhaps taxpayers all cooperate to eat the loss and life goes on.
We don't have a time-suspension ray gun, of course, so in addition to unemployment and loss of consumer activity, we are also experiencing a failure spiral wherein banks' asset values suffer, which drags down the economy, which causes further write-downs at the banks , which slows the economy even more...
I do not know how to establish a static value for bank assets during a dynamic failure spiral.
All I can come up with is freezing the banks (nationalization, Buiter's good/new bank proposal, etc.) and then Treasury would have to run a quasi-bank to perform the frozen banks' clearing, settlement, and lending functions while the economy recovers. This would cost $5 to $10 trillion up front, though much of that could be recouped when the economy recovers and the banking system is unfrozen.
Whatever the plan, it's goal is to prevent the CDS market from cascading.
Yeah, we responded all right. . . We responded by competing by racing to the bottom in mtg finance, and seeing who could spend the most money on worthless trifles.
Which would be fine if only the banksters, fraudsters and foolish paid for their mistakes, but it doesn't work that way.
Oh, well we could be peasants with lords fox hunting or warring over our not yet harvested fields.
They've been working on rebranding the idea from Bad Bank and Bailout to something happier too. Watch for that. Geithner's going to kick it off tomorrow - any ideas?
Federal Insured Nation Entity (FINE)
I can't think of one thing they can announce* that will cause the market to tank. When it does it simply won't be because of anything that comes out of any perceived plan.
Ciao
MS
Ya can't fix what ya can't even agree is broke!
CR- "The leaked details might keep changing, but I guess the time is set for the announcement."
/SNARK ON
Why do I have the feeling that, like it was during my time in the army, they are "pulling this out of their asses?"
/SNARK OFF
Excellent speed.
I hereby insure everything is this best of all possible worlds is absolutely fine.
I don't have the ability to do that. But then neither does the govt.
Where can I find a schedule of upcoming bond auctions and their size? Treasury direct has the auction dates and types, but does not list the size of the auctions.
What they need is a Bazooka see, an economic bazooka, not to use it, just to let everyone know they got it, see. That's what they need to announce tomorrow.
No, I'm being silly, nobody would talk like that in high office, besides that would just be "more of the same" and Obama is about "change" as you all know. Still though, a bazooka type metaphor seems needed tomorrow as a reminder of how far we've come and all the changes and sacrifices we've made to get there since Bush and Paulson were swept from office and the Great Reformation of our economy and society was begun by Abraham Obama. Now let's have one hell of a friggin speech tomorrow Timmy, Hoorah.
haloscan tanking agin.
"No, I want this subject discussed in public !! "
No, I will not take up bandwidth discussing something so complex - I would have to explain the sacramental theology of the Church, which I am not even qualified to do - and do it in a venue completely irrelevant to it. I would also have to know about the inner administrative workings of the curia, both in theory and in current practice, and the history of SSPX and its relations with the Vatican over time.
You have read the Pope's denunciations of the opinions of the SSPX bishop and his reaffirmation of Vatican II re the Jewish people and the Shoah.
If that is not enough, please write me privately and I'll try to find someone who can answer your questions expertly and thoroughly.
This is how Obama should handle negotiations with the banks.
Schedule a 6 am meeting. They complain, promise them breakfast.
When they get there there is only bagels and cream cheese, with coffee.
When the first opposition member reaches for the cream cheese, slap it out of the hand and throw the cream cheese in the trash.
When they go to have coffee, they'll spit it out surprised at its lukewarm temperature.
When the first one bites into a bagel, they'll chip a tooth on the month old stale piece of dough.
When they ask you what you plan on having for breakfast because the cream cheese is in the trash, the bagels are rock hard, and the coffee is cold: "I'm looking at my breakfast, let's get to work. No one leaves the room without the FDIC shutting their bank down, no less than 4 DOJ lawsuits being placed against their business and their person, and the IRS seizing all assets all within 10 minutes of you walking out the door."
kinda found it. Treasury Direct doesn't list the sizes next to the upcoming announcements, you have to go into the PDFs of all the auctions... what a pain.
Broward Horne: The Free Marketeers drive me crazy because they just really have NO CONCEPT of what it takes to make something complicated work.
Exactly. Especially when the already over-complicated, out-of-date, poorly regulated, skewed to the needs of Wall Street 'system' (subway train) must be kept running while new track is layed with wider rails and 20-30% of the country wants you to fail and is working toward that objective.
Fair Economist writes:
Obama has never taken a major position without copious trial balloons. He's never moved in opposition to his policy team either.
Note that even in Iraq - where originally he was pushing for a fast withdrawal - nothing has happened yet. And that's in a field where he's been publicly saying for five years where we should get out as fast as possible.
--
Now that just is not true.
Obama never said we should get out of Iraq as fast as possible. He set a 16-18 month withdrawal plan, and said repeatedly that the US should be as careful getting out of Iraq as we were careless getting in.
He talked down Petreus and still kept him as his head general in Central Asia.
Now if you want to talk about atroubling inconsistency, we can do so. See the DOJ's adherence to Bush Admn invocations of state secrets in regard to lawusits brought for torture.
We will see how that plays out. It could be serious reneging on pledges. It could be delaying for time to review and process information at DOJ, where the new Atty Gen just got confirmed. We will see, and I will hold Obama's feet to the fire on that.
"It's like trying to figure out fourier the day before the big test
Have a Great Depression! | 02.09.09 - 5:27 pm | #
(Non-nerds should skip to the next comment.)
The problem is we need a LaPlace Transform - this is new territory, not a repeating function."
I vote for a Laplace transform calculation which minimizes damage.
I think we can add wall street bonuses to the growing list of government entitlement spending. And we never cut entitlements, they are a one way street. This is the biggest swindle in history.
I can't stand Geithner either. His schtick tomorrow is going is really going to set me off. GRRRRRR!
I'm apologizing here and now (in advance) because tomorrow I'll be in total rant mode.
I can't see 'No Drama Obama' going for something like nationalization, at this time. It's too big and scary, and they don't think they can get buy-in. I'm thinking the package will look like a patchwork of stuff designed to appeal to particular Congresspeople. It won't be terribly coherent, but it has to get political support from the major stakeholders, somehow.
OTOH, it may be that some of the administration don't think the package will work, but feel they must do some sort of handwaving to calm the waters. If that's true, the plan will be utterly incoherent, because it's only purpose is to 'be there.' Or, as my father used to say, 'do something, even if it's wrong.' So, either a mishmash of semi-ok stuff, or a total dog's breakfast.
Angry Saver,
Me too. I'll probably be at my desk saying nothing and fuming on the inside.
lawyerliz/krista
Sacramento Real Estate Statistics: Your Bailout Money At Work: $1 Billion Fraud In Sacramento
Obama never said we should get out of Iraq as fast as possible...."
What's "Iraq"?
Could we even fund bringing them home right now? I'm not kidding.
Timmy G is in way over his head
interesting, it's like two versions of halo are running simultaneoulsy for the same thread.
or, is it I who had a bit too much of red bull this wonderful afternoon?
Nobody knows what will work, or if something works, what exactly it was. That's our condition, no?
gav-
Simply put the system wants to nationalize "hold and hope"...delaying any (and all) price discovery.
That's why I said it would take 10 minutes to solve it but quite a different time period to recover.
The system's problem is that it has all it's capital in basically one place...depreciating assets. If they had another vehicle to achieve yield then this wouldn't be such a huge problem. They don't...so it is. Inflating assets is the only thing they are going to do (being successful at it is another entirely different argument) to "try" and get out of this. Look at the Fed..they are enacting many polices that cause deflation and inflation at the same time. It's as if they are just spinning a roulette wheel daily.
If you bet red and black at the same time you eventually run out of money.
Ciao
MS
They're doing everything possible to create a public outcry for bank nationalization - "Nationalize Now" picketers in Washington. Then they'll give it to us. And won't we be happy.
Could we even fund bringing them home right now? I'm not kidding.
I'm just saying Napolean left his troops behind in desert and went home alone mostly for budgetary reasons (okay and a sunk fleet but still).
I'm going to start a little experiment.
I'll do a little compare and contrast between two sets of comments. I'll put a calendar reminder to revisit the comments in about a month to see who wrote something intelligent, accurate, thoughtful or . . . not.
Here goes.
Set #1
"They're scurrying around like cockroaches when the lights are turned on."
-Comrade Terry | 02.09.09 - 5:23 pm
"Holy shit. More evidence they truly have no clue what to do."
- That's Ballgame Comrades | 02.09.09 - 5:27 pm
"Whatever their new plan is, I want nothing of it, considering that it was probably scribbled on a cocktail napkin at the bar 5 minutes ago after they decided that the bad bank idea might actually be political suicide."
- Bond Girl | Homepage | 02.09.09 - 5:32 pm
Set # 2
Three of the major reporting sources have been CNBC, Bloomberg, and WSJ. And the fourth has been the Yellowcake and Aluminum Tubes NYT. Set BS detector on extra-high when no sources are named.
Now scream and scream because there is no plan and Obama=Epic Fail and all that stuff . . . but remember that no 3 page plan was delivered as an overnight ultimatum (see Paulson and Bush) and also that the longer delay allows more devastating information to come out and circulate about the banksters.
The longer the delay, the more possible and likely nationalization becomes. The more and more that all alternatives are examined and discarded, the more isolated nationalization becomes as the best and only workable solution.
Now rant and rave, and remember that we are all=Epic Fail because none of us fixed this, either.
- joe shmoe | 02.09.09 - 5:33 pm
Thank God, an actual adult in the room. There is no advance plan for something like this: there is a goal, and there should be a set of criteria for success. If they don't have that, they're effed. The plan is what you make as you discover what works and what doesn't. And as you, through experience, leave behind the that preconceptions you didn't know you had.
As far as I'm concerned, this administration is right on schedule; ahead of schedule, actually.
- Bob Dobbs | Homepage | 02.09.09 - 5:41 pm
Well, at least there's 2hr15min to place your bets!
Casino opens before the dealer turns his cards over. Any cards up his sleeve ?
They're kind of deciding these things last minute it seems. In other words, they still don't have a solid sense of direction.
There were too many powerful rich people thrusting risks onto the American people that were neither necessary nor beneficial in order to take advantage of them. The whole regime needs to be shaken out of the trees. But it is like a saavy monkey that can hang on with its tail when its claws are pried loose.
Just nationalize the bastards already.
"Insolvent banks go under. Shareholders wiped out, bondholders get haircut"
Devil's Advocate (I actually like the plan), but wouldn't that give us another "Lehman" situation (except much worse)?
Again, not that the issue won't come up eventually, but perhaps that's one of the reasons that the PTB are balking at that course of action (again, the "too big to bail" issue?)
We can't nationalize people. Our banks are too big to save. Putting out little fires and hoping the wind stops whipping is our only hope. Get real. Don't you think they would have ended this madness if they could?
somebody-
it's really meaningless because they don't break down the portion of it that is snapped up with the indirect bid. Unless they changed it from the last time I looked at it.....
Ciao
MS
It's too big and scary, and they don't think they can get buy-in. I'm thinking the package will look like a patchwork of stuff designed to appeal to particular Congresspeople. It won't be terribly coherent, but it has to get political support from the major stakeholders, somehow.
scone | 02.09.09 - 6:43 pm | #
If they're not asking for more TARP money, they don't have to suck any Congressional dick.
I really don't expect anything. When I conceived the size of the thing, back in fall, 07, I concluded within 10 minutes that there wasn't enough money in the world to solve it.
Make it the approximate size of the thing. You can't conceive of the size of the thing without having read a little Astronomy. Hence the Larry Niven comment is not entirely OT.
And I think the pope only yelled at the bad bishop after public opinion and some very important people pointed out loudly how idiotic this was. Both in and out of the Vatican.
When I'm not fuming at him, I'm feeling sorry for him 'cause he's a clueless old man. And then I'm evilly happy, 'cause he's making the Church go down faster.
Me too. I'll probably be at my desk saying nothing and fuming on the inside.
I'm angry just thinking about how angry I'm going to be tomorrow.
Seriously. I can't afford any more free lunches.
'cause I got plenty of doubts no matter what is suggested and I'm not smarter or more observant than they are.
dryfly | 02.09.09 - 5:45 pm | #
That's the essence. Whenever I see the word stupid bandied regarding the key policy makers, I can happily ignore the poster from that point on because he/she is a simpleton.
The complexity here is not only that the objectives of the project are not clearly defined but that it is just about impossible to come up with non contradictory objectives that satisfy 60% of the Senate.
To then define requirements in a field of contradictory and even rapidly shifting objectives because of political trade winds is a magnitude more complex. Anybody who has implemented complex systems knows how high the failure rate of such a project will be and this is before any solution is even proposed.
There really is only one way to approach such a task and it is along the lines of the software implementation methodology prototyping/evolutionary design which by definition assumes multiple failures along its implementation path.
Any implementation based on political objectives cannot be efficient nor effective simply because the opposition, in order to get elected, has to torpedo the perception of success. Democracy as a system has a high failure rate built in which means it can only meander to its eventual destination. It uses its failures to build consensus.
"Why do I have the feeling that, like it was during my time in the army, they are "pulling this out of their asses?""
Because...they are.
I must be in the crash mindset today
craigslist | Page Not Found
Grabbing five of these containers for composting and food storage.
Somebody stop me.
Devil's Advocate (I actually like the plan), but wouldn't that give us another "Lehman" situation (except much worse)?
What was so bad about the Lehman situation? Commodity bust, declining cost of living, decreased leverage, recognition of our ponzi eCONomy, etc.
Painful for some, but necessary medicine imo.
20 min ago:
"By a razor-thin margin, the Senate advanced the $838 billion economic stimulus bill, clearing the way for a final vote on Tuesday."
NYSE rally, rallym rally !!!
I expect not much tomorrow, and I think delay is better than either bad plan or blowing all of one's political capital on a suicide mission.
The right kind of delay would be the best step tomorrow, and by that I mean a dragging out of the issue that enables more bad news about the banks and banksters to come to light, and to circulate under conditions of public opinion that will make a big majority of the country furious at the banks....
Then and only then can the right kinds of solutions be implemented.
Inferno Engulfs
Beijing Tower "A massive fire apparently destroyed a tower in the soon-to-be completed headquarters complex of China's national TV broadcaster."
Seems the Chinese have figured out the solution to CRE oversupply...
If they're not asking for more TARP money, they don't have to suck any Congressional dick.
Eric
.
That's not the way the game is played. Every thing they do is a complex calculation of favors and paypacks. Getting a Congressperson's vote always involves giving something in return. Just getting them to a meeting is a victory with costs and ritual obligations. The same type of horsetrading goes on inside the Cabinet. That's politics.
It is and will be simply another method to remove money from taxpayers and place it in the pockets of the wealthiest, who will then continue to outsource, offshore, and live overseas when the mess they made turns sour.
There is more brewing than just economic disaster.
"Whenever I see the word stupid bandied regarding the key policy makers, I can happily ignore the poster from that point on because he/she is a simpleton."
Expressing outrage by labeling someone stupid (and there are many candidates) gets a label of simpleton???
There are stupid actions and stupid things said. I hope you really realize the difference.....or you won't be reading too much here.
Ciao
MS
Kung Fu Panda
I posted a link to that in an overnight thread. Definite reason for suspicion of arson
if you saw pictures/video, wow what an arson job. Certainly didn't leave it to chance
Hoopajoops --- Glad to see you back here. I just remember Daily Fail getting under your skin and then -- poof -- you were gone.
Any idea if those containers are safe for storing food?
MS - 10 year note auction Wed, long bond Thurs.
I don't think Mr Bondy will waity tho. We may get early movement around Geithner's statement tomorrow.
C
That's not the way the game is played.
scone | 02.09.09 - 6:55 pm | #
But but but but but... we were promised Change...... Yes We Can!!!!
"There have been great teams of people in power before, and they got crunched by history just the same, e.g. 'the best and the brightest.' I don't think any power on earth can stop this. The stimulus is like trying to sew a parachute together after you jump out of the plane."
I'll see your Robert McNamara and raise you a George C. Marshall/Dwight Eisenhower.
Fascists - bad, tough problem. And yet, holy shit, we didn't get crunched by history.
Not saying we'll find people the stature of those two this time, but Jesus Christ, enough with the drama queen hissy fits.
Have any of you people ever been in a tough spot and made it through? Or are you all pissing your pants and rocking?
Is it going to be bad? Yeah probably. But how bad? Civil War bad? WWII bad? Lost my job but there's a social safety net this time bad? U6 is up, but hey, traffic sure is light bad?
Suck it up, ninnies.
Well, its finally happened... they are literally giving boats away for free: craigslist | Page Not Found
I saw on Bloomberg that the ECB is recommending that member states adopt that bad-bank plan, just as Washington is dropping it.
I like how the life ring is not included......
Ciao
MS
When Obama said he would promote change, people didn't realize he meant pocket change.
Hoops is back. Everybody's back except CSC. Where arrrrre you???
i still think we will be all right, several years down the road from now.
however, the question of the day is at what future cost will we be all right?
sick
Pavel, I thank you for your answer, although I do not really understand it .
What has the unholiness of un-excommunicating Holocoust-deniers to do with sacramental theology ?
And, there are plenty of shocked people who, without any knowledge about the inner administrative workings of the curia, both in theory and in current practice, can clearly see the unholiness of this action .
Pavel, you know that in Germany, Holocoust-denial is illegal !!
It almost looks like the "Bundesrepublik Deutschand" is holier than the Catholic Church ? At least they are doing something against Holocoust-deniers instead of associating with them .
So, do not hide behind the curia and theology etc. in trying to explain :
"What is holy in someone who un-excommunicates Holocoust-deniers ??"
And why does the Catholic Church associate with Holocoust-deniers while Germany made Holocoust-denying illegal?
RE,
What people are labeling stupid is the attempt to keep bailing out failing institutions.
We must face up to the fact that banks and Wall Street have failed to adequately allocate capital to productive uses, and instead have turned into ponzi style machines using regulatory loopholes to fleece the public. The sooner we smash the paradigm, the faster we begin to make progress to a new solution that works in getting money to folks to buy houses, and a new finance structure to keep people from walking away when their economic incentive is currently screaming at them to take a hike.
Now,
A new nationalization of Fannie and Freddie to finance owner occupied housing. Financed by selling government guaranteed bonds.
4% financing as a result of this to all who qualify (Gee, like the old fashioned financial inquisition financing), with higher rates corresponding to lower down payments.
(Gee- 20% down 4%, 15% down 4.5%, 10% down, 5%- with a special 5% down with 5% FHA style guarantee) Lie on you application, and you lose the house and your down payment if you were an investor hiding in the owner system.
And lose your tax deduction- now does anyone really want to cheat in that system?
4% refis to everyone underwater- with a special unemployment provision to allow an underwater borrower who loses employment to walk away.
The 4% refi would cram down the current 1st and 2nd to the current value of the property in proportion plus 10%. They eat their losses.
No more YSP- no more hidden kickbacks, investors must have 10% down cash, and the free market can operate in the investment category.
Now, is that concrete enough?
Simple really.
Someday this war's gonna end...
Any idea if those containers are safe for storing food?
No idea... I'm going to ask the guy what he put in them. If it's something noxious, I'll use them as compost rotators. If it's something reasonable, I'll use 'em for dried beans, barley, and oats. Throw in a little silica, dry ice, and a few dollar bills for a laugh and I'm set.
Washington isn't dropping the Bad Bank plan. They're camouflaging it in their HAPY plan.
Ask him about Pius XII, Werner. And the NAZIs.
counter-
Crispy mentioned last week about those coming...pretty huge in size..no?
I think we get a major sell-off tomorrow and where oh where do you suppose those recently minted profits could be directed at?
Ciao
MS
Werner,
welcome to CR companion.
where is Chuck Norris when our Senators need him? He would simply kick the bail out in submission, or even better cut it in a half.
Is the nationalization talk tied to TARP pt2 $350bn?
I don't see the Treasury increasing planned Treasury issues in advance. If/when they go over the limit it will be through re-timing stimpack spending, new short notice treasury sales, and unsanitized money creation if necessary.
So as far as the current plan is concerned, it would have to at least appear to fit within the $350bn.
I figure they will do as much heavy lifting out of the limelight as possible [Fed's $2tn balance sheet of undisclosed quality and $500bn of MBS purchases, lowering reserve requirements of banks and insurers (or accounting changes to that effect), etc]
"We must face up to the fact that banks and Wall Street have failed to adequately allocate capital to productive uses, ..."
Outrageous! Simply outrageous. That anyone or any organization should presume that it has the right or responsibility to "allocate capital" is, well, outrageous!
Not bad, Allen, not bad.
and what does "And why does the Catholic Church associate with Holocoust-deniers while Germany made Holocoust-denying" or any other similar issues have to do with this topic?
???
crispy&cole | Homepage | 02.09.09 - 6:22 pm | #
check your email
Comrade de Chaos(Unrated) writes:
\twhere is Chuck Norris when our Senators need him? He would simply kick the bail out in submission, or even better cut it in a half.
Comrade de Chaos | 02.09.09 - 7:05 pm | #
You can find him here, but I don't think you're going to like it
LOL
I can tell you right now this plan will not work!
Just like Japan 15 years ago, banks will not sell their bad assets at the prices buyers will offer. Private equity will offer at 20% of the banks current book value. The bank lending system will remain frozen until the government bites the bullet and nationalizes the bad banks.
No mustard seed here!!
Suck it up, ninnies.
5 Foot 3 Pablo Picasso
.
The quality of trolling has really declined on this blog recently. At one time, the trolling was insightful, witty, and deserving of hard-hitting counter-troll flame wars. Now, it's not even argument, just contradiction.
This would have been an awesome headline back in 1913.
"Last November he made the following observation of massive new government investment in the banking sector: These (injections of capital to the banking and financial system) should be good investments, since so much of the crisis is psychological, and values will rebound when confidence is restored. (How Obama Can Fix the Economy, November 12th, 2008, Wall Street Journal). I hope the paper didnt make your doorstep that day."
Groucho’s Investment Club: Membership Has Rewards « Your Mortgage or Your Life…
The stimpack is not so much about the economy, as it is feed for congress -- the house that local politics built. Keeps them looking busy.
The choice on what manner and terms to recapitalize the big banks is for the White House.
Going to go watch tv.
Nitey nite, folks.
The sun will come up tomorrow, but will it the following day?
I think we get a major sell-off tomorrow and where oh where do you suppose those recently minted profits could be directed at?
First guess: commodities?
Second guess: equities?
Third guess: mattresses?
is 2012 still onboard for end-times?
Kudlow is saying that there will be a bad bank.
Who the hell knows what is going on with this plan!
Did anybody else notice that the "bad bank" rumor/trial balloon was officially renounced only after the Senate barely passed its version of the stimulus bill?
I suspect the administration needed to "keep hope alive" for all those bank lobbyists until it was too late for them to stop the bill...
Maybe the president's team more shrewd than some here give them credit for.
There are stupid actions and stupid things said. I hope you really realize the difference.....or you won't be reading too much here.
MS | 02.09.09 - 6:56 pm | #
Unless one fully and in depth understands the complexity of a situation, it is impossible to develop an understanding of a problem. It might look really simple from 10,000 feet but once inspected with a microscope it reveals a completely different structure.
It is people who quickly jump to judgment that generally don't want to understand nor involve themselves in the grueling details that reveal the real complexity of a situation. It is mostly these folks that jump to conclusions, i.e. call people stupid. I think they deserve to be called simpletons.
Somebody with a proper appreciation for complexity will choose a term like disagree and then lay out reasons.
It's Schrödinger's bad bank!
Now, it's not even argument, just contradiction.
no it isn't
no it isn't
Nemo | Homepage | 02.09.09 - 7:17 pm | #
yes it is-
David in NY writes:
I liked pre-privatization, myself.
David so true.
I don't understand why the administration is not playing the meritocracy angle here.
Talking about nationalization is a terrible concept given what it means to most people.
Now, it's not even argument, just contradiction.
no it isn't
Nemo
Nemo writes:
Now, it's not even argument, just contradiction.
no it isn't
Yes it is, yes it is, yes it is, look there, you just contradicted me!!!
All fired up! Ready to go!
"There really is only one way to approach such a task and it is along the lines of the software implementation methodology prototyping/evolutionary design"
And that, then is the problem. On the one hand we are too prototype and try different methods until we find one that "works", and on the other hand we have calls to "do something and do it NOW", else we are going to face (yet again) financial Armageddon.
It's hard to prototype when the software is required for air traffic control today.
In other words, evolutionary design is all fine and dandy when you actually have time to do it. If you NEED to prototype and follow evolutionary design, but don't have the time to do it, well, you are kind of screwed.
And that's where we are at.
So when they tell us that "we need to do this", or that "this will fix this part of the problem", forgive us for calling their BS.
Comrade de Chaos writes:
...and what does "And why does the Catholic Church associate with Holocoust-deniers while Germany made Holocoust-denying" or any other similar issues have to do with this topic?...
Nothing, but it would just be one of manny manny manny O/T discussions here.
So, don't hide behind O/T or bandwith, etc.
It is an extremely important issue, and trying to look the other way will not (!) make it go away.
P.S. How manny accusations about the Holocoust and the Nazies did I (as a German) get to hear on this blog.
All O/T of course, but I never claimed O/T !
RE-
This is not very complex.......arriving at a sane solution that is. There have been many put forth here over the last several years. It's getting to the point of fatigue......just caution painting people with the same brush that's all.
But I understand it depends on one's perspective.
Ciao
MS
Inferno. The Ringworld series. Ahhh.
lawyerliz | 02.09.09 - 6:25 pm | #
Gil Hamilton. I can see the nanny state nerfing humanity, leaving us vulnerable to the first crackpot despot to put 2 and 2 together. Also I can see the whole body bank thing happen when the boomers get old and use thier political numbers to postpone mortality, any way possible.
Nationalization can only happen as the result of a process or a catastrophe, or most likely a combination of the two.
joe shmoe | 02.09.09 - 5:52 pm | #
joe, your posts are getting better and better as the days go by.
I can't figure out if it's because you're brilliant or just because I agree with everything you say.
)
Nationalization can only happen as the result of a process or a catastrophe, or most likely a combination of the two.
A catastrophic process.
About sums it up.
Actually I think the Schrödinger analogy makes sense. The assets have some fuzzy value as long as the investors don't look at them. As soon as an investor observes them, their value collapses.
If we can just maintain sufficient uncertainty until... until... OK not sure how to finish this part.
"There really is only one way to approach such a task and it is along the lines of the software implementation methodology prototyping/evolutionary design"
Another software development methodology would define requirements, then design, then implement. And then, yes, test.
"Comrade de Chaos writes:
...and what does "And why does the Catholic Church associate with Holocoust-deniers while Germany made Holocoust-denying" or any other similar issues have to do with this topic?...
Nothing, but it would just be one of manny manny manny O/T discussions here.
So, don't hide behind O/T or bandwith, etc. "
Werner, we definitely have many OT discussions on this blog. Some of them continue, some of them don't.
Normally though, when someone has been asked 5 times on the same thread to drop a topic, it gets dropped.
I wish you would pick up the hint.
If we can just maintain sufficient uncertainty until... until... OK not sure how to finish this part.
Nemo | Homepage | 02.09.09 - 7:23 pm | #
That pretty much describes Geithner's actions so far.
Oh yeah, let's borrow ideas from the software engineers.
TARP II = Windows Vista