Geithner: My Plan for Bad Bank Assets
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CalculatedRisk on Sun, 03/22/2009 - 9:14pm (168 comments)
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A "Public-Private" plan! I don't see how anything could possibly go wrong.
It's a looting-extortion plan. The banks can lend, but they won't until we take out their trash.
Yes. Let's not repeat the Japanese experience.
It's unclear if he is intentionally aiming for worse or if he qualifies for the mental special olympics (no offense meant).
More debt = FAIL.
These funds will be open to investors of all types, such as pension funds, so that a broad range of Americans can participate.
Somehow the editorial would've seemed a tad bit difference if he wrote "private equity and hedge funds," who according to Romer are "good guys."
And how do a "broad range" of Americans participate in this?
This man has lost my trust.
I find it hard to justify the time it takes to give careful consideration to his hair-brained plans. Does anybody hold these "experts" accountable for their past actions and opinions? What credibility does this man have left?
On top of it all, I have become quite cynical about whether the American public has any say in these matters, given the response by Congress to our overwhelming opposition to the original bailout plan.
In short, I don't trust them, and I don't think they care anyways.
My solution -- withhold my tax money to whatever extent possible.
"[T]he financial system as a whole is still working against recovery"
and someone at the Treasury has been working overtime...
Why does he assume we can recover from the greatest financial catastrophe in histry.
Oh goody can I have that toxic asset in the window.
So the private sector is willing to share the risk and take the losses with the taxpayer.
I guess I need more details.
By the way, anyone see Spitzer on Fareed's show today? Talking sense, shame he can't serve as head of the SEC or something.
Video - Breaking News Videos from CNN.com
Of course, futures are up big for tomorrow. I say we rally for a few days and maybe into month-end/quarter clsoe. Mutual funds gotta put lipstick in their q-end statements.
I said atleast 6 months ago that pension funds would end up bailing out the banks. Since pension funds are already insolvent this is simply doubling down and praying.
Maybe the 8:45 announcement is a smoke screen to cover up waht happened on BFF. GGP, the 57b Of assets seized from credit unions and such,
The ability to sell assets to this fund will make it easier for banks to raise private capital, which will accelerate their ability to replace the capital investments provided by the Treasury.
Yeah right Tim "private" capital will replace the Trillion dollars you will put in...
Stealing public money like this is criminal. It's not gonna help nothing.
C'mon, libs; where is your outrage at this? This is the right-hand man of your President.
Disgusting.
If Tim Giethner married the guy who played Perry Mason on TV (i.e. Raymond Burr).
He'd be called most properly "Tim Burr"!!
Gov. officials keep saying that banks want to lend and this will help the economy but because of bad assets banks can not lend so Gov. has to clean up bank's balance sheet.
Consumer has lost significant net-worth (in real estatd and stock market), Has it ever crossed Gov. that people may not want, may not be able to take new debt.
People don't want to borrow anymore period.
of course not.
I said atleast 6 months ago that pension funds would end up bailing out the banks.
Bailing out the banks to bail out the pension funds, who are now bailing out the banks. And with the "managers" taking their pound of flesh on every turn.
The worst risk that the market currently faces is Washington's inept interference. Can we please get someone down there who cares more about the nation than themselves?
Well I would call myself Liberal but I'm disgusted by this plan. So is my wife. And I'm not picking up too much support at work here in SF for what's going on.
same here out east of ya...we voted for this guy and he is failing us in the biggest way possible. You'd think he'd know better, but somehow, one of the most if not THE most important decision he'll likely have as President and he is FAILing big time. I mean, what is it about fox guarding the henhouse that he doesnt get? Did they buy him? I mean, he's not a maroon but a child could figure out that this isnt the solution.
"My Plan For Bad Bank Assets, Or: Pay No Attention To That Bankster Behind The Curtain!"
"Over time, by providing a market for these assets that does not now exist, this program will help improve asset values..."
But does he really know what the quality of these assets is? Doesn't seem like it, but I bet there are many who would be buying these right now but for the fact that they DO have any idea of what the quality is. This goes back to the liquidity v. solvency argument, I guess I was wrong when I thought solvency had won with knock-downs in rounds 1,2, and 3. I mean, are buying all these stakes in BAC, Citi, and AIG because there is a liquidity problem? Someone correct me if I'm wrong, lease.
The Latest from Mish:
Geithner's Plan, a Gigantic Confidence Game
Confidence is a subjective mindset. Can we really improve the economy by playing more psychological mind games?
Well, one positive of a meltdown is there won't be any market for celeb sighting news anymore. We'll all long for the days of Brittney's snatch or her girl kiss at an awards show. Prozac for everybody!!!
I remember when I was a young consumer, I weighed my decision to borrow very carefully. Now I'm an older consumer and I still do.
JG writes:
"C'mon, libs; where is your outrage at this? This is the right-hand man of your President.
Disgusting."
As long as it comes from the glorious leader, it's Disgusting We Can Believe In!
"People don't want to borrow anymore period."
High quality borrowers don't want to borrow anymore. Low quality borrower will borrow whatever you throw at them. That is the travesty of this plan.
Translation of this BS:
"The US taxpayer will be left holding the bag after paying an incredible amount of money for total and utter worthless crap. But the banks will make out like theives and that is afterall who I work for."
Does Congress need to vote on this plan?
I think the plan has a chance of "working" because pension plans are allowed in. Pension funds appear to be run by the special olympics of investing professionals. If you read the history of the aftermath of the S&L crisis this is looking like history all over again.
I missed the part where civilization collapses if we don't agree.
It's not proper extortion unless there's a threat.
NervousRex: That makes me think of Bond and Blofeld. At least Paulson looked like Blofeld.
Blofeld/Paulson "Extortion is my business. Go away and think it over, gentlemen. I'm busy."
Poic
Maybe Obamas Special Olympics joke was a clever jab at the Pension managers...
C'mon, libs; where is your outrage at this? This is the right-hand man of your President.
Disgusting.
Disgusting? Yes. Outrageous? No. Really, I can't imagine why anyone thought that change means that we avoid all the stupidity of the current situation. You notice anyone out there with political sense putting forth 'solutions'? As cynical as it sounds, I voted with the idea that the economic situation was FUBAR, and at least I'd get a different President to stop all the whining about American racism. (Well, I don't expect the whining to stop, but at least there's a counter-argument.)
Thanks for sharing your view about racism, which had nothing to do with this thread.
It's like we woke up one day in the United States of Goldman Sachs. At least it's contained.
I'm a lib and I'm mad. I'm not going to turn around and vote for a bunch of fascists though.
Anonymous says:
Today, 10:01:16 PM
“I'm a lib and I'm mad. I'm not going to turn around and vote for a bunch of fascists though.
It's looking more and more like you already have.
Because I should have voted for John McCain? Yes that's what this country needs... the same people who in 8 years doubled the size of gov't, doubled the debt, destroyed the stock market, and lost two wars. Yes... REPBULICANS ARE THE SOLUTION.
How quickly you, alambka, the shallow partisan you are, forget who made this mess.
comrade poor savings account says:
Today, 2:03:15 AM
“Because I should have voted for John McCain? Yes that's what this country needs... the same people who in 8 years doubled the size of gov't, doubled the debt, destroyed the stock market, and lost two wars. Yes... REPBULICANS ARE THE SOLUTION.
How quickly you, alambka, the shallow partisan you are, forget who made this mess.
I actually voted for Bob Bar since my candidate had been marginalized by the Republican machine. Maybe you should have supported Kucinich, I would of voted for him. As for the shallow partisan ? You should look in the mirror.
The Toxic Outlet Imaginative Legal Explanation Tender (TOILET) is about to go into effect.
I stopped drinking when these plans didn't make sense after imbibing a quart of everclear infused with valerian root.
Bush told me to be in fear of losing my life, now with BO I'm in REAL fear of losing my country.
Anonymous writes:
"Well, one positive of a meltdown is there won't be any market for celeb sighting news anymore. We'll all long for the days of Brittney's snatch or her girl kiss at an awards show."
Wrong!
Britt's air-conditioned photo ops brought us all together as Americans and united us under one common (though admittedly oyster-colored) flag.
Had we not learned this important Togetherness Lesson, I doubt Obama'd be prez. Ho We Can Believe In ---> Hope We Can Believe In. These developments often come in stages.
More smoke and mirrors.
The Latest from Yves:
Guest Post: Why Does Failure Merit Reward?
ponziMCC says:Today, 9:18:01 PM PDT (CA)
can we debate this:
does it start at the top or the bottom ;demand , that is
I would argue that demand is bidirectional, and more dependent on network proximity than anything else.
That's my answer and if people don't like it then I probably don't like the questions they choose.
I think I hate Timmay.
"My Plan for Bad Bank Assets" = "Don't blame Obama if this plan falls on its ass."
I'd believe this was a con game if the man had more confidence. He doesn't even believe it will work enough to call it "our plan."
"If Tim Giethner married the guy who played Perry Mason on TV (i.e. Raymond Burr).
He'd be called most properly "Tim Burr"!!"
I find this offensive becasue you are making stereotypical assumptions about who would be on top!
I am extremely skeptical about this plan, but look on the bright side - maybe the private partners won't be interested in buying any of this dreck, and then Geithner will have to get some better stress tests and start pre-privatizing.
I found it encouraging that Obama said he would not accept Geithner's resignation. If this plan doesn't work, they can give Geithner a new office at Guantanamo. If the next plan doesn't work, they can start waterboarding him until he comes up with a plan that will work.
--"If Tim Giethner married the guy who played Perry Mason on TV (i.e. Raymond Burr).
He'd be called most properly "Tim Burr"!!"
I find this offensive becasue you are making stereotypical assumptions about who would be on top! --
No assumption made, just the facts. Mason never lost a case and Geithner never won one. Plus if they used Geithner's surname their credit rating would be destroyed.
Come now, no one said late stage capitalism would be fun. Have a chuckle at the absurdity of it all, and put your imagination to use on what the survivors will do on the other side of the wall we are about to crash into.
After viewing Obamas cabinet selections, what did you expect? Reform is not a option at this point.
A superstition based economic system will eventually catch up with reality.
Bush told me to be in fear of losing my life, now with BO I'm in REAL fear of losing my country.
If it's any comfort to you,...that country you fear losing was never real anyway. It was all a figment of your imagination and dreams.
What angers me the most is the ignorance that this portrays regarding the simple fact that jobs in the US are the most important fact, and secondarily employees with those jobs having the ability to buy debt regardless if they are in houses or stocks.
I have yet to see out of the Obama administration a serious Jobs program that can put us back on the road to productivity.
People with jobs have hope, and those with hope buy houses. Once they buy houses they invest in the long term prosperity of our nation.
Geithner writes and speaks through gauze-covered jello. All those phrases with no discernable content, intended to make people feel warm. Just trust him. And please don't ask to verify or show how the money is spent or to whom.
I have yet to see out of the Obama administration a serious Jobs program that can put us back on the road to productivity.
That was the objective of the ARRP. Whether or not it's successful is another matter.
Comrade-Dope jg (jg) says:Today, 9:32:49 PM“C'mon, libs; where is your outrage at this? This is the right-hand man of your President.
If no one has mentioned this, there is considerable outrage, some apology, and definitely misdirected anger over at dailykos.com
Me, I'm with Krugman ... this is sickening.... this is the Paulson plan, which assumes it's just a confidence problem. Sickening.
I don't see anything that has changed since the baptism of the PPIF
Government brings money
Government takes on risk within a sliding scale according to the private party's wishes
Private party determines pricing despite providing a fraction of the money and — this is the real problem here — an even smaller fraction of the risk.
If the treasury had the balls to set the prices on their own, it would be undoubtedly a better program from a practical perspective. However the government and treasury have objectives beyond restoring the fiscal health of the domestic banking sector (which they assume will revert the economy to the good old days of recent memory, despite that being dead wrong)
Simply put they want to bail out the banks with government cash, but to do so hiding behind the trouser legs of free markets and private capital taking the risk.
It may be hard to accept, but that is what Gordon Brown did right. He separated the issue of banks needing money, and the value of existing assets on their balance sheet. Whether or not the UK can afford it is immaterial. If they deny funding up front, or run out of money later, it's all the same in the end — the deciding factor is not one they can control at this point. I think he accepts that his entire career is beyond his control now, he just has to wait for the economic stats to print
A. E. Housman
LXII
`Terence, this is stupid stuff:
You eat your victuals fast enough;
There's nothing much amiss, 'tis clear,
To see the rate you drink your beer.
But oh, good Lord, the verse you make,
It gives a chap the belly-ache.
The cow, the old cow, she is dead;
It sleeps well, the horned head:
We poor lads, 'tis our turn now
To hear such tunes as killed the cow.
Pretty friendship 'tis to rhyme
Your friends to death before their time
Moping melancholy mad:
Come, pipe a tune to dance to, lad.'
Why, if 'tis dancing you would be,
There's brisker pipes than poetry.
Say, for what were hop-yards meant,
Or why was Burton built on Trent?
Oh many a peer of England brews
Livelier liquor than the Muse,
And malt does more than Milton can
To justify God's ways to man.
Ale, man, ale's the stuff to drink
For fellows whom it hurts to think:
Look into the pewter pot
To see the world as the world's not.
And faith, 'tis pleasant till 'tis past:
The mischief is that 'twill not last.
Oh I have been to Ludlow fair
And left my necktie God knows where,
And carried half way home, or near,
Pints and quarts of Ludlow beer:
Then the world seemed none so bad,
And I myself a sterling lad;
And down in lovely muck I've lain,
Happy till I woke again.
Then I saw the morning sky:
Heigho, the tale was all a lie;
The world, it was the old world yet,
I was I, my things were wet,
And nothing now remained to do
But begin the game anew.
Therefore, since the world has still
Much good, but much less good than ill,
And while the sun and moon endure
Luck's a chance, but trouble's sure,
I'd face it as a wise man would,
And train for ill and not for good.
'Tis true, the stuff I bring for sale
Is not so brisk a brew as ale:
Out of a stem that scored the hand
I wrung it in a weary land.
But take it: if the smack is sour
The better for the embittered hour;
It will do good to heart and head
When your soul is in my soul's stead;
And I will friend you, if I may,
In the dark and cloudy day.
There was a king reigned in the East:
There, when kings will sit to feast,
They get their fill before they think
With poisoned meat and poisoned drink.
He gathered all that sprang to birth
From the many-venomed earth;
First a little, thence to more,
He sampled all her killing store;
And easy, smiling, seasoned sound,
Sate the king when healths went round.
They put arsenic in his meat
And stared aghast to watch him eat;
They poured strychnine in his cup
And shook to see him drink it up:
They shook, they stared as white's their shirt:
Them it was their poison hurt.
-- I tell the tale that I heard told.
Mithridates, he died old.
This plan is about as liberal as the Ronald Reagan Library. In fact, I can't really see any significant difference between this and the Paulson plan (okay, private industry is being asked to put up a whopping 3% of the money here).
Shoot me now.
But buy gold first.
News from the peakinese front -
Aabar, a Abu Dhabi stock exchange listed investment company, is buying roughly 9% of Mercedes, according to radio reports. The stocks will be newly issued (dilution seems assured), and the capital is supposed to be used to finance research and production of electric vehicles.
Take your pick -
A. Peak oil is a silly theory, and Arabs whose major source of wealth is oil, are getting involved to actually block competition for their abundant oil supplies. Or at least ensuring that the high end market remains firmly in the hands of people who love burning fossil fuels - a group that tends to be dominated by the people that control those fossil fuels.
B. The Arabs, after magically doubling their oil reserves in the mid-1980s, have finally been confronted with the unavoidable truth that infinite oil on a finite piece of land is about as reality based as creationism or intelligent design, have decided it is time to make sure they can keep getting a cut of the exurban lifestyle, or at least ensure that the very wealth off can continue to enjoy spending time in boxes without having to walk among their lessers.
This requires those in the private sector to remember that government assistance is a privilege, not a right. - Timmay
This is the creepiest thing I've heard since Al Haig reassuring us he was in charge.
Geithner : Ack Acka Ack Ack! Ack!
Quick get the Slim Whitman, hurry up!!!
Is business better for the solvent banks in the last year? What is their reward for the failures of their competitors?
That's the bitch of it. The biggest failures are guaranteed redemption while everyone else is on their own.
"Legacy" is the most nauseous word to come out of this crisis.
Like they're any less of an entity because you now regret them.
r_t_o,
C. The Arabs are hedging their highly exposed position.
D. Peak oil is a silly theory and the Arabs are wisely transitioning before the charade is exposed.
Oh, and you forgot the "O.T." disclaimer for trying to start a pissing contest. Move on.
I look at this very naively. The PTB club has this huge vacuum cleaner, and is siphoning off money wherever they find it. Private household assets sucked up through heloc, now pension fund, and in between they had emptied out the accounts of the old and poor in Europe. They look where money is, and then device a vacuum / siphon accordingly. Easy.
Geithner/Summers need to go. Otherwise Obama is going to have a hard time getting re-elected. At this point, i've had with both parties. They seem to be equally in thrall to wall street.
Nothing is going to change until a million citizens gather around capitol hill and demand it.
My Plan for Bad Bank Assets
No sorry ,too Mein can't Kampf, sorry no.
Charlie Gasparino is going to have a field day tomorrow
Obama, when asked in his 60 Minutes interview why he was laughing when talking about the financial crisis, wrote it off as "gallows humor". The man is becoming more politically tone-deaf than Beethoven.
Maybe he's letting slip news about imminent nationalizations.
Hussman is getting more and more disgusted about the government actions. He had recently turned bullish about long-term returns for US equities. However, he views the latest government actions as bad news for stocks, medium to long term...
His weekly missive, which is at its normal level of excellence, IMHO:
Hussman Funds - Weekly Market Comment: Fed and Treasury - Putting off Hard Choices with Easy Money (and Probable Chaos) - March 23, 2009
Why would a liberal take comfort in this plan? I bet right-wing goons at CNBC like Larry Kudlow love it.
Just about every liberal economist out there has called for nationalization. Most of us liberals worried that Geithner was another Paulsonite - the ghost of Ronald Reagan and his Democratic enabler Robert Rubin. Larry Summers speaking like C3PO with Lyle Lovett's hair.
No, we liberals wanted a liberal in the Treasury seat - a Stiglitz or a Krugman. Hell, even a Volcker would be great. But Obama doesn't want to be accused of "socialism" so he sells out to the CNBC crowd and picks a Wall Street fave.
I'd love to be proven wrong and have this plan magically work. As a liberal, I'm more interested in the rest of the Obama agenda re: health care, energy and education being passed than selling out to Wall Street. If the economy miraculously turns around Obama will have less debt to deal with and more public support for the rest of his agenda. For that reason, I hope this works.
But I doubt it will. And in a year we'll be replacing Geithner with Stiglitz or Krugman and we'll finally get around to the more radical solutions necessary.
US stock index futures are up about 1.5 to 2%, according to Bloomberg.
Wahoo!!
Let's see what the financials do tomorrow... Interesting day. Will investors forget about the recent bank failures, Friday's corporate credit union events, FDIC warnings about its need for additional money??? I'm sure GuyNerd's plan will make them forget all that.
geithner should go on letterman...that would instill confidence...
OMFG. Ya have a brief nap and all manner sh!tpile breaks loose. This is an appalling hybrid solution. The basic Occam's Razor test FAILS here. In almost 20 years of public policymaking I don't think I've seen a worse instrument to a policy challenge.
The simplest solution is the right way. If it's that comprehensively fked and should be saved, just nationalize the liability and move to repair and sell-off. None of this hybrid nonsense. PPPs are great theory but sh!t record.
C
[poic.v20 writes:
Well I would call myself Liberal but I'm disgusted by this plan.]
Liberal != Democrat
Conservative != Republican
Democrats = Republicans = idiot Kleptocrats that don't realize the Banksters are leading them down a dead end road. They just differ on a few quaint policies to divide the votes.
Didn't we all agreed on this years ago?
I've always imagined most people on CR as fiscal conservatives with very liberal views on individual rights.
Republicans and Democrats seem to be fiscal retards with very restricted views on individual rights.
I've always imagined most people on CR as fiscal conservatives with very liberal views on individual rights.
That's an excellent description of me.
Thanks.
double inverse recession - I think you're bang on to rights with the fiscal conservative comment. There's another way of looking at some of us:
YouTube - IGGY POP and the STOOGES "search and destroy"
C
You can't spend what you ain't got.
You can't lose what you never had...
YouTube - Muddy Waters - You Can't Loose What Your Never Had
C
The funds... will use government resources in the form of capital from the Treasury...
Geithner left out this sentence: "Naturally, the House of Representatives will originate a bill to authorize this spending of taxpayer monies, and the bill will be passed by both houses and signed by the President."
An oversight, natch.
If I got a dollar for every piece of bullshit I ran into I would be trillionaire.
“"The Fly says:If I got a dollar for every piece of bullshit I ran into I would be trillionaire."
A trillion that's like $50 in real money ? Sorry, I mean 50 EUROs
ya...print me up some capital please
Barack Obama: "I am not removing Timothy Geithner from the post of Treasury Secretary , now or in the future."
George McGovern: "I support my running mate Thomas Eagleton 110%."
Gadzooks, what political blunders!
Obama will lose the last of his media credibility when he has to eat his words and cut Geithner loose. That will be in less than two months, I expect.
The Latest from Yves:
Fed Rescue Programs: No Exit?
Unfortunately, Volcker is being marginalized because of Larry Summers. And Larry likes Timmay, they are old chums. And Larry has Obama's ear.
I hope the bad bank CEO gets a big bonus
Hmmm, bottom line Treasury is buying foreclosures.
I hate the soundbit nature of this system -
Expect to see a lot more of such transactions in the future - but don't expect them to appear in the America media with much insight to what is going on.
This is the government of Abu Dhabi looking for a way to profitably launder dollars for euros, since the American designed laundry is seemingly full of suds floating in front of the machines. And this is also a way to do it without actually roiling any markets, thus diminishing the dollar value of other emirate holdings.
This is not dryfly's screaming run for the exits, this is the departure of some extremely tastefully dressed money simply leaving before the unruly crush. Or crash, as the case may be.
Anon, that being the case why shouldn't most folks (ie, inestors) follow the Abu Dhabi example rather than investing one cent in the Geithner "Toxic" scheme?
"Market prices for many assets held by financial institutions -- so-called legacy assets -- are either uncertain or depressed"
Is this referring to houses? How can house prices be depressed when relative to median income they simply do not make sense? What else do legacy assets include?
Here's the key part
"Just this month, we saw a 30% increase in refinancing of mortgages, which means millions of Americans are taking advantage of the lower rates. This is good for homeowners, and it's good for the economy. "
Really. And what if residential RE tanks another 30%, Timmy? Sorry, WHEN it tanks... will those Refis be "good for the economy" then?
Every day, the image of Gitmo being repurposed for bankers seems less like a funny, ironic image and more like a necessary step to restoring real confidence in the system. In fact, it seems politically inevitable.
Some clown from Templeton was quoted in Bloomberg as saying that now is the buying opportunity of a lifetime. Fair enough... he was the ultimate vulture and it is their job to say things like that (or more correctly, to do it themselves). Some mildly interesting background...
"Interesting connection here... John Templeton passed away last year. He was the ultimate vulture investor. His foundation operates an Africa-oriented NGO with the Koch family's Mercatus Center at George Mason Univ. in Arlington, VA. Conveniently enough, Mr. Deregulation, Phil Gramm? His wife is the Chairman of Mercatus (reportedly one of the best funded conservative thinktanks). Coming full circle, the people that formed the group at Morgan Stanley that invented cds were from Oxford/Cambridge/LSE. Phil Gramm went into business with the founder of that Morgan Stanley group (called the "Morgan Mafia"). Templeton, or more properly Sir John, endowed a whole school at Oxford and maintained close connections with the university. Joseph Cassano, the leader of the FP unit at AIG who left with a few hundred million dollars? Now hiding out in London. There is a very strong British angle that no one is talking about." --UBMW
Many roads leadng back to Eng-a-londe. And to organized crime? They called the MS group "The Morgan Mafia." The first cds product that group rolled out was called "BISTRO." In England bistros are known as places where mobsters hang out.
Uncle Billy,
Very OT, but I used to camp with the boy scouts, where George mason is located in Fairfax county.
Ponzi would be so proud of this latest idea. So would Madoff. When the train stops the banks are rid of their trash, Geithner is left with the bag. Nice.
The Latest from Yves:
Links 3/23/09
Hazard - who says that 'sideline money' will be investing in any toxic waste? After all, much of the world's savings glut was already poured into various American securitized toxic waste. This doesn't mean that investors won't be found - a Russian mafia oligarch might find a hundred million laundered dollars to be a fine insurance policy when his family decides to take a longer term vacation in some warmer clime, for example. Not to mention various central banks, playing at something a bit different than simple economics (something too often forgotten here - DC is interested in power, money is only a secondary concern, a mirror reflection of Wall Street).
A couple of points - it is often very hard to translate not merely the words, but also the ideas of a different language/culture/society - but trying to grasp the idea of 'Konkursverschleppung' would be also in gaining another perspective in looking at much of corporate America over the last decade.
The second point is - a couple of billion dollars/euros, in real money for a stake in real factories producing real vehicles, also provides a measure of how much real money is available to finance trilions of imaginary debt. Can anyone imagine how casually trillions is thrown around these days, as if that is a valid unit of measure, instead of just another measure of hallucinated wealth?
There are billions of dollars available world wide, quite likely tens, possibly hundreds of billions of dollars currently available to 'invest' - but what makes anyone think that there are actually trillions of dollars available which actually exist?
Mark to market is so casually thrown around here - at some point, what it really means will begin to sink in.
If we let the maggots steal more then everything will be okay.
From Yves at Naked Capitalism
Fed Rescue Programs: No Exit?
.............a.good one day rally material......thanx Tim.......
Anon, you are right. Absolutely. I see the banks playing with each other to flush out their toxic waste. And thats about the extent of this latest drivel.
I'd also suspect the other gov'ts are becomming more and more angry at the US for its failures to take appropriate steps toward cleaning this mess up. One straw on top of another. Eventually the limit will be reached.
Oil Sheiks park their money in a lot of different places.
As well, the UAE is big into 'green' PR. That may be all that this is about.
"eithner should go on letterman...that would instill confidence..."
Oprah.
As for Volcker being marginalized, he never had power to start, merely a figurehead to buy some credibility.
" Yes that's what this country needs... the same people who in 8 years doubled the size of gov't, doubled the debt, destroyed the stock market"
Looks like the country got what it needed!
Obama is manufactured.
It's amazing you guys still haven't figured it out.
Some facts about what 2 billion dollars/euros buy these days in real terms.
It buys 10% of the following -
Automotive World - Germany: Daimler reports 2008 global truck and bus sales (Plus this - 'Daimler Buses is also the world market leader when it comes to buses with hybrid drive, and around 1,700 Orion hybrid buses are currently on the road in North America.')
This is in addition to the car division(s - Smart is still 'independent'), by the way.
Mark to market is not, in the end, a financial concept, it is based on a market and on what you sell in it.
Selling debt is likely to be a losing business for a while.
Especially when viewed in light of another viewpoint -
Daimler currently builds something like 5% of the world's trucks (a defensible statistic, though the total of heavy duty is undoubtedly higher), and 15% of the world's larger busses.
Which means that 2 billion dollars/euros buys you, in part, .5% of the world's current truck production, and 1.5% of larger bus production, involving a company with a long track record with extremely conservative corporate accounting, a high reputation for quality and reliability, with facilities spread across the globe.
For fun, we will call those production figures worth 1 billion dollars/euros, making a simplistically clean split between the car and other vehicle divisions.
Which then leads to this interesting, if only illlustrative, bit of math - 100% of the world's total truck production (absurdly) 300% of larger bus manufacturing is worth something on the very approximate order of 200 billion dollars, at current market rates.
How much debt is the U.S. planning to sell in the near future? Enough to buy four or five planets worth of truck manufacturing? 12 to 15 planets worth of bus manufacturing?
Right.
Mark to market is not only about imaginary numbers attached to delusionary visions of value. Which makes a lot of the plans coming from any official U.S. government office the moral equivalent of something other than a war on a part of speech. These pronouncements are simply America's take on Soviet or Oceania five year plans.
Credit, Credit, CREDIT...credIT
You know, what are people and business supposed to do with all this credit??? We don't have enough strip malls? Need some more Big Box stores? Regualr malls. Running low on Starbucks? Housing shortage...Heh.
Funny how no one "talks of the shame that dare not speak its name" ...not enough income!!! But raising people's incomes is pretty difficult. Lets just sell more bonds...people were stupid enough to buy them the first time...surly they will be stupid enough to buy then again???
Good to see the CBOT's site no longer reports the last front-month Dow futures trade as +279,000 points. Hope that was a mechanical error and not fat finger!
The Latest from Ritholz:
US Futures Higher
Anonymous says:
Today, 4:06:11 AM
There are billions of dollars available world wide, quite likely tens, possibly hundreds of billions of dollars currently available to 'invest' - but what makes anyone think that there are actually trillions of dollars available which actually exist?
Wishful thinking brought on by necessity. "It's fucked, stick a fork in it, everyone start battling desperately for survival... NOW." Not really the kind of press release I'm expecting to see any time soon.
Are you asking me, do I think that money is really out there? Get serious, not a chance. Which brings up the point, that this is kind of the wrong audience to use as a target for blanket criticism of American fiscal ignorance. Most of us already agree with you.
Mark to market is so casually thrown around here - at some point, what it really means will begin to sink in.
What, there are more debts than there is money to clear them? Possibly by an order of magnitude or two? You aren't the only person here who grasps this.
Of course Turbo Timmay writes well. But will this series of words pushed together (even on paper they rattle a bit like an old man coming down with something awful) do anything other than continue the biggest heist in history...
geithner is proving to be a genius. seemingly he knows the banks are good at what they do, its just that these toxic assets need to be writ down for business to continue as normal. this is necessary for our country to prevail. wall street must prevail as it always has.
and ppl like krugman and stiglitz are just jealous because obama didn't choose them as advisors... its like they are big babies.
do not doubt the facts, we've reached bottom. we should be celebrating this masterful plan. and for the wise private investor, these assets are literally water into gold. time to buy.
evidence of this success? futures are up massive.
Anonymous rent_to_own,
would you kindly pick a handle?
The next step in the hopeless qwest to stop the red ink bleeding out of the banks and financials--try again to fool the public by flooding the economy with money backed by nothing. This has been the theme all along, their only "solution" to cleaning up this mess. Nothing left to do I guess, this is all we have left.
blah writes: "do not doubt the facts, we've reached bottom. we should be celebrating this masterful plan. and for the wise private investor, these assets are literally water into gold. time to buy.
evidence of this success? futures are up massive."
I'm picking up on your sarcasm.
Mr. Giethner will be gone within 6 mo. He will not get a medal. He will go back to making lots and lots of money. If anything, it will make him more valuable to certain entities.
It is going to be ok. Inventory levels are dropping. This will set us up for the magic trampoline rebound. The results will not be played on Americas Funniest Videos
..........news released during Asian markets in action.......especially Honnkong-H index rallied more than +6%............
OT - I'm sure this has probably been discussed, if so, will somebody point me in the direction of that post/thread? Thanks.
ICE Trust website shows their first CDS clearings dated 3-13-09 here: https://www.theice.com/marketdata/reportcenter/reports.htm?reportId=98
Did ICE Trust clear $7B in CDS's in their first clearing? I thought it was supposed to be a big deal when they got this up and running but I haven't seen anything on it. Sorry if I missed it. : (
And the markit link for current CDS settlements is here: Products and Services Overview
From the markit link, if you click the red announcement link, it brings you here: Products and Services Overview
Did Goldman Sachs get rid of $10M in CDS exposure in the last week? All of this is completely beyond my abilities to understand, so I am hoping one (or more) of you smart folks can look this over and and give a brief explanation of what this means that a born and bred dope can understand. Thanks again.
-AnonyMiss
Did anyone ever have any doubt that the U.S. taxpayer would be the final bagholder?
Too bad there isn't a viable alternative party out there. We're a nation of born and bred dopes.
ING asking 200 execs to return 2008 bonuses, SocGen taking back stock options. Wow.
ING Seeks Return of Bonuses to Stem Taxpayer Anger (Update5) - Bloomberg.com
-AnonyMiss
Oops, make that ING asking 200 execs and their 1,000 team members to return 2008 bonuses.
-AM
The Latest from Ritholz:
Public-Private Investment Program
Who knew that knock-you-down-and-rape-you theft could be presented in such a way that sounds so reasonable and boring.
Is this the change that we can believe in?
I would comment on this plan if I understood it. What is going to happen? Who is going to buy what? How much are they going to pay?
Most excellent.
This is the third step in the the three-step heist.
Since there are still some "funds" that are solvent (some pension plans, for example), we'll have to make sure that we can skim off their money as well.
After all wealth has been mopped up from all outlying sources, the operation can be shut down and called a success (depending on your position, of course).
Comrade Dope (jg) wrote:
C'mon, libs; where is your outrage at this? This is the right-hand man of your President.
As a "lib" I have to agree, and I am outraged...Geithner and, by extension Obama are, on this issue, turning out to be Paulson-II and Bush-III. I had high hopes that they would not be a replay of Clinton/Rubin but in trying to avoid the hard choices and finessing this issue, Obama is pissing away his opportunity to make significant changes anywhere.
Disgusting.
Both parties claim to be the party of the little man...everybody wants to wear that populist mantle...but the GOP has always pretty clearly been the party of the rich and Corporate America, so you knew the rhetoric always rang a little hollow. This plan is egregiously disgusting as the Democrats go well out of their way to pretend to be the party of the middle class and everyman.
I'm starting to wonder if Axelrod and Obama really are afraid of the 'socialist' label...why they don't just nationalize and be done with it (ala Krugman) is puzzling. They have to know this plan is going to offend so many people and be such a bailout of the rich by the poor and middle class (yet again) that any future prospects for their more ambitious policy goals will be dead letters. Obama needs to grow some balls and demonstrate some leadership. If he really needs political cover for "nationalization" he need reach no further than Reagan and Bush-I and the S&L crisis.
Disgusted indeed. Pathetic.
I would comment on this plan if I understood it. What is going to happen? Who is going to buy what? How much are they going to pay?
Just remember they are using the value of dollar from existing savers, pensioners, your cd's, and your labor to fund it.
"Timmy's got a plan,
Timmy's got a plan,
His dog days just began
Now everybody is on the run."
Dumb question: if Timmay & co are lending or "investing" up to 97 percent of the nut on these deals, and the hedgies are putting in the other three percent, why do we need the hedgies?
And then, if this plan is designed to "get the banks lending again," but it's done at the cost of a no-interest, 97 percent loan from the fed, then why do we even need the banks? Why not just have the gummit lend directly to real borrowers?
Here's an comment from Dean Baker's latest column:
"Suppose Timothy Geithner announced a new program that would tax every family $10,000 dollars and give the money to Wall Street banks and hedge funds. (Any resemblance between this hypothetical program and real world programs is purely coincidental.)"
Geithner: How many toxic assets were mortgage loans and subsequent refinances originally given to illegal aliens who walked? Is the US taxpayer eating the loss for this egregious and racist lending policy?
The Latest from Denninger:
Geithner: Banking Stooge
milton friedmaniac says:
Today, 7:54:36 AM
Dumb question: if Timmay & co are lending or "investing" up to 97 percent of the nut on these deals, and the hedgies are putting in the other three percent, why do we need the hedgies?
Figleaf! Otherwise it's not a private partnership, and it's just giving money away to private individuals as long as they're organized and wealthy enough to masquerade as institutions for the handout. Once you get a few private dollars in there, it's not so apparent that you're just looting the state, and the government can start saying it's not giving a handout, just a hand.
A journey of a thousand miles starts with but a single step, so you take the first step and Uncle Sam will give you a piggyback ride the rest of the way.
What an evil decoy the word "socialism" has become. The same way the klepto class used "libertarianism" to steal everything not nailed down, they use the threat of "socialism" avoid opening up their books to public scrutiny (despite public tax dollars propping them up). And they use it to avoide the crucial breakup of banks and wipeout of shareholders. This is, of course, so they can pry up everything nailed down and steal it. Why wipe out just shareholders when you can bleed the whole nation dry?
Be very careful of anyone bearing isms these days.
"A journey of a thousand miles starts with but a single step, so you take the first step and Uncle Sam will give you a piggyback ride the rest of the way."
Byz: +1
Yep, nice line Byz.
This scheme is so manifestly ridiculous as to make commenting futile. But at least the scale of the stupidity is known to most of this board.
Far out.
C
Considering what the Wall St. goons did in Russia back in the day they called themselves "communists", and again in 1991, when they called themselves "capitalists", Americans should consider themselves lucky so far.
Too bad the American host is too weakened to fight the parasite.
Geithner: This is what happens when you don't learn your lesson about the sustainability of trade deficits:
PIER ONE INC Share Price Chart | PIR - Yahoo! Finance
You brilliant Stanford MBAs better get your heads out of your asses and start considering what's good for the US economy in your business decisions.
aig up 21 pct premarket, citi up 24, gs up 6 -fire burn and cauldron bubble
Let the looting begin!
Too bad all Geithner just wants to enrich his buddies. I have been tinkering with an equity-based plan (you can't solve an excessive debt problem with more debt), but since no one gets to loot the Treasury under my proposal, surely it would fall on deaf ears.
Must be good and fine to be a friend of Tim...
by friday avo I thought I'd made a huge mistake buying UYG on friday morning - but then.. the visible hand of the non-market steps into the picture, to shake things up again, add volatility across the board.
It is just impossible to make long term decisions about anything right now.
Somebody somewhere believes this will do something
good--enuf peoples to push up futures a lot?
Or is this computers at work.
The symbolic value of money is gone.
"Many banks, still burdened by bad lending decisions, are holding back on providing credit."
Cnage to:
Many banks, still burdened by the idiots who made bad lending decisions, are insolvent.
Both are true.
New Thread: Details on Public Private Partnership Investment Program
http://www.calculatedriskblog.com/2009/03/details-on-public-private-partnership.html ( 0 comments ...You could be FIRST! )
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"Many banks, still burdened by bad lending decisions, are holding back on providing credit. "
Why on earth do all these plans assume banks need to lend more when everyone is already over leveraged?????
Man I hate typos.
All Geithner wants to do...
Geithner just wants to...
Either way: I say there's a statistically significant correlation between possessing Geithner's cell phone number and making huge taxpayer-sponsored profits over the next three quarters.
It is Obama's decision... and apparently he has decided to govern in opposition to the people who elected him, rather than for them.
The tide against him is turning and, barring any major change by him, will soon become vocal and public. Too bad, but that's his choice, it seems.
Lawyerliz,
Have you noticed and mispricing of residental real estate in Florida (like the examples CR posted over the weekend?_
I've voted third party for a long time and everyone tells me I'm throwing away my vote, but it's times like these where I don't care if it was a wasted vote.
Can anyone tell me what gives the FDIC the power to participate in this program? This doesn't seem to jive with their current role. Thanks
Tsk, tsk! Looks like somebody forgot to clear his cookies before doing a couple of drive-bys. Whatever happened to that vaunted German efficiency? Just a gentle ribbing, I enjoy reading most of your posts. : )
Werner says:Today, 7:10:23 AM“@ rent_to_own :
Excellent posts ! Thanks !
Calculated Risk
Anonymous says:Yesterday, 7:26:19 PM“"Toxic briefing" for the intoxicated credit junkies .
ROTFL.
Calculated Risk
Anonymous says:Yesterday, 7:20:04 PM“scone says:
The anonymous drive-by trolls are jealous! Score one for me.
Jealous ? Jealous ?
Ha, why should I be jealous ?
Calculated Risk
Anonymous says:Yesterday, 5:31:20 PM“scone says:
“Several trillion good reasons to get out of this country...
Hope you go to Afghanistan or Iraq !
Calculated Risk
Anonymous says:Yesterday, 4:56:09 PM“"Open the spigots, open the spigots, more credit, more credit." Yeahhaha. More credit is what America needs !
(Idiots!)
http://www.calculatedriskblog.com/
Actually, refinancing activity would speed resolution of many problems related to MBSes. The AAA rated tranches will be liquidated first as mortgages are paid off (through the refinancing process, the bundled mortgage gets paid off). The banks are probably not holding the lower rated "mezzanine" and "equity" tranches. Lower rates and availability of credit for the purpose of refinancing is indeed a solution to that problem.
Am I supposed to understand this goblygook? Can it be explained to normal folks in ten sentences or less? :-E
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