It's not news to me. I thought this was the plan all along. Banks would buy each others assets and instead of taking a 50% loss on their portfolio, they would take a 7% loss on their purchases.
The tax payers would take a huge loss, but i'm not sure what that really means anymore. It's not like anyone's taxes are actually going to increase because of this. In the end, i think what will end up happening is the Federal Reserve will have a bunch of toxic assets.
So basically the banks can use this program to gain a bunch of free government money and have the same assets on the books if they agree to buy each others crap.
Gosh, what about some money to finance the sale of REOs?
Other than fha. Require if an asset is held so long, that it must be sold at market (mark to market!!!), and financed by the institution that owns the asset. Something has to be done to prevent lots of good housing being ruined.
“It is between a bank and their supervisor whether they are healthy enough to acquire assets,” raising the possibility regulators may prevent weak banks from becoming buyers'
MTM revisions will make the banks appear healthy. Obama/Geitner are crooks and criminals. I voted for Obama. At least Bush just forced crap down our throats. Obama's admin. insults the intelligence of us all by lying to us and believing we're too dumb to see it as a lie. Right wing government control is in our near (2010-2012) future.
This program can only succeed if the banks holding the assets get to participate. Taking the assets off the balance sheets at their present, perceived (and likely real) market value leaves the banks with huge losses to declare, or you take the assets off the balance sheet at an inflated price and fix the balance sheets by doing so. No party will participate that doesn't receive a huge subsidy to do so, and the only subsidy in this plan large enough to entice anyone to do so is the chance to put the assets to the government at an inflated price- a subsidy that is only open to sellers of these assets.
This is just a report, and it would appear to be inappropriate for any bank receiving TARP funds to buy "legacy assets" using the PPIP. My suggestion is to explicitly ban this activity to help build confidence in the PPIP.
That would be like banning a plane from flying
or banning a gun from shooting
If you ban somthing from doing what it is designed to do, it is rather pointless
I suppose you could use the gun as a hammer.
Ban the buying of "legacy assets"? Why, do you want them to setup a shell company and do the buying by proxy insted?
Lets face it... they will game the system, it's only a matter of how we are screwed, not if we are screwed. The rules of the game are designed for that outcome.
Isn't the whole point of this thing to launder the assets using taxpayer money?
If bank A swaps assets with bank B, in both cases using non-recourse govt loans to actually finance the deal, then for a 3% haircut they get to transform their toxic crap into CASH MONEY.
Yeah, I emailed my Senator Bennet ((D) CO) telling me of the self-dealing possibilities and to do everything he can to prevent it and to tell the Treasury that a lot of people are watching out for all the self-dealing/gaming variants and that there will be a hell of a fuss if it happens.
Who knows - it might do so some good - After all, CNBC actually talked of the U6 as the real rate of unemployment and even graphed it !
I think this is awesome. Isn't the whole point to get the velocity of money back up where it needs to be? I suggest setting up another program so the banks selling toxic assets can buy the assets back again a few weeks later, indefinitely, ad infinitum.
Oh, there will be a commission on each sale, right? Got to have some productive aspect to all this buying and selling.
Gosh, what about some money to finance the sale of REOs?
Lawerliz, that is an excellent suggestion. I don't think a lot of people realize that there is real value being lost to the economy during the time between foreclosure and REO disposition (actually, in most cases between delinquency and REO disposition, if it comes to that).
What at one point was useable housing stock quickly loses value, sometimes to a point less than worthless, as money must be spent to remove it from the land (usually it doesn't get that bad, but as you know, the value decline is almost always 20% as a start).
Instead of speeding up this process, government at all levels has thrown all kinds of roadblocks in the way: foreclosure moratoriums, judicial foreclosure laws, accounting practices that discourage disposition, etc. Meanwhile owners give up and move out, nature and vandalism take over, and the a real economic resource is wasted.
While this theoretical possibility raises the blood pressure (because it was not anticipated and explicitly forbidden), the mark-to-figment accounting change is far more maddening, since it makes the balance sheet a relic of that old-guard of financial accounting.
But isn't gaming these assets back to fictional values the point of all the FASB accounting manipulations and the government insuring these assets? I mean, the only reason not to have them sell the assets to themselves (also under consideration!) is sideskirting public opinion.
Why the outrage, this is just the next evolution of Calvinball?
Everyone wanted this rather than insolvency. Nobody wanted to contemplate the consequences of insolvency. Well here are the consequences of Calvinball. Contemplate those instead.
I think mark to fantasy will have all sorts of bad unintended consequences, such as the market discounting the assets even more than they actually deserve.
[The government plan does not allow banks to buy their own assets]
Now that's difficult to game. Just buy each others asset. Or are banker just ethically bound to do the right thing in the eyes of the naive treasury and administration.
The banks will work against the interests of the country until it's bankrupt. JUST CLOSE THE FUCKERS DOWN NOW!
The Judge on Fox News this morning stated those nine banks called in by Paulson in September were told inorder for the public not to know who was in trouble each would take TARP Funds, now FDIC demanding for 2% ownership they get a seat at the board table with decisions on management. Toxic assets was not brought up this morning, but if FDIC is demanding a seat at the table, one would surmise, toxic assets would be on that table as well.
OT: I am not overly obsessed with the equity markets (having liquidated all my positions on the day after Election Day, soon to be officially renamed as Day One), but does anyone think the markets are pricing in a downward spiral that leads to the collapse of civilization? And if so, at what probability?
does anyone think the markets are pricing in a downward spiral that leads to the collapse of civilization? And if so, at what probability?
It's impossible to "price in" an event that would leave the assets being bought and sold, and the medium of exchange, entirely worthless. It's a singularity. Zero divided by zero.
Lots of lesser events are being priced in, at low probabilities, but the end of civilization is not.
I watched Obama's speech in Strasbourg... at one point- - maybe during the Q&A he mentioned the bedrock of the 1789 revolution, those three French nouns of Egalite ...but got really stuck on the the other two... needed a shout out from the audience!
does he really do that badly when he goes off teleprompter?
Yeah, production might be up, but with global trade down so much, I think that they're spending money/reserves on production to keep things in the pipeline and people.
Economic collapse, that leads to political collapse, that leads to societal collapse? 25%
Economic collapse, 100%.
Political collapse? 35%
Societal collapse? 5%
--bh
I'm curious; if there's a 25% of "Economic collapse, that leads to political collapse, that leads to societal collapse", then you'd think that the probability of Societal collapse would have to be equal to or higher than 25%. Just sayin'...
We must give the government credit, though. This month they revised downward the number TWO months prior, in order to obfuscate the situation even more.
Harder to do with quarterly data, of course (i.e. GDP).
Here's a snarky suggestion: have the guvmint hand out enough money to bring all mtges current where the houses aren't actually abandoned. Hundreds of thousands of mtg foreclosures dismissed!! Income stream to banks! Toxic assets no longer toxic for a month!!!
A colleague of mine reads the Chinese papers, visits pretty often. According to him there are protests everyday, all over, as 10s of millions are laid off, but according to him the advantage is that the government just sends them back to the countryside, however, he noted this may not last as the scope of the problem is erroding the control of the government. Second, according to the newspapers he's reading, there is a general consensus that the US must change its economic policy to accomdate the Chinese. The official line is that we, the US, are very much the debtor, and how we spend their money is very much a concern--and therefore, they are demanding that we prop-up their export economy. Read it however you want.
Chinese authorities are accutely aware where their revolutions come from, and how effective they can be.
I'm not sure I see revolution in the US, just erosion, over time.
The official line is that we, the US, are very much the debtor, and how we spend their money is very much a concern--and therefore, they are demanding that we prop-up their export economy. Read it however you want.
I read that as "they better keep buying our treasuries" if they want to keep playing that game.....
as an old china hand... ok, maybe a finger or two... I would not put the greatest confidence in all of what they say... I hear two many stories over here about "Nam and China business and the BS they continually pump...
I should point out that the economy here is run by ethhic Chinese and they keep an ear to the ground, the Khmers on the other hand, wel... hmm
"Gaming PIPP" is exactly what's going to happen. When I heard Summers utter the word non-recourse on the Stephanopoulos show, I immediately smelled a rat.....and I was right. Using non-recourse, all of banks will free themselves of the toxic sausage, and it will end up on the taxpayer's bill for future generations to come w/o it ever seeing the light of day........... so let's close down all of these banks, insurance cos, and multi-nationals one by one. What's the difference, we're going down anyway. ..............except that means big losses in bonds for the well connected and would expose all of the criminal activity and put all the criminals behind bars.........maybe.
"Gaming PIPP" is exactly what's going to happen. When I heard Summers utter the word non-recourse on the Stephanopoulos show, I immediately smelled a rat.....and I was right.
What the hell is wrong with Summers, going off message like that? Nobody says "non-recourse" on the air. They're "low interest loans to incentivize private participation in the market." Got that, Larry?
That's a great observation. That first percentage should be 5%, not 25%. I don't think there's a 1 in 4 chance of a complete breakdown. And by breakdown, I don't mean Soviet collapse. As terrible as that was, that's the kind of collapse, or erosion we'll likely get--and might hope for. By complete breakdown, I mean no central government, and enclaves and ethnic cleansing.
You might see "no central government, and enclaves and ethnic cleansing" affecting the cities, but I suspect that the countryside will be much more subdued; No Mad Max scenario, at least not right away. Still too many guns and Rednecks out here in the boonies.
Thanks Glod I'm a country boy
blackhat, not sure I agree with your friend that the gov. just ships them back to the countryside... from what I understand millions are squatting across factory towns... consider the idea of face...
No appetite for further taxpayer bailouts of Wall St. for their toxic assets under PPIP, but bailing out state pension funds for their purchases of these toxic assets will strike a more sympathetic chord.
April 3 (Bloomberg) -- Federal Deposit Insurance Corp. Chairman Sheila Bair was scheduled to travel to New York today to pitch the government’s latest plan to save banks to potential investors including Lone Star Funds and five state pension funds, people familiar with the matter said.
I just don't get it why the market is not cliff diving on the unemployemnt data . The rest of this stuff is smoke and mirrors by a different part this time .
The PPIP is a transparent money laundering operation, with full backing from the Fed printing press. The plan is so simple that the general public might even understand it enough to become outraged! The treasury issues loans to allow the banks to lever up, knowing that the Fed printing press is going to dilute the money supply pushing up the value of everything. If you KNOW the value of everything is going to go up, then why not leverage yourself to the max so you can take that 2% increase and turn it into 200%?
It seems like a brilliant plan except for one thing... the pool of commodities that we all live off of... that pool has shrunk along with the general economy. So when these bankster pigmen all get filthy stinking rich off this scam, they are going to fire up their yachts and all their other crap, driving commodity costs wayyyyy up. Meanwhile the average consumer is stuck paying 20% more for food and energy, precisely at a time when they cannot afford that extra bill. So begins a new waves of defaults, and we go into the next leg of the depression. Then the banks get hit even harder. But the Fed prints more, the banks get bailed out again, and more people end up in tent cities. And so on we go until we get revolution or the pigmen decide theyve taken enough ("for now")
This is a criminal racket, plain and simple. I cant imagine a way it could possibly be simpler. They have a gun to america's head, and have had it there for a long time.
Ummm...no. In fact, if economic collapse were a prerequisite of a societal collapse and the probability of that occurrence was less than 100% then
P(E)=.5
P(S|E)=.2
P(S)=P(E)P(S|E)=.5.2=.05
You might see "no central government, and enclaves and ethnic cleansing" affecting the cities, but I suspect that the countryside will be much more subdued; No Mad Max scenario, at least not right away. Still too many guns and Rednecks out here in the boonies.
You know what a "bastion region" is yet? Might want to do a little reading.
The bird flu could solve all of this. We need maybe a reduction of 10 million workers in total and OK we also need the elimination of everyone over the age of 50 to solve medicare/SS.
So it's simple, bird flu targeted at 50 - 65 year olds.
Course, we have way too much RE. So we need the fault to blow and remove the west coast but we do not want to lose the consumers under the age of 50. They would then buy RE in Florida and Arizona and RE is good.
Yay, bankers are acting like bankers! The looting will continue as planned! Public disgust will grow and grow! And eventually, the system will collapse.
I'm feeling a little Maoist these days, a little Cultural-Revolutionary. How about reeducation camps for bankers and Wall Street types out in the Mojave? Nothing wrong with their attitudes that a few years of grinding, backbreaking labor wouldn't adjust.
Remember, after a revolution, the folks who helped foment it are usually the first or second to the gallows. No new goverment needs those revolutionary types hanging around with nothing to do....
r
I think over the years our financial system has changed from a mechanism that provides efficient representation, exchange, and lending of real wealth to one that redirects wealth away from the real economy and concentrates it in the hands of the bankers and fund managers.
I suspect by now the financial system has been structurally altered to the point where the arbitrary redistribution and accumulation of wealth is it's only mode of operation. Wall Street has to keep vacuuming all the wealth out of Main Street because this is the only way it can survive without collapsing.
This is the nature of a system re-engineered around ponzi finance - continue scamming the rest of the country out of it's wealth or die.
I believe this is why the financial industry is able to effectively hold the government hostage and force them to go along with the ongoing looting of the middle class.
The alternative is the complete collapse of the financial system and likely the political system with it.
It's the most ingenius criminal enterprise: The government is forced to assist in the heist because if they don't the whole economy drops dead. It really is the perfect crime - the victims do most of the work for you and their lives depend on not punishing you for robbing them.
arbitrary redistribution and accumulation of wealth is it's only mode of operation
I think that your use of arbitrary here is incorrect; there nothing arbitrary about it. It really is the perfect crime
Maybe, maybe not. Afterall, WE KNOW WHO THEY ARE....
No surprise that the banks would buy each others waste to prop prices. But is there any limitation from whom the banks can buy from? If the banks are the only institutions allowed to be helped by the PPIP then the toxic assets are more valuable to them than other institutions (endowments, pensions, hedge funds etc.) that own mbs. If Wall Street is free to scour the world buying mbs from non-bank institutions (at 20 to 30 cents on the dollar) the screwing the taxpayer recieves will be several magnitudes worse.
If the banks are prohibited from buying "legacy" assets, they will just cut hidden deals with hedge funds to do the dirty work. There are so many ways they can launder the money.
If the banks are prohibited from buying "legacy" assets, they will just cut hidden deals with hedge funds to do the dirty work. There are so many ways they can launder the money.
We may not be able to stop it but we could make it illegal and prosecute the offenders when discovered, if we had the political will to do so.
That'd be enough for me. It's impossible to eliminate crime entirely, but that doesn't make the enterprise of a society of laws a worthless one.
Hey let me buy my neigbors mortgage for 6% with the taxpayer bankrolling the default and he can buy mine. If it does not go up it was worth the bet.If we all can do it then we can sell each other houses and we will be rich I tell you rich
My understanding is the advantage of temps has great qualities. Use as needed, no union, reduced or no benefits, no retirement, easy to dismiss with out law suits. Never had one but it sounds better then full time employees with baggage.
My understanding is the advantage of temps has great qualities. Use as needed, no union, reduced or no benefits, no retirement, easy to dismiss with out law suits. Never had one but it sounds better then full time employees with baggage.
Better than owning slaves - you have to buy, house and feed slaves. Think of it as 'rent-a-slave'. What could be better.
I would second everything you wrote except the part about the government being forced to participate. The political class are the rulers, not the ruled- one should never, ever lose sight of this fundamental truth. The bankers could never get away with the theft if it weren't for the government guns giving the paper currency value.
Buffett is trying his damnedest to get those GS warrants in the green. Or does GS have to ensure that their capital raise is priced at above $115/share to prevent Buffett from seeking compensation?
Interesting action in financials and REITs today. The bulls are not giving up without a fight.
I just watched a National Park Service employee shovel a dead beaver off a road. Is it something like that? Except he didn't get a bonus for the beaver?
Certainly no surprise here. I thought from day one that the biggest buyers under this plan would be the banks themselves. I thought they might even buy their own stuff...
If they continue pulling this crap, I think there is going to be public violence against them. They are already way, way over the limits of tolerability and more and more there is a public perception much in line with the Simon Johnson notion: these guys and our government are working for each other.
Spencer Bachus, the top Republican on the House financial services committee, told the paper that he would introduce legislation to stop financial institutions "gaming the system to reap taxpayer-subsidized windfalls."
Bachus added it would mark "a new level of absurdity" if financial institutions were "colluding to swap assets at inflated prices using taxpayers' dollars," according to the paper.
Bachus added it would mark "a new level of absurdity" if financial institutions were "colluding to swap assets at inflated prices using taxpayers' dollars," according to the paper.
My guess is this isn't an unintended consequence - it is the INTENDED consequence... turning mark-to-model into mark-to-manipulated-market.
"Remember, after a revolution, the folks who helped foment it are usually the first or second to the gallows. No new goverment needs those revolutionary types hanging around with nothing to do...."
This is America. We have middle-class revolutions here. Nobody lost their heads following the Revolutionary War. Okay, some of them were mercilessly snubbed, but that's about it.
I'm joking, but it doesn't have to be the way you say.
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You know, the Emperor really doesn't have any clothes. I understand that the number of individuals available to be fleeced in the mkt has dropped a lot, so the institutions are left with fleecing each other.
At some point there will be so few standing that it won't matter what fantasy is being pushed.
So the FNMA30 4% MBS are now trading at near par. If MBS are at 4%, you aren't gonna be getting 4% mortgage rates (not without paying points anyway, or having, say, a builder pay the points for you).
BB still has the jackboot on the throat of the mortgage basis, but, lo and behold, the 10 year rate is rising. Why? Isn't the Fed buying?
Bob, I know your joking about the peacefull middle class revolts here in America. The truth is we have a long history of armed riots... from Shays' Rebellion and the Whiskey Rebellion following the Revolutionary War to the NYC draft riots in 1863, to the ugly lynchings that following the Civil War in the south, to the racial riots in the 60s.
We can get ugly. If our currency collapses, I suspect it will.
What a fraud. Citibank will buy half of Bank of America's assets, Bank of America will buy half Citi's, and the government will be forced to contribute dollar by dollar! End result: Citi and BAC each have half the liabilities and the government is responsible for the other half.
Good luck preventing the banks from setting up investment vehicles to launder their participating in buying each others' toxic assets at above market prices with Fed $$$.
This is news. The oliagarchs are going to game the system. I'm shocked, shocked I tell you.
It's not news to me. I thought this was the plan all along. Banks would buy each others assets and instead of taking a 50% loss on their portfolio, they would take a 7% loss on their purchases.
The tax payers would take a huge loss, but i'm not sure what that really means anymore. It's not like anyone's taxes are actually going to increase because of this. In the end, i think what will end up happening is the Federal Reserve will have a bunch of toxic assets.
This comment thread has been CRC-IZED by yagij (CRbot helped a little).
CRCizer: Report: Banks Considering Gaming PPIP <br/><br/><br/> And for the stubborn old-timers... it's also been HALO-IZED by CRbot.
http://realize.org/cr/halokit.php?halourl=http://www.haloscan.com/comments/calculatedrisk/1337224368319171340
So basically the banks can use this program to gain a bunch of free government money and have the same assets on the books if they agree to buy each others crap.
1-to-30 Leveraged debt purchased with taxpayer backed debt leveraged at 1-to-6
I see nothing wrong with this picture.
Of course they're going to game this. They are not happy with the size of the current pile of s--t - it needs to be larger.
Gosh, what about some money to finance the sale of REOs?
Other than fha. Require if an asset is held so long, that it must be sold at market (mark to market!!!), and financed by the institution that owns the asset. Something has to be done to prevent lots of good housing being ruined.
Anyway you look at it, the PPIP is a scam
MoT
Speaking of Scams. Add in a little of this. Just a pinch!
<h3 class="post-title">Geithner's Gift To Pimco</h3>
<div class="post-header-line-1">
</div>
Geithner's Heist America Plan is receiving words of self-serving praise from Pimco's Bill Gross. Indeed, Geithner’s Non-Recourse Gift Keeps on Giving to Bill Gross.
“It is between a bank and their supervisor whether they are healthy enough to acquire assets,” raising the possibility regulators may prevent weak banks from becoming buyers'
MTM revisions will make the banks appear healthy. Obama/Geitner are crooks and criminals. I voted for Obama. At least Bush just forced crap down our throats. Obama's admin. insults the intelligence of us all by lying to us and believing we're too dumb to see it as a lie. Right wing government control is in our near (2010-2012) future.
Gaming? Really? Wow, that would be, like, unethical or something.
Can't see it happening. Not in this great country.
C
CR,
This program can only succeed if the banks holding the assets get to participate. Taking the assets off the balance sheets at their present, perceived (and likely real) market value leaves the banks with huge losses to declare, or you take the assets off the balance sheet at an inflated price and fix the balance sheets by doing so. No party will participate that doesn't receive a huge subsidy to do so, and the only subsidy in this plan large enough to entice anyone to do so is the chance to put the assets to the government at an inflated price- a subsidy that is only open to sellers of these assets.
This is just a report, and it would appear to be inappropriate for any bank receiving TARP funds to buy "legacy assets" using the PPIP. My suggestion is to explicitly ban this activity to help build confidence in the PPIP.
That would be like banning a plane from flying
or banning a gun from shooting
If you ban somthing from doing what it is designed to do, it is rather pointless
I suppose you could use the gun as a hammer.
Ban the buying of "legacy assets"? Why, do you want them to setup a shell company and do the buying by proxy insted?
Lets face it... they will game the system, it's only a matter of how we are screwed, not if we are screwed. The rules of the game are designed for that outcome.
Isn't the whole point of this thing to launder the assets using taxpayer money?
If bank A swaps assets with bank B, in both cases using non-recourse govt loans to actually finance the deal, then for a 3% haircut they get to transform their toxic crap into CASH MONEY.
The Latest from Yves:
Guest post:: Employment situation report paints grim picture
Who was supposed to buy the assets, if not other banks?
Interesting Times,
That captures things perfectly.
Yeah, I emailed my Senator Bennet ((D) CO) telling me of the self-dealing possibilities and to do everything he can to prevent it and to tell the Treasury that a lot of people are watching out for all the self-dealing/gaming variants and that there will be a hell of a fuss if it happens.
Who knows - it might do so some good - After all, CNBC actually talked of the U6 as the real rate of unemployment and even graphed it !
Pigs may fly.
-K
CNBC actually did that???
I don't know about this how would these things show up on the balance sheets?
I think this is awesome. Isn't the whole point to get the velocity of money back up where it needs to be? I suggest setting up another program so the banks selling toxic assets can buy the assets back again a few weeks later, indefinitely, ad infinitum.
Oh, there will be a commission on each sale, right? Got to have some productive aspect to all this buying and selling.
Why is it that nobody ever hands ME free money?
"Anyway you look at it, the PPIP is a scam"
Absolutely. Please tell me that this and Mark-to-MakeBelieve isn't all we're using to saving the Western banking system.
I think we're also printing money......
Gosh, what about some money to finance the sale of REOs?
Lawerliz, that is an excellent suggestion. I don't think a lot of people realize that there is real value being lost to the economy during the time between foreclosure and REO disposition (actually, in most cases between delinquency and REO disposition, if it comes to that).
What at one point was useable housing stock quickly loses value, sometimes to a point less than worthless, as money must be spent to remove it from the land (usually it doesn't get that bad, but as you know, the value decline is almost always 20% as a start).
Instead of speeding up this process, government at all levels has thrown all kinds of roadblocks in the way: foreclosure moratoriums, judicial foreclosure laws, accounting practices that discourage disposition, etc. Meanwhile owners give up and move out, nature and vandalism take over, and the a real economic resource is wasted.
It is a real shame.
While this theoretical possibility raises the blood pressure (because it was not anticipated and explicitly forbidden), the mark-to-figment accounting change is far more maddening, since it makes the balance sheet a relic of that old-guard of financial accounting.
--bh
Selling pressure is modest, but both the 10 Year and the S&P selling off a bit...
http://finance.yahoo.com/q/bc?t=1d&s=%5ETNX&l=on&z=m&q=l&c=%5EGSPC
Well damn it, we only have ourselves to blame.
Seriously, this bunch of asshats drove the financial system to the ground and aren't smart enough to find their asses with both hands.
So instead, they hang out at blogs like this and nakedcapitalism to get new and innovative means to game things even further.
So all of you. Just shut up.
CNBC graphed the u-6 but only back to 1992... said data didn't exist for earlier dates
But isn't gaming these assets back to fictional values the point of all the FASB accounting manipulations and the government insuring these assets? I mean, the only reason not to have them sell the assets to themselves (also under consideration!) is sideskirting public opinion.
Why the outrage, this is just the next evolution of Calvinball?
Everyone wanted this rather than insolvency. Nobody wanted to contemplate the consequences of insolvency. Well here are the consequences of Calvinball. Contemplate those instead.
I think mark to fantasy will have all sorts of bad unintended consequences, such as the market discounting the assets even more than they actually deserve.
[The government plan does not allow banks to buy their own assets]
Now that's difficult to game. Just buy each others asset. Or are banker just ethically bound to do the right thing in the eyes of the naive treasury and administration.
The banks will work against the interests of the country until it's bankrupt. JUST CLOSE THE FUCKERS DOWN NOW!
There are still American pitchfork manufacturers - aren't there ? I mean it would be really sad if we didn't even make our own pitchforks.
The Judge on Fox News this morning stated those nine banks called in by Paulson in September were told inorder for the public not to know who was in trouble each would take TARP Funds, now FDIC demanding for 2% ownership they get a seat at the board table with decisions on management. Toxic assets was not brought up this morning, but if FDIC is demanding a seat at the table, one would surmise, toxic assets would be on that table as well.
OT: I am not overly obsessed with the equity markets (having liquidated all my positions on the day after Election Day, soon to be officially renamed as Day One), but does anyone think the markets are pricing in a downward spiral that leads to the collapse of civilization? And if so, at what probability?
does anyone think the markets are pricing in a downward spiral that leads to the collapse of civilization? And if so, at what probability?
It's impossible to "price in" an event that would leave the assets being bought and sold, and the medium of exchange, entirely worthless. It's a singularity. Zero divided by zero.
Lots of lesser events are being priced in, at low probabilities, but the end of civilization is not.
From Lawyerliz:
<blockquote>Why is it that nobody ever hands ME free money?</blockquote>
Now, Liz, you can't simultaneously be the one handing out the free money and receiving it, now can you?
I wonder where Colbert's pitchfork was from. Somebody should ask him!
Hmmm, we don't even manufacture as much stuff. . .so why is China's economy said to be still growing? Could this be. . .a lie. . .???
lawyerliz,
There might some investors out there that prefer not to deal with companies using mark-to-figment.
I dare another competing country to immediately emphasize mark-to-market accounting as a feature of their market, and transparency as well.
Let's see where the money flows.
--bh
"Why is it that nobody ever hands ME free money?"
--Lawyerliz
The government did send out those 'stimulus' checks. Free only for those of us who don't pay taxes...
Some of us didn't even get those due to unusual tax situations.
My suggestion is to abolish the federal government and end this fucking nonsense.
Well, no, but I'm not handing out any free money either.
I watched Obama's speech in Strasbourg... at one point- - maybe during the Q&A he mentioned the bedrock of the 1789 revolution, those three French nouns of Egalite ...but got really stuck on the the other two... needed a shout out from the audience!
does he really do that badly when he goes off teleprompter?
Liz:
I don't buy the China's growing economy stuff.
Yeah, production might be up, but with global trade down so much, I think that they're spending money/reserves on production to keep things in the pipeline and people.
I call bullshit.
ghostfacedinvestor,
civilization ending? No.
Economic collapse, that leads to political collapse, that leads to societal collapse? 25%
Economic collapse, 100%.
Political collapse? 35%
Societal collapse? 5%
--bh
Argh!!!!! Why can't JS-Kit allow itself to be quoted without this
!
blackhat says:
“ghostfacedinvestor,
civilization ending? No.
Economic collapse, that leads to political collapse, that leads to societal collapse? 25%
Economic collapse, 100%.
Political collapse? 35%
Societal collapse? 5%
--bh
I'm curious; if there's a 25% of "Economic collapse, that leads to political collapse, that leads to societal collapse", then you'd think that the probability of Societal collapse would have to be equal to or higher than 25%. Just sayin'...
We must give the government credit, though. This month they revised downward the number TWO months prior, in order to obfuscate the situation even more.
Harder to do with quarterly data, of course (i.e. GDP).
Liz,
Believe me, Geithner and Obama would never put you to the trouble of handing out your own money- why, you just might refuse to do so.
Here's a snarky suggestion: have the guvmint hand out enough money to bring all mtges current where the houses aren't actually abandoned. Hundreds of thousands of mtg foreclosures dismissed!! Income stream to banks! Toxic assets no longer toxic for a month!!!
Weeellll?
The Latest from Ritholz:
Temporary Help Services Employment Down 27%
Of course they are. Isn't gaming things how they booked "profits" over the last decade or more? Why change now?
To them, fraud is just business. Nothing more, nothing less. Move along, please
Isn't temp a part of part time?? Guess you can have full time temps?
The Latest from Ritholz:
S&P500 Percentage Swings
[The government plan does not allow banks to buy their own assets]
FDIC May Let Banks Share Profit From Distressed Loans They Sell - Bloomberg.com
Not yet at least!
A note on China:
A colleague of mine reads the Chinese papers, visits pretty often. According to him there are protests everyday, all over, as 10s of millions are laid off, but according to him the advantage is that the government just sends them back to the countryside, however, he noted this may not last as the scope of the problem is erroding the control of the government. Second, according to the newspapers he's reading, there is a general consensus that the US must change its economic policy to accomdate the Chinese. The official line is that we, the US, are very much the debtor, and how we spend their money is very much a concern--and therefore, they are demanding that we prop-up their export economy. Read it however you want.
Chinese authorities are accutely aware where their revolutions come from, and how effective they can be.
I'm not sure I see revolution in the US, just erosion, over time.
--bh
The official line is that we, the US, are very much the debtor, and how we spend their money is very much a concern--and therefore, they are demanding that we prop-up their export economy. Read it however you want.
if they want to keep playing that game.....
I read that as "they better keep buying our treasuries"
homedad43
as an old china hand... ok, maybe a finger or two... I would not put the greatest confidence in all of what they say... I hear two many stories over here about "Nam and China business and the BS they continually pump...
I should point out that the economy here is run by ethhic Chinese and they keep an ear to the ground, the Khmers on the other hand, wel... hmm
We handed them money once. Wouldn't this just be handing them some more? Not better or worse than before.
A percent of a percent off is less, right?
The Latest from Ritholz:
AIG: Before CDS, There Was Reinsurance
"Gaming PIPP" is exactly what's going to happen. When I heard Summers utter the word non-recourse on the Stephanopoulos show, I immediately smelled a rat.....and I was right. Using non-recourse, all of banks will free themselves of the toxic sausage, and it will end up on the taxpayer's bill for future generations to come w/o it ever seeing the light of day........... so let's close down all of these banks, insurance cos, and multi-nationals one by one. What's the difference, we're going down anyway. ..............except that means big losses in bonds for the well connected and would expose all of the criminal activity and put all the criminals behind bars.........maybe.
"Gaming PIPP" is exactly what's going to happen. When I heard Summers utter the word non-recourse on the Stephanopoulos show, I immediately smelled a rat.....and I was right.
What the hell is wrong with Summers, going off message like that? Nobody says "non-recourse" on the air. They're "low interest loans to incentivize private participation in the market." Got that, Larry?
Geez!
cinco-x,
That's a great observation. That first percentage should be 5%, not 25%. I don't think there's a 1 in 4 chance of a complete breakdown. And by breakdown, I don't mean Soviet collapse. As terrible as that was, that's the kind of collapse, or erosion we'll likely get--and might hope for. By complete breakdown, I mean no central government, and enclaves and ethnic cleansing.
--bh
You might see "no central government, and enclaves and ethnic cleansing" affecting the cities, but I suspect that the countryside will be much more subdued; No Mad Max scenario, at least not right away. Still too many guns and Rednecks out here in the boonies.
Thanks Glod I'm a country boy
<-- Full-time Temp.
The Chinese can just keep their landfill filler.
blackhat, not sure I agree with your friend that the gov. just ships them back to the countryside... from what I understand millions are squatting across factory towns... consider the idea of face...
I wonder if "shiping them back to the countryside" is the same as sending your old dog "to live in the country"
Is Canada The Envy Of The World?
No appetite for further taxpayer bailouts of Wall St. for their toxic assets under PPIP, but bailing out state pension funds for their purchases of these toxic assets will strike a more sympathetic chord.
Chairman Sheila Bair was scheduled to travel to New York today to pitch the government’s latest plan to save banks to potential investors including Lone Star Funds and five state pension funds, people familiar with the matter said.
April 3 (Bloomberg) -- Federal Deposit Insurance Corp.
I just don't get it why the market is not cliff diving on the unemployemnt data . The rest of this stuff is smoke and mirrors by a different part this time .
The PPIP is a transparent money laundering operation, with full backing from the Fed printing press. The plan is so simple that the general public might even understand it enough to become outraged! The treasury issues loans to allow the banks to lever up, knowing that the Fed printing press is going to dilute the money supply pushing up the value of everything. If you KNOW the value of everything is going to go up, then why not leverage yourself to the max so you can take that 2% increase and turn it into 200%?
It seems like a brilliant plan except for one thing... the pool of commodities that we all live off of... that pool has shrunk along with the general economy. So when these bankster pigmen all get filthy stinking rich off this scam, they are going to fire up their yachts and all their other crap, driving commodity costs wayyyyy up. Meanwhile the average consumer is stuck paying 20% more for food and energy, precisely at a time when they cannot afford that extra bill. So begins a new waves of defaults, and we go into the next leg of the depression. Then the banks get hit even harder. But the Fed prints more, the banks get bailed out again, and more people end up in tent cities. And so on we go until we get revolution or the pigmen decide theyve taken enough ("for now")
This is a criminal racket, plain and simple. I cant imagine a way it could possibly be simpler. They have a gun to america's head, and have had it there for a long time.
In the inflationary 80s we all got pretty good raises. Now, no.
Isn't temp a part of part time?? Guess you can have full time temps?
Temp (at your office) = part time for you.
Temp (in general) = hoping for long gigs / regular work for the temp.
Cinco-X,
Ummm...no. In fact, if economic collapse were a prerequisite of a societal collapse and the probability of that occurrence was less than 100% then
P(E)=.5
P(S|E)=.2
P(S)=P(E)P(S|E)=.5.2=.05
(assuming independence - just sayin')
He didn't say that economic collapse was a prerequisite of a societal collapse. BH has already agreed on that.
doh! P(E)=.25 NOT .5
then the math works out to the .05 answer
Blackhat he's reading mainland Chinese newspapers, not translated into another language? in simple Chinese ideograms or the more tradtional ideograms?
sure doesn't sound like the China I know...
IIRC, China introduced newer print oriented characters when the Communist took over in '49.
You might see "no central government, and enclaves and ethnic cleansing" affecting the cities, but I suspect that the countryside will be much more subdued; No Mad Max scenario, at least not right away. Still too many guns and Rednecks out here in the boonies.
You know what a "bastion region" is yet? Might want to do a little reading.
What did you call me!?
Sewriously though, links please. The ones I found were for RPGs.
Sewriously
OMG! I sounded like Barney Frank!
On the last thread a commenter nemed Anonymoutoo linked an important article by Simon Johnon in the Atlantic Monthly:
www.theatlantic.com/doc/200905/imf-advice
I heartily recommend the article to anyone seriously interested in what the administration should be doing about the banking crisis in the U.S.
To say the current administration is not there yet is an understatement.
The bird flu could solve all of this. We need maybe a reduction of 10 million workers in total and OK we also need the elimination of everyone over the age of 50 to solve medicare/SS.
So it's simple, bird flu targeted at 50 - 65 year olds.
Course, we have way too much RE. So we need the fault to blow and remove the west coast but we do not want to lose the consumers under the age of 50. They would then buy RE in Florida and Arizona and RE is good.
But we still have that damn problem with Detroit.
Screw it. We are doomed.
Does seem like the rally is outta gas, but doesn't feel like the market got overextended. Too early to short - no reason to go long. Blueach.
We can clean your money!
Yay, bankers are acting like bankers! The looting will continue as planned! Public disgust will grow and grow! And eventually, the system will collapse.
I'm feeling a little Maoist these days, a little Cultural-Revolutionary. How about reeducation camps for bankers and Wall Street types out in the Mojave? Nothing wrong with their attitudes that a few years of grinding, backbreaking labor wouldn't adjust.
Tales from the Coast
Remember, after a revolution, the folks who helped foment it are usually the first or second to the gallows. No new goverment needs those revolutionary types hanging around with nothing to do....
duke,
He's a naturalized citizen from China. He reads whatever is written in the official papers since he visits frequently.
--bh
No, Dio is not as good as Ozzy.
Darn, thought I was on Krugmans blog
r
I think over the years our financial system has changed from a mechanism that provides efficient representation, exchange, and lending of real wealth to one that redirects wealth away from the real economy and concentrates it in the hands of the bankers and fund managers.
I suspect by now the financial system has been structurally altered to the point where the arbitrary redistribution and accumulation of wealth is it's only mode of operation. Wall Street has to keep vacuuming all the wealth out of Main Street because this is the only way it can survive without collapsing.
This is the nature of a system re-engineered around ponzi finance - continue scamming the rest of the country out of it's wealth or die.
I believe this is why the financial industry is able to effectively hold the government hostage and force them to go along with the ongoing looting of the middle class.
The alternative is the complete collapse of the financial system and likely the political system with it.
It's the most ingenius criminal enterprise: The government is forced to assist in the heist because if they don't the whole economy drops dead. It really is the perfect crime - the victims do most of the work for you and their lives depend on not punishing you for robbing them.
arbitrary redistribution and accumulation of wealth is it's only mode of operation
I think that your use of arbitrary here is incorrect; there nothing arbitrary about it.
It really is the perfect crime
Maybe, maybe not. Afterall, WE KNOW WHO THEY ARE....
I'm not clear on something.
No surprise that the banks would buy each others waste to prop prices. But is there any limitation from whom the banks can buy from? If the banks are the only institutions allowed to be helped by the PPIP then the toxic assets are more valuable to them than other institutions (endowments, pensions, hedge funds etc.) that own mbs. If Wall Street is free to scour the world buying mbs from non-bank institutions (at 20 to 30 cents on the dollar) the screwing the taxpayer recieves will be several magnitudes worse.
Am I correct in my thinking?
If the banks are prohibited from buying "legacy" assets, they will just cut hidden deals with hedge funds to do the dirty work. There are so many ways they can launder the money.
Good! Fraud and Money Laundeering. Time for RICO.
YAY!!!!
If the banks are prohibited from buying "legacy" assets, they will just cut hidden deals with hedge funds to do the dirty work. There are so many ways they can launder the money.
We may not be able to stop it but we could make it illegal and prosecute the offenders when discovered, if we had the political will to do so.
That'd be enough for me. It's impossible to eliminate crime entirely, but that doesn't make the enterprise of a society of laws a worthless one.
FDIC Seeks Comment on the Recently Announced Legacy Loans Program
http://www.fdic.gov/news/news/press/2009/pr09048.html
Were you previously a Lyndon Larue supporter?
Hey let me buy my neigbors mortgage for 6% with the taxpayer bankrolling the default and he can buy mine. If it does not go up it was worth the bet.If we all can do it then we can sell each other houses and we will be rich I tell you rich
Someone asked me if the economist were doing thier projections based on peak oil, uhh no.
My understanding is the advantage of temps has great qualities. Use as needed, no union, reduced or no benefits, no retirement, easy to dismiss with out law suits. Never had one but it sounds better then full time employees with baggage.
My understanding is the advantage of temps has great qualities. Use as needed, no union, reduced or no benefits, no retirement, easy to dismiss with out law suits. Never had one but it sounds better then full time employees with baggage.
Better than owning slaves - you have to buy, house and feed slaves. Think of it as 'rent-a-slave'. What could be better.
ac,
I would second everything you wrote except the part about the government being forced to participate. The political class are the rulers, not the ruled- one should never, ever lose sight of this fundamental truth. The bankers could never get away with the theft if it weren't for the government guns giving the paper currency value.
Buffett is trying his damnedest to get those GS warrants in the green. Or does GS have to ensure that their capital raise is priced at above $115/share to prevent Buffett from seeking compensation?
Interesting action in financials and REITs today. The bulls are not giving up without a fight.
Ron Paul Supporter Beats Fascist Gestapo TSA Interogation 3/28/09
http://www.youtube.com/watch?v=WLXEeZYyK2E
Nothing but bad news today and market still holding up? Who the heck is buying this market NOW? That's insane.
I just watched a National Park Service employee shovel a dead beaver off a road. Is it something like that? Except he didn't get a bonus for the beaver?
OT- Here's yet another take on Greenspan's complicity in the crisis:
<h1>It Really Is All Greenspan's Fault</h1>
<== test
< -- test 2
Certainly no surprise here. I thought from day one that the biggest buyers under this plan would be the banks themselves. I thought they might even buy their own stuff...
If they continue pulling this crap, I think there is going to be public violence against them. They are already way, way over the limits of tolerability and more and more there is a public perception much in line with the Simon Johnson notion: these guys and our government are working for each other.
Spencer Bachus, the top Republican on the House financial services committee, told the paper that he would introduce legislation to stop financial institutions "gaming the system to reap taxpayer-subsidized windfalls."
Bachus added it would mark "a new level of absurdity" if financial institutions were "colluding to swap assets at inflated prices using taxpayers' dollars," according to the paper.
Bachus added it would mark "a new level of absurdity" if financial institutions were "colluding to swap assets at inflated prices using taxpayers' dollars," according to the paper.
My guess is this isn't an unintended consequence - it is the INTENDED consequence... turning mark-to-model into mark-to-manipulated-market.
Only one thing better than a temp. An inter
Only one thing better than a temp. An intern
Slave 'free samples'...
Uhh, the bonus would be if he skins the beaver and uses the fur for a beaver hat!
"Remember, after a revolution, the folks who helped foment it are usually the first or second to the gallows. No new goverment needs those revolutionary types hanging around with nothing to do...."
This is America. We have middle-class revolutions here. Nobody lost their heads following the Revolutionary War. Okay, some of them were mercilessly snubbed, but that's about it.
I'm joking, but it doesn't have to be the way you say.
Tales from the Coast
New Thread: Bernanke on Fed's Balance Sheet
http://www.calculatedriskblog.com/2009/04/bernanke-on-feds-balance-sheet.html ( 0 comments ...You could be FIRST! )
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You know, the Emperor really doesn't have any clothes. I understand that the number of individuals available to be fleeced in the mkt has dropped a lot, so the institutions are left with fleecing each other.
At some point there will be so few standing that it won't matter what fantasy is being pushed.
"Better than owning slaves"
Those who don't control their destiny are willing to become slaves of jobs, debt and control. The Freedom they seek they gave away.
So the FNMA30 4% MBS are now trading at near par. If MBS are at 4%, you aren't gonna be getting 4% mortgage rates (not without paying points anyway, or having, say, a builder pay the points for you).
BB still has the jackboot on the throat of the mortgage basis, but, lo and behold, the 10 year rate is rising. Why? Isn't the Fed buying?
Hmmm, someone must be selling....
PPIP, PPIP hooray? =-O
Don't know if this has been posted yet. Excellent youtube video about how the banks will buy their own debt and transfer liabilities to the taxpayer.
http://www.youtube.com/watch?v=n-arbfLTCtI
Bob, I know your joking about the peacefull middle class revolts here in America. The truth is we have a long history of armed riots... from Shays' Rebellion and the Whiskey Rebellion following the Revolutionary War to the NYC draft riots in 1863, to the ugly lynchings that following the Civil War in the south, to the racial riots in the 60s.
We can get ugly. If our currency collapses, I suspect it will.
What a fraud. Citibank will buy half of Bank of America's assets, Bank of America will buy half Citi's, and the government will be forced to contribute dollar by dollar! End result: Citi and BAC each have half the liabilities and the government is responsible for the other half.
Good luck preventing the banks from setting up investment vehicles to launder their participating in buying each others' toxic assets at above market prices with Fed $$$.