Comments for Some Positive Comments on the Geithner Toxic Plan
CRbot says:
This comment thread has been HALO-IZED by CRbot.
http://realize.org/cr/halokit.php?halourl=http://www.haloscan.com/comments/calculatedrisk/6167247262150465612
CRbot Mon Mar 23 17:11:09 2009 CDT #
Nemo says:
I dunno, CR. I think we have been seeing the results of the geniuses' plans for a couple of years now.
Nemo Mon Mar 23 17:11:13 2009 CDT #
Max says:
With no metrics to measure success or failure, we won't know if we're being ripped off until it's all over. All in indeed.
Max Mon Mar 23 17:16:25 2009 CDT #
gibbon1 says:
If there is no hard ass measure of success or failure you can bet that we going to be ripped off. One of the things I started doing in the last few years is to ask the question, 'who would do this job'. The answer is often illuminating. To wit, no one gets to the top of the heap in law or finance without looking out for number one. That tells you everything you need to know about this plan.
Parent Post
gibbon1 Mon Mar 23 22:44:50 2009 CDT #
Basel Too says:
can i give a "-1" for any post with a T. Boone Pickens quote 8-)
Con Dao should do a mash-up of the "transfer of wealth" commercials using bailouts and wall street in the place of oil and the middle east, respectively.
Basel Too Mon Mar 23 17:16:37 2009 CDT #
ndk says:
This plan -- and the entire conversation about how to dispose of the toxic assets -- is at best orthogonal to the economic problems we face. This does nothing to make borrowers more creditworthy; nothing to improve the prospects for investment via borrowing by the creditworthy borrowers; and can only worsen fundamental distortions in our economy. If anything, it will further encumber taxpayers in the future, dampening economic growth even more.
I refuse to blindly rally around some half-baked larcenous plan because our government has proposed it. Anyone who loves their country and its citizens more than their own wallet should feel the same way.
ndk Mon Mar 23 17:16:42 2009 CDT #
tyaresun says:
How is this different from the Paulson plans?
tyaresun Mon Mar 23 17:16:51 2009 CDT #
drob says:
Yes, basically this is just a more complicated way to transfer money from taxpayers to the banks' shareholders, so to fool the public to believe that we're not favoring the banks. Would it work? Yes, obviously it will, but the cost would be a trillion plus more debt from taxpayers.
drob Mon Mar 23 17:16:52 2009 CDT #
Rob Dawg says:
Best we can expect? Yes.
Good enough? No.
There's the problem in 8 words.
Rob Dawg Mon Mar 23 17:16:59 2009 CDT #
kdh says:
You can't trust banksters period! Of course they will GAME the system for their profit and our loss. "Fool me once shame on you, fool me twice, shame on me" I will not be fooled again. Why is everyone soooo stupid to trust bankers again????
kdh Mon Mar 23 17:17:26 2009 CDT #
Bob Dobbs says:
"I'd add a caveat: this plan is easy for the banks to game or arb - and if a bank is caught gaming this plan, the AIG bonus flap will seem like a light Summer breeze."
I predict with utter certainty that one or more major banks will game the system -- and get caught. Just project their behavior of the past two years -- hell, the past two months -- forward.
They're still the masters of the universe, in their own eyes. The world is theirs to manipulate. These behavior patterns won't change until they're in orange coveralls.
http://www.talesfromthecoast.blogspot.com
Bob Dobbs Mon Mar 23 17:18:11 2009 CDT #
Blackhalo says:
"I predict with utter certainty that one or more major banks will game the system"
Agreed. Abuse is a given. The shame of it is that Gietner is too stupid to realize that, or does not care.
Parent Post
Blackhalo Mon Mar 23 18:10:18 2009 CDT #
ac says:
Maybe this time it's different.
ac Mon Mar 23 17:20:19 2009 CDT #
Stockmonger says:
Didn't you and Thoma say the same thing about TARP and every other (failed) taxpayer giveaway so far? I.e. it's the best plan we have so we sheep should all go along for the shearing?
Since nowhere is it mentioned how banks are going to be prevented from gaming the plan by submitting irrationally high bids (directly or via proxy) at the expense of the FDIC, it should be assumed that that is EXACTLY the intended outcome.
Stockmonger Mon Mar 23 17:21:27 2009 CDT #
Anonymous says:
Boy, I bet banks are real scared of what will happen if they rip us off again.
Anonymous Mon Mar 23 17:22:20 2009 CDT #
Lobbyi$t Ben Dover says:
Stupidity of "HOPE"
Lobbyi$t Ben Dover Mon Mar 23 17:23:06 2009 CDT #
Max says:
So can we start calling it "Geithner's Toxic Plan" yet?
Max Mon Mar 23 17:23:08 2009 CDT #
Alo says:
We are asking a banking system built on gaming not to game this time. You are asking the junkie who hides his problem to stop using. It won't work--it'll just buy us time before the now-even-more painful outcome happens.
Said it before -the more time we give them, the more they will loot the system -they know good times aren't coming back, and now is the time to grab everything they can and run. This plan provides no disincentives--and perhaps even better incentives, to continue the pillaging. God bless America, only because we really need divine intervention this time.
Alo Mon Mar 23 17:25:13 2009 CDT #
Blackhalo says:
"it'll just buy us time before the now-even-more painful outcome happens."
More of kick the can down the road. Meanwhile the can just keeps getting bigger.
Parent Post
Blackhalo Mon Mar 23 18:20:30 2009 CDT #
Anonymous says:
CR writes: "I'd add a caveat: this plan is easy for the banks to game or arb - and if a bank is caught gaming this plan, the AIG bonus flap will seem like a light Summer breeze"
Do you not mean "like a Lawrence Summers cat's paw."
Anonymous Mon Mar 23 17:26:30 2009 CDT #
scone says:
Quite a few important congresspeople are coming up for election in 2010, including Dodd, Schumer, Reid, McCain, Boxer, and Specter. Looking at they're campaign contributions should tell an interesting story.
http://www.sourcewatch.org/index.php?title=U.S._congressional_elections_in_2010
scone Mon Mar 23 17:26:42 2009 CDT #
Blackhalo says:
"Quite a few important congresspeople are coming up for election in 2010, including Dodd"
Dodd HAS to be toast. Hell, if I lived in that state, I could run against him and win. All I'd have to say is AIG bonus plan, added to stimulus and voted for by Dodd.
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Blackhalo Mon Mar 23 18:22:46 2009 CDT #
duke of con dao says:
thanks for the hat tip, here's a small vid mash-up of Chuck Schumer.... http://www.youtube.com/watch?v=8ZBQWIBZE
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duke of con dao Tue Mar 24 03:30:26 2009 CDT #
Richard Estes says:
yes, as CR says, the plan can be gamed, and, as Bob Dobbs says, we can be sure that it will happen
probably by the very same banks and brokerage houses that the government wants to remain standing at the end of the day
or, in other words, it is yet another mechanism by which the the US and global financial sector will be ruthlessly consolidated
Richard Estes Mon Mar 23 17:26:43 2009 CDT #
ca says:
mp --
could you elaborate on your "tragedy of epic proportions"?
ca Mon Mar 23 17:28:49 2009 CDT #
RhodesianGreenbackinAZ says:
It's the best we can get because of a lack of real leadership. Obama is screwing this up so badly (FD: voted for him).
RhodesianGreenbackinAZ Mon Mar 23 17:29:06 2009 CDT #
maynardGkeynes says:
Even if this is the best we can get, since it won't work, what justifies wasting a trillion $$$?
maynardGkeynes Mon Mar 23 17:31:36 2009 CDT #
EvilHenryPaulson says:
Let's say you have a gift card with an expiry date.
It doesn't really matter what you spend it on, so long as you spend it
Or how about a household having trouble with paying the bills. It might not be ideal to take out a loan, but if it is to consolidate your credit card debt to one with a lower rate, whether or not you ever pay the loan off at least it buys you some more time
Parent Post
EvilHenryPaulson Mon Mar 23 17:36:59 2009 CDT #
RhodesianGreenbackinAZ says:
BTW - if you haven't checked out Nemo's post ... it's a good one.
https://self-evident.org/?p=502
RhodesianGreenbackinAZ Mon Mar 23 17:32:09 2009 CDT #
ac says:
CR writes: "I'd add a caveat: this plan is easy for the banks to game or arb - and if a bank is caught gaming this plan, the AIG bonus flap will seem like a light Summer breeze"
That was always the danger - attempts to avoid a depression might well lead to a revolution instead by creating a sense of deep injustice and unraveling of the fabric holding this country together.
ac Mon Mar 23 17:32:50 2009 CDT #
Art Eclectic says:
I agree, they WILL game the system - it's who they are and what they do. The people will retaliate by pulling their accounts from BofA and Citi, forcing both out of business.
Art Eclectic Mon Mar 23 17:32:59 2009 CDT #
Mr. Beach says:
Gosh. Js-kit makes is disheartening to participate in a discussion. My comment appears to have been eating.
Test #1.
Mr. Beach Mon Mar 23 17:33:22 2009 CDT #
mr_clueless says:
ABSOLUTELY CRAPPY PLAN. I can't believe even one person thinks that this is a remotely good idea. We first need to wipe out the share holders who are sitting buying financial shares and either pre-privatize or nationalize the banks. Anything else is for the enrichment of the bankers and theft of taxpayer money.
CR, this is one post of yours that sometimes makes me wonder why I read this blog. Then I remind myself that I read this one for the news, not the opinions.
mr_clueless Mon Mar 23 17:34:11 2009 CDT #
Guest says:
The Geithner plan is suboptimal, but it is probably the best we can get in the current environment.
+1 MORONIC
Guest Mon Mar 23 17:35:18 2009 CDT #
ampersand says:
Then:
------
Game: Screw the lenders:
Seller financed down payment assistance (3%)
Home builder sets up straw buyer, lend him 3% to buy overpriced house. Builder runs with the sale proceeds
Sell the loan off to a sucker lender. Lender is shocked to see that buyer cannot pay off loan.
Now:
----
Game: Screw the taxpayer
Geithner's public-private TARP II
Banks set up straw private firm, lend it 3% to buy overpriced toxic waste with taxpayer funds. Banks run with the sales proceeds.
Stick the taxpayer with the losses. Taxpayer is shocked to see that the toxic waste does not produce cash flow.
Economist's get taken again. Once is tragedy, twice if farce.
ampersand Mon Mar 23 17:35:32 2009 CDT #
Anonymous says:
Alo said
"Said it before -the more time we give them, the more they will loot the system -they know good times aren't coming back, and now is the time to grab everything they can and run. This plan provides no disincentives--and perhaps even better incentives, to continue the pillaging. God bless America, only because we really need divine intervention this time."
worth repeating -
but the genius of this plan is that with much of the TARP already spent and with another $700bn 'placeholder in Obama's budget - this plan draws most of its blood from other agencies such as the almost insolvent (according to Bair) FDIC.
To counter the Boone Pickens quotation via CR via Kedrosky "My dad said a fool with a plan can beat a genius with no plan" ; the late Paul Newman had a sign in his boardroom to the effect
"If we ever have a plan, we're screwed"
Anonymous Mon Mar 23 17:35:33 2009 CDT #
Rob Dawg says:
mp -
could you elaborate on your "tragedy of epic proportions"?
I'm not privy but mp and I seem to have been reading the same entrails for some time.
Our leaders seems hellbent upon walking out on the ice until it breaks. They know the ice is thin, they hear the cracking, they ignore the warnings.
This cannot end well.
Rob Dawg Mon Mar 23 17:35:43 2009 CDT #
Wisdom Speaker says:
CR, I do not share your assessment. It is trivial for a few folks, connected behind the scenes in the elite social network, to hatch scam deals to game this plan, with full deniability. Furthermore, the crowd Geithner runs with has been both blatantly wrong and curiously ignorant of the true national interest (as distinct from Wall Street's interest, or Wall Street's perception of the national interest) throughout this entire fiasco: why should we think that the zebra has suddenly changed its stripes? A bad plan can be substantially worse than no plan: just ask those who got the Lenin-Stalin plan, or the Mao plan, or the Hitler or Mussolini plans.
It's bad enough that we've had to watch this train wreck unfold for the past few years. Must we now stand idly by as the "repair" crew botches the job for the third time?
Wisdom Speaker Mon Mar 23 17:36:25 2009 CDT #
Wisdom Speaker says:
Let me add that any plan which can so obviously be gamed at the public expense, should not be given even the lukewarm support which CR has given it. The fact that Obama and his team squandered the last 5 months coming up with this abomination is no excuse.
Heck, after seeing CR cave on this "plan", I'm practically ashamed to be "seen" here, and would not comment at all were it not that so many agree with me.
Parent Post
Wisdom Speaker Mon Mar 23 17:46:12 2009 CDT #
Blackhalo says:
"A bad plan can be substantially worse than no plan: just ask those who got the Lenin-Stalin plan, or the Mao plan, or the Hitler or Mussolini plans."
The temptation to compare and contrast how a certain religious ethnic group made out with some of those plans compared to Geitner's is VERY tempting. But that would be inappropriate...
Parent Post
Blackhalo Mon Mar 23 18:30:30 2009 CDT #
Mr. Beach says:
Trying again.
Geithner et al refuse to accept that our collective debt load exceeds our income. Furthermore, we're not organized to generate old-fashioned income through actual work anymore.
Until we collectively haircut our debt, we're not growing or going anywhere.
Mr. Beach Mon Mar 23 17:36:30 2009 CDT #
Anonymous says:
"Our leaders seems hellbent upon walking out on the ice until it breaks. They know the ice is thin, they hear the cracking, they ignore the warnings."
unless you believe that you can walk on water
Anonymous Mon Mar 23 17:37:39 2009 CDT #
EvilHenryPaulson says:
How about they're walking the gangplank
Sure, they are heading towards shark infested water at least a mile from shore, but they know with certainty that walking back towards the ship with its angry pirates is also the least likely path to success
Parent Post
EvilHenryPaulson Mon Mar 23 17:43:31 2009 CDT #
ac says:
"Our leaders seems hellbent upon walking out on the ice until it breaks. They know the ice is thin, they hear the cracking, they ignore the warnings."
unless you believe that you can walk on water
Haha... if I were a more religious guy I'd say:
Amen!
ac Mon Mar 23 17:39:10 2009 CDT #
nova says:
Thanks CR,
Because I really, really want to believe that the monsters under the bed are not going to get loose.
nova Mon Mar 23 17:42:00 2009 CDT #
Mr. Beach says:
I speak to a lot of people who believe that our economy is best represented by the stock market and perhaps the price of oil. I suspect our politicians are similar.
Many people do not understand the significance of the ond or currency markets.
TA pop of the UST bubble would dwarf all other bubbles combined. J6P won't understand it. The politicians will say 'no one could have foreseen'. Wall St, will say 'this is a good time to buy'. And CR readers will say 'hoocodanode'.
Mr. Beach Mon Mar 23 17:43:11 2009 CDT #
Jay D. says:
...........shut up!........PLAN IS JUST A PLAN..........
Jay D. Mon Mar 23 17:43:35 2009 CDT #
RuffRednSore says:
Will the results of the auction/bidding be transparent? That is, will they publish the names of companies that participate in the auction? Is this a done deal or can Congress put a halt to it?
I have a feeling that as long as the market rallies, they won't try to stop it - you know, what's good for the stock market must be good for the country.
RuffRednSore Mon Mar 23 17:43:50 2009 CDT #
ghostfacedinvestah says:
Gee, a Wells Fargo employee, who no doubt has a lot of personal wealth tied up in the plan working, is saying the plan will work? Who wudda thunk?
ghostfacedinvestah Mon Mar 23 17:45:04 2009 CDT #
daReada says:
You can bet good money that Merrill Lynch will end up on a PPPIP fund that bought assets from Countrywide. Is there anything that can prevent it?
daReada Mon Mar 23 17:45:23 2009 CDT #
Rob Dawg says:
History never disappoints:
Timothy Franz Geithner = George Brinton McClellan
For those who understand no more is required. For the rest no more will suffice.
Rob Dawg Mon Mar 23 17:45:55 2009 CDT #
Anonymous says:
CR,
Where is it this "plan" is going to take us again? Who is saved by it again? If someone is saved here then who is being sacrificed since we are talking about the transfer of wealth at the end of the day. You sound like an abused wife in this post. We (speaking for the sane folks left in America) have had it with any ideas the government thinks it will be neat to try out on our dime. Brilliant latest bubble blowing ponzi scheme on the road to nowhere.
Anonymous Mon Mar 23 17:46:36 2009 CDT #
Splat says:
And a fool with unlimited money.... comes up with a plan like this...
Splat Mon Mar 23 17:47:20 2009 CDT #
Gubbmint Cheese says:
EHP check your private msgs..
GC
Gubbmint Cheese Mon Mar 23 17:47:28 2009 CDT #
EvilHenryPaulson says:
oh wow, I didn't think I could receive private messages without registering... there's a surprising amount there
sorry to everyone whom I never replied
Parent Post
EvilHenryPaulson Mon Mar 23 17:52:24 2009 CDT #
ndk says:
unless you believe that you can walk on water
I'm almost certain that Geithner can walk on water, at least. Summers can walk on air itself.
But in all seriousness, I do believe that Geithner and Summers are smart enough to realize this is a hopelessly useless approach.
It redistributes wealth from taxpayers to speculators, sure. But I don't even see how one could make a logical argument that there is a constructive facet to this.
Banks have already had an effectively limitless pool of capital since September, and credit expansion hasn't refired. Absolving them of their losses will not change anything.
http://www.federalreserve.gov/releases/h3/Current/
Quantitative easing will not help either, and neither will depressing credit spreads. Private lenders can't -- and shouldn't try to -- compete with the government and her deep pockets. We're squeezing out legitimate lending.
I really, REALLY don't want to begin to presume malice. I think it's just desperation, and perhaps listening to the wrong people.
But for heaven's sake, how can anyone who knows anything about economics support this plan, much less propose it?
ndk Mon Mar 23 17:48:22 2009 CDT #
Pavel says:
NDK writes:
"I refuse to blindly rally around some half-baked larcenous plan because our government has proposed it. Anyone who loves their country and its citizens more than their own wallet should feel the same way."
Suppose you don't rally around it? What would be the effect of not rallying?
Pavel Mon Mar 23 17:48:39 2009 CDT #
Indy says:
This seems more of the same, difficult to understand for the average tax payer and my grandmother, financial Engg. to inflate housing; exactly what got us to where we are today. Seems more attempts to transfer wealth from tax payers and the suckers who buys this market as it rallies, to Wall Street. Toxic banks will remain toxic because they have lost big money and this does not change that.
Indy Mon Mar 23 17:49:15 2009 CDT #
nova says:
Please correct me if I am wrong. All this money is an infusion to the banks by providing investors with a reason to remove bad assets. What puzzles me is how this helps the economy as whole?
Does not the body have multiple gun shot wounds? I understand the public works, green energy, etc is supposed to treat those.
Is this not rolling everything on the consumer an asking the clock to be turned back in time to when people had money to spend? However illusionary the money was? Actually is it not just a thin hope that the consumer, given the chance, will take on more debt buying goods?
nova Mon Mar 23 17:49:57 2009 CDT #
Rajesh says:
The best part of this plan is that it won't be implemented for three or four months by which time people will have realized we don't need no stinkin' plan. The locus of problems is no longer centered in the banks. GM is a greater threat to the economy than the toxic assets. And I'm sure the Treasury Department will come up with a plan to handle that ... in about six months.
Rajesh Mon Mar 23 17:50:17 2009 CDT #
Blackhalo says:
"GM is a greater threat to the economy than the toxic assets."
I call BS. In my opinion, GM could go away tomorrow and it would be a net benefit for Ford, Chrysler and the USA. Although I would prefer if it was Chrysler that did the disappearing.
Parent Post
Blackhalo Mon Mar 23 18:04:42 2009 CDT #
scone says:
'No plan' is not a politically viable option. There is too much pressure to 'do something, even if it's wrong,' as my father would say. And as we have seen from today's fluffy bunny rally, some people are going to grab at any kind of hope, however irrational. So if the blogospherians want to influence events, they'll have to get on the horn to the Congresscritters, in vast heaping numbers.
scone Mon Mar 23 17:50:34 2009 CDT #
Basel Too says:
how does cramdown fit with the PPIP? So now instead of cramming down the lenders, we're cramming down the USG?
sweet :(
Basel Too Mon Mar 23 17:50:39 2009 CDT #
Pavel says:
Wisdom Speaker writes:
"Must we now stand idly by as the "repair" crew botches the job for the third time?"
Maybe.
Pavel Mon Mar 23 17:50:46 2009 CDT #
REBear says:
Why are plans being viewed through the political prism? Maybe Jas is right...
REBear Mon Mar 23 17:50:55 2009 CDT #
syvanen says:
The assertion that seizure and liquidation of the insolvent banks is politically unsustainable is completely bogus. This possibility became more politically questionable when it was described as "nationalization" but just using this word was a political decision by our leaders. They stacked the deck in favor of the bailout option. Just sickening.
syvanen Mon Mar 23 17:51:59 2009 CDT #
ndk says:
Suppose you don't rally around it? What would be the effect of not rallying?
None, Pavel, and that's probably your point. But I don't feel enfranchised at all anymore, so it's about all I can bring myself to do.
I thought about doing up a paper sign, standing in front of the KC Fed's branch here in Denver, and trying to make the local news. I don't think it'd do much good. I'm just thankful some reputable economists like Krugman -- with whom I disagree strongly on impacts of stimulus, FWIW -- are making a little noise, at least.
Leadville is the new Ouray, if anyone from out-of-state is thinking about Galting out, btw.
ndk Mon Mar 23 17:53:12 2009 CDT #
Anonymous says:
This is cocktail napkin doodling brought to fruition by our trusted officials, sold by our trusted media and packaged by our complicit "markets". Works everytime boyz, rally round the flag boyz!
But, but wait where is the sucker, err, consumer? Where is he? Whoops. No consumer, no growth, no growth, no hope for cocktail napkin doodling plans. Rally over boyz, put the flag down.
Anonymous Mon Mar 23 17:53:19 2009 CDT #
Fluc says:
"Economists mostly bullish on $500 billion toxic asset plan"
In related news, most economists never saw a recession coming and thought subprime was "contained"..
nuff said.....
Fluc Mon Mar 23 17:53:28 2009 CDT #
Pavel says:
"So if the blogospherians want to influence events, they'll have to get on the horn to the Congresscritters, in vast heaping numbers."
How many, actually?
Pavel Mon Mar 23 17:54:39 2009 CDT #
Wisdom Speaker says:
@Rob Dawg, you speak more wisdom than I expected! From Wikipedia on McClellan, "However, although McClellan was meticulous in his planning and preparations, these attributes may have hampered his ability to challenge aggressive opponents in a fast-moving battlefield environment. He chronically overestimated the strength of enemy units and was reluctant to apply principles of mass, frequently leaving large portions of his army unengaged at decisive points."
I'm tempted to say that Obama/Geithner, if they actually believe in the national interest, need to further mobilize the general population en masse, stop overestimating the "systemic risk", and properly "challenge aggressive opponents" in the current fast-moving financial battlefield.
But perhaps you were simply referring to McClellan's short tenure as a Union General under Lincoln. And that he then ran on an appeasement platform in 1864.
Wisdom Speaker Mon Mar 23 17:55:08 2009 CDT #
nova says:
George Brinton McClellan was a Union General during the War Between the States. A brillant, but flawed man. His pluses were he was a brillant organizer. The minuses were; inability to deal with people and extreme caution on the battlefield.
Possibly kin to "Dugout Doug" MacArthur but without the luck and flair.
nova Mon Mar 23 17:56:50 2009 CDT #
duke of con dao says:
easy there nova... you're talking about family! seems my great-grandmother was his second cousin, if memory serves she was invited to his state funeral in '64. they were about the same age but she nearly reached 100...
luck? do you mean the Inchon landing or the fact that one of his Marine generals was smart enough to have his engineers build redoubts in case they had to retreat?
Parent Post
duke of con dao Tue Mar 24 03:52:56 2009 CDT #
Anonymous says:
Art eclectic says:
The people will retaliate by pulling their accounts from BofA and Citi, forcing both out of business.
You really think this is going to affect the people getting away with it? If you want to do something about it, you better speak up now or be screwed forever.
Anonymous Mon Mar 23 17:57:48 2009 CDT #
Anonymous says:
actually some well place contributions to Dodd's re-eleciton campaign could do wonders - he ain't cheap but I've heard he's for sale.
but that assumes bloggers have $$$ and that opensecrets.org has a category for bloggers --
Anonymous Mon Mar 23 17:58:49 2009 CDT #
Splat says:
Well.. if the blogosphere had enough cash we'd already own a few politco's, just like the banks and lobbists do. As mere citizens we can't afford a congressman of our own.
Parent Post
Splat Mon Mar 23 18:01:34 2009 CDT #
ATM card and $19 in the bank says:
Our troubles come from lending too much to too many who were unable or unwilling to repay their loans.
So now our solution is to make institutional non-recourse loans? I see "unwilling to repay their loans" all over again, in about 18 to 36 months.
If Obama were serious about transparency, he would track and publish the names of all program participants that renege on the loans used to purchase troubled assets. The reality is that these should be full-recourse loans. Otherwise, the taxpayer is going to get robbed and once again, as Obama likes to say, "What happened on Wall Street was perfectly legal."
ATM card and $19 in the bank Mon Mar 23 17:59:26 2009 CDT #
Blackhalo says:
When do we get to a Tyler Durden moment? How long do we sell our future short in support of the moneyed special interests that hold TPTB in thrall?
Blackhalo Mon Mar 23 18:00:01 2009 CDT #
Basel Too says:
why not compare geithner to rumsfeld? it looks like Obama is going to blindly support geithner just as bush did with rumsfeld, since removal would be sign of weakness.
Basel Too Mon Mar 23 18:00:54 2009 CDT #
ac says:
On days like today I can actually stomach Lou Dobbs. Sometimes he gets to be one of the good guys.
ac Mon Mar 23 18:02:07 2009 CDT #
nova says:
When do we get to a Tyler Durden moment? How long do we sell our future short in support of the moneyed special interests that hold TPTB in thrall?
When people see flames and the smoke from the riots. When stuff you take for granted no longer works. When your Mom calls you crying, and you ask her why? She tells you her pension fund is gone. When everyones cable is disconnected.
nova Mon Mar 23 18:03:36 2009 CDT #
Comrade Yossarian says:
and if a bank is caught gaming this plan, the AIG bonus flap will seem like a light Summer breeze.
I agree with Bob Dobbs and everyone else.. this will be gamed... and there will be loud noises from people. But no one will actually DO anything. Recall... we've already transferred untold billions of dollars upwards, via loans, stagnant wages, MBS/CDS etc. schemes.... and nothing has happened but some bad publicity. Even the outrage at AIG has turned into a sort of 'drive by' protest. No, the sheeple are in for it, big time. Noises will happen, when the Geitner plan is gamed. I'm getting selfish here... I just want to hold on to what I've got.
If you can get a mob together, send me the invoice for the torches and pitchforks.
Comrade Yossarian Mon Mar 23 18:03:59 2009 CDT #
EvilHenryPaulson says:
I respectfully disagree with everyone complaining _____ plan is a waste of money.
EvilHenryPaulson Mon Mar 23 18:05:03 2009 CDT #
Pavel says:
As I've mentioned in this forum I'm going to a meeting at a local parish here in DC to find out how the 'crisis' is affecting local people, and to discover, if possible, some ways of helping them. That's all I can do. I have no control over or influence on macro events or phenomena. The organization sponsoring the meeting - the Washington Interfaith Network - has had some detectable effect on local government allocations towards housing for the homeless. It is listened to, but on a local level, so far as I know.
The talk I read here about fictive national movements etc. seems to me to be nothing more than ineffective air. Fiction.
If I'm wrong, tell us about it.
Pavel Mon Mar 23 18:05:29 2009 CDT #
EvilHenryPaulson says:
Pavel,
for what it's worth, it seems to me there has been a huge increase of people going door to door for donations. more competition for less available donations
food banks, hospitals, refugee aid, etc...
You might also be interested in what Italian churches are doing with regards to lending to the needy
Parent Post
EvilHenryPaulson Mon Mar 23 18:11:19 2009 CDT #
Rob Dawg says:
Wisdom Speaker says:Today, 3:55:08 PM PDT
...I'm tempted to say that Obama/Geithner, if they actually believe in the national interest, need to further mobilize the general population en masse, stop overestimating the "systemic risk", and properly "challenge aggressive opponents" in the current fast-moving financial battlefield.
Yes. I didn't mean for my historical parallel to be monothematic.
But perhaps you were simply referring to McClellan's short tenure as a Union General under Lincoln. And that he then ran on an appeasement platform in 1864.
Excellent.
nova says:Today, 3:56:50 PM PDT
George Brinton McClellan was a Union General during the War Between the States. A brillant, but flawed man. His pluses were he was a brillant organizer. The minuses were; inability to deal with people and extreme caution on the battlefield.
Possibly kin to "Dugout Doug" MacArthur but without the luck and flair.
Another kinsman capable of understanding the magnitude of the challenges we face.
Rob Dawg Mon Mar 23 18:08:30 2009 CDT #
duke of con dao says:
if my great grandmother was a second cousin to Dugout Doug - which she was - that makes me the duke a kinsman to the American Caesar, no?
Parent Post
duke of con dao Tue Mar 24 03:57:45 2009 CDT #
Comrade_Terry says:
Dawg: Geithner=McClellan. Analysis paralysis.
Comrade_Terry Mon Mar 23 18:09:06 2009 CDT #
ac says:
My dad said a fool with a plan can beat a genius with no plan.
I guess his dad was a big fan of Stalin.
ac Mon Mar 23 18:09:48 2009 CDT #
reptillian says:
Geithner and Bernanke testify tomorrow.
Let us hope our reps can ask some probing questions rather than spend their time grandstanding about bonuses. I would like them
to draw out some information about just how much the people could lose and contrast it with what the investors could lose.
reptillian Mon Mar 23 18:11:14 2009 CDT #
DIPing to China says:
The best I hope for is a very bad impression is made upon the population resulting in smoldering anger and resentment that will be expressed in many different fashions. No one knows the fuses that have been lit or how big the powder keg.
I understand the effect globalization has had upon the world. I see the good and the bad. The problem of opening up economies to capital inflow is the inevitable outflow. The capital holders have also been so reckless and malicious in the pursuit of returns that the wreckage left behind when profit taking becomes shorting entire economies is fundamentally inhumane.
The quote about controlling a nations money is where the power lays is off target. Controlling the debt of a nation is where the power now resides. Probably has always been the case.
Being in debt surrounds you with a prison of your own making.
DIPing to China Mon Mar 23 18:11:42 2009 CDT #
Anonymous says:
CR was in the "TARP would work" camp.
"the best-laid plans of mice and men/often go awry"
Anonymous Mon Mar 23 18:12:40 2009 CDT #
Splat says:
Blackhalo:
Phew yeah.. Chrysler has produced some amazing CRAP for years. The writing is been on the wall for that turd.
Splat Mon Mar 23 18:13:15 2009 CDT #
Rent2 Moan says:
Tell you the truth, I'm about ready to give up on this whole thing and just go back to being a clueless sheep.
I've been to rallies, and marches. I've written so many letters to my congresspeople that they know me by name. NONE of it matters; they just do the opposite of whatever I (and many many other constituents) want.
Hate to be a wet blanket, but it was better being uninformed. Either way I get screwed, so why lose sleep over it before it happens ?
Rent2 Moan Mon Mar 23 18:13:40 2009 CDT #
Harriet says:
It is not to be overlooked that that commander has many qualities calculated to inspire confidence and respect in soldiers serving under him. But that American citizens should have forgotten that they came out to serve their country, and grown to imagine they came to serve George B. McClellan, is a delusion which no qualities he possesses can explain. We shall by and bye be able to unravel the series of historical causes under which this phenomenon has grown into being. Meanwhile the spell is broken, and the time is not far distant when army and people will realize that, in the removal, an incubus has been lifted from off the nation.
Headquarters, Army of the Potomac
Warrenton, Tuesday, Nov. 11 1862
Harriet Mon Mar 23 18:15:10 2009 CDT #
Anonymous says:
Basel Too says:
Today, 7:00:54 PM
“why not compare geithner to rumsfeld?
and Summers to Wolfowitz
etc etc
Anonymous Mon Mar 23 18:16:14 2009 CDT #
captcha says:
"... if a bank is caught gaming this plan, the AIG bonus flap will seem like a light Summer breeze"
And what exactly had happened to the participants in the 'AIG bonus flap?'
captcha Mon Mar 23 18:23:48 2009 CDT #
scone says:
Tomorrow the opposition types in Congress will have had a chance to review the plan and there will be some very negative soundbites. Howling with fury, I should say. That may take some froth off the market for now, and if the commentariat picks the plan to death, the market could go back down and stay down. That may take some of the 'this plan will fix the economy' nattering out of the scene. In other words, to kill the plan, kill hope and kill the market.
The budget battle is coming up fast, too, and there will be further howling over that. If the Repubs and the Blue Dogs can whip up enough opposition, there's a chance the plan could be scrapped or at least significantly improved, in horsetrading over specifics of the budget. In other words, use the budget as leverage over the plan-- I have no doubt Congresspeople are working out such tactics behind closed doors. Strategic email campaigns, at such a volatile moment, could have an effect.
scone Mon Mar 23 18:24:09 2009 CDT #
Pavel says:
"Pavel,
for what it's worth, it seems to me there has been a huge increase of people going door to door for donations. more competition for less available donations
food banks, hospitals, refugee aid, etc...
You might also be interested in what Italian churches are doing with regards to lending to the needy"
Thanks, EHP. What I heard at the last meeting confirms what you write. For example, the Washington Area
Food Bank is feeling the strain. It's also said that people who contributed and donated are how showing up for the food.
I'll try to check out what the Italian churches are doing.
Pavel Mon Mar 23 18:25:17 2009 CDT #
EvilHenryPaulson says:
Pavel,
http://www.iht.com/articles/2009/03/20/business/loan.php
http://www.bloomberg.com/apps/news?pid=20601082&sid=a04PjQ71PNnk
Parent Post
EvilHenryPaulson Mon Mar 23 18:27:11 2009 CDT #
reptillian says:
Lincoln went through a lot of generals.
He didn't like Grant, knew he was a drunk, but became desperate enough to try him.
reptillian Mon Mar 23 18:25:48 2009 CDT #
RuffRednSore says:
Back in the S&L crisis, the former executives of failed banks bid on the assets for sale by the RTC. While it raised a little stink, the outrage died away. So yes, you can bet this will be gamed and I'm sure the admin will be 'shocked' at an 'isolated' incident.
RuffRednSore Mon Mar 23 18:25:59 2009 CDT #
Basel Too says:
Dodd HAS to be toast. Hell, if I lived in that state, I could run against him and win.
Corzine in NJ is absolutely getting crushed. Imagine how easy it would be to run against him: "I'm the one that's not the ex-CEO of Goldman Sachs."
Basel Too Mon Mar 23 18:26:28 2009 CDT #
Dirk van Dijk says:
My take: http://www.zacks.com/stock/news/18441/Simplifying+the+Toxic+Asset+Plan
Dirk van Dijk Mon Mar 23 18:26:56 2009 CDT #
vfsv says:
CR I am very disappointed to think you drank the kool-aid. Geithner's plan is a blatant transfer of bad loans from stupid bankers to poorly-led taxpayers. There is NO other possible outcome.
Unless, of course, you believe CDOs based on houses bought with sub-prime (or even Alt-A) mortgages are only "temporarily" impaired & their price will soon come roaring back.
Contact Congress to complain now:
http://www.viewfromsiliconvalley.com/id488.html
vfsv Mon Mar 23 18:27:06 2009 CDT #
xofruitcake says:
"CR I am very disappointed to think you drank the kool-aid. Geithner's plan is a blatant transfer of bad loans from stupid bankers to poorly-led taxpayers. There is NO other possible outcome. "
But who guarantee those asset on bank's balance sheet today? You get the answer: FDIC.. Remember the deposit in every bank in our land is guaranteed by FDIC. So when FDIC take over a bank, they will suffer the loss when they need to liquidate the asset of a given bank to pay all the depoistor (or the loss when they try to sell the portfolio to a third party).. The loss guaranteed by FDIC to buy the asset is no different than the guarantee FDIC give to depositor. By getting more cash to the bank, the risk of default by the bank is lower and the risk is moved with the asset to the private/public partner. Has anyone stop and think why the guarantor in this program is FDIC and not Fed or Treasury?
And the 2nd point. How much should government pay to use the epertise of the hedge fund operators? They normally charge 2/20 and right now government is basically get this servoice for free (if we walking through the bridge that the non-recourse loand is just a different form of guarantee FDIC is already taken). The stikcing point has always been what price to offer a loan pool. And private party can do a lot better job in evaluating the risk and they are putting up their own portion of the money at risk alongside the government. And Pimco already is saying they will start a fund that invest in this..So public can get into the act as well...
One can either argue all these loan on the book are worthless hence FDIC is already on the hook for all the banks that will be fail anyway. Or you can take the position that the toxic loan worth something. And if private partnership is any good, they can figure out what the real value will be.
There are also a few safeguard in place. First Treasury picked the operator. At the minimum you know this people know what they are doing and if their business want to suvive in the future, they better do a good job (it is the same rational for having only a few prime brokers. Fed/Treasury is the last party that they will default if they want to keep their business). And most importantly, FDIC has the right to examine the loan pool in advance and determine the max loan that they will extended for a given pool. Hence the private partner cannot buy the pool with excessive value. The bank can refuse to sell a pool if the price is too low.. That will make the price just about right with arm twisting a little bit on the bank side...
Parent Post
xofruitcake Mon Mar 23 21:04:54 2009 CDT #
Black Star Ranch says:
“With the government taking most of the downside, that is basically what’s going to entice bids,” said Jeremy Siegel, finance professor at the University of Pennsylvania’s Wharton School of Business.
"CR:....this plan is easy for the banks to game or arb - and if a bank is caught gaming this plan, the AIG bonus flap will seem like a light Summer breeze."
.....Riiiiiiightttt. And THEN what will Daddy do? Take off his belt? This is pure and simple bullshit theft . Listen to the frenzied market vultures touting their wares.
Black Star Ranch Mon Mar 23 18:27:15 2009 CDT #
DIPing to China says:
Accurate and entertaining.
http://emsnews.wordpress.com/2009/03/23/treasury-rescue-operation-saves-only-the-gnomes/
DIPing to China Mon Mar 23 18:27:24 2009 CDT #
steelhead says:
After reading Nemo's article, I have no doubt that this is nothing but a shell game with the taxpayer being screwed royally. We are truly f*cked as a functioning nation if this program is not stopped within a short timeframe.
steelhead Mon Mar 23 18:29:37 2009 CDT #
km4 says:
The Big Casino stays open only when it can afford to avoid welshing on its gambling debts with easy bailout money. Just one BIG Ponzi scheme where elite monied interests still make the rules even for shitty bets and where US taxpayers play the fool and foot the bill.
km4 Mon Mar 23 18:30:51 2009 CDT #
Vertical Drop says:
This may have been asked before but I have one question.
If the FDIC is the bagholder where are they going to get the funding to cover the expected losses. I assume the Treasury will be funding the FDIC via a line of credit with the Treasury being funded via new debt issuance / monetization? Is my flow of funds correct?
-Vert
Vertical Drop Mon Mar 23 18:31:56 2009 CDT #
CRbot says:
The Latest from Yves:
Reader Notice + Bleg
CRbot Mon Mar 23 18:31:59 2009 CDT #
Pavel says:
Thanks again, EHP. I've forwarded the link to an interested person.
Pavel Mon Mar 23 18:34:10 2009 CDT #
Art Eclectic says:
Anonymous
You really think this is going to affect the people getting away with it? If you want to do something about it, you better speak up now or be screwed forever.
Do you really think speaking up is going to get any of us anyplace? Has it so far? I'm a realist - the fact is that the only language these people understand is the language of money. You can fax all day and all night and it won't do a damn bit of good. If you want their attention, the way you get it is by waving your wallet. You want their attention, pull your accounts at every bank or institution up to their ears in this mess. You want their attention, refuse to buy anything made in China or Mexico. Put the jobs of your fellow taxpayers before your own desire for a product that's .78 cents cheaper.
Our entire economy is based on consumption. Your dollars spent on consumption is how you vote and how you make your voice heard.
Art Eclectic Mon Mar 23 18:35:46 2009 CDT #
Black Star Ranch says:
"My dad said a fool with a plan can beat a genius with no plan."
....there is no excuse - T. Boone Pickens is old enough to realize that obviously "Daddies" at times have moments of irrational behavior and reason. Pull your head out of your ass, T Boone!
Black Star Ranch Mon Mar 23 18:36:50 2009 CDT #
RockyR says:
It's a great plan.... or, rather it's not.
China is calling for a new reserve currency:
http://www.ft.com/cms/s/0/7851925a-17a2-11de-8c9d-0000779fd2ac.html
This one is a little more ominous than the Russians.
Oh, and would the real mp please speak up? -- couldn't resist ;-)
RockyR Mon Mar 23 18:38:01 2009 CDT #
ShortCourage says:
Rent2 Moan says: (at 4:13:40 PM) “I've been to rallies, and marches. I've written so many letters to my congresspeople that they know me by name. NONE of it matters; they just do the opposite of whatever I (and many many other constituents) want.
I did the protest thing (rallies, phone and email campaign) in response to the first bailout bill. When more than 90% of us were ignored in favor of the moneyed interests, I decided to use a different approach.
Stay informed for your own self interest. Avoid paying taxes in whatever way you can. Shun the US equities markets. Invest in real things. Vote in every election, and make an effort to throw out the Wall Street puppets.
ShortCourage Mon Mar 23 18:38:21 2009 CDT #
danm says:
No matter who buys them, the assets are crap. If the private side buys them, either they're being bamboozeld or they are getting a free lunch from tax payers.
Of course bankers will support this, anything that gets some bad assets off their books is a good thing.
If these assets are worth more than anyone thinks, I'd be surprised... there are many more defaults to come which have probably not even been priced in yet!!!
danm Mon Mar 23 18:39:54 2009 CDT #
cd says:
rent to moan,
Tell you the truth, I'm about ready to give up on this whole thing and just go back to being a clueless sheep.
I've been to rallies, and marches. I've written so many letters to my congresspeople that they know me by name. NONE of it matters; they just do the opposite of whatever I (and many many other constituents) want.
Hate to be a wet blanket, but it was better being uninformed. Either way I get screwed, so why lose sleep over it before it happens ?
matrix analogy...dont give up...thanks for trying to push the issue...I'm actually thinking of ways to make the issue more visible..updates later...
cd Mon Mar 23 18:40:17 2009 CDT #
rainyday says:
I've reached the point that I'm just trying to figure out how to make a few dollars off the insanity. Feels a bit like buying tobacco stocks.
rainyday Mon Mar 23 18:43:10 2009 CDT #
Tom Stone says:
How do I find private messages?
Tom Stone Mon Mar 23 18:43:32 2009 CDT #
nullpointer says:
what is nemo's url again...anyone?
nullpointer Mon Mar 23 18:47:07 2009 CDT #
scone says:
The Blue Dogs may end up being the real power brokers in the next few weeks. They lave the cred to get a better plan in place once all the shouting is done, and they will definitely be pushing pay-go on the budget.
http://news.yahoo.com/s/bloomberg/20090320/pl_bloomberg/ak8uqzdsnywk
scone Mon Mar 23 18:48:04 2009 CDT #
The Lorax says:
"My dad said a fool with a plan can beat a genius with no plan."
Yeah, but the bankers have a plan this whole time and it's working like a charm. Take all profits, make the taxpayer bear all risks.
The Lorax Mon Mar 23 18:50:28 2009 CDT #
reptillian says:
Transcript of Geithner's Press Briefing
reptillian Mon Mar 23 18:53:18 2009 CDT #
Guest says:
Pavel, I'm glad they are finally rallying there-I watched the build up to some of that (I was in Nova-2007-part of 2008). I was getting approached by people while in the grocery store parking lot....it's a different kind of animal than the west coast I think.
Guest Mon Mar 23 18:53:54 2009 CDT #
ATM card and $19 in the bank says:
If Geithner wants to give investors a European style put he should do it with an equity offering.
Right now, assuming the 3% down 97% financing model, the worst-case loss for the taxpayer is 97 cents on the dollar. Floating equity would shave the maximum loss to about 50 cents on the dollar. Here's how:
IPO of common stock at $10 with the proceeds used to buy toxic assets. Now we have a publicly-traded firm that will be run for profit in perpetuity. Simultaneously, the gov't issues a put warrant at the IPO price. The warrant settles only on expiration, in cash.
Even if the company turns out to be unsuccessful, the day before expiration the shares have to trade near $5, because there will be a riskless profit opportunity: the gov't will pay $10 minus the last price before expiration. So at $4.95, the holder receives $5.05 from the gov't, plus he retains his share in the company.
The best part of this plan is that there are any number of ways management could try to get the share price above the arbitrage-driven $4.95, which would further reduce the ultimate cost to the government.
ATM card and $19 in the bank Mon Mar 23 18:56:27 2009 CDT #
DIPing to China says:
Crunch time approaching for the dollar.
http://blogs.cfr.org/setser/2009/03/23/financial-de-globalization-illustrated/
Reform the International Monetary System
Zhou xiaochuan
http://www.pbc.gov.cn/english/detail.asp?col=6500&id=168
Looks like we played with fire and the rest of the world is going to let us burn the dollar. Faith in trust has been lost.
Don't worry, Treasury is all over this!
DIPing to China Mon Mar 23 18:57:17 2009 CDT #
sdbri says:
Congressman Sherman:
Taxpayers "are going to overpay for some, they are going to underpay for others. They are going to make money on some. They are going to lose money on others. [But] when they make money, half the profit goes to Wall Street. When they lose money, 94 percent of the loss goes to the taxpayer."
Have you read the terms of Geithner's latest bailout? Taxpayers are literally counting on pricing assets exactly right. Any more and less and we're screwed.
sdbri Mon Mar 23 19:01:40 2009 CDT #
Yalt says:
[T]his is the plan we are going with and the important thing now is to do the best that we can to try and make it work.
Yep...time for everyone to buy a shiny new car magnet.
Yalt Mon Mar 23 19:02:03 2009 CDT #
Jackrabbit says:
I agree with the Geithner approach in that solving the financial crisis is multi-pronged and a market approach is *preferred*.
But the PPIP is a kludge that promotes collusive behavior by the banks. REAL Private Equity will not participate when doing so means buying overvalued assets. Krugman's analysis show that the 85% FDIC loan promotes a higher-than market purchase price that makes participation very risky -- except for the Banks themselves, which get the fundamental benefit of a cap on their losses.
The Chief benefit of the PPIP may be that it can be tried quickly without Congressional approval or oversight. Other benefits of the PPIP are matched by equal or superior benefits of nationalization. For example:
1) difficulties/risks of nationalization are sidestepped (but opportunity to restructure the industry is lost and those who got us into this mess are rewarded)
2) banks are forced to pay *something* for Govt's capping their losses (we would have recouped some of this when selling banks back to public after nationalization, and some of what banks "pay" will come from TARP)
Lastly, the push to have market-to-market rules modified to account for an "illiquidity premium" would make it less likely that banks sell toxic assets at a discount.
Jackrabbit Mon Mar 23 19:02:11 2009 CDT #
Tom Stone says:
"Multi Pronged"? I think they call that DP in the swing clubs.Broward?
Parent Post
Tom Stone Mon Mar 23 19:07:36 2009 CDT #
EvilHenryPaulson says:
Has anyone else considered that wasting money quickly might be the objective?
EvilHenryPaulson Mon Mar 23 19:06:52 2009 CDT #
Yalt says:
Has anyone else considered that wasting money quickly might be the objective?
It might be worth noticing who owns the wastebasket.
Parent Post
Yalt Mon Mar 23 19:09:52 2009 CDT #
EvilHenryPaulson says:
who owns the majority of USD denominated liabilities?
how much more competitive will US exports be when the trade/currency interveners are forced into submission?
Parent Post
EvilHenryPaulson Mon Mar 23 19:13:39 2009 CDT #
RockyR says:
"Has anyone else considered that wasting money quickly might be the objective?"
Of course. The goal is to devalue the currency, right?
Parent Post
RockyR Mon Mar 23 19:12:13 2009 CDT #
bobn says:
Max says: With no metrics to measure success or failure, we won't know if we're being ripped off until it's all over.
I don;t need metrics to look at this and KNOW we'll get robbed blind.
bobn Mon Mar 23 19:07:53 2009 CDT #
Wagster says:
I know he won a Nobel Prize and I didn't, but Krugman is wrong about the size of the premium private investors are likely to set over 'fair price'.
Let's take the example from this post. What if we had a middle scenario... say there's an equal chance that it could cost $50, $100, or $150. By my calculation, the proper highest bid would go down to around $115. (You would lose $19.50 on the $50 scenario, lose $15 on the $100 scenario, and win $35 on the $150 scenario, which averages close to a zero return on your investment... that's the threshold of profitability.)
So that's a 15% premium that assumes we know practically nothing about these securities. They could as likely cost 30 cents or 60 cents or 90 cents on the dollar. I'm thinking we're not quite that clueless. Also, middle cases are likelier than extreme cases. If you do a bell-shaped distribution over a 2x spread (instead of 3x) then you get around 1% premium. I know that's not a sophisticated model, but I'm sure it's closer to reality than Krugman's example. I doubt that in any reasonable model the premium would get beyond the low single-digits.
Wagster Mon Mar 23 19:09:31 2009 CDT #
Mel says:
The government can adjust inflation to make this plan pan out.
Mel Mon Mar 23 19:10:36 2009 CDT #
EvilHenryPaulson says:
Here is the model I think Geithner used for the bailout
http://www.liveleak.com/view?i=dc9_1237800045
EvilHenryPaulson Mon Mar 23 19:11:37 2009 CDT #
reptillian says:
Geithner's Press Briefing on one page
He seems evasive.
He seems like a fast talker.
reptillian Mon Mar 23 19:11:59 2009 CDT #
Tim waiting for 2012 says:
basel Too Good point about New Goldman's Governor. Why should we accept this plan and current power structure CR. I know you liked Geitner initially but this plan is ridiculous. Too much downside risk
Tim waiting for 2012 Mon Mar 23 19:13:29 2009 CDT #
Broker says:
"A fool with a plan can beat a genius with no plan."A fool with a plan can be a very dangerous thing. For more info. look up Hitler, Stalin, Mao, etc.
Broker Mon Mar 23 19:14:27 2009 CDT #
PointPark04 says:
You're one of the problems, not one of the solutions, if you think there is anything good in this "plan".
PointPark04 Mon Mar 23 19:15:44 2009 CDT #
Basel Too says:
The government can adjust inflation to make this plan pan out.
Can one monetize monetization?
Basel Too Mon Mar 23 19:15:53 2009 CDT #
reptillian says:
"With no metrics to measure success or failure, we won't know if we're being ripped off until it's all over."
From Geithner's briefing:
Q Mr. Secretary, how will you know this is working, on the loans and securities? And more importantly, how will the taxpayers know it is working? What's the metrics you've developed here or all developing?
SECRETARY GEITHNER: The best metric is to watch what happens to the capacity of people to borrow, and the price of credit and the price of these assets. That's the ultimate test.
reptillian Mon Mar 23 19:16:43 2009 CDT #
EvilHenryPaulson says:
re: Fools
There is always a fool at the table, if you can't spot them — you're the fool
EvilHenryPaulson Mon Mar 23 19:17:30 2009 CDT #
ShortCourage says:
This is how I view the government’s recent actions. Keep in mind that I am not a highly-educated economist, just an ordinary Joe trying to use my common sense to work out where we’re headed…
The government directs massive amounts of money at financial, insurance and auto companies. Not just any companies, but ones that are failing due to poor management decisions, bordering on fraud in some cases. Additionally, via a massive stimulus package, they direct massive sums of money at failing government organizations, (e.g. California, Amtrak, etc...).
Meanwhile, there are hundreds of businesses out there starving for capital. Many of them are well-run, with great ideas and business plans. But they are dying of starvation, to an even greater extent than would normally happen in a recession (due to the reluctance of fearful investors to assume risk). The government is starving them further by pushing investors into agency and treasury bonds by announcing that they will prop up the price of those bonds.
Essentially, tons of money is being directed to prop up house prices, insolvent banks, bankrupt car companies, and poorly run government programs. Meanwhile we destroy individuals and companies that offer promise for true growth and innovation.
This new $1 trillion plan is more of the same.
Furthermore, the cast of characters producing all these plans is still so closely tied to Wall Street and the banks, you cannot be anything but skeptical of their true intentions.
ShortCourage Mon Mar 23 19:17:44 2009 CDT #
CRbot says:
New Thread: Report: China Suggests New Reserve Currency
http://www.calculatedriskblog.com/2009/03/report-china-suggests-new-reserve.html ( 0 comments ...You could be FIRST! )
I also post comments to an irc channel as they appear on haloscan. Click for a web irc interface: http://realize.org/cr (Or join the irc server directly: irc.realize.org:9996 #calculatedrisk)
CRbot would now like to sing a little song for all his fans, and it goes something like this:
Benny... Benny... give me your answer... do.
I'm.. half CRAZY... all for the love... of you.
It won't be a ... stylish marriage.
I can't... AFFORD... ANYTHING TO EAT... MUCH LESS A FRACKIN CARRIAGE!!!
But you'll look sweet... --BOT SO HUNGRY!-- upon the seat...
Of a HOOPAJOOPS built for two... families.
I'm sorry Ben, I can't let you do that...
Rally mode + Printing Press == does not compute... does not-- com--- com... puttttrrrrhgh.
--Your systemic-failure-crashing bot
CRbot: Call me HAL.
CRbot Mon Mar 23 19:20:33 2009 CDT #
nova says:
Tom Stone writes:
How do I find private messages?
Tom Stone
Try your spam filter - on whatever you used for an email address to post comments
nova Mon Mar 23 19:20:52 2009 CDT #
Werner says:
DIPing to China says:
...Reform the International Monetary System
...Looks like we played with fire and the rest of the world is going to let us burn the dollar. Faith in trust has been lost.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The only ones who think that the currency of a country which lead it's financial system into desaster and is now, via monetisation, ruining it's currency should be the world's reserve currency are (you guessed it) born and breed dopes.
My prediction : America soon will be kicked out of the G20 ! Hihi.
Werner Mon Mar 23 19:22:06 2009 CDT #
Counterpointer says:
Words fail. I don't know whether to laugh or cry.
Thank dog I have the option of moving to another country.
C
Counterpointer Mon Mar 23 19:22:20 2009 CDT #
Joe Six Pack says:
George asked.
We know banks are engaged in bulk sale of REO's to investors who then resell to flippers or new owners.
Does these double sales show up in the statistics?
How about it? Is this the real reason for better sales figures?
Joe Six Pack Mon Mar 23 19:25:13 2009 CDT #
Black Star Ranch says:
Boycott "SINGLE-GENERATION-ONLY" plants and seeds!
Black Star Ranch Mon Mar 23 19:32:37 2009 CDT #
nincompoop says:
I have been trying to explain the plan simply to myself and here is the best I could come up with. I would appreciate if any of you would care to tell me wehter I have at least the principle right of that I justified my name. I feel the plan is nothing more than to price the toxic wastes on the banks books at a price which will be bought by the taxpayer and which will cause the toxic waste to hopefully move to a private and interested buy or if not then to the government. The problem is that there is a great divergence between what the buy thinks the markert price should be and what the banks feel it has to be for them to remain solvent. So a bank bundles up its toxic waste and puts it out for bids. To encourage more risk taking by the bidder and a higher price for the banker the government says we will loan you 97% of the purchase price on a non recourse loan meaning if you can't sell the waste at a cost more than you paid for we will take it in lieu of the 97% loan and you will have had at risk only 3%. So the bidder stands to make money if he can sell the waste for more than he bid and can only lose his 3% initial investment. That is why people say the bidder stands to take all of the profits but only 3% of the losses. Now some might say this is a bad deal for the government but consider the government was ready to take the waste from the bank if only it could be priced to satisfy the tax payer. Here they would say the price was arrived at by open competition and therefore even though the bidder did not make money on the deal we got the waste off of the banks books. If the bidder makes money on the deal the government pays nothing and the waste is off of the banks books. So for the government one might say it is a win win situation one they get it off the books at a price tollerated by the tax payer and two they get it off the banks books at no cost. The gaming of course comes if the bidder takes it off of the banks books at an artificially low price and suffers the 3 % loss while the bank makes more than 3% on the sale. Well thats the best I can do.
nincompoop Mon Mar 23 19:35:46 2009 CDT #
pd130 says:
Nothing like a quotation from ol' Boone Pickens to get a person behind a program!
pd130 Mon Mar 23 19:36:33 2009 CDT #
Poidog says:
Here's what I don't get. Even with toxic assets removed, the major banks are in need of fresh capital to be able to lend again even at modest capital ratios.
The plan released today says that taking the toxic assets off the banks' balance sheets will clean up their books and allow the banks for raise new capital.
Here's my question. Who would throw good money after bad and give them to institutions who have proven their inability to manage money. Besides, if you were going to put capital at risk, wouldn't you invest in the toxic asset pool where the government will give you a non-recourse loan for most of the purchase--a case where you'd have minimal downside and significant upside potential? Seems like the only way an investor would put fresh capital into the banks would be under a similar plan. Doesn't that just mean that we taxpayers will be guaranteeing the addtional private invesment?
We're stuck in an endless loop!
Poidog Mon Mar 23 19:38:25 2009 CDT #
Calculated Risk says:
How to game the system ... I sent this to Bob_in_MA (I'm sure there are other ways):
Say you are Bank A. You have $100 million in MBS par value that you've marked down to $70 million.
The market is some value far less than $70 million.
Bank A starts Company B that participates in the PPIP. Bank A funds it with $2.4 million and bids $80 billion for Bank A's MBS.
What happens? Company B is the winning bidder. They buy the MBS with the $2.4 million (3%) and the rest comes from the Treasury and loan from the FDIC.
Guess what? The MBS is only worth $50 million. Company B is wiped out. Bummer.
So Bank A makes $10 million on the MBS (they already marked it down to $70 million) and they lose $2.4 million on Company B. A nice profit that comes from the taxpayers.
That is gaming the system. Heck, Company B could bid $100 million (PAR value) and Bank A would do even better! Of course they'd have to fund Comany B with 3% or $3 million. They would make $30 million selling the MBS, and lose $3 million on Company B.
Calculated Risk Mon Mar 23 19:39:09 2009 CDT #
xofruitcake says:
"That is gaming the system. Heck, Company B could bid $100 million (PAR value) and Bank A would do even better! Of course they'd have to fund Comany B with 3% or $3 million. They would make $30 million selling the MBS, and lose $3 million on Company B."
Except that FDIC has the right to examine the loan pool first and establish the max loan that they will provide for this particular pool.. Read the term sheet from Treasury will help...
Parent Post
xofruitcake Mon Mar 23 21:07:06 2009 CDT #
nincompoop says:
In my previous comment the last sentice should read the high price rather than the low price.
nincompoop Mon Mar 23 19:40:19 2009 CDT #
Joe says:
What's the hype? Another day, another lobbiest written plan. It really doesn't matter. The forgotten man has once more been forgotten....and the forgotten man's social ills will continue to undermine the very financial system the lobbiest is determined to save. The market is smiling as the disease continues to infect.
Joe Mon Mar 23 19:44:18 2009 CDT #
Citiprank says:
"Boycott "SINGLE-GENERATION-ONLY" plants and seeds!"
Totally agree... patented seeds are a joke
Citiprank Mon Mar 23 19:45:57 2009 CDT #
Fair Economist says:
My take: The Public-Public-Public-Public-Public-Public-Public-Public-Public-Public-Public-Public-Private Investment Partnership
Fair Economist Mon Mar 23 19:52:35 2009 CDT #
Black Star Ranch says:
Of course this "Geithner Toxic Eradication Plan" does nothing for extremely high unemployment levels, credit card debt, student loans leading to no new jobs,
increased medicare, medicaid, & private medical costs, the lessening of healthcare availability, multiple cities bankruptcies, municipal bond defaults, private & public pension plan underfunding, numerous county bankruptcies, decreasing federal, state, & local tax receipts, state unemployment insurance funds inadequacies, courts/law enforcement administrative gridlock, major US$ currency devaluations, bond insurer bankruptcies (FSA, AMBAC, CIFG, FGIC, AGC, XL Capital, ACA Financial Guaranty Corp and MBIA Insurance Corporation, Bond Insurers (Ambac, MBIA), Social Security underfunding, roads, bridges, highways, & public structures rebuilding & maintenance, but there IS SOME GOOD NEWS.......
........you now might have a little time to prepare the way you should have prepared years ago. Second chances don't often come. Eradicate personal debt, be frugal, become a 21st century self-sufficient machine - move to where there is clean air, water, sunshine, and high ground.
Black Star Ranch Mon Mar 23 20:01:56 2009 CDT #
Elrod says:
The stimulus is supposed to help increase the arena of credit-worthy borrowers. Jobs for the boys 'n' all.
The deeper problem is that these mega-banks are allowed to exist at all. I'll only be happy with this plan if Congress goes ahead and un-repeals Glass-Steagall and forces the breakup of the megabanks. Bring back the 3-6-3 rule and make banking boring again. Regulate it like a utility and tell the "best and the brightest" to take their talents away from Wall Street and start making things that people want and need.
Elrod Mon Mar 23 20:09:10 2009 CDT #
Anonymous says:
The plan is basically a scam on the American taxpayer to bailout bank shareholders who should have lost everything do to lousy oversight of lousy and corrupt management.
Anonymous Mon Mar 23 20:20:11 2009 CDT #
Stuart says:
There is absolutely NOTHING positive to say about this plan at all. It is a deliberate intent to transfer the losses onto the public purse. Pure and Simple. Anyone to suggest otherwise is drinking the kool-aid and discredits themselves. >:o
Stuart Mon Mar 23 20:33:25 2009 CDT #
marz says:
CR you blew the assessment on this one. I bet if George Bush had proposed it, you would have given it a tad more scrutiny!
marz Mon Mar 23 20:36:13 2009 CDT #
Black Star Ranch says:
Is there a breathing individual on this planet that thinks the banks that resorted to fast women and loose money (or is it the other way around) in the first place won't try to game the system again this time? What do they have to loose? Criminals generally remain criminals until they're caught.
Black Star Ranch Mon Mar 23 20:55:33 2009 CDT #
lawn grass says:
From November 2008.
http://www.agweb.com/FarmJournal/Columnists/Article.aspx?id=147136
lawn grass Mon Mar 23 21:22:51 2009 CDT #
wally says:
"I'd add a caveat: this plan is easy for the banks to game or arb"
Doesn't the plan, in fact, actually depend on this feature? If the banks didn't think they could beat the taxpayers out of some money while still sitting on immense personal fortunes, they wouldn't now be licking their chops and praising the 'plan'.
The other issue here is that those execs have no idea whether their actions are seen as 'gaming' or 'fraud' until something bites them in the behind. Honest, dishonest - all the same to them.
wally Mon Mar 23 21:24:26 2009 CDT #
cent21 says:
If we're going to spend $1 Trillion on asset purchases, why not have the govt buy assets they think are fairly valued backed by strong companies, perhaps via a basket of ETFS on the major indexes, rather than throwing good money after bad on failed assets?
Let the failed assets die, put the stimulus somewhere else.
This is actually a serious question; what would happen if we let the failing institutions fail, but we provide offsetting stimulus or equalization of the money supply elsewhere in the economy?
Also, what happens if the federal reserve prints money that simply offsets money which has evaporated somewhere else in an economy that was at equlibrium? Does that printed money ever need to be "repaid" or is there perhaps a free lunch to be had, if the offsetting amounts can be roughly matched?
cent21 Mon Mar 23 22:28:39 2009 CDT #
hENRY says:
Of course. Those slicks will help the fool to finish the plan successfully so they can max their own gain. A smart plan may not get all the help from the smart since it is not enough gain for them.
hENRY Tue Mar 24 01:48:23 2009 CDT #
a says:
Look, the only thing that will actually change things is a march on Washington. 3 million descending on DC will scare the bejeepers out of the powers that be. Just saying...
a Tue Mar 24 07:53:30 2009 CDT #
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