The gov't will end up making money on the deal. They are ruthless tightwads.Quote:
Originally Posted by bkkandrew
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The gov't will end up making money on the deal. They are ruthless tightwads.Quote:
Originally Posted by bkkandrew
Maybe the US can get a refund on the Iraq war. That should square things up:)Quote:
Originally Posted by who
Originally Posted by bkkandrew https://teakdoor.com/images/td_defaul...s/viewpost.gifQuote:
Originally Posted by Spin
Commentator on BBC World Business Report stated that M-O-A-B would cost IORO $2TRILLION.
Oh dear, thats a lot of money to print (because no-ones going to lend them that much)...
What do all the initials stand for ?
Above is my original post on this subject.
Would GWB be able to find the Refunds Dept. thought?Quote:
Originally Posted by Spin
Congressional Leaders Stunned by Warnings
WASHINGTON — It was a room full of people who rarely hold their tongues. But as the Fed chairman, Ben S. Bernanke, laid out the potentially devastating ramifications of the financial crisis before congressional leaders on Thursday night, there was a stunned silence at first.
Mr. Bernanke and Treasury Secretary Henry M. Paulson Jr. had made an urgent and unusual evening visit to Capitol Hill, and they were gathered around a conference table in the offices of House Speaker Nancy Pelosi.
“When you listened to him describe it you gulped," said Senator Charles E. Schumer, Democrat of New York.
As Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, put it Friday morning on the ABC program “Good Morning America,” the congressional leaders were told “that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.”
Mr. Schumer added, “History was sort of hanging over it, like this was a moment.”
When Mr. Schumer described the meeting as “somber,” Mr. Dodd cut in. “Somber doesn’t begin to justify the words,” he said. “We have never heard language like this.”
“What you heard last evening,” he added, “is one of those rare moments, certainly rare in my experience here, is Democrats and Republicans deciding we need to work together quickly.”
Although Mr. Schumer, Mr. Dodd and other participants declined to repeat precisely what they were told by Mr. Bernanke and Mr. Paulson, they said the two men described the financial system as effectively bound in a knot that was being pulled tighter and tighter by the day.
“You have the credit lines in America, which are the lifeblood of the economy, frozen.” Mr. Schumer said. “That hasn’t happened before. It’s a brave new world. You are in uncharted territory, but the one thing you do know is you can’t leave them frozen or the economy will just head south at a rapid rate.”
As he spoke, Mr. Schumer swooped his hand, to make the gesture of a plummeting bird. “You know we’d be lucky ...” he said as his voice trailed off. “Well, I’ll leave it at that.”
As officials at the Treasury Department raced on Friday to draft legislative language for an ambitious plan for the government to buy billions of dollars of illiquid debt from ailing American financial institutions, legislators on Capitol Hill said they planned to work through the weekend reviewing the proposal and making efforts to bring a package of measures to the floor of the House and Senate by the end of next week.
Lawmakers in both parties described the meeting in Ms. Pelosi’s office on Thursday night with Mr. Paulson and Mr. Bernanke as collaborative, and that they were prepared to put politics aside to address the needs of the American people.
While Democrats initially said after the meeting that they planned to use the administration’s proposal of a huge rescue effort to win support for an economic stimulus package, they pulled back slightly on Friday morning, saying that their top priority was to help put together the bailout package and stabilize the economy.
But it was clear they continued to examine ways to make clear that the government was stepping up not just to help the major financial firms but also to protect the interests of American taxpayers and families by safeguarding their pensions and college savings, and by preventing any further drying up of consumer credit.
In addition to potential stimulus measures, which could include an extension of unemployment benefits and spending on public infrastructure projects, Democrats said they intended to consider measures to help stem home foreclosures and stabilize real estate values.
Among the potential steps Congress can take include approving legislation to allow bankruptcy judges to modify the terms of primary mortgages — authority that the bankruptcy laws do not currently allow and that the banking industry has strenuously opposed.
But the Democrats said it was too soon to discuss such details, and that they were awaiting a draft of the proposal from the Treasury Department.
“We have got to deal with the foreclosure issue,” Mr. Dodd said. “You have got to stop that hemorrhaging..If you don’t, the problem doesn’t go away. Ben Bernanke has said it over and over again. Hank Paulson recognizes it. This problem began with bad lending practices. Those are his words, not mine, and so this plan must address that or I’ll be back here in front of a bank of microphones at some point explaining the next failure.”
Even before the drafting of the plan was complete, the Bush administration and the Fed began efforts to sell the idea of a huge rescue to potentially skeptical rank-and-file members of Congress. Mr. Paulson and Mr. Bernanke held a conference call with House Republicans to explain their thinking.
Senator Richard C. Shelby of Alabama, the senior Republican on the Senate banking committee, said in a television interview that cost to the government of purchasing bad debt could run to $1 trillion — a potential warning sign since Mr. Shelby is a longtime skeptic of government intervention in the private market.
Until Mr. Shelby was interviewed on Friday morning, officials on Capitol Hill had been careful not to discuss specific figures, though the rescue envisioned by the Treasury Department clearly entails a government appropriation of hundreds of billions of dollars.
http://www.nytimes.com/2008/09/20/washington/19cnd-cong.html?_r=1&oref=slogin
See my above post for evidence, but I guess you don't believe Paulson, Bernanke, Dodd, etc. either...:rolleyes:Quote:
Originally Posted by Butterfly
Another picture to look at while we await the full version of the Paulson "mother-of-all-bailouts" plan:
https://teakdoor.com/images/imported/2008/09/548.jpg
And what direction do we think the graph will go in with this being the general approach?
1. Shit hits fan
2. Bailout announced
3. Shit hits fan
4. More wide ranging bailout announced
5. Goto 1
Well, I have to say I like the bailout plan. Damn, I made some money over the last couple of days. It was nice to get back on the long side of things and make some money.
I hope it lasts, of course there are others who are absolutley gagging to see the whole thing go tits up but that just got about 90% less likely.
Like it or not, if the treasury backstop the whole fcuking shabang, the doom and gloom merchants are gonna have to find something else to fcuking moan about.
^Do you remember the good old days, when the Fannie and Freddie bailouts were supposed to 'draw a line under the credit crunch' and solve everything?
Two weeks ago...:rolleyes:
That may now be part of the problem...Quote:
Originally Posted by Spin
I dont ever remember reading that claim, all I remember reading was that they were taken over because they were badly run and illiquid.Quote:
Originally Posted by bkkandrew
^Paulson stated it IIRC.
You might think so, but the majority of of people with the ability to see the positive in a situation might not.Quote:
Originally Posted by bkkandrew
At the end of the day, the whole world relies on America, they have to go along and do whatever America wants to do economically. No country in this world can cut off its nose to spite its face where America is concerned and as such when the US need the trillion or whatever, they will queue up in an orderly fashion and buy the debt. Same as they ever did.
Fannie Mae and Freddie Mac: After the rescue, Paulson's real work begins - TelegraphQuote:
In the days leading up to Sunday's unprecedented rescue of Fannie Mae and Freddie Mac, Hank Paulson couldn't sleep.
"This is the first time in my career I had trouble sleeping," admitted the US Treasury secretary, who led the swarm of government agencies and regulators who surrounded the two ailing mortgage agencies and delivered their poison - in the form of an all-consuming nationalisation unlike any seen in financial history.
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"I've never been through any situation which was as difficult," added Paulson, the former Goldman Sachs chairman who has been at the Treasury for just over two years.
Paulson's temporary insomnia, however, is the least of his worries. After staging the weekend's coup d'état - removing the two companies' chief executives, placing them into a conservatorship, injecting $1bn (£569m) into their preferred capital structures - the real work has now begun.
The rescue will help to reawaken the US housing market, by providing added confidence, as almost 50pc of the $12,000bn market is now owned or guaranteed by the balance sheet of the US government, rather than merely Fannie and Freddie.
There's another quote somewhere, but I have to go out.
Hold on a minute, where is the quote from Paulson specifically saying that the Fannie and Fredie bailout would as you claim "'draw a line under the credit crunch"
What you have shown me there is Paulson saying:
"The rescue will help to reawaken the US housing market, by providing added confidence"
Thats a million miles from saying what you percieve him to be saying.
If you're gonna make claims you need to back them up with facts dude:)
^Right just back. I said IIRC. It was Paulson, Bernanke or some Government dude. I will find out if it matters that much.
<Cue sound of Googling>
All the google returns on the correct date seem now to have had the content deleted. I wonder why.:rolleyes:
For example:
Now returns a 404 - not found at MoneyWeek.Quote:
Market overview: FTSE 100 up 182
MoneyWeek (subscription) - Sep 8, 2008
... has shot ahead led by the banks on hope that the US rescue of mortgage groups Fannie Mae and Freddie Mac may draw a line under the credit crunch. ...
Abover taken from this date-sensitive search:
credit crunch line draw fannie freddie - Google News
Its great being a news outlet - you can just pretend the past hasn't happened, by pressing the 'delete' key!
Its not unusual for news items to have 404 error messages or are you claiming that there is some sort of government conspiracy that had instructed every website to remove any comment that stated the credit crunch was over?Quote:
Originally Posted by bkkandrew
Sorry but I dont remember anybody saying that the fnm/fre bailout was the final fix.
^No, it is not a conspiracy. Calm down, I said IIRC, I only say that if I haven't got a link. If you follow the Google link, you can say that it was published, but it is not clear who said it. Interestingly the Google result above/below the one quoted in my post (from an Aussie publication) describes the bailout as a "Salvation". It didn't quite turn out that way either.
Anyway, no worries, you think that this (current) bailout (whatever the details turn out to be) will mark the bottom and it gets better from here. You may be right, I just don't happen to agree. This thread will report it either way. :)
So did Fannie and freddie stop trading? Ceased to exist? filed for bankrupcy?Quote:
Originally Posted by bkkandrew
Did I miss something?
^No, it was referring to the situation in Oz, i.e. "salvation". Bizarre I thought...
Anyway, back to the UK and Lloyds and their death-wish:
FT.com / Companies / Financial services - Lloyds raises capital after HBOS takeoverQuote:
Fitch, the ratings agency, put HBOS and Lloyds on rating watch negative this week after the deal was announced, saying its action reflected concerns over the potential impact of Lloyds owning lower-rated HBOS.
Paulson Goes All In
Peter Schiff
Sep 19, 2008
Just three days ago, after looking at the prospect of bailing a string of distressed financial institutions in the country, the government seemingly drew a line in the sand, and refused to bail out Lehman Brothers. The authorities clearly saw Lehman's demise as a trial balloon to see how the markets would react if the government stayed on the sidelines. That trial balloon quickly turned into the Hindenburg. Immediately reversing course, the Government has decided to go "all in" and bail out every institution with financial exposure to U.S. mortgages. Simply put, Americans will not be allowed to visibly suffer losses after the greatest asset bubble in U.S. history. But make no mistake, the losses are real and Americans will pay one way or another.
Moving beyond the guided munitions of selective bailouts, the Government is now trying the financial equivalent of carpet bombing (for AIG, Merrill Lynch, and especially Lehman Brothers, this gives new meaning to being a day late and a dollar short). To continue with the military analogies, Paulson's bazooka turned out to be a nuclear tipped ballistic missile.
By committing trillions of tax payer dollars (not the "hundreds of billions" that Paulson predicts), the plan will save commercial and investment banks from certain bankruptcy. In his statement today, Paulson made clear that Congress must pass new legislation to allow the Government to acquire even those loans too poorly collateralized to currently qualify for GSE or FHA absorption. The losses baked into these mortgage products, which Wall Street has been reluctant to even estimate, will now be borne wholly by taxpayers.
In his press conference, Paulson assured us that this plan was designed to safeguard our savings. But in typical government fashion, the plan will have the reverse effect as savings are wiped out through inflation. He also claims that the plan will safeguard home equity by keeping real estate prices high. Since when did high home prices become a strategic national priority? If the plan succeeds, the gains for home sellers will simply be matched by losses for homebuyers, who end up paying inflated prices, and taxpayers, who get stuck with the losses when those buyers default.
Paulson's distress and confusion was clearly evident when he fielded questions from reporters. The first asked Paulson to describe his fears regarding the probable economic consequences of government inaction. Paulson provided no answer and promptly exited stage right.
When the U.S. government owns all mortgages, the real estate market will be completely subject to political, rather than financial, concerns. Will foreclosures be outlawed? Will loan term easements and principal reductions become standard campaign issues?
While it is dizzying to predict how this plan will be implemented, it is fairly simple to foresee the macroeconomic consequences. The U.S. dollar will be shattered beyond repair. The government simply has no means to make good on the trillions of new liabilities. Interestingly, while both Paulson and President Bush acknowledge that the plan will put "significant amounts of taxpayer dollars on the line," they did not mention any tax increases. Given the politics, no such move is forthcoming. The printing press is their only solution.
The government has also decided to insure all money market funds, adding trillions more in unfunded liabilities to the Federal balance sheet in the blink of an eye. Of course, since bad real estate loans are not the only toxic assets on the balance sheets of financial institutions, we will also need to absorb other classes of asset-backed securities, such as those backed by credit card debt and auto loans. So while the move ensures that depositors will not lose money, is does insure that the money itself will lose value. Is the trade-off really worth it? Washington thinks so.
Further, since I assume the plan will apply to all mortgage debt, U.S. taxpayers will also be on the hook to bail out foreign institutions that loaded up on the financial sludge. However, once the government takes them off the hook, do not expect them to re-invest the windfall back into other U.S. dollar denominated assets. This get-out-of-jail free card will likely scare them straight. The global mass exodus from the U.S. dollar and Treasury debt is about to begin: do not get caught in the stampede.
Although gold initially sold off as the apparent need for a financial safe haven ebbed, look for a spectacular rally to commence as its traditional role as an inflation hedge returns with a vengeance.
Sep 19, 2008 Paulson Goes All In Peter Schiff 321gold ...inc ...s
Interesting article. I wonder how students in 2050 will view the great crash of '08?
I'm doubting theres any truth in this. Anyone care to comment?Quote:
Originally Posted by Peter Schiff
Losses at UBS in Switerland are losses at UBS in Switzerland surely?