Posted on 09/21/2008 8:32:53 AM PDT by Flavius
Treasury Secretary Henry Paulson said Sunday that foreign banks will be able to unload bad financial assets under a $700 billion U.S. proposal aimed at restoring order during a devastating financial crisis.
"Yes, and they should. Because ... if a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution," Paulson said on ABC television's "This Week with George Stephanopolous."
(Excerpt) Read more at news.yahoo.com ...
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
The US taxpayers better get ready for more of this, and he will not even use any KY.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
MADNESS! Sheer madeness.
They are playing ‘roulette’ with the tax payer’s money. Anytime the stock market takes a dive, they look to see who they need to bail out.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
To me, it doesn’t sound like being “politically tone deaf”...it just sounds like %@$% @#$@% #@%!^#@$.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
it seems other central banks are pumping little spending money for the banks in their little places
that means they must have had the cash in our markets betting on joe working at McDonalds making his payment on McMansion
iv seen 70Trillion at risk and 140Trillion, now with all the panic Nancey’s screaming to sell their gloom and doom books,bloogs,wigs whatever
anyone have a clue what is really going on was this not similar to Savings and Loans bail out ...
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
Man oh man.....this is Alice in Wonderland.
I’m seein’ this, but keep thinkin’ it’s a dream.
This is the end of US capitalism as we know it. If a Democrat administration were doing this there’d be blood in the streets.
Wow.....
WTF is going on here?
I can easily envision the US getting stuck with every foreclosed house in the entire country.
Then we will have two competing forces. The RATs will want to give subsidized rents to "poor people", which will result in exporting crime to the suburbs, and huge swaths of "suburban blight".
Fiscally responsible people will want to sell off the foreclosed properties and recoup as much as possible. I see an entire new bureaucracy of federal house maintainers, house sellers, house rental agents, etc. Of course, this will result in cheap houses becoming available to anyone halfway qualified, which will further knock the stuffing out of the construction industry.
I posted this earlier because it was something I had heard but wasn’t sure about, abut sosmeone confirmed it. When we bailed out AIG, 80 percent of their debt was foreign. So we’re already headed down that path with the AIG bailout.
Why the hell are we even paying taxes for this bullsh*t????
I believe I saw the number 165 trillion thrown in there - but hey, whats a few trillion among banks
Good God! The number of emotional, knee-jerk screeching monkeys in this thread are embarrassing! The Treasury is not going to pay 100 cents on the dollar for these loans. They will pay according to the quality. THE ISSUE AT HAND, BEING SOLVED, IS GETTING CAPITAL FLOWING AGAIN IN THE CAPITAL MARKETS. The institutions will be selling these bad loans to the FED/Treasury at a discounted price. I agree with Rupert Murdock that this might not wind up costing the US taxpayer anything in the long run.
I know everyone is talking with emotion right now but you really need to think about it. A foreign investor bought insured AAA assets at say $100. They will now be selling them back to the US government for $30. How is that a bailout?? They lost $70 on an investment that they had ever reason to expect to be secure due to the rating and insurance!!! Sure you can argue that they should have been smarter with their due diligence but you need to recognize that they have already taken a serious financial hit on these investments.
Also, people can’t seem to realize that the government can make a profit on this. Do you really think that houses sold for $100,000 are now worth less than $30,000? Keep the panic up and it will be. Allow the market to settle down and the government can turn it around and recover more than 30 cents on the dollar. That was exactly what happen with the RTC. THE GOVERNMENT MADE MONEY ON THE DEAL.
I realize that I may be barking up the wrong tree and that most of you refuse to listen. I will say it anyway in the case someone wants to be rationale about this.
The taxpayer (thats us) lost $30.00 on that transaction.
REVOLT...
You’re supposed to be happy they aren’t stealing more of your money. LOL
Insured by whom?
No. The taxpayer pays $30 for a mortgage which has real estate as collateral. The loss is $30 if and only if the value of the property is $0!!
The lack of financial understanding in this country is really, really sad!!
Most of these bonds were insured by AMBAC and MBIA.
The theory of Free Lunch, cooked up using the magical powers of the fedgov.
The Tsy proposal specifically exempts anything Paulson does from review.
“Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”
This is essentially a coup d’etat by the Fed and Treasury.
Now I got some back episodes of ‘Merican Idol to check out on the Tivo.
I say, in the name of equality, bail-out no one.
Then why not seek recourse from them???
The lack of financial understanding in this country is really, really sad!!
I don’t even have a mortgage. Tell me how I’m not getting screwed.
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Keep up the panic and you will be getting screwed!! Allow the market to calm down and the government can sell these assets for a gain.
If there was a market meltdown you would be screwed worse. Remember the Great Depression? You would lose you job, inflation would sky rocket, civil unrest you make you fear for your safety!
Some of the assumptions you make might make sense were it not for fact that government is not in the business of making money.
I realize you are optimistic at the prospect of the government making a profit on this - I do not share your optimism is this regard and do not believe for one second the government will break even.
As for the government having real property as collateral goes - that is outside their purview.
Comrades: Is glorious `Comprehensive 5 Year
Ekonomik Reform Plan’! Da—from workers having ability to pay, to those domestic & foreign comrades needing rubles.
Hail to Commissar Paulson and brave nomenklatura!
Some of the assumptions you make might make sense were it not for fact that government is not in the business of making money.
I realize you are optimistic at the prospect of the government making a profit on this - I do not share your optimism is this regard and do not believe for one second the government will break even.
As for the government having real property as collateral goes - that is outside their purview.
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While I generally agree with you about the government’s incompetence, there is a precedent here. The government made money with the RTC.
Your math logic is faulty. If I sell a stock to you for $100 I first have the $100. If I buy it back for $30, which is probably its true value now, I have a $30 stock plus $70 of your money. Not too bad.
Unbridled panic & hyperbole rule the day!
Pass the Valium please.
Then why not seek recourse from them???
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AMBAC and MBIA has alreay gone bust! The fact that you don’t know that shows that you are not following this situation closely. IMO you really should educate yourself before you express an opnion!!
With all due respect, how the hell do you know this?
The so-called crisis supposedly stems from the fact that no one can determine the value of these assets.
If they were objectively worth $30, the bank would write them down to $30 (like every other business in America has to do with its bad debts) and life would go on.
Instead the banks get to unload them on the taxpayer at some indeterminate amount, probably less than face value but I bet a lot more than what they will finally be worth when the housing prices finish dropping to normal levels.
And please don't get me started on "AAA" asset ratings pulled out of somebody's AAAss.
This act is a de facto nationalization of all financial, insurance, and related industries. What's left to pretend about this?
well i would like to be ahead of a next snow job, so what is the next scam that follows this one
REIT’s,
S & L, 80’s, 70’s, 00 subprime, what other financial vehicle can these ivy league morons package so that i can get ahead of the ponzi scheme any ideas
Its sad that the Clinton financial legacy that let loose these dogs of financial ruin is being allowed to be “rescued” by the same Democratic party that created it. Paulson is a stand up guy to deal with it in as much of a non-partisan way as possible.
Didn’t the original draft say it was only open to US companies?
So start the hijinks.
Your math logic is faulty. If I sell a stock to you for $100 I first have the $100. If I buy it back for $30, which is probably its true value now, I have a $30 stock plus $70 of your money. Not too bad.
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WOW!! You are way off base. The investor paid out $100 cash for the security. It is now worth $30. If they sell it to the Feds they will only get $30 - a $70 loss!! Did you ever take an accounting course!!
This is going to be an auction entity of bad mortgage packages much like the RTC did with S/Ls which cost us almost nothing.
Banks will still lose...and lose a lot...espcially derivatives.
But this slows down the cliffdive and allows some order and time to restructure.
make no mistake, financials are still going to lose some serious capital
we are not just giving away a trillion dollars, we are providing a clearinghouse and allowing these failed banks to place their bad debt there to be bid upon eventually
granted though, this is fairly new charted waters so who knows precisely but this is not taxpayers are paying off the debt of these companies through grant remedies.
if these foreign banks are located here and have these US bundled exposures it would be sorta hard to block them from the same re-liquidity option granted to domestic banks.
this is how I heard Rupert Murdoch and Senator John Kyl explain it Friday...and neither of them are big entitlements proponents as a rule
If the opportunity to make money on these depressed assets is so great, then why don't cash rich players with long investment horizons, like sovereign wealth funds, university endowment funds, and the Buffetts of the world, swoop down and buy these up? Is Federal Government better at assessing these assets than the professionals?
The capital will get going again when the holders of mortgage backed assets lower the price to market clearing prices. E*Trade sold their portfolio for about 30 cents on the dollar late last year. Indymac sold theirs for 20-45 cents on the dollar in June. Other players will purchase these bonds, but the prices have to be low enough to compensate for risk. So far, banks have been unwilling to do so, because they've been valuing the debt way above market value in order to maintain capital ratios.
The only way for the government's plan to actually "save" the banks is for them to buy the assets at well above market value. And that's unlikely to be profitable for taxpayers.
Don't be so eager to drink the Kool-Aid. What is proposed is something that will be with us for at least a couple of decades.
An ounce of prevention...
I disagree.
If my neighbor bought that $100 stock and sold it to another neighbor for $30, and then held me responsible for that $30 with the promise of future return - I’m still out $30 buck.
Never mind that the neighbor that borrowed the $30 has a poor history of making profit or paying his debts.
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