Posted on 09/26/2008 2:38:35 PM PDT by MeanWestTexan
I work in the markets. Ain't nothing yielding a secure 10% that needs to be bought by the taxpayers. That's just f'ing silly.
The problem with the deal is the liberals are REDIRECTING THE PROFIT from this DEAL to stupid liberal projects and corrupt schees (e.g, ACORN).
A government back insurance of financial paper is an on going government program.
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Two points. First, I am not sure that this is meant to be ongoing. They may mean it to be insurance on those securities already outstanding.
Second, based on your view FDIC is socialism so we already know what we are. We just don’t know the price ;-). To me, all free markets need some level of government oversight and I think FDIC has worked well in the past. As with the FDIC, this insurance would be financed with private sector premiums.
If the current value of the bond package is 20 cents, then they are NOT buying at 20 cents on the dollar.
So then you are saying you support the nationalization of the banking industry (or at least the home mortgage part) and the last big step into socialism/communism?
“The only way I can read this bill is that Government wants to be in business on my dime and get the profits, I presume for some later brilliant use.”
This is a legitimate complaint.
The profits should be used to pay down the national debt.
They will stop paying once they realize they are upside down on their mortgages and just walk away.
And Hey at 20c per $1 send Paulson-Cantor to sleep I buy directly from the market.
Actually, for taxpayers, it’s a win-win-win-win.”
Oh really? Will I see my win-win-winnings? No. All this stuff I now own, will see it? No. If I own a piece of these bonds, etc., can I sell my share? No. Do I have possession or control? No.
So pray, how do I own anything? Nonsense and double nonsense.
I thought that’s what I said.
Yes, the Paulson/Cantor plan is the way to go. Listening to Senators opine on the bailout is like a lawyer walking into a hospital and providing advice to a surgeon.
I love how he smoothly switches from "bonds" to loans. The plan will buy neither, the exact language is "mortgage-related securities" defined circularly. That means they will buy worthless securities such as credit default swaps. They will buy far more than 700B, it will take trillions in purchases to put a small dent in the supply. A lot more will have to written off by institutions holding them. The government will burn all the ones it buys, won't sell anything.
“So what do I “own”?”
Same thing you own in a B-2 bomber, if your question is, “as a taxpayer.”
If your question is “as the government” you would hold the mortgages for 1,000s of borrowers, 99% of which perform, the bad ones backed by some collateral, and all of them backed by the right to sue the heck out of whoever signed the note.
I own mortgages for properities I developed and “seller financed” in a lakefront property in Texas (NONE of which is remotely sub-prime). I have a lien on the houses, a note, and get a flow of principal/interest over 10 years.
The Treasury (which is a bank) would be in a similar situation, except instead of having fronted 100% of the principal, and just getting interest, it would be BUYING THE NOTES AT A DISCOUNT -— say 90 cents on the dollar -— effectively getting 14-15% return on the money (10%, plus interest)
For each 1,000,000,000 purchase, that would be $150,000,000 profit -— basically balancing the budget at these numbers.
No joke.
These are such a great investment vehicle everyone is rushing out to buy them, right?
"should"
In 50 years on this country, I have seen 0, zilch, nada, nothing put into paying off the debt.
Only crones, criminals, PACS, and lazy and out of work devoted voters get paid off.
Those who understand what a debt means wind up paying for it and then get to watch somebody else get the reaping of the hard work required to produce and pay via government payoff with others money who aren't even born of this earth as of yet.
Those with liquidity are.
The profits should be used to pay down the national debt.
“should”
I agree, this is the key issue.
They will buy far more than 700B, it will take trillions in purchases to put a small dent in the supply”
Agreed, a little more than a year ago Bernanke was putting total bank losses due to the subprime meltdown at 50-100 billion. 700 billion is less than 2% of total corporate and consumer debt held by banks. The banks will sell their cr@p to Paulson and maybe some hedge funds who will attempt to arbitrage this non-market market attempt by the Treasury. The Treasury is going to have to issue scads of bonds to carry this out which will put a lot of upward rate pressure on the T bond market which could well throw us into a very nasty recession with our huge debt levels. If that happens most of this junk Paulson holds becomes non-performing and the taxpayer is stuck. Paulson’s plan besides being unconstitutional very likely will not work other than very short term.
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