Posted on 09/26/2008 2:38:35 PM PDT by MeanWestTexan
“Any loan package bought by the Treasury will be 100 percent taxpayer owned.”
The notion that something owned by the US government is somehow “taxpayer owned” is just spin. Now if they decide to invest $700 billion in bank stock, and then send me my shares in the mail, that would be truly “taxpayer owned”.
In other words - nothing. And while I'll get no check cut from any of the imaginary profits from this bailout, La Raza and LULAC and ACORN will.
I can think of another four letter word beginning with the letter "s" that would be even more appropriate.
The profits should be used to pay down the national debt.
In your grandest fantasies do you really believe that will ever happen?
No they are no profits to be made period. If they ever existed no crisis will ever existed.
That's the basic idea, just kick the can some more and hope Mises' law of credit bubbles gets repealed.
Also require that certain products be manufactured in this country, or a certain percent of them, create a lot of jobs overnight.
The plan that will have the fewest bad effects and that will not create “necessities” for further government intervention is the plan to kick this thing right out of the Congress and let the market do what the market will do. There will surely be a short sharp recession and after a couple of quarters or a year of it, a solid recovery. Any sort of “bailout” and intervention will prolong the ill effects and prevent a healthy recovery for years and then the recovery that occurs will be a paper recovery; the numbers will be based on inflation and government spending and household prosperity will continue to decline. I fear we are looking at the long desired-by-Democrats final transition to socialism. FDR made the first big step economically. LBJ added a huge social component. Now maybe Bush and this Congress will put it over the line.
I wish to God posters who don’t know what they’re talking about on this issue would withhold their say until they’re up to speed or else defer to those who are. We have a confidence crisis which is wracking our financial system. Nobody likes being in this situation, least of all the banks (looters?), but aside from a wholesale cratering of the economy, the alternative is to lower reserve requirements and in effect massively increase the money supply.
If 99% of these assets were peforming, there wouldn’t be a crisis.
If 99% of these assets were peforming, there wouldn’t be a crisis.
You need to do some research. This is what the taxpayer will get, in just one of WaMu’s pools. Note the numbers well.
* The total pool size is $513,969,100.
* $476,069,000 was rated AAA.
* 92.6% of this cesspool was rated AAA.
* Yet 15% of the whole pool is in foreclosure or REO after a mere 8 months!
Mish takes us on a magical mystery tour of a recent (mid-2007) WaMu mortgage pool in this post. It is certainly enlightening. He finds an interesting anomaly: there are more loans showing up as foreclosures than can be explained by pre-foreclosure delinquencies. He suggests that this might mean a significant number of people are simply walking away.
We think this is likely. Further, we take his analysis a step farther, and combine REOs with the foreclosure number. From Dec 2007 to Jan 2008, then, there is an increase in these two piles of 6.11% (relative to the total mortgage pool). Dec 2007 had only 3.79% of loans 90-day delinquent, meaning 2.32% of the loans in the pool, in one month, came from out of nowhere or earlier stages of delinquency (probably walk-aways).
In one month.
Other interesting factoids in this pool include:
* That it is post-subprime-collapse (mid-2007), even though all the talking heads have been saying the problems are mostly localized to late-2006 vintages of mortgages from before the break down of the secondary market.
* That it’s not subprime.
* That the average credit score is about 705. Mish alludes that something might be wrong with FICO; we’d suggest something was wrong with debt burdens, and something is wrong with the direction people’s incomes are going.
* That 15% of this pool is already in or past foreclosure (REO), yet as Mish points out, 92.6% of the pool was rated AAA.
* It seems you can see people move through the levels of delinquency in waves. In the January snapshot, 90 and 60-day delinquencies are down, but 30-days are up. It is as if a burst of loan re-working has been going on, but is struggling against an increasing incoming pipeline of bad loans.
This is what non-subprime looks like. And WaMu has tens of billions of the same stuff (or worse).
http://bankimplode.com/blog/2008/09/24/washington-mutual/
http://globaleconomicanalysis.blogspot.com/2008/02/evidence-of-walking-away-in-wamu.html
Oh and by the way, you do know that what the bill proposes to buy is just the security and not the underlying asset, right ?
Agree. I was hoping McCain would pick Cantor. Can’t complain about Sarah, but Eric has his head screwed on right. Emphasis on RIGHT. Thanks for the post.
The Banks in the Cayman Islands will also see their deposits swell. And contractors who build houses for politicians will do well. Gold dealers will prosper. All sorts of leftwing activist groups will get great infusions of funds. Even Planned Parenthood will get help. Prosperity will come to some but the American economy and society will suffer.
I do hope that this or something like it gets passed and signed.
Well in response to your points:
1. On going means without end. I am not sure how you can say they might mean to insure only already outstanding securities. If you insure something you want to get to the low and high risk individuals to buy your insurance. If new paper coming online is better than the old paper, you of course hope the holders will insure it too. Certainly a free or even only partly free market insurance company does not want only the bad risks.
2. Yes FDIC is not a market solution. It is a form of government protection. The reason for it is to prevent bank runs. The reason it has an upper limit is to because we are hoping to protect the financially unsophisticated, ie widows and orphans, not the big money guys who should be able to evaluate the risk of various banks.
If this plan goes through, we are going to have socialized some of the risk of financial paper. That is what insurance does is spread risk. When it is government insurance not private insurance we have socialized that risk. That is rather than stockholders bearing the risk to gain a return, tax payers will shoulder the risk with no chance of a return and this program likely will never end. The buy out gets us assets that might rise in value and can be limited by a dollar amount that is appropriated for purchases.
Cantor is stepping up nicely and not just on this. I said before that he would be a great VP but he would have more impact and influence on the House. McCain is going to stir things up but our idea factory is the lower chamber.
I’m starting to really like this plan. The companies and incompetent executives get screwed by the taxpayers, and while the money is out there, it can’t be spent on pork. Hope McCain is in to spend it while it comes back.
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