Lorrie Goldstein ping.
Screw that -- I'd like to buy them a drink!
Cheers!
Cheers!
Fortunately, they repaid the loans from TARP at a profit to the Treasury.
It is a slow day in the small Minnesota town of Marshall , and streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit.
A rich tourist visiting the area drives through town, stops at the hotel, and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.
As soon as he walks upstairs, the hotel owner grabs the bill and runs next door to pay his debt to the butcher.
The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.
The pig farmer takes the $100 and heads off to pay his bill to his supplier, the Farmer's Co-op.
The guy at the Farmer's Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her "services" on credit.
The hooker rushes to the hotel and pays off her room bill with the hotel owner.
The hotel proprietor then places the $100 back on the counter so the rich traveler will not suspect anything.
At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves town.
No one produced anything. No one earned anything... However, the whole town is now out of debt and now looks to the future with a lot more optimism.
And that, ladies and gentlemen, is how the United States government is conducting business today.
If you can believe this, I received that article a week ago in an email from my contact in India! I forwarded it to all my contacts here in US.
Here we go again. If the bankers did not load up mortgage backed securities with liar loans and rated them AAA paper when they were actually junk we could have survived the subprime meltdown. The first 18 months most of the failure in mortgage notes involved subprime mortgages. Mathematically the US financial system can survive the hit because subprime mortgages are clearly flagged before the investor buys them. The concept of subprime is economically stupid and time proved it because more then 1/3 defaulted and the taxpayer was on the hook for the losses. The coup de grace was the liar loans collapsed after the subprime. Here the losses were much larger because the investors paid higher prices for them because he thought they were AAA investments. Even worst the buyers used leveraged money to buy them. Derivatives were based on AAA odds of failure not junk odds. That makes a major difference in price and the cost of failure. We took a serious hit with subprime but we took a more severe hit from the liar loans. The gov CRA policy encouraged subprime, but never liar loans. That was invented by greedy bankers when they discovered that Freddie Mac and Fannie Mae were not reviewing the mortgage notes they were buying from the bankers and mortgage companies.
The story leaves out the part where Heidi’s bank is threatened by the federal government to find a way to market the debt.
Great post... thanks.
Foster Brooks shoulda told this story - too bad he died ...
THIS was great! I am going to use this example.
They left out the roll of IGA that we bailed out.