Bailout Bonanza

[DanS]

The end of the now-closed Lehman thread...

http://apolyton.net/forums/showthread.php?s=&postid=5416122#post5416122

Reposting from the thread...

There are ways of doing this that would recapitalize the banks while being punitive. There are several different asset classes to use.

As an example, see Warren Buffett's investment in Goldman Sachs last evening. Perpetual preferred shares with a coupon rate of 10%, and in-the-money warrants for an equal amount. This went a long way in recapitalizing Goldman and Buffett will make out like a bandit meanwhile.

If you want to remove the distrust inherent in the mortgage-backed securities, you could structure the recapitalization to take the securities off the balance sheets of the banks on punitive terms. The taxpayers need Paulson to think more like a vulture and less like a Good Samaritan. The public has an unlimited capacity on its balance sheet, but private entities should be charged very dearly for using it.

[Kidlicious]

Paulson isn't concerned with taxes. Bush will make sure his taxes are low. He's concerned with banks making profit.

[Whoha]

Looks like RTC2 will have the power to buy pretty much all bad loans, which neatly covers the coming balloon payment loan collapse as well.

[Sandman]

Has this been posted yet?

Your Urgent Help Needed

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion
dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may
know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names
of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person
who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to
wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with
detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury,
Paulson

[Kidlicious]

Warren Buffet today said something that supports what PLATO has been saying about the proposed bailout. He said the government better leverage up, because no one wants to leverage up right now, including him. In fact, he said he can't.

[Lord Avalon]

The government wants to spend $700 billion to bail out Wall Street. What's the quickest way to set up a massive failing firm? [/Stephen Colbert]

[Zkribbler]

Originally posted by Kidicious
Paulson isn't concerned with taxes. Bush will make sure his taxes are low. He's concerned with banks making profit.

They're ignoring Zkribbler's First Rule of Taxation: Taxes aren't determined by the tax rates but rather by the spending rates. For every dollar that goes out, one has to come in.

[Kidlicious]

Originally posted by Zkribbler


They're ignoring Zkribbler's First Rule of Taxation: Taxes aren't determined by the tax rates but rather by the spending rates. For every dollar that goes out, one has to come in.

That's the most untrue rule ever.

[Vanguard]

I don't see any reason why we shouldn't get as good terms as Buffet did.

[Zkribbler]

Originally posted by Kidicious


That's the most untrue rule ever.

Not correct. When the government spends a dollar, that dollar must come from (a) taxes; (b) inflation (i.e. by increasing the money supply, devaluing all other currency -- a most insidious tax) or (c) borrowing, which means that later, the principal must be paid back with interest (using either [a] or [b]).

[Kidlicious]

Originally posted by Zkribbler
which means that later, the principal must be paid back with interest (using either [a] or [b]).

Plainly, No. That is absolutely always untrue.

[Aeson]

"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."

[notyoueither]

Re: Has this been posted yet?

Originally posted by Sandman
Your Urgent Help Needed

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion
dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may
know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names
of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person
who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to
wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with
detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury,
Paulson

Run on bank in Hong Kong.

[Dinner]

Re: Has this been posted yet?

Originally posted by Sandman
Your Urgent Help Needed

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion
dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may
know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names
of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person
who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to
wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with
detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury,
Paulson

God damn that's priceless and so true.

[Vanguard]

Originally posted by Plato in the precursor thread "Lehman" (pg. 17)

It is not so much that a lot of this paper is leveraged. Most of the leveraged positions have been hedged with credit default swaps...and then those positions have been hedged with credit default swaps...and so on. This is one of the real problems we are facing. No one knows how much is out there in credit default swaps...there is no clearing house or any records of this stuff except the agreements themselves. Part of what is causing Treasury's urgency...Lehman's $600 billion in debt was something the government and the markets figured that they could stand...what they didn't realize was the nearly $1.7 trillion in credit default swaps tied to that debt and the effect that is going to have on other institutions.

Credit default swaps are possibly the worst financial instrument ever invented. Why exactly would you even want to spread the risk of investments as broadly as possible? The risk of investment is the only thing that prevents people from making bad investments.