Bailout Bonanza

[Kuciwalker]

DanS is obviously right that the subsidies are a major factor in the price increase.

[Jon Miller]

That only works if you are assuming that Education is a good, and students are consumers, and the whole thing is a market.

While I agree that their are elements of that, that isn't the whole aspect. For example, there are also ways that it resembles a public utility or nonprofit. These types of institutions don't have the same behavior as the standard market behavior.

JM

[Kuciwalker]

That only works if you are assuming that Education is a good, and students are consumers, and the whole thing is a market.

Those three assumptions are all obviously correct.

[Jon Miller]

Not completely, as I posted it shares a lot more in common with non-markets.

But let's use the new thread for this.

JM

[DanS]

Sometimes I despair at the result of all of this. Treasury got off-script by making the bailout terms too lucrative. It's amazing the crap that people will spew for a piece of the pie.

At the U.S. Treasury, a growing number of financial institutions and other companies have been lobbying to get a slice of the $700 billion federal bailout.

Some foreign banks are asking to participate in the Treasury's bank investment program because "this is a global crisis," according to a letter from the Financial Services Roundtable, a trade association for large financial firms.

The nation's two major bond insurers sent letters making suggestions on shaping the rescue plan, with one asking that the government cover a portion of their losses to prevent a "systemic implosion" of the economy.

Meanwhile, General Motors wants some of the rescue money to help it merge with Chrysler, and insurance companies have asked that they be given the same consideration that banks have received under the rescue.

"Everyone has their hand out now," said a lobbyist who represents one of the industries recently in touch with the Treasury. The lobbyist declined to comment further for fear of hurting the industry's case. "It's a lot of money, and people are hurting."

http://www.washingtonpost.com/wp-dyn/content/article/2008/10/29/AR2008102902605.html

[Arrian]

Not everyone...

SAINT PAUL, Minn., Oct 28, 2008 (BUSINESS WIRE) -- In a letter to U.S. Treasury Secretary Henry Paulson, The Travelers Companies, Inc. stated it does not require or intend to request any financial assistance from the Treasury Department, which is considering investing in insurance companies as part of the economic stabilization package approved by Congress.
Travelers Chairman and Chief Executive Officer Jay Fishman's letter to Secretary Paulson is below:

"The last several months have seen extraordinary systemic financial market dislocation which has negatively impacted a broad range of financial institutions and, unfortunately, millions of Americans across the country. You and your team at Treasury have worked tirelessly to address these enormous problems, and we commend you for your continuing efforts.

"As we are sure you know, there have been recent reports that the Treasury Department is considering investing in insurance companies under the Capital Purchase Program. We are writing now to advise you that Travelers does not require or intend to request any such assistance. We continue to generate attractive returns on equity, and in fact we have grown our book value almost 3.5% over the past twelve months after returning $3.7 billion to shareholders through stock repurchases and dividends. In addition, all of our financial strength indicators are at or better than target levels, including holding company liquidity of $2.1 billion, which is approximately twice our target level. Travelers is a strong, resilient and well capitalized property casualty insurance company which has been thoughtfully managed.

"We understand that the substantial majority of insurance companies represented by the American Insurance Association feel the same way we do about participating in the Capital Purchase Program. We also understand, however, that a few life insurance companies may find themselves in different circumstances. We would encourage a thorough exploration of private market solutions in these circumstances, preserving federal financial assistance for more acute problems.

"We would be pleased to offer any technical assistance that might be helpful to you or your team."

-Arrian

[Colon™]

Originally posted by The Economist

Volvo wins the prize for statistic of the crunch to date. The Swedish firm said it had received a mere 115 orders for heavy trucks in Europe in the third quarter, down by 99.7% on the 41,970 order bookings during the same period of 2007.

[Krill]

ouch...

[Drake Tungsten]

I am vindicated in my support for TARP and my opposition to the auto bailouts.

Hey, remember last year when there was a lot of populist hostility to the whole bailout idea because it was going to cost the taxpayers a truckload?

It's funny how things turn out:

The Treasury Department expects to recover all but $42 billion of the $370 billion it has lent to ailing companies since the financial crisis began last year, with the portion lent to banks actually showing a slight profit, according to a new Treasury report.

The new assessment of the $700 billion bailout program, provided by two Treasury officials on Sunday ahead of a report to Congress on Monday, is vastly improved from the Obama administration’s estimates last summer of $341 billion in potential losses from the Troubled Asset Relief Program. That figure anticipated more financial troubles requiring intervention....

[T]he new estimates would lower the administration’s deficit forecast for this fiscal year, which began in October, to about $1.3 trillion, from $1.5 trillion.

If you dig through the numbers, the bulk of the losses come from two sources -- the bailouts of GM and Chrysler, and the bailout of AIG.

http://drezner.foreignpolicy.com/posts/2009/12/07/theres_gold_in_them_thair_bailouts

[Dinner]

GM & Chrysler are peanuts. AIG is virtually the entire thing.

[Drake Tungsten]

GM & Chrysler are peanuts. AIG is virtually the entire thing.

Read the ****ing article, you moron. The auto bailouts and AIG are responsible for roughly equal losses.

[Dinner]

Liar. That's only counting half of the $700 billion and not counting the trillions in mortgage backed securities the Feds paid top dollar for but which can't be sold and even if they could be sold wouldn't be sold for full value... Which is what the Fed paid for them.

Most of those are insured by AIG meaning AIG is going to be on the hook for vast, vast, vast loses.

[notyoueither]

Great! I am the first to rule the world!

[DaShi]

I'd rather be the last.

[rah]

It doesn't matter that it didn't cost as much as they thought. They're rushing to spend it anyway.