Bailout is actually more than $700bn

[MrFun]

Originally posted by Asher


I never said that. I'd order you some classes in fundamental logic but I don't want to support the departments of philosophy.

You were claiming that Lenin had never been proven right on ANYTHNG.

Che was referring to his sig line in claiming that Lenin was right about workers having to pay cost of shortcomings of major businesses.

So, I came back to ask you if workers have never paid such unfair costs. If you can't agree that workers have never paid such costs, then Lenin was right in this instance, and hence, your claim is wrong.

[Asher]

Originally posted by MrFun
You were claiming that Lenin had never been proven right on ANYTHNG.

I claimed no such thing. This is what I'm talking about when I say you have no grasp at all on basic logic.

If there's anyone who has ever been proven wrong in this world, it is Lenin.

All I've said is Lenin has been proven wrong. This is not a universal qualifier.

Logic: it's not just for professionals. Even history majors can get in on the action: roll up your sleeves, put on your thinking cap, and it'll come to you with time.

[MrFun]

So then if that was not a universal qualifier why did you bother posting that remark specifically toward Che's point made in his sig line if Lenin was correct in that regard?

[Asher]

Originally posted by MrFun
So then if that was not a universal qualifier why did you bother posting that remark specifically toward Che's point made in his sig line if Lenin was correct in that regard?

He was not correct in that regard.

You also have issues here -- in saying he was not correct in that regard I am NOT saying that never in history have employees "ever bore any costs due to shortcomings of corporations and industries"

This is a common logical fallacy on your behalf, either intentionally or unintentionally.

[KrazyHorse]

As I've said before, I'd have rather just burned the $700bn.

Well, printing and burning 700 billion would have the same effect as not printing the money in the first place, so I don't see this as being a very strong statement. Except for the actual cost involved in printing, of course.

TARP's $700 billion so far is being used to buy preferred shares in banks to shore up their capital. The program was originally intended to hold banks' troubled assets while markets were frozen.

Buying x$ in assets from banks is the same as buying x$ / (leverage multiplier) in equity. That is elementary.

[Aeson]

Originally posted by KrazyHorse
Well, printing and burning 700 billion would have the same effect as not printing the money in the first place, so I don't see this as being a very strong statement. Except for the actual cost involved in printing, of course.

It's a figure of speech. Meaning to get no return on the expenditure. The damaging part of the bailout isn't the $700 billion (even if it wasn't paid back at all). The damage is congress handing over the national credit card to a dunce (or evil genius, either way we're ****ed) like Paulson.

EDIT: Paulson and Bernanke I should say.

[Aeson]

What's your take on the real issue KH? (The Fed taking on ~$800bn in non-disclosed assets as collateral from undisclosed entities over the past 7 weeks?)

[Aeson]

Originally posted by KrazyHorse
Buying x$ in assets from banks is the same as buying x$ / (leverage multiplier) in equity. That is elementary.

Depends on the assets. Some are better collateral than others. (Like say, the stuff Moody's just downgraded from investment grade to junk status. How much of that is the Fed holding as collateral, or do we now own/will own via holding shares?)

[KrazyHorse]

The Fed taking on ~$800bn in non-disclosed assets as collateral from undisclosed entities over the past 7 weeks?

It's a way to get around asking Congress for more money, just like buying equity instead of assets is a way of getting around the same issue.

If you agree that the federal government should be doing this at all then I think it should be done by the technocrats, not by a bunch of bumbling politicians who can't even wrap their heads around the difference between competitive and comparative advantage.



The issue is that the Federal Reserve/Treasury are setting themselves up as the "buyer of risk of last resort" and "pricer of risk" as they have operated as the lender of last resort and pricer of liquidity for many, many decades now. If they are going to be this (and it should most properly be the Fed, given its stature as an arms-length organization, not the Treasury) then they cannot have legislative oversight on day-to-day operations. How would you like Congress setting the federal funds rate?

[KrazyHorse]

Originally posted by Aeson


Depends on the assets. Some are better collateral than others. (Like say, the stuff Moody's just downgraded from investment grade to junk status. How much of that is the Fed holding as collateral, or do we now own/will own via holding shares?)

Yes, there are details. But I would think that at least there is a liquid market in equities, whereas it was going to be difficult to price the assets people were talking about.

The issue is that banks want to reduce their leverage. They can either sell equity or assets to do this. If the federal government buys assets then it has de facto set up its own bank. If it buys equities then it's going through existing banks.

The people arguing about this distinction would do well to realize that to a first approximation they accomplish the same thing.

[Kidlicious]

Originally posted by KrazyHorse

As I've said before, I'd have rather just burned the $700bn.

Well, printing and burning 700 billion would have the same effect as not printing the money in the first place, so I don't see this as being a very strong statement. Except for the actual cost involved in printing, of course.

The $700bn is coming out of the real economy. They aren't just printing it.

[Kidlicious]

Originally posted by KrazyHorse
If you agree that the federal government should be doing this at all then I think it should be done by the technocrats, not by a bunch of bumbling politicians who can't even wrap their heads around the difference between competitive and comparative advantage.

It shouldn't be done at all obviously since the technocrats (fancy name for crooks) can't be trusted anymore than Congress. But the point is that since it's being done anyway the transactions should be transparent for the public to see what's happening with their money.

[Aeson]

Originally posted by KrazyHorse
It's a way to get around asking Congress for more money, just like buying equity instead of assets is a way of getting around the same issue.

First of all, you're still ducking the issue. Doesn't it concern you that >$1trn (in less than 2 months) has been appropriated/printed/whereverthehellitscomingfrom with no accountability as to what it's being used for? We don't know to who these loans are being made (other than the portion for F&F), or what is being used as collateral. For all we know the Fed took you up on your offer to take that $700bn, and you gave them a poly+ membership as collateral. (Is this why you seem so happy about it? I had a rock I was willing to offer as collateral for $30bn last year... I'm not greedy... but no skipping in line!)

But as for "getting around asking Congress for more money"... that's circumventing the US Constitution. I'm the last person to defend Congress from their (very well deserved) reputation... but we have laws and observe them for a reason, and circumventing them to take $trillion+ on the whim of a "technocrat" without any transparency of how the funds are used is not a good precedent to set.

If you agree that the federal government should be doing this at all then I think it should be done by the technocrats, not by a bunch of bumbling politicians who can't even wrap their heads around the difference between competitive and comparative advantage.

I don't agree that the federal government should be doing this (in this manner). I'm all for letting failures fail, and if we have to, we can restructure them after bankruptcy and then sell them back onto the market (and/or replace them). Saving failures is promoting failure, or rather high risk of failure (with high returns)... not a good policy for our future.

I do agree that we should listen to "technocrats", but not just one or two like we've been putzing around based on the whims of Paulson and Bernanke, and certainly not to allow them to lead us around blindfolded on leashes as Congress seems to prefer.

The issue is that the Federal Reserve/Treasury are setting themselves up as the "buyer of risk of last resort" and "pricer of risk" as they have operated as the lender of last resort and pricer of liquidity for many, many decades now. If they are going to be this (and it should most properly be the Fed, given its stature as an arms-length organization, not the Treasury) then they cannot have legislative oversight on day-to-day operations. How would you like Congress setting the federal funds rate?

You're promoting a false dichotomy.

Congress can have oversight of how much is budgetted (as per the Constitution), and have some measure of oversight, without actually implementing day to day operations.

We can certainly have transparency of operations without Congress managing day to day operations.

Yes, there are details. But I would think that at least there is a liquid market in equities, whereas it was going to be difficult to price the assets people were talking about.

I agree that equity is better than buying assets. (Since we can almost be sure they would be the poorest assets the firm holds... though that wouldn't necessarily have to be the case, it just would given who's making the decisions, Congress or the Fed or the Treasury... none of them seem to have a clue and/or care.) At least that way we get the "benefit" of holding a homogenous share of all assets, so can't be screwed with the poor assets.

But we aren't just trading in equity. The Fed is taking these "difficult to price" assets on as collateral, while the Treasury is buying the stock in the institutions. (With better policy makers running the show though, we could be better off with the assets, since we could require the good stuff... but that would require far more intelligence than we can expect.)

[Kidlicious]

The way I see it they have to disclose the information under the Freedom of Information Act. Does anyone know why that would not be the case?

[Darius871]

Originally posted by Kidicious
The way I see it they have to disclose the information under the Freedom of Information Act. Does anyone know why that would not be the case?

Well somebody has to care enough to file the FOIA request first.