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2009-03-10 Home Front Economy
Tim Geithner's Black Hole
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Posted by Omoter Speaking for Boskone7794 2009-03-10 08:33|| E-Mail|| Front Page|| [6469 views ]  Top

#1 You're right OSofB, I don't really understand what is going on but I suspect I am not alone. I do know that BHO and Geithner have that "Deer in the Headlight" look. And they keep saying "It's all Bush's fault".
Posted by tipover 2009-03-10 11:03||   2009-03-10 11:03|| Front Page Top

#2 Here's the problem: Today's true market value of the U.S. banks' toxic assets (that ugly stuff that needs to be removed from bank balance sheets before the economy can recover) amounts to between 5 and 30 cents on the dollar. To remain solvent, however, the banks say they need a valuation of 50 to 60 cents on the dollar. Translation: as much as another $2 trillion taxpayer bailout.

Then absorb the banks that are insolvent into the reconstituted First Bank of the United States. Limit it for twenty years. Why in the blazes should the citizens be stuck with the institutions insolvency bill but get nothing really in return [except more campaign contributions into the usual suspects coffers]. We take all or nothing.
Posted by Procopius2k 2009-03-10 11:15||   2009-03-10 11:15|| Front Page Top

#3 
Keynesianism

You have two cows. The demand for milk plummets. You come up with a plan to get people drinking again. You have another drink. And another ... and console yourself with the fact that in the long run even our children's children will turn to drink in times of crisis ...
Posted by 3dc 2009-03-10 11:32||   2009-03-10 11:32|| Front Page Top

#4 My solution would be to declare all credit default swaps fraudulant. Tell anyone who bought one that the have to sue the issuer of the swap to recover. Watch AIG dwindle to nothing. Send issuers to jail.

Make sure every Wall St. trader sees these guys do a perp walk.
Posted by Frozen Al 2009-03-10 11:43||   2009-03-10 11:43|| Front Page Top

#5 Someone help me here, maybe the weather change has my head cloudy - but when an organization absorbs another does it not also absorb its liabilities? That is, if the banks were nationalized then the taxpayer would absorb the toxic asset and still end up footing the bill?
Posted by swksvolFF 2009-03-10 12:05||   2009-03-10 12:05|| Front Page Top

#6 James Baker and George Mitchell are not independent czars and part of the same toxic cabal that needs cleaned up.
Posted by Thealing Borgia122 2009-03-10 12:23||   2009-03-10 12:23|| Front Page Top

#7 <<< but when an organization absorbs another does it not also absorb its liabilities? >>>

No unless it takes specific action in the form of a novation. The liability stays with the legal entity which undertook it in the same way that the asset remains in the target. On acquisition ordinarily the acquirer would simply manage the wind down and/or inject capital after settling the liabilities. A sort of informal Chapter 11. But if insufficient DD is done on the way in, the acquirer might find they have bought a dog rather than something they can manage. BOA did this with ML hence the need to get more capital from the Treasury under the threat that they would not proceed with the transaction. But there has to be residual value in the first place otherwise the deal will never get done. That is why LEH went under. No-one wanted it and there wasn't enough the Treasury could legally do at the time to put lipstick on the pig.

Posted by Omoter Speaking for Boskone7794 2009-03-10 13:18||   2009-03-10 13:18|| Front Page Top

#8 That is, if the banks were nationalized then the taxpayer would absorb the toxic asset and still end up footing the bill?

The bailouts are being arranged were we the people pick up the toxics off the banks books, but the banks keeps operating independently with its books cleansed and garnering profits to 'restart' the economy. So we're going to get stuck with the bad anyway. We might as well get the good as well.
Posted by Procopius2k 2009-03-10 13:19||   2009-03-10 13:19|| Front Page Top

#9 Just another example of Congress doing something they didn't understand...

Who says they didn't understand? I'd bet money that there were some who understood exactly what would happen.
Posted by Trader_DFW 2009-03-10 13:34||   2009-03-10 13:34|| Front Page Top

#10 That thought has occurred to me, Trader. It's awfully paranoid but sometimes I wonder...What gets me is the timing...the way it all went to hell right before the election and all the donks started screaming it's Bush's fault.
Posted by Ebbang Uluque6305 2009-03-10 14:25||   2009-03-10 14:25|| Front Page Top

#11 After all, I don't believe the donks ever really gave a damn about Iraq either. They were delighted to use it as a club to beat Bush but I don't believe the likes of Obama, Kennedy and Pelosi ever gave a rat's ass about the troops. I think they wanted defeat in Iraq because it would embarrass Bush. Now, if they would stoop that low they wouldn't have any qualms about wrecking the country's banks either if they thought they could use it for political advantage.
Posted by Ebbang Uluque6305 2009-03-10 14:33||   2009-03-10 14:33|| Front Page Top

#12 Do you really want the banks nationalized? Remember, the federal government can't even run a whorehouse for a profit. When they took over the Mustang Ranch in Nevada, they eventually had to close it. As someone said, if you can't sell sex to drunken truckers, how the hell can you run any business?
Posted by Rambler in Virginia">Rambler in Virginia  2009-03-10 19:07||   2009-03-10 19:07|| Front Page Top

#13  Do you really want the banks nationalized?

If they've failed already, really what's the difference. At least it cuts out the expense of middlemen. As to the quip about the government running stuff, I believe we've just seen one element of the government rebuild an entire country nearly from ground up while fighting a war. And those who did it, did it with on the job training since no one had 'written a book' on how to do it in a half century.
Posted by Procopius2k 2009-03-10 21:52||   2009-03-10 21:52|| Front Page Top

#14 the federal government can't even run a whorehouse for a profit. Are you implying that the banksters have been better at ruinning their businesses than the feds?
Posted by Anguper Hupomosing9418  2009-03-10 22:00||   2009-03-10 22:00|| Front Page Top

#15 The bank already is nationalized if you bought share on it. They just forgot the part where you root out corruption and congress shys away from it on purpose.

They are the shareholders likely.
Posted by newc">newc  2009-03-10 22:41||   2009-03-10 22:41|| Front Page Top

#16 Must use "newspeak".

Recapitalization after fed control for limited years. No if's ands or buts.
Posted by newc">newc  2009-03-10 22:45||   2009-03-10 22:45|| Front Page Top

#17 Yet it could suprisingly show profits. If comperable enough, you wont have to take it out back and shoot it.
Posted by newc">newc  2009-03-10 23:15||   2009-03-10 23:15|| Front Page Top

23:53 newc
23:51 rjschwarz
23:46 Jeremiah Glinter9060
23:46 rjschwarz
23:45 Jeremiah Glinter9060
23:45 Jeremiah Glinter9060
23:21 badanov
23:15 newc
23:11 JosephMendiola
23:10 Iblis
23:01 trailing wife
22:45 newc
22:41 newc
22:27 CrazyFool
22:00 Anguper Hupomosing9418
21:59 Procopius2k
21:58 Pappy
21:54 ed
21:53 Frank G
21:52 Procopius2k
21:51 Frank G
21:47 Skunky Glins 5***
21:45 Procopius2k
21:42 newc
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