Killing The Banks with TARP

The second version of TARP or what ever you call it is unclear to me. Your going to encourage private money with borrowed leveraged money? Didn't they already get burned by assets that where backed by the government. If they get out of the way wouldn't someone find a way to make some money out of this mess? Instead everyone sits on the side lines waiting to see what the government is going to do. What are they doing? Confusing the issue more and borrowing more money collateralize by borrowed money. I don't trust them. I am not sure they really want fix the problem. At lest until they pass everything they want behind the veil of fear.

From A PLAN TO KILL BANKS TREASURY'S DEADLY 'KINDNESS'

"The new Treasury plan continues to put most of the emphasis on pushing banks to make more loans to over-indebted consumers, homeowners and firms. Unlike last year, however, Geithner now believes, "Our policies must be designed to mobilize and leverage private capital, not to supplant or discourage private capital. When government investment is necessary, it should be replaced with private capital as soon as possible."
That's a laudable goal - but contradictory. In reality, government capital replaces ("crowds out") private capital, leaving taxpayers holding a bigger and bigger bag. Call that nationalization by default. "

The leverage idea has been around from the start of this mess. It is not a bad idea but the way it is being done now really is not leveraging anything.

"TARP-afflicted firms will have to pay dividends to the Treasury for its preferred shares before any remaining crumbs fall to common shareholders. Treasury will be first to get any dividends or capital gains if the firm does well, and first to get repaid in the event of bankruptcy.
Once a bank or insurance company gets in bed with the government, the property rights of that company's stockholders become uniquely insecure. When the government jumps into the cockpit, smart stockholders bail out.
And depressed stock prices deflate the banks' capital cushion, regardless of Treasury investments - making them more likely to fail and therefore less likely to lend. In other words, government "help" achieves the opposite of Geithner's declared goal."

The government should NEVER be this in bed with any company. If you bail them out that should be it. Give them the money and treat it as a loan, take common stock or just walk away. There is no risk to the government if they are first to get payed in all cases. In this case it was public outrage that there was no guarantee the money would be payed back. The people needed a clear explanation of what this was going to lead to "incremental nationalization of banks and insurance companies". The "people" where wrong. Why? They are not taught these things (I really wasn't either), NO one explains it to them(sometimes if you look around enough) and they are often used. Think for yourself (that's usually what I have to do).
It may be a good sized hill to understand the bank mess. The basic are not that hard. You don't need an economics degree, library of books or really a class on economics. The last one might help but is not necessary. A little logic and some quite time and you should be fine. If it still doesn't make sense. Get a book on logic.

First Obama Press Conference

He is who he is. It when well. He is a collectivist hack. We have gone from realizing there are true socialists in our government to socialists idealist.

Stop Helen Thomas. Don't call on Hufpost people. Do you really want to talk baseball when yo say the sky is falling. I am just going to do a few quick hits in this. Just not in the mood to burn straw men all night.

Japans lost decade? Not an economist. 6 Trillion in spending and that didn't fix it? Their are arguments all over on it. My question is do you want to multiply the debt by four and what didn't work

FDR? Your surprised he was wrong. That belief is spreading fast. When was the Great Depression over? After the war?

Not enough credit and its number two. #1 fix it before the stimulus. Fix the problems first and quickly. then massive stimulus. Can it wait for 2? 3? 4? months?

Economist and both sides say we need stimulus? True but not all of them think this package is it.

Tarp 2 as it looks will not work. You have to directly buy up the toxic assets. They can be auctioned off almost immediately. We might lose some money in the deal but it is the source of the problems.

The return to failed policies? wtf? The tax cuts? NO pushing housing? Capitalism? That is the most dishonest statement he has made and he makes it over and over.

The comments on Iran And the rest I am ignoring for the time. The super nova of government is more important.

No earmarks do not mean no pork.

Electronic records of fine. They create some jobs. The saving will not show up for years. They need to be stored offline(thumb drives), updated electronically and protected from government snooping. Not a bad idea but how stimulative is it?

Schools have been state responsibility. With federal money comes Federal strings. I really don't want anyone that believes in over blown social justice any where near schools.

How partisan is it to keep implying that the alternative to this bill is doing nothing. It is not. Very few, if any are saying do nothing.

Bipartisanship? If someone disagrees with you are you sure they are just doing it political reasons or do they know your wrong.

He at time plays at being pragmatic. I don't think he is. Government is the only one that can fix this? They do need to get out of the way. Fix the systemic problems that government made. It is not that capitalism is failed. It is that government that stuck there hand in and played around.

This bill is a massive government expansion. There is no sunset on any of the programs in it. If parts of the bill would not pass on their own, many of them wouldn't, why do we want to let them run on forever.

Bush spun at times he did it more than he should. He was wrong at times. Fine. But Obama, is whistling past the whole argument. Straw men and red herring are not only breeding at an exponential rate they are much bigger than I ever imagined. At some point they blot out the truth. Truth is hard enough to see and usually it takes time to become clear. What he is doing is at least intellectually dishonest. Spinning this much is telling lies. I have made the some argument for people on the other side as well. They make good points at times and at others they lie.

It Is NOT a bail out of Wall Street. Just us on the edge.

It is not a bail out of Wall Street. It is a bail out of the US economy. This is not a comment on the plan and blame, another post. Just on the problem. Bush tried in his little speech, but failed miserable. It is hard to due if your playing blame games and trying to sell a vague out line of a fix.

Top down, the Uber-banks have this "bad paper". The bad paper is a mix, mostly good mortgages, some bad mortgages and the rest a mix of insurance and other financial "instruments". All in neat little packages called mortgage backed securities. The Uber- banks aren't sure what its worth and therefore can't borrow against it or even value it as part of their company. So no one wants to lend them money and they can't lend money. At that level it very fluid, very large, very short term loans, from day to day from what i can tell. They depend on that fluidity to survive.

When the money is frozen at the top the big, regional and local banks can't borrow from above and can not lend to any one. That doesn't just include your new house or car loan. It includes farmers buying seed and fertilizer, manufacturers buying material and parts to keep them going, small and large businesses trying to expand, any corner store or mom and pop the carries a small line of credit to buy inventory and well just about any business in this country.

When they can't get loans they either have to severely cut costs or go out of business. What is usually the biggest cost? Labor. Job losses will quickly mount. More people spending less forcing more businesses on the edge out of business and more job losses. It could just keep accelerating bring in larger companies that are already hurting. Inflation? Collapse of local and state governments?

Forget about you 401 k.What about the farmers six months from now that can't plant? And what happens next winter? What about loss of confidence in the dollar? Confidence is the only thing that really keeps the dollar afloat. What happens if we suddenly get 100% inflation? Don't think it can't happen. What if your dollar is worth .50 or more accurately everything is now twice as much. What if it's 200%? How hard will it be to find gas? medicine? food? That is very dark but is more and more of a real possibility.

We are not talking about over the course of years or even months, more like weeks at best. If the credit at the top comes to a complete stop the whole US economy hit a brick wall, a fast, sudden and messy stop.

The bail out good plan or not is bailing out the US economy, not Wall Street! I don't know what we don't understand. Set aside the blame, why it happened and if its a good plan or not, we all are in very real, very big trouble.

On CNN, yesterday now, they was a cattle ranch that freely admitted that he had to borrow 80-100k a yr to keep his ranch in business. Then he proceeded to say that he had to pay his bills and that we shouldn't be bail out Wall Street. What the hell are people not getting. If the problem is not fixed he will have a big surprise when he goes to borrow the money he needs!

Not the problem here but, please vote out every incumbent ( they are a bunch of children that we have not supervised in a very long time). I rather see you vote for a 3rd party and stick it to both of them. It may make no difference, there might not be much left to run any way. Sorry.

Have a nice day?