prosperity Posted February 11, 2009 Report Share Posted February 11, 2009 It's not the way you linked, it is that site itself. I found that the link works at time and does not work at others. In fact, if one gets the error, hitting "refresh" will bring up the article. To summarize, that article notes that the market value of the TARP assets has fallen. It mentions that Paulson said the government would not lose money. There is no surprise there. Markets go up and down, and Paulson never suggested that they would not. What he did suggest was that the final realized amounts will not be less that the govt's purchase price -- something that won;t be known for a while. In fact, Paulson may turn out to be right, but that will still remain a secondary issue. The real issue was the act of taking on the "toxic" assets in the first place. Today's business news noted that the govt. is dropping the term "toxic asset", and will now use the term "legacy asset". Even the "troubled asset" "TA-rp" is out the window. Instead, the program will be called "Financial Stabilization Program". With these new names, we should all sleep better! I'm not sure they really understood the value of these things when they purchased them... ...if, for example, the price of these "troubled assets" were inflated due to easy credit...what do you suppose would cause them to come back to at least the purchase price? More inflated values? Quote Link to comment Share on other sites More sharing options...
softwareNerd Posted February 12, 2009 Report Share Posted February 12, 2009 I'm not sure they really understood the value of these things when they purchased them...They did not buy toxic/troubled/legacy assets directly. The government has given the banks money in exchange for preferred shares that pay a certain rate or interest plus warrants to buy some shares. In addition, they've guaranteed some bank debt. Now, this report is saying that the government provided a subsidy. I'm not saying the government did not provide a subsidy. Let's ignore banks like Wells on whom the money was forced. Private capital was not willing to provide money to the ones in trouble. For instance, there were reports of AIG trying to raise money with no success. So, if they were not able to get any money, and the government gave them money, why would we not consider the entire amount to be a subsidy? This report is claiming that a reasonable businessman with funds would have actually put up money for AIG, but would have demanded better terms. How is such an assumption justified? Here's a simplified example of just one component. The government gave AIG $40 billion @ 10% interest. What was the subsidy on this? If nobody else was willing to pay and the company would have gone into bankruptcy, why should we not assume that the entire $40 billion was a subsidy? Or, if we take Paulsons view, we can say that if we get the $40 million back, once we consider the interest, we're at par Or, we can take the approach taken by this report and assume that a private party would have charged 25% interest, so we were giving AIG a subsidy of more than half the principle. My point is merely this: where's the surprise? This report seems more like political posturing than useful information. Quote Link to comment Share on other sites More sharing options...
prosperity Posted February 12, 2009 Report Share Posted February 12, 2009 My point is merely this: where's the surprise? This report seems more like political posturing than useful information. What? What exactly is the "posture". It was simply reporting what the Oversight board has found. Now, this report is saying that the government provided a subsidy. Where does it say that? It says that it lost value in the investments it made in AIG and Citigroup. Or, we can take the approach taken by this report and assume that a private party would have charged 25% interest, so we were giving AIG a subsidy of more than half the principle. ???? Are you reading the same article that the rest of us are? Nowhere did it even imply this. Now...perhaps we should come together on what you are considering a subsidy. I was under the impression this was essentially a bridge loan to AIG. I usually agree with your assessment on a variety of issues but I think you missed the boat here. It was just reporting that the Government's investment has lost value...and in my own opinion, because the assets were not valued properly, I'm not sure we're ever going to see a return like Hank implied. Quote Link to comment Share on other sites More sharing options...
softwareNerd Posted February 12, 2009 Report Share Posted February 12, 2009 (edited) What? What exactly is the "posture". It was simply reporting what the Oversight board has found.I happened to hear the Harvard law professor who chairs the oversight board, on NPR; I've also looked over the original report. So, I'm basing my evaluation on more than the linked article. Where does it say that? It says that it lost value in the investments it made in AIG and Citigroup.Okay, let's start here: what investments? I submit that the government did not make any investment in AIG or Citigroup. If I give money to a bankrupt to whom nobody else will give money on any terms, is that an investment? If so, how do I evaluate the "fair value". This committee tries to evaluate a fair value for that money that the government gave to AIG and others. That is simply bogus, because it is based on a bogus assumption. If AIG got $40 billion, and nobody was willing to give it a dime, the whole $40 billion was a give-away. Now, the oversight committee says that only $20 billion of that was a give away. So? If we assume they're right -- which they are not -- it would be a good thing! The linked article makes it sound as if the government took over some pre-existing assets -- like some mortgage-backed securities etc,. --- from these companies and that these assets have gone down in value. That is simply false; it has not happened. Edited February 12, 2009 by softwareNerd Quote Link to comment Share on other sites More sharing options...
prosperity Posted February 12, 2009 Report Share Posted February 12, 2009 I happened to hear the Harvard law professor who chairs the oversight board, on NPR; I've also looked over the original report. So, I'm basing my evaluation on more than the linked article. Okay, let's start here: what investments? I submit that the government did not make any investment in AIG or Citigroup. If I give money to a bankrupt to whom nobody else will give money on any terms, is that an investment? If so, how do I evaluate the "fair value". This committee tries to evaluate a fair value for that money that the government gave to AIG and others. That is simply bogus, because it is based on a bogus assumption. If AIG got $40 billion, and nobody was willing to give it a dime, the whole $40 billion was a give-away. Now, the oversight committee says that only $20 billion of that was a give away. So? If we assume they're right -- which they are not -- it would be a good thing! The linked article makes it sound as if the government took over some pre-existing assets -- like some mortgage-backed securities etc,. --- from these companies and that these assets have gone down in value. That is simply false; it has not happened. Perhaps I should have said alleged assets. Or alleged investments. I agree with you in that I don't think that there was a way to objectively price these things and no way to determine what their value actually is/was. When I first saw/heard this was happening on the nightly news, I was scratching my head thinking how the hell do you price something without a market for it? I hadn't seen the fill report nor heard it on NPR. Obviously I am missing something. Quote Link to comment Share on other sites More sharing options...
softwareNerd Posted February 12, 2009 Report Share Posted February 12, 2009 Here's a very simplified version of the approach taken by this report: The government lent AIG $40 billion @ 10% No private investor was willing to give AIG money on those terms at that time Private investors would have demanded more So, the government was giving AIG a subsidy Using the above, the guys who wrote the report tried to figure out what higher rate a private investor would have charged. They then used this to put a dollar value on the amount of the subsidy. For more details, check this out. Quote Link to comment Share on other sites More sharing options...
brian0918 Posted February 13, 2009 Report Share Posted February 13, 2009 The House just approved the stimulus, with NO Republican support. Quote Link to comment Share on other sites More sharing options...
K-Mac Posted February 13, 2009 Report Share Posted February 13, 2009 Good! Then the Dems can't blame them like they always do when it blows up in their face! Quote Link to comment Share on other sites More sharing options...
Maximus Posted February 13, 2009 Report Share Posted February 13, 2009 Good! Then the Dems can't blame them like they always do when it blows up in their face! Since they don't have Bush to be the hobgoblin, I wonder who they'll blame now? Quote Link to comment Share on other sites More sharing options...
softwareNerd Posted February 13, 2009 Report Share Posted February 13, 2009 I suppose that first they will blame evil businessmen. If allowed to continue, they will blame you: for not spending, for nor being your neighbors keeper, for wanting more health care than "we" cam afford, and so on. Quote Link to comment Share on other sites More sharing options...
prosperity Posted February 13, 2009 Report Share Posted February 13, 2009 I suppose that first they will blame evil businessmen. If allowed to continue, they will blame you: for not spending, for nor being your neighbors keeper, for wanting more health care than "we" cam afford, and so on. Actually, I can see this happening. I can even see the line of thinking: "Being greedy is evil Businessmen are greedy therefore, businessmen are evil ...and since we "know" that we did "something" to fix the economy, the only thing left to blame is the ones who always thwart our plans, the evil people...the businessmen...they did "something" to mess this up..oh, did you American's say that you too are greedy....? You hoarded your cash instead of spending it? Why did you do that? It's not our fault, you guys screwed yourselves" Quote Link to comment Share on other sites More sharing options...
pam Posted February 15, 2009 Report Share Posted February 15, 2009 The healthcare issues in the bill (posted in this thread) are extremely frightening, as someone said to me the other day, "the govt is now going to decide whether you live or die" Quote Link to comment Share on other sites More sharing options...
prosperity Posted February 17, 2009 Report Share Posted February 17, 2009 The healthcare issues in the bill (posted in this thread) are extremely frightening, as someone said to me the other day, "the govt is now going to decide whether you live or die" K-mac posted an excerpt from that bloomberg article. Tom Daschle has some very scary ideas here. Apparently, in his book, Daschle had said the goal of his health care reform (emphasis added): source: http://www.bloomberg.com/apps/news?pid=206...id=aLzfDxfbwhzs "...is to slow the development and use of new medications and technologies because they are driving up costs. He praises Europeans for being more willing to accept “hopeless diagnoses” and “forgo experimental treatments,” and he chastises Americans for expecting too much from the health-care system." ...Daschle says health-care reform “will not be pain free.” Seniors should be more accepting of the conditions that come with age instead of treating them. That means the elderly will bear the brunt. I think Daschle is saying that sick and elderly people should be ready and willing to suffer and die by Government mandate. Quote Link to comment Share on other sites More sharing options...
Thomas M. Miovas Jr. Posted February 17, 2009 Author Report Share Posted February 17, 2009 Well, the spendulus is now law , and . Quote Link to comment Share on other sites More sharing options...
JMartins Posted February 18, 2009 Report Share Posted February 18, 2009 At least some people cared. Quote Link to comment Share on other sites More sharing options...
K-Mac Posted February 18, 2009 Report Share Posted February 18, 2009 Yeah, some of those idiots got on the mic and yelled things like, "end illegal immigration!" Great. Quote Link to comment Share on other sites More sharing options...
gags Posted February 19, 2009 Report Share Posted February 19, 2009 Chairman Obama has added a $75 billion bailout for homeowners facing foreclosure and he has raised the government's committment to Fannie and Freddie to $400 billion. It's as if this is all being done with Monopoly money. http://www.washingtonpost.com/wp-dyn/conte...9021801081.html Quote Link to comment Share on other sites More sharing options...
brian0918 Posted February 19, 2009 Report Share Posted February 19, 2009 (edited) I bought my home January 28th, and already got the $7500 "tax credit" that the IRS let me apply to my 2008 return. Now the new stimulus has a true $8000 tax credit for people who buy in 2009. So I should be able to get both! Edited February 19, 2009 by brian0918 Quote Link to comment Share on other sites More sharing options...
prosperity Posted February 23, 2009 Report Share Posted February 23, 2009 Chairman Obama has added a $75 billion bailout for homeowners facing foreclosure and he has raised the government's committment to Fannie and Freddie to $400 billion. It's as if this is all being done with Monopoly money. http://www.washingtonpost.com/wp-dyn/conte...9021801081.html Well, the theory is based on something called the "Keynesian multiplier". Allegedly, for every $1 that the Government "stimulates" the economy with, it will produce a "multiplier effect" depending on how much the Government "stimulates" the economy and how much of that "stimulation" gets spent vs. saved. It is definitely a "demand side" type of economics where it is argued that demand drives production instead of production driving demand. I think it's funny because - and I think someone here has mentioned something to this effect before - if the multiplier really worked, why not "stimulate the economy" with $15 trillion, or better yet $100 trillion? Why limit yourself to a measly $800 billion? At that point, I think you'd get a lot of voices in Washington saying "oh no, that's too much". But why? If your theory was valid, the dollar amount shouldn't matter. You could stimulate the economy with $1,000,000 trillion and we'd be the richest nation ever. Of course, what is being overlooked here is that you - as a consumer - can't buy anything unless there is something to buy. So, production comes before consumption. Keynes didn't get it then and Obama doesn't get it now. Quote Link to comment Share on other sites More sharing options...
fountainhead777 Posted February 23, 2009 Report Share Posted February 23, 2009 Well Obama has put Joe Biden in charge of the stimulus. Not too happy about that since Biden usually doesn't know how to think before he speaks very well. link Quote Link to comment Share on other sites More sharing options...
Maarten Posted February 23, 2009 Report Share Posted February 23, 2009 Obama pledges to reduce deficit By Obama's own account, the new stimulus bill will add to this fiscal year's deficit, which the administration projects will be $1.5 trillion. Obama said he will at least cut that in half by the end of his first term 2013. This is just sad. And disgusting. As if it is somehow a good thing to first create a record budget deficit with your retarded economic policies, and then take credit for "cutting" what should be temporary increases in the first place by a percentage that is totally insignificant and will STILL result in higher deficit levels than before. That's like someone who just gained 60 pounds by overeating claiming it's impressive if they lose 15 pounds. And then pretend that they really are better off than before. God, I don't even have words for how dumb this is. After all, half of 1.5 trillion is still 750 billion, and that's almost twice as much as Bush's deficit was last year. And 1.5 trillion is a low-ball estimate for next year's deficit.... Quote Link to comment Share on other sites More sharing options...
gags Posted February 23, 2009 Report Share Posted February 23, 2009 Well, the theory is based on something called the "Keynesian multiplier". I doubt that a "multiplier" exists in the long run. The fact is that higher taxes and/or inflation are the end result of deficit spending. Of course both of these curtail economic growth. This is just sad. And disgusting. As if it is somehow a good thing to first create a record budget deficit with your retarded economic policies, and then take credit for "cutting" what should be temporary increases in the first place by a percentage that is totally insignificant and will STILL result in higher deficit levels than before. Worse yet, he's now openly talking about raising taxes on "rich" people, cutting defense spending and extorting money from businesses through a cap and trade carbon emission program. "Revenue from the sale of emissions permits under a cap-and-trade system will help pay for the deficit reduction, along with reductions in spending on the war in Iraq and higher taxes on wealthy individuals and businesses. The budget will allow the Bush tax cuts for those earning more than $250,000 to expire after 2010. The top marginal income tax rate will rise to 39.6 per cent. The top capital gains tax rate will be set at 20 per cent." http://www.ft.com/cms/s/0/797459da-0111-11...0077b07658.html Quote Link to comment Share on other sites More sharing options...
softwareNerd Posted February 23, 2009 Report Share Posted February 23, 2009 Worse yet, he's now openly talking about raising taxes on "rich" people, cutting defense spending and extorting money from businesses through a cap and trade carbon emission program.Likely, yesterday someone warned him about inflation; so, he's going to try stagnation instead. Tomorrow is a new day though, and pragmatists flit from this to that. Probably, the only thing certain for the next year or so is that uncertainty (and consequent volatility) will reign. Quote Link to comment Share on other sites More sharing options...
Maximus Posted February 23, 2009 Report Share Posted February 23, 2009 Will we ever make it to the mid-term elections? It's only been a month, but feels like much, much longer. Quote Link to comment Share on other sites More sharing options...
Maarten Posted February 24, 2009 Report Share Posted February 24, 2009 Will we ever make it to the mid-term elections? It's only been a month, but feels like much, much longer. It would be pretty wonderful I think if Obama has to deal with a republican congress from 2010-2012. Maybe that'll work out better than this current mess. At least it shows that Democrats still know how to outspend the Republicans! That's some certainty for you, sNerd =) Quote Link to comment Share on other sites More sharing options...
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