Return to the Household Finances Forum | Post a Follow-Up

 o
Dangerous Unintended Consequences

Posted by dreamgarden (My Page) on
Wed, Apr 8, 09 at 14:48

When will the madness stop? When will the American public say enough is enough and tell the banks (and Congress) that they HAVE to be fiscally responsible and stop expecting taxpayers to continue subsidizing outright fraud?

Many news sources tell us the bottom is in sight and that banks will start lending again and that house prices will rise again soon. Unfortunately, some of this news comes from some who would prefer that the general public not know what is really going on behind the scenes. This has caused many people to lose money in their 401k's, investment accounts, etc.

Martin Weiss is one of the few who is willing to say the emperor isn't wearing any clothes. This is why I continue to post his 'pearls'. Here is one more bit of recent news (yesterday) that may or may not matter to those who are being asked to subsidize the greatest ponzi scheme our country has known. Please be sure to examine the white paper in the full article below to see how safe your bank is:

"The Financial Times tells us that U.S. banks that have received government aid, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets from other banks. So what’s to prevent all these banks from overpaying for each other’s assets with our money … overpayments that would leave Uncle Sam holding the bag?"


*Please note the disclaimer below stating that the author (and GW) have given the OP permission to repost the following article in its entirety.

Dangerous Unintended Consequences
by Martin D. Weiss, Ph.D.
03-23-09

I’ve just returned from Washington, DC, where I held a press conference at the National Press Club and a round-robin series of meetings with members of Congress … with more to come this week.

Let me first tell you what I told them. Then, I’ll explain what I think you should do about it …

Why Banking Bailouts, Buyouts, and Nationalizations
Can Only Prolong America’s Second Great Depression
And Weaken Any Subsequent Recovery
(Edited Transcript of Press Conference Presentation)

The Fed Chairman, the Treasury Secretary and Congress have now done more to bail out financial institutions and pump up financial markets than any of their counterparts in history.

But it’s not nearly enough " and, at the same time, it’s already far too much.

Two years ago, when major banks announced multibillion-dollar losses in subprime mortgages, the world’s central banks injected unprecedented amounts of cash into the financial markets.

But that was not enough.

Six months later, when Lehman Brothers and AIG fell, the U.S. Congress rushed to pass the TARP, the greatest bank bailout legislation of all time.

But as it turned out, that wasn’t sufficient either.

Subsequently, in addition to the original goal of TARP, the U.S. government has loaned, invested, or committed $400 billion to nationalize the world’s two largest mortgage companies … $42 billion for the Big Three auto manufacturers … $29 billion for Bear Stearns, $185 billion for AIG, and $350 billion for Citigroup … $300 billion for the Federal Housing Administration Rescue Bill … $87 billion to pay back JPMorgan Chase for bad Lehman Brothers’ trades … $200 billion in loans to banks under the Federal Reserve’s Term Auction Facility (TAF) … $50 billion to support short-term corporate IOUs held by money market mutual funds … $500 billion to rescue various credit markets … $620 billion in currency swaps for industrial nations … $120 billion in swaps for emerging markets … trillions to cover the FDIC’s new, expanded bank deposit insurance, plus trillions more for other sweeping guarantees.

And it STILL wasn’t enough.

If it had been enough, the Fed would not have felt compelled this week to announce its plan to buy $300 billion in long-term Treasury bonds, an additional $750 billion in agency mortgage backed securities, plus $100 billion more in Fannie Mae and Freddie Mac paper.

Total tally of government funds committed to date: Closing in on $13 trillion, or $1.15 trillion more than the tally just hours ago, when the body of this white paper was printed.

And yet, even that astronomical sum is still not enough!

Why not? Because of a series of very powerful reasons:

First, most of the money is being poured into a virtually bottomless pit. Even while Uncle Sam spends or lends hundreds of billions, the wealth destruction taking place at the household level in America is occurring in the trillions " $12.9 trillion vaporized in real estate, stocks, and other assets since the onset of the crisis, according to the Fed’s latest Flow of Funds.

Second, most of the money from the government is still a promise, and even much of the disbursed funds have yet to reach their destination. Meanwhile, all of the wealth lost has already hit home " literally, in the household.

Third, the government has been, and is, greatly underestimating the magnitude of this debt crisis. Specifically,

* The FDIC’s “Problem List” of troubled banks includes only 252 institutions with assets of $159 billion. However, based on our analysis, a total of 1,568 banks and thrifts are at risk of failure with assets of $2.32 trillion due to weak capital, asset quality, earnings, and other factors. (The details are in Part I of our white paper,( and the institutions are named in Appendix A.)

* When Treasury officials first planned to provide TARP funds to Citigroup, they assumed it was among the strong institutions and that the funds would go primarily toward stabilizing the markets or the economy. But even before the check could be cut, they learned that the money would have to be for a very different purpose: an emergency injection of capital to prevent Citigroup’s collapse. Based on our analysis, however, Citigroup is not alone. We could witness a similar outcome for JPMorgan Chase and other major banks. (See Part II of our white paper.)

* AIG is big. But it, too, is not alone. Yes, in a February 26 memorandum, AIG made the case that its $2 trillion in credit default swaps (CDS) would have been the big event that could have caused a global collapse. And indeed, its counterparties alone have $36 trillion in assets. But AIG’s CDS portfolio is just one of many: Citibank’s portfolio has $2.9 trillion, almost a trillion more than AIG’s at its peak. JPMorgan Chase has $9.2 trillion, or almost five times more than AIG. And globally, the Bank of International Settlements reports a total of $57.3 trillion in credit default swaps, more than 28 times larger than AIG’s CDS portfolio.

Clearly, the money available to the U.S. government is too small for a crisis of these dimensions.
Fourth, but at the same time, the massive sums being committed by the U.S. government are also too much:

* In the U.S. banking industry, shotgun mergers, buyouts, and bailouts are accomplishing little more than shifting their toxic assets like DDT up the food chain.

* And the government’s promises to buy up the toxic paper have done little more than encourage banks to hold on, piling up even bigger losses.

* But the money spent or committed by the government so far is also too much for another, relatively less-known reason: Hidden in an obscure corner of the derivatives market is a unique credit default swap that virtually no one is talking about " contracts on the default of United States Treasury bonds. Quietly and without fanfare, a small but growing number of investors are not only thinking the unthinkable, they’re actually spending money on it, bidding up the premiums on Treasury bond credit default swaps to 14 times their 2007 level. This is an early warning of the next big shoe to drop in the debt crisis " serious potential damage to the credit, credibility, and borrowing power of the United States Treasury.

This trend packs a powerful message " that there’s no free lunch; that it’s unreasonable to believe the U.S. government can bail out every failing giant with no consequences; and that, contrary to popular belief, even Uncle Sam must face his day of reckoning with creditors.

We view this as a positive force. We are optimistic that, thanks to the power of investors, creditors, and the people of the United States, we will ultimately guide, nudge, and push ourselves to make prudent and courageous choices:

1. We will back off from the tactical debates about how to bail out institutions or markets, and rethink our overarching goals. Until now, the oft-stated goal has been to prevent a national banking crisis and avoid an economic depression. However, we will soon realize that the true costs of that enterprise " the 13-digit dollar figures and damage to our nation’s credit " are far too high.

2. We will replace the irrational, unachievable goal of jury-rigging the economic cycle with the reasoned, achievable goal of rebuilding the economy’s foundation in preparation for an eventual recovery.

Right now, the public knows intuitively that a key factor which got us into trouble was too much debt. Yet the solution being offered is to encourage banks to lend more and people to borrow more.

Economists almost universally agree that one of the grave weaknesses of our economy is the lack of savings needed for healthy capital formation, investment in better technology, infrastructure, and education. Yet the solution being offered is to spend more and, by extension, to save less.

These disconnects will not persist. Policymakers will soon realize they have to change course.

3. When we change our goals, it naturally follows that we will also change our priorities " from the battles we can’t win to the war we can’t afford to lose. Right now, for example, despite obviously choppy seas, the prevailing theory seems to be that “the ship is unsinkable” or that “the government can keep it afloat no matter how bad the storm may be.”

With that theory, they might ask: “Why have lifeboats for every passenger? Why do much more for hospitals which are laying off ER staff, for countless charities that are going broke, or for the one in fifty American children who are now homeless? Why prepare for the financial Katrinas that could strike nearly every city?”

The correct answer will be: Because we have no other choice; because that’s a war we can and will win. It will not be very expensive. We have the infrastructure. And we’ll have plenty of volunteers.

4. Right now, our long-term strategies and short-term tactics are in conflict. We try to squelch each crisis and kick it down the road. Then, we do it again with each new crisis. Meanwhile, fiscal reforms are talked up in debates, but pushed out in time. Regulatory changes are mapped out in detail, but undermined in practice. Soon, however, with more reasonable, achievable goals, theory and practice will fall into synch.

5. Instead of trying to plug our fingers in the dike, we’re going to guide and manage the natural flow of a deflation cycle to reap its silver-lining benefits " a reduction in burdensome debts, a stronger dollar, a lower cost of living, a healthier work ethic, a better ability to compete globally.

6. We’re going to buffer the population from the most harmful social side-effects of a worst-case scenario. Then, we’re going to step up, bite the bullet, pay the penalty for our past mistakes, and make hard sacrifices today that build a firm foundation for an eventual economic recovery. We will not demand instant gratification. We will sacrifice our lifestyle today to assume responsibility for our future and the future of our children.

7. We will cease the doubletalk and return to some basic axioms, namely that:

* The price is the price. Once it is established that our overarching goal is to manage " not block " natural economic cycles, it will naturally follow that regulators can guide, rather than hinder, a market-driven cleansing of bad debts. The market price will not frighten us. We can use it more universally to value assets.

* A loss is a loss. Whether an institution holds an asset or sells an asset, whether it decides to sell now or sell later, if the asset is worth less than what it was purchased for, it’s a loss.

* Capital is capital. It is not goodwill or other intangible assets that are unlikely to ever be sold. It is not tax advantages that may never be reaped.

* A failure is a failure. If market prices mean that institutions have big losses, and if the big losses mean that capital is gone, then the institution has failed.

8. We will pro-actively shut down the weakest institutions no matter how large they may be; provide opportunities for borderline institutions to rehabilitate themselves under a slim diet of low-risk lending; and give the surviving, well-capitalized institutions better opportunities to gain market share.

Kansas City Federal Reserve President Thomas Hoenig recommends that “public authorities would be directed to declare any financial institution insolvent whenever its capital level falls too low to supports its ongoing operations and the claims against it, or whenever the market loses confidence in the firm and refuses to provide funding and capital. This directive should be clearly stated and consistently adhered to for all financial institutions that are part of the intermediation process or payments system.” We agree.

9. We will build confidence in the banks, but in a very different way. Right now, banking authorities are their own worst enemy. They paint the entire banking industry with a single broad brush " “safe.” But when consumers see big banks on the brink of bankruptcy, their response is to paint the entire industry with another broad brush " “unsafe.” To prevent that outcome, we will challenge the authorities to release their confidential “CAMELS ratings” on each bank in the country. And we will ask them to reverse the expansion of FDIC coverage limits, restoring the $100,000 cap for individuals and businesses.

Although these steps may hurt individual banks in the short run, it will not harm banks in the long run. Quite the contrary, when consumers can discriminate rationally between safe and unsafe institutions, and when they have a motive to shift their funds freely to stronger hands, they will strengthen the nation’s banking system.

I am making these recommendations because I am optimistic we can get through this crisis. Our social and physical infrastructure, our knowledge base, our democratic form of government are strong enough to do so. As a nation, we’ve been through worse before, and we survived then. With all our wealth and knowledge, we can certainly do it again today.

But my optimism comes with no guarantees. Ultimately, we’re going to have to make a choice: The right choice is to make shared sacrifices, let deflation do its work, and start regenerating the economic forces that have made the United States such a great country. The wrong choice is to take the easy way out, try to save most big corporations, print money without bounds, debase our dollar, and ultimately allow inflation to destroy our society.

This white paper is my small and humble way of encouraging you, with data and reason, to make the right choice starting right now.

What You Must Do Now

There followed a vigorous debate and some of the most unique questions I’ve had the honor to answer in many years. (I’ll share them with you when I have the transcript.)

In the meantime, here’s what I recommend you do:

Step 1. As soon as you have a chance, take a look at our white paper on the banking crisis.

Step 2. In Part II (where I list a few big banks) and in the appendix, where I have all the rest of the banks and thrifts we believe are at risk of failure, make sure yours is not on it.

Step 3. If it is, I recommend shifting to a stronger institution, regardless of the size of the bank or the size of your account.

Step 4. For our list of the strongest banks in the U.S., plus instructions on where to find even safer havens for your money, see our free report available to all Money and Markets members. (www.martinweiss.com/images/pdf/SMR0250_BankingSurvivalGuide.pdf)

Step 5. Most important, stand by for my appeal for help! I can’t do this alone. I will need your support, and I’ll explain exactly how soon.

Good luck and God bless!

Martin

* Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

A link that might be useful:

www.moneyandmarkets.com/dangerous-unintended-
consequences-2-32820

Distortions, Deceptions and Outright Lies
by Martin D. Weiss, Ph.D.
April 7, 2008

www.moneyandmarkets.com/issues.aspx?Distortions-Deceptions
-and-Outright-Lies-1640

www.moneyandmarkets.com/7-reasons-
why-the-big-bad-bear-will-return-3-33047


Follow-Up Postings:

 o
RE: Dangerous Unintended Consequences

Specifically, what about what Weiss is saying do you agree with? Please elaborate and share any reasoning you have.


 o
RE: Dangerous Unintended Consequences

Hi Dreamster,

When will the American public say enough is enough and tell the banks (and Congress) that they HAVE to be fiscally responsible and stop expecting taxpayers to continue subsidizing outright fraud?

On the same day the American public demand their politicians STOP bringing them back more welfare (at all levels, from poverty subsidies to corporate subsidies to the newest banking subsidies.)

IOW... it ain't gonna happen. That is *UNLESS/UNTIL* we shift out of a subsidy/welfare mindset (as a majority/whole.) The only way through this is *THROUGH* this... and yes, the fever may very well kill the patient (terminating our political system as we know it.... likely in a very uncomfortable (hopefully non-bloody) revolution.)

Ain't I a bright ray of sunshine?
Dave


 o
RE: Dangerous Unintended Consequences

patser-Specifically, what about what Weiss is saying do you agree with? Please elaborate and share any reasoning you have.

What more is there to elaborate about? Didn't you read the entire post? Is there anything he said that you do not agree with?


 o
RE: Dangerous Unintended Consequences

"The Financial Times tells us that U.S. banks that have received government aid, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets from other banks. So what’s to prevent all these banks from overpaying for each other’s assets with our money … overpayments that would leave Uncle Sam holding the bag?"

Internal accounting staffs, external auditors, regulators will prevent it, that's what. If the man had ever had a job at a bank, he'd know what he's talking about.

"Six months later, when Lehman Brothers and AIG fell, the U.S. Congress rushed to pass the TARP, the greatest bank bailout legislation of all time.

But as it turned out, that wasn’t sufficient either."

So why has Wells Fargo, the first to announce first quarter earnings, reported a record quarterly profit?

I don't have the inclination to bother to go on so these are but 2 of his misconceptions. If you understood banking, you would have been able to answer my question.


 o
RE: Dangerous Unintended Consequences

Buried in the rant of the original posting are a few disquieting allusions to the problems fancy derivatives pose for the whole economic structure, and the bets that "sophisticated" investors are making that the bubble in Treasuries that's been building in recent months because of the "flight to quality," a safe place to park your money until it seems okay to go back into the stock market, will eventually blow up. Then all bets are off if/when that happens.

I am sure that the ones who are making these bets are not what one would call patriots who really care about America and the public interest. They thrive on chaos. They're the ones who got us into this mess in the first place, by forcing the SEC to ignore its regulatory responsibilities. They are also the ones who cheered when they caused Congress to dismantle the protections instituted in the 1930s, for their personal convenience, so they could rape the system with impunity.

It's up to the newly elected administration to stand up to these latter day robber barons, and put in new regs that will essentially put them out of business. The new regs should specify exactly the kinds of financial instruments and transactions that are allowed, and should spacify that all others are not allowed, so that new ones like derivatives and credit default swaps, which are not regulated, will not reappear. We need, most of all, a radical change in the culture and climate in our financial institutions, a change that says you play by the rules, and if you don't like it, go to Las Vegas.


 o
RE: Dangerous Unintended Consequences

Patser-"If you understood banking, you would have been able to answer my question."

Your an expert on banking?

Then perhaps you could explain to the rest of us why so many bankers forgot economics 101, got in trouble and became unable to manage their business without having ask to ask non-bankers (taxpayers) to bail them out.


 o
RE: Dangerous Unintended Consequences

patser-"So why has Wells Fargo, the first to announce first quarter earnings, reported a record quarterly profit?"

Probably because they accepted $25 billion of TARP capital?

It remains to be seen how well they will do after they release their full quarterly report on April 22. Especially considering they slashed their quarterly dividend 85 percent to 5 cents per share.

Financials Won't Follow Wells
Carl Gutierrez, 04.10.09

"We believe that credit quality materially deteriorated in the first quarter and that Wells Fargo is under-reserving for expected future losses," Miller said, reiterating his "underperform" rating.

Wall Street was comfortable with blissful ignorance, sending Wells Fargo's shares soaring 31.7%, or $4.72, to close at $19.61. Over the past 12 months, the company's stock has lost 31.2% of its value."


A link that might be useful:

www.forbes.com/2009/04/10/wells-fargo-banking-markets-
equity-financial-mortgage.html


 o
RE: Dangerous Unintended Consequences

It's up to the newly elected administration to stand up to these latter day robber barons....

Exactly like FDR did in the 30s, right? Which, of course, killed employment, depressed the stock market, and kept the country in a depression for five to seven years longer than the rest of the world.

The government can't even control its own pets, Fannie and Freddie, yet supposedly they can supposedly properly control the multitude of other commercial institutions?

Here's much simpler self-limiting solution:

NO BAILOUTS


 o
RE: Dangerous Unintended Consequences

There is nothing wrong with fancy derivatives - things like credit default swaps are currently used with much success WHEN they are used properly and are modeled against the underlying instrument correctly.

Guess what dreamgarden - the success or failure of a bank is NOT dependent on what dividend they pay.

Yes, I know plenty about banking, globalization of banking, bank holding companies, non-bank financial services companies. So?


 o
RE: Dangerous Unintended Consequences

dreamgarden: "It remains to be seen how well they will do after they release their full quarterly report on April 22. Especially considering they slashed their quarterly dividend 85 percent to 5 cents per share."

Especially considering they slashed their dividend???

That makes no sense whatsoever.

In fact, it is 180 degrees from the point you were trying to make.

"Slashing" their dividend benefits their bottom line because they have that much more cash on hand rather than paying it out to stockholders.


 o
RE: Dangerous Unintended Consequences

The people who oppose the bailouts overlook the danger that allowing these incompetently managed financial institutions to go belly up will result in a catastrophic collapse of the whole financial system worldwide. If that were to happen, we would all suffer like the people of Zimbabwe are suffering now, or the Germans suffered during the hyperinflation era of the 1920s -30s.


 o
RE: Dangerous Unintended Consequences

haus proud,
NO.... that is wrong.

A) We have a very strong small-business class that generally operates without the leverage and largesse of the "too big too fail" behemoths, and the collapse of the giants will be filled virtually instantaneously by the existing strong hands... smaller they may be, but infinitely stronger.

B) Zimbabwe is suffering from government corruption (which is *DEFINITELY* a path of risk we are sliding down.) In order to steer away from Zimbabwe's pains we *MUST* restore populist power (the power belonging to the common man and HELD AWAY from government.)

C) Hyperinflation Germany during the Weimar Republic occured because of *EXACTLY* what our current administration is doing; Trying to "fix" a naturally occuring cyclical 'problem' (like gravity, or the Earth revolving around the Sun,) by spending money they didn't have. In order to avoid the same fate we must STOP printing funny money.

Seriously... this isn't about politics.. this is ECONOMICS. The so-called "bailouts" are *ALREADY* showing to be a miserable failure... AND ITS NOT A SURPRISE TO ANYONE!

We're setting up for GIRGORMOUS INFLATION (that's several multiples of "brazillionth" ;~)
It *WILL* become obvious soon....
It *IS* being created by irresponsible "saviourism" money printing (that isn't even doing any good!!!)...

The responsible thing for individuals to do;
PREPARE for inflation,
PREPARE for more government corruption before the pendulum finally swings,
PREPARE for more unemployment as government further burdens employers with regulation & taxation.

As the problems caused by excessive intervention worsen, MORE intervention will accelerate the misery.

If you PREPARE, you have a better chance for a more peaceful life.

Luck all!
Dave


 o
RE: Dangerous Unintended Consequences

Wait a minute, Dave.

Aren't you the one that has been telling us that interest rates will stay low for....well....forever?

And now you're warning about hyperinflation?

Surely you're not suggesting that we'll have both hyperinflation and low interest rates?

And speaking of inflation (or the lack thereof)....

The PPI came out today at negative 1.2% for the month of March. Compared to the same period last year, producer prices are 3.5% lower, the largest decline in prices since 1950.

1950!

I think that avoiding an extended period of deflation is our major concern at this point in time. Not inflation.

Sure that will change at some point, the money spigot will need to be turned off and credit will need to be tightened.

But not right now.


 o
RE: Dangerous Unintended Consequences

Hi BethesdayManman,

Wait a minute, Dave.
Aren't you the one that has been telling us that interest rates will stay low for....well....forever?

NEWP, that wasn't me.... you've been reading that elsewhere. NOT that I expect you to save & index all I write... but you won't have found *ME* saying anything to the effect of your idea.

I was the one pointing out that we HAD BEEN in an extended longterm interest rate DOWN-TREND (up through eoy 2008...) and that while rates were still solidly dropping (not rising, as the fearmongers claimed,) the established trend wouldn't last forever.

I published here (and everywhere else I write, including my BLOGs) that I believe the trend has now bottomed (if not actually reversed... yet.) This happened in December of 2008 when the government threw itself over the edge and sent out the signal it can be bled in the bond markets for a virtually endless sum of money (or at least a far greater amount than the thinking markets would volunteer to pay.)

And now you're warning about hyperinflation?

Exactly.

Surely you're not suggesting that we'll have both hyperinflation and low interest rates?

Exactly, I surely am not.

And speaking of inflation (or the lack thereof)....
The PPI came out today at negative 1.2% for the month of March. Compared to the same period last year, producer prices are 3.5% lower, the largest decline in prices since 1950.
1950!
I think that avoiding an extended period of deflation is our major concern at this point in time. Not inflation.

Indeed, that may be what you think... but you'll be severely caught if you don't observe & prepare.

Sure that will change at some point, the money spigot will need to be turned off and credit will need to be tightened.
But not right now.

Why not? The money spigot is doing bupkiss in any GOOD way... and it doesn't take more than 4th grader's understanding of dilution to realize the effect of meaningless currency being pumped into the system. Why should we keep spending money we don't have on things that aren't working? (That's how we got INTO this extended bull market, which is now swinging back so hard to the mean and below!)

Longterm credit (as has always been the case) is primarily determined by the global bond traders... NOT any King's government... and the bond markets are an exponentially bigger force than any one (or combination of) central banking schemes.

The surface illusion of the so-called "deflation" at present is simply the combination of a collapse of available credit, and greatly-overdue natural regression-to-the-mean of cyclical asset prices (especially leverageable assets, as in real estate and business.)

Trying to borrow-and-spend our way out of it is tantamount to a ships captain trying to build higher ship decks because of a dropping tide.
A) its pointless,
B) gravity will ALWAYS win!

Cheers,
Dave Donhoff
Leverage Planner


 o
RE: Dangerous Unintended Consequences

dave, you say "Seriously... this isn't about politics.. this is ECONOMICS. The so-called "bailouts" are *ALREADY* showing to be a miserable failure... AND ITS NOT A SURPRISE TO ANYONE!?

What are you talking about? What miserable failure?


 o
RE: Dangerous Unintended Consequences

What miserable failure?

Are you kidding?

Try 13.4 Billion to GM who is now asking for an addtional 16 billion, but is now being asked by the Feds to file bankruptcy by June 1. Why could the feds not ask them to file bankruptcy before they gave them a tax payer bailout!

If that does not qualify as a miserable economic failure I don't know what does!


 o
RE: Dangerous Unintended Consequences

Why could the feds not ask them to file bankruptcy before they gave them a tax payer bailout!

Let's be fair...

The Feds said that the government MUST give them billions because it would prevent a bankruptcy that would destroy the US economy.


 o
RE: Dangerous Unintended Consequences

be real...

The real reason is payback for the UAW.

Bankruptcy does not always mean a complete and total failure or shutdown. More often than not, it is a complete corp. restructuring that leads to streamlining and profitability. Just look at the airlines.

They too employ millions, directly and indirectly, everything from aircraft manufactures, food service, taxi cabs, etc.. The US economy DID NOT FAIL why would it be any different for the auto companies?

Again 13.4 billion tax dollars given to GM, June 1 bankruptcy. I say that counts as a HUGE FAILURE


 o
RE: Dangerous Unintended Consequences

rar1:

We agree ... my last comment should be read as intended: dripping with sarcasm.


 o
RE: Dangerous Unintended Consequences

Sorry Shadow I must have had way too much coffee this morning!... can you tell subject this really hits a raw nerve with me!


 o
RE: Dangerous Unintended Consequences

patser-"Guess what dreamgarden - the success or failure of a bank is NOT dependent on what dividend they pay."

Guess what patser, many people DO consider the success or failure of a bank to be dependent on the dividends a bank pays.

Experience shows that when a company finds it necessary to slash its dividend it is often a sign of significant trouble in the underlying business and most often the company’s stock drops in reaction to the cut. How many banks have you seen cut their dividends recently and had their stock plummet? A LOT.

Are you aware of the restrictions on dividend rate increases imposed on participants in the TARP Program? Wells Fargo was one of the first companies to receive bailout funds from TARP. Do you think shareholders are happy to know they will be earning less from those companies that are on the government dole?

WaMu's dividends were paying $2.24 in 2007 and are now paying $0.60. Guess what has happened to WaMu shares since they cut them? B-A-N-K-R-U-P-T-C-Y!

"Yes, I know plenty about banking, globalization of banking, bank holding companies, non-bank financial services companies. So?"

TO DAVE-"What are you talking about? What miserable failure?"

Sorry pats, but you can't have it both ways. Either you ARE knowledgeable about banking (and know why our economy is collapsing), or you are in complete denial. Which one is it?

"There is nothing wrong with fancy derivatives - things like credit default swaps are currently used with much success WHEN they are used properly and are modeled against the underlying instrument correctly."

Then WHY you think so many 'experts' in the financial industry abused these?

Who's side are you on anyway? The side that says enough of rewarding criminals with taxpayer dollars for playing ponzi schemes with derivatives? Or the side that says as long as I'm getting mine, screw the taxpayers.


 o
When hell freezes over?

bethesdamadman-"Sure that will change at some point, the money spigot will need to be turned off and credit will need to be tightened.

But not right now."

Well when DO you think should we stop giving the Wall Street robbers back their 'guns' so they can continue extorting the nation for money they didn't earn?

Are you familiar with what it means to take personal responsibility for your own actions? YOU make a mess, YOU clean it up.

Why do you think its OK to reward these criminals with yet more money? Yikes.

I do not approve of my tax dollars going to the criminals on Wall Street who perpetrated this mass ponzi scheme anymore than I approve of my tax dollars being used to support that brainless Octo mom who purposely got herself knocked up with 8 babies after already having 6.


 o
RE: Dangerous Unintended Consequences

Well when DO you think should we stop giving the Wall Street robbers back their 'guns' so they can continue extorting the nation for money they didn't earn?

As I said in the other thread, you are being manipulated to hate a trillion dollar strawman.

The wall streeter are not "robbers" ... they did not TAKE your money.

At best, they are "beggars" who were given your money.

Maybe you should direct your anger at those that actually took your money to give to them?


 o
RE: Dangerous Unintended Consequences

"I do not approve of my tax dollars going to the criminals on Wall Street who perpetrated this mass ponzi scheme ..."

So then cast your vote for new representation the next time you have an election.

I know with certainty that MANY in the financial industry use derivatives EXACTLY as they were designed to be used. I also know that there were some big mistakes that YOUR regulators totally blew off and let stay in place. Remember, your tax dollars paid the salaries of these folks.

You just don't hear about the successful uses because that doesn't make good headlines.

Dave, Could you elaborate on your statement? I'd rather hear what YOU mean instead of what others think you mean.


 o
RE: Dangerous Unintended Consequences

Hi Patser,

I know with certainty that MANY in the financial industry use derivatives EXACTLY as they were designed to be used. I also know that there were some big mistakes that YOUR regulators totally blew off and let stay in place. Remember, your tax dollars paid the salaries of these folks. You just don't hear about the successful uses because that doesn't make good headlines.

1,000% agreed!

Dave, Could you elaborate on your statement? I'd rather hear what YOU mean instead of what others think you mean.

The Fed & Treasury have peen pissing away artificial funny money (let alone perfectly good money we do not have) in 'hail mary' bailout schemes that are pointless in the first place (the markets don't need a bunch of business-illiterates 'saving' it) and futile in the second place (you can't fight natural cycles.)

There's a rich and robust 'undergrowth level' of financially strong small and medium sized businesses that played it straight & conservative during the government-fueled over-stretched bull markets in virtually every industry. They are very well positioned, having responsibly foregone the sugary temptations during the orgy hey-days, to absorb & take on the business of the overstretched "too big to fail" behemoths of every market.

The responsible businesses (their employees, shareholders & customers) are being penalized, and the taxpaying citizenry are being abused (massively) by the government's attempts (let alone the pissed-away costs of its FAILED attempts) to prop up bloated behemoths that have no competitive justification to exist any further.

Why would *ANY* semi-intelligent elected official do something so inane? There can only be one logical answer;
The behemoths are the paymasters!

As they say; "follow the money!"

Our government has continually become more and more corrupt, and it obviously has NOT stopped (whatsoever) with Obama's promise of "change."

The extreme left & right are equally guilty in this aspect... and its NOT getting any better.

Dave


 o
RE: Dangerous Unintended Consequences

Although I don't have the insider information to prove this out, I have enough knowledge to firmly believe there were 2 primary reasons for the bailouts/aka loans to financial services companies. First, foreign policy and second, the economic impact on municipal governments within the US.

Globalization has resulted in companies becoming 'too big to fail' and those very same companies have become large components of the economic structures of countries throughout the world. IF those companies had been allowed to fail, I believe there would have been a very negative effect on the US' relationships with many countries around the globe. In this day and age of pretty decent sized concerns with a number of countries around the globe, I believe that the US acted to avert severe negative repercussions with countries that it hopes to have as allies.

It's no secret that many municipalities throughout the US have been struggling financially throughout the last 18 or so months. The combination of a slowdown in revenues generated from transfers of property and slowdown in tax collections as a result of unemployment added to the potential for driving up the cost of muni bond issuance to extremely high levels and/or driving municipalities out of the bond markets entirely posed another huge level of risk which the US govt chose to avoid. If bailouts hadn't occurred to the financial companies, municipalities would have been at risk for even worse financial results, and that is exactly why Bernanke, Obama and others were speaking about the trickle down effect on main street. Ignore for a moment the specifics of people losing jobs in a recession, and you are left with municipalities being on the receiving end of over $12 billion in payments from just AIG for GICS that were in place last year. And then add in the impact of what happened to the muni insurers last year, the fact that AIG had been THE largest buyer of municipal bonds in the US, GICs with other financial institutions - and the perfect storm was in place for municipal govts. To me, that was the other huge reason for financial service bailouts.

Auto bailouts - look at the state of Michigan. Yes, the companies haven't managed well over the last 40 years. However, IF they were allowed to fail WHILE everything else was going on in municipalities, then Michigan's current unemployment rate of 20+% would become reality in many more states in this country. IMO, the bailouts have bought time to work thru this in an organized manner that has the least negative impact on this country as a whole, all else considered.

Say what you want, but IMO there is NOTHING that goes on in any aspect of running this country that doesn't have numerous ties to other things. And it's that inter-connecedness that provided reasons for bailouts. It's not JUST about bailout out financial firms and 2 auto companies.


 o
RE: Dangerous Unintended Consequences

Excuse me - Detroit's unemployment rate is 20+%, not the entire state yet.


 o
RE: Dangerous Unintended Consequences

"I do not approve of my tax dollars going to the criminals on Wall Street who perpetrated this mass ponzi scheme ..."

patser-"So then cast your vote for new representation the next time you have an election. I know with certainty that MANY in the financial industry use derivatives EXACTLY as they were designed to be used. I also know that there were some big mistakes that YOUR regulators totally blew off and let stay in place. Remember, your tax dollars paid the salaries of these folks."

YOUR regulators? lol. These weren't MY regulators, they were paid off by the people in YOUR industry. The ones you never seem to find fit to criticize.


Quotes from 2 bank 'insiders' that might be useful:

"I believe that banking institutions are more dangerous to our
liberties than standing armies. If the American people ever allow
private banks to control the issue of their currency, first by
inflation, then by deflation, the banks and corporations that will
grow up around [the banks] will deprive the people of all property
until their children wake-up homeless on the continent their fathers
conquered. The issuing power should be taken from the banks and
restored to the people, to whom it properly belongs."
- Thomas Jefferson (1743 - 1826), Letter to the Secretary of the Treasury
Albert Gallatin (1802)

"Some people think the Federal Reserve Banks are US government institutions.
They are not... they are private credit monopolies which prey upon the
people of the US for the benefit of themselves and their foreign and
domestic swindlers, and rich and predatory money lenders. The sack of the
United States by the Fed is the greatest crime in history. Every effort has
been made by the Fed to conceal its powers, but the truth is the Fed has
usurped the government. It controls everything here and it controls all our
foreign relations. It makes and breaks governments at will." -- Louis McFadden(1876-1936) US Congressman (R-PA) (1915-1935), Chairman of House Banking and Currency Committee. Poisoned in 1936. Source: June 10, 1932


 o
RE: Dangerous Unintended Consequences

Please provide a reputable source that shows regulators were paid off.


 o
RE: Dangerous Unintended Consequences

Dave: "NEWP, that wasn't me.... you've been reading that elsewhere. NOT that I expect you to save & index all I write... but you won't have found *ME* saying anything to the effect of your idea.

I was the one pointing out that we HAD BEEN in an extended longterm interest rate DOWN-TREND (up through eoy 2008...) and that while rates were still solidly dropping (not rising, as the fearmongers claimed,) the established trend wouldn't last forever."

My apologies then, Dave. I thought that I had recalled you posting on the other board that mortgage rates would stay low for years and years, and that we would never return to the high rates of years past. My error.


 o
RE: Dangerous Unintended Consequences

Let's step back a little to get some perspective on the mess we're in. I see 3 major contributors: Greesnpan lowering interest rates too far and too long, which prompted real estate speculation. The Gramm-Leach-Bliley law that undid Depression Era banking laws, which the Nobel economist Krugman described as "the great unraveling" long before the worldwide financial house of cards collapsed. The militant anti-regulation climate that has prevailed in the Belway since Reagan, and that reached its peak in the W Bush years. The prevailing view has been that regulation of every stripe is bad, and when it cannot be eliminated by new legistation, it should be weakened as much as possible by underfunding the agencies that regulate and by appointing anti-regulation political cronies in position of responsibility. That has happened throughout the Beltway during the last 25 years, and especially during the recent Bush years, to the point that we cannot ensure the safety of our food and drug supplies, the transparency of our investments, the competence and efficiency of disaster relief agencies [remember Katrina?], and I could go on and on -- the list is very long.

I am not a trained economist and, I suspect, even the best of them do not completely understand what has happened in the worldwide collapse we are undergoing, nor are they sure of how best to intervene. Unfortunately, since the whole process has been highly politicized, and the stakes are very high for very super rich people who wield a disproporationate share of influence in how the mess is fixed, corrective action will not be straightforward, or I should say even less straightforward than it could be if we has optimal conditions where everyone was pulling in the say direction and had their eye on the public interest as a first priority.

But the one thing that is very clear to me is that the banks need to be fixed AND RE-REGULATED. The new regs need to take into account all the new sophisticated financial instruments that the financial superstars have inflicted on us, and the guiding principle needs to be TRANSPARENCY, so that risk can be easily measured, not buried in a mathematical formula that nobody understands. I will not re-invest in the stock market until I am satisfied that the good regs have been put in place. And, I suspect, the better the new regs are for the economy as a whole and for the public interest, the more the PARTY OF NO and their super rich cronies will scream like a bunch of raped apes that their hands a tied and they can no longer do business.


 o
RE: Dangerous Unintended Consequences

Hi Bethesdamanman,

My apologies then, Dave. I thought that I had recalled you posting on the other board that mortgage rates would stay low for years and years, and that we would never return to the high rates of years past. My error.

Eeeesschhh .... well.... actually... kinda sorta, YES.... your apologies in this case are NOT warranted. Herein lies a case of "text failing where a verbal conversation *may* have worked better."

I've never said rates would stay low "well... forever"....

I HAVE said rates (30 FRM rates to be precise) will unlikely climb over 7% in our lifetimes.

I *STILL* stand by that.... albeit, I am now offering that we are entering a territory of government-induced inflation at levels I (perhaps naively) thought the United States political system was above.

If we continue down the path of dollar-dilution that we've begun accelerating along, there are only two end-game results;
A) we reverse course back out of it before we self-destruct in revolution,
B) we self-destruct (and the devil we do not know is always a potential problem.)

*IF* we successfully reverse and dig ourselves out of the hole of trouble our most recent past and our current government administrations are hell-bent on digging us into... there are only two ways of "sopping back & vacuuming up" the diluted unbacked funny-money that has been injected out into the system;

A) The Treasury collects more taxes than it provides to the government to spend,
and/or,
B) The Fed increases interest rates higher than its blended payout on the treasury bonds (and then some... the greater the positive income spread to the Fed, the more painful to the "fixed-income retired crowd" which is our baby-boomer bubble... who will rally with AARP-sponsored pitchforks.)

Both A & B will be met with *MASSIVE* resistance from the only crowd that the poloticos *KNOW* will consistently show up to vote, and have almost unlimited spare time to write, call, email, and generally pester the daylights out of the politicians; The Seniors.

SO.... I've learned to never rely on "common sense" when it comes to anticipating "government logic" (an oxymoron if there ever was one.)

Obama has enlisted the original architect of option B... Paul Volcker... as a "senior economic advisor." ("Senior" may (MAY) work somewhat to our advantage here... as Gramps Volcker *MIGHT* have some age-gained sensitivity to his classmate comrade's plight.) Volcker is the one who decided to fight inflation in the 1970's by driving short-term interest rates up to the 20%'s...

The late '70's and early '80's result was that Volcker recaptured (in a VERY painful way) the excess liquidity (flooding of funny money) our country created by going off the gold standard and adopting a "weak dollar" policy through the 1960's.

WHAT WILL WA DC DO???????????????
I dunno.... (I know what I pray/chant/meditate they will do...)

*IF* the government (both the loonie left & jackthug right) get OUT of the way of the naturally balancing markets... then my expectations and predictions stand, with virtually my 100% confidence.

My fears are that the United States idea of a market-based capitalist self-righting system has been a grand and wonderful social experiment... but that the human frailties (compounded in mob psychology) are sabotaging the underlying DNA strands that made it possible to stand.

My COMFORTING REALIZATION... is that despite my egoistic pride for being part of a "successful system".... even if that system turns out to be a decaying failure, INDIDIVIDUALLY I and my family, and those I guide, can still retain their own personal success and quality of life.

Cheers,
Dave Donhoff
Leverage Planner


 o
Nope, no regulator kickbacks here....! ;)

patser-"Please provide a reputable source that shows regulators were paid off."

A 'reputable' source that regulators shows regulators were paid off?

Hmm, I would have assumed you already knew the answer. Is this a trick question?!

In any case, here is an example. Hopefully, from a source you consider 'reputable.

October 08, 2008
Kicking Around The OTS

"As the mortgage crisis deepened in California last year, officials in Washington put the fate of thrifts in the West in the hands of a veteran regulator who had a memorable role in the last major crisis in the savings and loan industry.

Darrel W. Dochow was the head of supervision and regulation at the Federal Home Loan Bank Board in Washington when Lincoln Savings & Loan of Irvine failed in 1989, at the time the largest and costliest thrift failure ever.

Eventually he was relieved of his high-level duties and demoted. Now, Dochow is back on the beat as the top U.S. banking cop in the West amid another financial crisis, one that was underscored by last month’s seizure and sale of Washington Mutual Bank, the biggest bank failure in U.S. history.

Critics are complaining that Dochow’s approach to the mortgage meltdown as Western region director of the Office of Thrift Supervision evokes the industry-friendly treatment he and other regulators a generation ago were scored for in the Lincoln case.

Just before he retired earlier this year, Mr. Dochow had the luxury of still being employed getting his healthy salary of $230,000 of taxpayer dollars

Dochow declined to be interviewed for this story, but the Office of Thrift Supervision strongly defended him as a seasoned professional."


STRONGLY defended him as a seasoned professional? Yikes! Who is supposed to protect the taxpayers from the OTC?

Links that might be useful:

www.banklawyersblog.com/3_bank_lawyers/2008/10/kicking-around.html

latimesblogs.latimes.com/money_co/2009/02/regulator-who-p.html

How to win friends and influence regulators; the delayed closing of Lincoln Savings cost the taxpayers $1 billion
by James Ring Adams- National Review
March 19, 1990

findarticles.com/p/articles/mi_m1282/is_n5_v42/ai_8782373/pg_2/


 o
RE: Dangerous Unintended Consequences

Trouble is, our eceonomies being as inter-linked as they have been ...

... when the U.S. system gets a sniffle ...

... the Canadian one gets ... pneumonia!

Sure hope that you guys can get the mess straightened out before ...

ole joyful

P.S. I've said for years that the Canadians should spend some time learning some essentials from the Koreans ...

... mainly ...

... how to live next door to big neighbours (as the Koreans have done for millenia) ...

... without getting eaten!

o j


 o
RE: Dangerous Unintended Consequences

dreamgarden: "It remains to be seen how well they will do after they release their full quarterly report on April 22. Especially considering they slashed their quarterly dividend 85 percent to 5 cents per share."

Well dreamgarden, here's your answer:

"Wells Fargo posted a record profit of $3.05 billion in the first quarter that it said was helped by its acquisition of Wachovia.

Confirming an early earnings release two weeks ago, the bank said it saw earnings of 56 cents per share after expenses related the merger. That was slightly ahead of analyst projections of 55 cents.

Net revenue excluding stock dividends was $2.38 billion.

Wells Fargo [WFC 19.16 0.35 (+1.86%) ] posted record numbers in a number of areas, including a pre-tax provision profit of $9.2 billion, and said it had its best mortgage origination program quarter since 2003.

Revenue totaled $21.02 billion, above the $20 billion that Wells Fargo had forecast. Company officials said Wachovia generated 41 percent of that total."


 o
RE: Dangerous Unintended Consequences

I fail to see why anyone should revere Thomas Jefferson as a financially astute source. He was many things, most of them admirable, but was totally incompetent at handling money. Even the Jefferson Encyclopedia on the Monticello.org website admits he perpetually lived beyond his means, always treating himself to the "good life". He died with debt obligations of $107,000, which is the equivalent of somewhere between $1-2 MILLION today.

Or did you mean to use him as a negative example; e.g., likening him to the current percentage rise in US debt vs GDP? Either way, his debt accumulation eliminates him as any sort of knowledgable financier. Frankly, he was an honest banker's nightmare customer.

This current mess, in addition to the $1 Trillion shadow wars that Bush ran off-balance sheet, and the new torture allegations, are a pretty strong indictment of a certain political party that happily ran amok and winked at the shenanigans cooked up by people who contributed heavily to party coffers. Me, I voted for the guy who should have won but didn't (Gore), and I shall always wonder if things would have been different had Florida's hanging chads not happened.

Those with WSJournal subscriptions might peruse the recent article that appeared earlier this week, excerpted below:

Bailout Is a Bargain
Despite tea party protests to the contrary, the Wall Street bailout is costing taxpayers much less than feared so far.
WSJournal Writing On The Wall April 23, 2009, by David Weidner

Anyone who takes tea with friends will tell you: The parties are painless. It's the gossip that hurts.

In the same way, today's antitax, antispending movements aren't the problem, it's the dangerous misconceptions they spread about the government response to the financial crisis.

Their argument -- that huge tax hikes are coming or have been implemented to pay off bailouts for banking fat cats -- betrays a lack of understanding of the government's approach to solving the financial crisis. When protesters or critics complain about the $10 trillion-plus spent on the Wall Street bailout, you can understand how their estimates of the number of protesters in the streets last week were slightly, well, inflated.

The truth: No one's paying new taxes directly related to the bailout. And most of the government rescue packages offered to the banks have gone untapped or are being repaid.

.....Make no mistake, U.S. taxpayers are on the hook for a lot of money. The government has spent or expects to spend about $2.4 trillion in the next few months to keep the financial gears moving. It's a stunning amount of money made worse by rage-inducing missteps such as the bonus debacle at American International Group Inc. and the initial lack of direction for the Troubled Asset Relief Program.

We'll shake our head about those mistakes someday, provided the government plan works as hoped.

But the misinformation surrounding Washington's aid to Wall Street is obscuring exactly how the bailout funds are being used, and it's pressured lawmakers to focus on constituent complaints instead of working on solutions.

Here is a link that might be useful: Jefferson and debt


 o
RE: Dangerous Unintended Consequences

You and the author of that article completely miss the point of the tea parties. Not a big surprise since I didn't see one journalistic article that got it 100% right and most opinionists got it mostly wrong.

It is not about a single category of government misconduct; drunken sailor spending that has infected our federal government is merely one aspect. This is not a President Bush or President Obama thing, or even a Democrat or Republican thing... it is an indictment of the whole level of government.

Does saying the bailouts "won't result in higher taxes" take into account the $100 million per day we incur in interest? Howabout the consequences due to monitizing nearly a trillion dollars of debt? And that's just some of the issues from that last administration.

The current administration is continuing this pattern: $700 billion as a "down payment" on as-yet-to-be-defined "national healthcare"; cap and trade (which will drive consumer energy prices through the roof); heck, even the $100 million that they so ceremoniously said they were going to save from the budget over the next 90 days last Monday is not going to be returned to the taxpayers .... it's just going to be reallocated to other programs.

And when the government makes promises about new taxes, just remember that they made "guarantees" that the federal tax would NEVER go above 1% (and it would only be on the ultra-rich) when it was introduced. The same was said about Social Security taxes ... though the maximum (for everyone) was either 3% or 6% total (either half or quarter what it is now).


 o
RE: Dangerous Unintended Consequences

dreamgarden: "It remains to be seen how well they will do after they release their full quarterly report on April 22. Especially considering they slashed their quarterly dividend 85 percent to 5 cents per share."

bethesdamadman-"Well dreamgarden, here's your answer:

"Wells Fargo posted a record profit of $3.05 billion in the first quarter that it said was helped by its acquisition of Wachovia. Wells Fargo posted record numbers in a number of areas, including a pre-tax provision profit of $9.2 billion, and said it had its best mortgage origination program quarter since 2003."

Wells Fargo received 25 billion in TARP funds. How well do you think they WOULD have done had they NOT received this money? The big losses at Wells Fargo and most major banks are still to be revealed. The evidence: The IMF is expected to double its estimate of global losses by fiancial institutions (from this debt crisis) to $4 trillion. But, only about ONE-THIRD of those losses have been written off so far. Even with the new, somewhat more lenient rules proposed by the G-20 countries, financial companies WILL have to recognize these losses, and, as they do, their shares are bound to resume their precipitous decline. It remains to be seen how well they can expect to do after they are done sorting out their worthless derivatives.

"Regulatory reports show 5 big banks face huge loss risk
Greg Gordon and Kevin G. Hall : McClatchy Newspapers
March 12, 2009

WASHINGTON-Five of America's largest banks, most of which have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show.

Citibank, Bank of America, HSBC Bank USA, Wells Fargo Bank and J.P. Morgan Chase reported that their "current" net loss risks from derivatives" insurance-like bets tied to a loan or other underlying asset" surged to $587 billion as of Dec. 31. Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days."

TARP Recipients Testifying For Congressmen They Bankrolled
February 11, 2009

Troubled Assets Relief Program, Wells Fargo, Politics News
"The eight CEOs testifying Wednesday before the House Financial Services Committee about how their companies are using billions of dollars in bailout funds may find that the hot seat is merely lukewarm. Nearly every member of the committee received contributions associated with these financial institutions during the 2008 election cycle, for a total of $1.8 million. And 18 of the lawmakers have their own personal funds invested in the companies.

All of the companies represented at the hearing have received millions, even billions, from the government's Troubled Assets Relief Program (TARP), including Goldman Sachs, JPMorgan Chase, Bank of New York Mellon, Bank of America, State Street Corporation, Morgan Stanley, Citigroup and Wells Fargo. These companies' PACs and employees gave $10.6 million to all members of the 111th Congress in the 2008 election cycle, with 61 percent of that going to Democrats....."


Links that might be useful:

bailout.propublica.org/main/list/index

www.mcclatchydc.com/227/v-print/story/63606.html

www.huffingtonpost.com/2009/02/11/tarp-recipients-testifyin_n_165970.html


 o
RE: Dangerous Unintended Consequences

WFC reported preliminary positive first quarter earnings which you summarily dismissed by saying that it remained to be seen what would happen when they reported official earnings on April 22. You also added the incredibly ridiculous statement that cutting their dividend would adversely affect their earnings when, in fact, the complete opposite is true. I pointed this out to you earlier, but you just ignored the correction of your completely erroneous supposition.

On April 22, I posted the "official" earnings that you had stated you were waiting for, but your response was to post two articles from earlier this year that pre-date the earnings report and on their face are already outdated.

But then again, why should I be surprised that your response to a post is to C&P somebody else's opinion. After all, that is your M.O.


 o
RE: Dangerous Unintended Consequences

Bmadman, you worked as a retirement and benefits officer for the federal government and are set to receive a government pension. Has your portfolio been affected by the Bankster induced subprime fiasco?

Do you honestly believe that Wells Fargo would have been able to show a profit if they HADN'T accepted TARP money (or been given congressional kickbacks)?

If WFC were doing so well, then tell me WHY you think they accepted this money in the first place?

Funny how when YOU quote information from widely available sources, you consider this "pertinent information" (even when it ISN'T your own opinion). Yet when I quote, you consider this C&Pasting. Nothing like calling the kettle black, hmm?!

Why don't you be helpful. Instead of criticizing me, why don't you criticize my sources. ;)


 o
RE: Dangerous Unintended Consequences

dreamgarden: "If WFC were doing so well, then tell me WHY you think they accepted this money in the first place?"

Because they were forced to by Treasury Secretary Paulson. They neither needed nor wanted the funds.

dreamgarden: "Instead of criticizing me, why don't you criticize my sources."

I have. I pointed out to you quite some time ago that your favorite C&P source Martin Weiss had been sanctioned by the SEC. It didn't seem to make any difference to you.


 o Post a Follow-Up

Please Note: Only registered members are able to post messages to this forum.

    If you are a member, please log in.

    If you aren't yet a member, join now!


Return to the Household Finances Forum

Information about Posting

  • You must be logged in to post a message. Once you are logged in, a posting window will appear at the bottom of the messages. If you are not a member, please register for an account.
  • Please review our Rules of Play before posting.
  • Posting is a two-step process. Once you have composed your message, you will be taken to the preview page. You will then have a chance to review your post, make changes and upload photos.
  • After posting your message, you may need to refresh the forum page in order to see it.
  • Before posting copyrighted material, please read about Copyright and Fair Use.
  • We have a strict no-advertising policy!
  • If you would like to practice posting or uploading photos, please visit our Test forum.
  • If you need assistance, please Contact Us and we will be happy to help.


Learn more about in-text links on this page here