TARP windfall...

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kiryan
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TARP windfall...

Postby kiryan » Mon Dec 07, 2009 9:04 pm

http://finance.yahoo.com/tech-ticker/ar ... et=&ccode=

Sell us a 700 billion dollar package to save the financial system by buying "toxic assets". Instead of buying toxic assets, as soon as its approved they choose to make direct capital infusions instead of doing what they said they would. Then it was used to bailout the unions (I mean automakers). One of the arguments floating around at inception of the "investments" in the banks was we're gonna make money on this. Then we expected to lose 340 billion. Now we are only losing 140 billion so Congress is trying to figure out what to do with this "windfall". Dems want to use the 200 billion they aren't going to lose for a jobs program.

They lie to us, take the money and spend it however they deem is right. When they run out of money, they find ways to get more money. Whether its accounting gimmicks like 10 years of taxes for 6 years of benefits, or future economic growth that will offset the increase in spending or future "savings" that are pure fantasy. The more money, the more they can fix even if nothing is ever fixed. TARP was a big giant blank check, and our government keeps cashing it over and over and over. Its mind boggling.
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Re: TARP windfall...

Postby Ragorn » Mon Dec 07, 2009 9:22 pm

And yet, the DOW is up 65%. According to the Republican Presidential Effectiveness Meter, the bailout seems to be working.
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Re: TARP windfall...

Postby Corth » Mon Dec 07, 2009 9:31 pm

If you measure the state of the economy with the dow jones, then yes it has improved. I think the stock market is up because it is forward looking and anticipates an improvement in the economy. Personally, I think the major players are wrong, just as they were when they bid the Dow Jones up to 14,000+ before it crashed. As far as up 65% - that is from it's low. Anyone who bought the Dow Jones at it's high is still out 25% or so of their money.

Also not measured is the inevitable toll that the bailout will take on the economy. Certainly the liquidity from over a trillion freshly printed dollars will cause a short term spike. However, it is also to likely cause a hangover. The dollar is now devalued and there is a good chance in the long run it will crash further. Accordingly, foreign countries are likely to have less appetite for our bonds, which will result in a situation where the government will not be able to borrow unlimited amounts at favorable rates. At that point any further spending will have to actually come from real tax dollars, or from cuts. We haven't gotten to that point, but we are well on our way - and that is when we will feel the cost of the bailouts.
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Re: TARP windfall...

Postby kiryan » Mon Dec 07, 2009 9:43 pm

They managed in the short term a soft landing to what was shaping up to be a precipitious crisis.

That has nothing to do with what I was trying to get at, that they just spend the money however they want. They say they're going to use it for one thing then keep spending it on whatever they want. Up next, jobs program, which I don't really agree on, but is a lot more meaningful in my opinion than the original bank bailouts and the union bail out.
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Re: TARP windfall...

Postby teflor the ranger » Tue Dec 08, 2009 3:02 am

I would not lend any credit to any administration when the economy recovers. The economy will recover because Americans have the capital, the will, and the initiative in the global market to do well, make money, and demand a higher standard of living.

I credit the Bush administration for doing the unpopular thing that actually helped stem the recession, a part of the capitalistic economic cycle, by rescuing banks to unfreeze credit.

I blame the Obama administration for bailing out unions and specific interest groups in order to buy the votes of the easily deceived.
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Re: TARP windfall...

Postby Corth » Tue Dec 15, 2009 8:34 pm

http://www.calculatedriskblog.com/2009/ ... yment.html

Calculated Risk's thoughts on the banks repaying TARP funds

He correctly points out that what allowed the banks to repay TARP is in fact a second 'stealth' bailout - the massive governmental (taxpayer) support of asset prices allowing the banks to raise capital right now. The banks are actually acting quite rationally. Paying off the explicit bailout by taking advantage of the implicit 'free' one. Either way, taxpayers pay for it.
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Re: TARP windfall...

Postby Ragorn » Wed Dec 16, 2009 2:53 pm

Yeah, BAC's stockholders (myself included) are not amused at their attempts to pay back TARP by taking out an unregulated federal loan.
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Re: TARP windfall...

Postby kiryan » Wed Dec 16, 2009 4:29 pm

Good article.
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Re: TARP windfall...

Postby Tasan » Sat Jan 09, 2010 2:31 am

Image
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Re: TARP windfall...

Postby Ragorn » Mon Jan 11, 2010 2:33 pm

Huge financial rally this month. Investors have already forgotten BAC's shady repayment strategy. I love it because I'm making money, but I'm also kind of facepalming at how willing people are to chase money rather than accountability.
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Re: TARP windfall...

Postby kiryan » Mon Jan 11, 2010 7:18 pm

http://money.cnn.com/2010/01/11/news/co ... /index.htm

We're gonna make 50 billion off the GM rescue so we should be happy... right?

Really, do people not understand how little of a difference there is between what we are doing and say what the chinese are doing and how its slightly less formal than what Venuzela is doing? US government used to be above capitalism, above companies, above all that stuff. Now every city has a pension fund with millions of dollars to invest and the US government is taking out investment stakes and turning a profit. The people who make, bend and break the rules, are now stake holders in capitalism.

You can not compete with the government for profits... and you shouldn't have to. The government picked Lehman brothers to fail... picked everyone else to succeed... It picked which creditors of GM got paid (unsecured union debt) and which ones essentially got wiped out (senior secured investors that had provided capital after disaster started to strike). The government can't be an investor like a common person, they wield too much power. The government making 50 billion on GM does not send me triapsing down the halls shouting with glee, it turns my stomach with fear, worry and revulsion.
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Re: TARP windfall...

Postby Ragorn » Mon Jan 11, 2010 7:41 pm

This is an example of what I call "moving the goalposts." Twelve months ago, the big buzz was that the government shouldn't waste its money keeping GM afloat because that was money wasted that the taxpayers would never see back. GM has now suggested that they'll be repaying the bailout with interest, and now you're complaining that government shouldn't be making money off private corporations.

The impression you give is that you're against the bailout, and when all of your concerns are addressed, you just find new reasons to be against it.
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Re: TARP windfall...

Postby kiryan » Mon Jan 11, 2010 8:11 pm

You may call it moving the goal posts, but I would argue that I'm not putting together comprehensive arguments for or against something. I'm mostly blogging on the issue of the day.

I probably did actually make a statement about government not supposed to be making money somewhere during the bailout because they were saying we're going to make money, but today I decided the article was good enough and I had enough time to really have a cow over it.

Yes there were a couple smaller stories about the banks repayment of TARP a month ago. Yes this happened before 40 years ago with the automakers and Lee Iacoca

and although I can admit that the results of the GM bailout appear to be positive in short term terms of employment, tax revenue and rate of return for the actual investment... its hard to say it was better than doing nothing in the long term. I think its pretty clear GM would be bankrupt today and unemployment would be higher if nothing had been done. Status quo stabilized with significant changes, perhaps not all the changes necessary or that would've resulted from a bankruptcy.

I do know the government upended bankruptcy law to decide who won and lost, wiping out specific investors and saving others. Did we save GM or did we manipulate a company to turn a profit? Would they have made the investment if they didn't think we'd make money on it? Who decides how much money we have to net or how risky before we "invest" in companies to "save them"? What about next time? I mean Hugo was planning on spending billions of dollars to fix infrastructure and said because we are fixing this infrastructure (their job anyways) we're going to take over the companies who used it because they didn't fix it out of their pocket.

Hugo called it nationalization, we called it a prepackaged bankruptcy. Both literally transferred assets from private ownership to government control with government unilaterally deciding how much the former owners were going to get based on their own valuations. All we are missing is the feds arresting and harassing the investors for refusing to negotiate in good faith along with whats best for the country and we could be living in Zimbabwe.
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Re: TARP windfall...

Postby Ragorn » Mon Jan 11, 2010 8:21 pm

kiryan wrote:I do know the government upended bankruptcy law to decide who won and lost, wiping out specific investors and saving others. Did we save GM or did we manipulate a company to turn a profit? Would they have made the investment if they didn't think we'd make money on it? Who decides how much money we have to net or how risky before we "invest" in companies to "save them"? What about next time? I mean Hugo was planning on spending billions of dollars to fix infrastructure and said because we are fixing this infrastructure (their job anyways) we're going to take over the companies who used it because they didn't fix it out of their pocket.

And if Obama had allowed the carmakers and banks to fail, and unemployment were 17% now instead of 10%, wouldn't you be screaming all the louder? Wouldn't Glenn and Rush and Bill be all over your television shrilling at the top of their lungs about how Obama was leading us into a full blown depression?

The economy sucks. None of the options are ideal. Obama handed the carmakers a check, but he did so with provisions to govern repayment and restrict executive compensation. That's preferable to carte blanche, and it's preferable to letting several huge corporations go belly up and force tens of thousands of people into unemployment. Now the money's coming back, which is a good thing.

Who decides how much money we have to net or how risky before we "invest" in companies to "save them"?

Your elected officials do. That's why you elect them.
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Re: TARP windfall...

Postby Corth » Mon Jan 11, 2010 8:49 pm

Rofl.. no need to move the goalposts here. A) The government had no business using taxpayer monies to benefit GM. B) There is no way in hell taxpayers will see a profit from GM, regardless of what their CEO is now saying.
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Re: TARP windfall...

Postby kiryan » Mon Jan 11, 2010 10:01 pm

My elected officials have no business going into business as a car company. Theres supposed to be a separation between the public and private sector. My computer club sold computers that we bought and assembled until local businesses had a cow. I realized at that time they were right. It was a good learning experience, but a public entity has no business going into competition with private business.

It would've been a disaster, yes Glenn and Rush would've villified him for not doing anything (assuming he didn't do anything). This is not to say he was going to be criticized by the right no matter what. If Obama had reduced taxes, reduced regulation and allowed those companies to go bankrupt, especially Chrysler and GM, then I think he would've not only been praised by the Republicans, he would also be able to continue to blame the state of the economy on republican policies.

Instead, he pushed a 700 billion "stimulus" that was full of pork and didn't spend much money this year while at the same time selling it as needing to be passed immediately to stabilize the economy and prevent unemployment from going above 8%. I believe that this was really political calculus by Rahm Emanuel and the D leadership. They pass outrageous spending in a hurry, blame bush for another year as the economy goes to shit, then in an election year the vast majority of the "stimulus" is unleashed to spur job creation. I'd be very surprised if between the census hiring and the stimulus money waiting to be spent that unemployment won't improve this year and help Democrat's chances in 2010. Am I a crazy conspiracy theory guy or is everyone else just stupid?
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Re: TARP windfall...

Postby Ragorn » Tue Jan 12, 2010 3:20 pm

kiryan wrote:It would've been a disaster, yes Glenn and Rush would've villified him for not doing anything (assuming he didn't do anything). This is not to say he was going to be criticized by the right no matter what. If Obama had reduced taxes, reduced regulation and allowed those companies to go bankrupt, especially Chrysler and GM, then I think he would've not only been praised by the Republicans, he would also be able to continue to blame the state of the economy on republican policies.

Actually, he would have been vilified for allowing unemployement to escalate, pushing jobs overseas, and allowing Good American Companies to fail while we continue to import millions of foreign vehicles. Allowing Chrysler and GM to go bankrupt would cost millions of jobs, and then you'd be yelling very loudly about how Obama forced millions of people into unemployment just in time for the United States Government to pick up the tab for their health care. You'd be the first one screaming about it :)

Instead, he pushed a 700 billion "stimulus" that was full of pork and didn't spend much money this year while at the same time selling it as needing to be passed immediately to stabilize the economy and prevent unemployment from going above 8%. I believe that this was really political calculus by Rahm Emanuel and the D leadership. They pass outrageous spending in a hurry, blame bush for another year as the economy goes to shit, then in an election year the vast majority of the "stimulus" is unleashed to spur job creation. I'd be very surprised if between the census hiring and the stimulus money waiting to be spent that unemployment won't improve this year and help Democrat's chances in 2010. Am I a crazy conspiracy theory guy or is everyone else just stupid?

You're a crazy conspiracy theorist. Pull up some charts, look at where our economy is right now compared to July 2008 before the crash. The DOW and S&P are within 10% of where they were last July, and the Nasdaq is already there. All three indexes are climbing. A lot of banks failed, but some of the biggest ones came through the crash infused with government cash and are repaying or have repayed their loans. The car companies took some money, consolidated, cut or spun off nonprofitable brands and product lines, and are rebuilding. Unemployment is high, but unemployment is a trailing indicator of economic stability, and unemployment has stopped growing.

Turn off Fox News, and look at the charts. The only reference I'm using right now is Google Finance. No CNN, no Glenn Beck. Just look at the charts, and tell me that the stimulus has failed.
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Re: TARP windfall...

Postby kiryan » Wed Jan 13, 2010 8:37 pm

I don't think the right would've vilified him for letting GM and Chrysler go bankrupt. I disagree. I would also not be screaming any louder about healthcare if there were 12 million additional unemployed. It will bankrupt us eventually now or later I will continue screaming about it.

I DO NOT WATCH FOX NEWS. I DO NOT WATCH TV AT ALL. Is it clear now? I LESS THAN ONCE A WEEK LISTEN TO RADIO WHICH USUALLY DOES NOT INCLUDE RUSH OR BECK. Can you hear me now? I am an independent crazy conspiracy theorist, not astro turf.

Wow you think the stimulus pulled off the economic recovery? Go read some articles on how much of the stimulus has been spent. Then go and read what the CBO said (economy would recover without the stimulus and the stimulus wasn't going to stimulate in the short term). Then go and listen to what Rush had to say, the economy will recover despite the D's best efforts to prevent destroy it. Then go and read about this "jobless" recovery. This is almost as good as Obama "creating or saving" jobs, completely unverifiable, why not claim to have created or saved 10 million jobs? We "unexpectedly" lost jobs in DECEMBER, seasonally there is a surge in hiring and hours to support the holidays and we continued to lose jobs...
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Re: TARP windfall...

Postby Corth » Wed Jan 13, 2010 10:16 pm

Recovery my ass. The 'stimulus' will ultimately be blamed for making things worse.
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Re: TARP windfall...

Postby Ragorn » Thu Jan 14, 2010 2:57 pm

Corth wrote:Recovery my ass. The 'stimulus' will ultimately be blamed for making things worse.

By conservatives looking for an excuse :)
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Re: TARP windfall...

Postby Corth » Thu Jan 14, 2010 3:45 pm

Too much politics. :)
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Re: TARP windfall...

Postby Corth » Thu Jan 14, 2010 10:00 pm

I don't usually care for Jon Stewart but I fully endorse this clip:

http://www.thedailyshow.com/watch/tue-j ... et-bonuses
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Re: TARP windfall...

Postby Ragorn » Fri Jan 15, 2010 2:12 pm

Corth wrote:I don't usually care for Jon Stewart but I fully endorse this clip:

http://www.thedailyshow.com/watch/tue-j ... et-bonuses

Aren't you in favor of large bonuses for executives? Unregulated business, power of the free market, and all that? :)
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Re: TARP windfall...

Postby kiryan » Fri Jan 15, 2010 3:12 pm

it would be funny if it wasn't so true.

that fox clip Ragorn posted was truly one of the funniest things I'd ever seen.
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Re: TARP windfall...

Postby Corth » Fri Jan 15, 2010 5:52 pm

Ragorn wrote:
Corth wrote:I don't usually care for Jon Stewart but I fully endorse this clip:

http://www.thedailyshow.com/watch/tue-j ... et-bonuses

Aren't you in favor of large bonuses for executives? Unregulated business, power of the free market, and all that? :)


Unregulated business and power of the free market - exactly. Large bonuses fall under the latter. Couldn't care less how a company that is self sufficient pays its employees. However I am not sure why my tax dollars are subsidizing Goldman's 8 figure bonuses.
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Re: TARP windfall...

Postby teflor the ranger » Sat Jan 16, 2010 5:56 am

Because non-subsidized bank A is paying 8 figure bonuses.
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Re: TARP windfall...

Postby Corth » Sat Jan 16, 2010 4:36 pm

Trying to understand your point Teflor. Are you saying that Goldman should be allowed to give out 8 figure bonuses with taxpayer money because otherwise they will lose employees to the non-subsidized banks? Because that is exactly what should be happening. The banks that made poor business decisions need to get screwed by the market and the one's that made good ones need to be rewarded.
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Re: TARP windfall...

Postby Corth » Thu Jan 21, 2010 2:10 pm

http://www.msnbc.msn.com/id/34967521/ns ... _business/

If we are going to have bailouts of private entities - which we shouldn't - but if we are, then this initiative by the Obama administration is prudent. This is one topic I definitely disagree with the Republicans on. I am with Obama on his 'war on wall street'. Any bank that had to come begging for the US government to keep it from going under deserves a whole shitload of pain.
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Re: TARP windfall...

Postby kiryan » Thu Jan 21, 2010 4:49 pm

I have to agree... if banks are going to allow the government to bail them out with tax payer money, we not only have a right to get involved in pay issues, we also have a responsibility to regulate them such that this doesn't happen again =(.

We probably should've just given them money and left them alone to get back on their feet or fail... but that could never happen especially once we decided that they were a security risk (too big to fail).

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