So I guess the honeymoon is over.

To be fair, Brad DeLong argues that the Geithner Plan isn’t so bad, it’s just that everything to do with the financial sector seems covered in slime to me right now …

It’s total slime. Any system that depends on “faith,” etc., is destined to be manipulated by the scum of the earth, who will then be celebrated as geniuses until the next inevitable breakdown.

It’ll never work for more than a few yrs.at a time, because there’s always a new generation of assholes to take everything that’s not nailed down, resulting in yet another bust, which of course no one thought would ever happen again.

Feh!!

I laugh at Glenn Beck and his doomsaying, but then I read this and begin to think about what I’ll do when Sarah Palin is elected in 2012. Tits, maybe?

I like to think of this all as one super-giant abandoned self-storage unit up for blind auction. The taxpayers supply most of the money. Any TVs and stereos and vintage baseball cards go the banks and hedge funds. The taxpayers get the lice-infested stained mattresses and the suitcases filled with dirty laundry and oozy shampoo bottles. Not only do we have to cart’em away, we also have to pay a separate fee to chuck’em into the municipal dump.

Brad is saying it isn’t that bad, because it seems he doesn’t want to think about how bad it means the situation really is if the plan is bad, i.e. not enough. Admitting things suck ass is actually for once a situation where perception is a huge driver of reality because confidence and self-esteem actually seem to matter here, unlike the terrorists who don’t care they don’t have dates for the prom or some such when somebody criticizes George Bush. This irony I feel like choking on.

No, seriously, am I missing something here, or is this the stupidest idea eva?

the government is saying, we’re giving 80% loans to people to go to Vegas. If you lose, you lose your money and ours. If you win, you pay the loan back to us and keep the profits…

So, here’s what I and my buddy X do: Each one of us sets up one of them funds and we agree to share the profits. We both put in $200 in our respective funds, and take out a $800 loan.

We go to Vegas and I put all my $1,000 on Red, my buddy puts his $1,000 on Black. Do the math: no matter what turns up, black or red, we split $800 in profits and the govt loses $800. It’s bulletproof.

Did Timmy not think of this scenario?

Because the government can hold those mortgages as long as it wants, officials are BETTING the government will be repaid and that taxpayers may even earn a profit if the market value of the loans climbs in the years to come.

Ok, I think I see the trick. Make it so the loans don’t default and then bailing out AIG’s counterfeiting operation won’t be necessary.

Big Bet…

BIG fucking bet…

the nation’s banks are holding at least $2 trillion in troubled assets, mostly residential and commercial mortgages.

Luck be a Lady tonight

You know what would be kind of cool … if the plan is really to buy up the toxic assets then turn around and forgive the mortgage holders’ debts. That does the double duty of actually helping Main Street while at the same time screwing over whatever well-heeled private financiers Geithner gets to play along with this parlor game. ‘Course, we’re all out $1 trillion …

We go to Vegas and I put all my $1,000 on Red, my buddy puts his $1,000 on Black. Do the math: no matter what turns up, black or red, we split $800 in profits and the govt loses $800. It’s bulletproof

Your plan reminds me of when you are a kid and you play cops and robbers and the “robber” gets locked in jail, but eventually just gets bored and goes home, and why do we put criminals in prisons anyway when they can just walk out of them and go home for dinner?

The only even close to cool outcome is that by some complete fucking miracle some of the shitty paper Timbo is buying for you is actually worth something.

LOLOLOLOLOLOLOLOLOLOLOLOLOLOL.

Sorry. It’s just that the idea is to buy this shit and hold it to maturity, and the notion that banks are going to sell anything that would actually make more money than they could sell it to the United Suckers of America if they held it is hilarious.

US Economic Policy from Trickle Down to Bailouts:

You can have some money, just as soon as the rich people are finished with it.

Sorry. It’s just that the idea is to buy this shit and hold it to maturity, and the notion that banks are going to sell anything that would actually make more money than they could sell it to the United Suckers of America if they held it is hilarious.

I don’t know, I bet there are more than a few cities in America that have more than enough “Strip Malls” and could use a “Federal Wetlands Reclamation Project”

We bought it, We can decide how it’s used.

“For our Posterity” has value too.

That’s it, I’m moving to Costa Rica with Rod Dreher’s friends and family:

http://blog.beliefnet.com/crunchycon/2009/03/leaving-america.html#more

Well, there was a very good point made over at Teh GOS earlier, that the assets aren’t the problem, the liabilities are.

Buying toxic assets is “nice” for banks, but solves nothing. Bailing out AIG, oddly enough, could be seen at least as a step in the right direction – the problem of course being that if you’re going to take care of all potential liabilities, the total bill might be in tens of trillions, rather than mere trillions – with a lot of that money going to the smart hedge funds that bet on things going badly in various markets and for various institutions (cf Pauslon above).

Given all that, we have several routes:

* one that gives a lot of money to banks that do not deserve it to solve their asset problem, but still do not make them creditworthy (the current Geithner plan), which gives stock markets a temporary boost, taxpayers permanent pain, and solves nothing;

* one that does help them get rid of their real problem (huge contingent liabilities on bets that are turning sour), but is vastly more expensive than the mind-numbing numbers we’re throwing around already, and gives all the money to hedgies: the AIG route, multiplied ten or hundred-fold;

* one that acknowledges that the issue is liabilities rather than assets, and that focuses on the fact that a lot of these liabilities are wholy unrelated to any economic or financial activity, and are contingent rather than actual – ie nobody loses anything if they are cancelled. If a 100:1 bet you made is cancelled, your actual loss is not 100, it is 1 – something that could be paid back to you.

So far, the second route has been used when an emergency beckoned (AIG et al); the first route has been used massively but the Treasury does not seem tired of it yet, and the third one seems anathema.

Of course, it means taking the shiny toy away from the hands of the hedgie kids.

Why is that a bad thing, again?

The whole thing is a decent read.

Yeah, justme, but contracts are sacrosanct right here in the US of A. So prepare to pony up.

In crisis lies opportunity, and we should milk this for all it’s worth:

— AIGreedheads have brought back the 90% income tax rate;
— We’ve got a huge stock of houses, after a long housing bubble;
— We’ve got agreement from just about everyone that massive government intervention in huge swathes of the economy is A-OK;

The only thing we need to do is point out the bloody obvious: UR DOIN’ IT RONG. Caring about what the greedhead clowns think is not merely morally wrong, but a complete waste of time. Cut them out of the loop, arrange some deal to get actual owners into those newly-built houses, and nationalize the banks to manage it all. Meanwhile, start the prosecutions already; that’ll give the clowns an opportunity to turn on each other, which they’ll take with great gusto: there is no honor amongst thieves. Vast expansion of the newly-acceptable high, high marginal rate should happen at the same time: both barrels, I say!

Looks like I got out just in time. Suckers.

Shorter Sadly, No! :
Much as we love to mock the notion of “Going Galt”, as it happens, the big investors will get exactly what they want because the country can’t afford to lose them and therefore, their demands will be met. I trust you’re aware, they will be met.

You know that huge stock of houses plus our national debt gives me an idea, tensor. We need to globalize this shit on eBay. ‘Big Sam’s April Fool’s Day Citizenship and Tract House Sale! Come on down!’

Condos! Back-Splits! Multi-Million Dollar Casas With Multiple Pools! All at HUGE discounts!

Craaazzzyyy Sam’s just givin’ away entire sub-divisions!

Green card with every third house!

Wouldn’t it just be easier to increase the number, and decrease the requirements for EB-5’s

So, they are all banksta….

Did Timmy not think of this scenario?

Of course he did. That’s a feature, not a bug.

(Seriously. It will “free up money to get the banks lending again”. I don’t see how that follows, since it’s easier to do just what you said than make loans, but that’s why he steals, er, um makes the big bucks).

From the sounds of it, they’re going to get everything they want and then some, because if they don’t, they’re going to crash the economy into the World Trade Center the ground. Change the significant nouns here (from “bankers” to, say, “members of X group” and “the economy” to “people”) and the media would be going nuts about the terrorists and their evil hostage-taking.

Yep. We’re fucked.

My ‘hope’ is that the whole house of cards comes tumbling down.

Yes, it would be painful for just about everyone on the planet. But sometimes you just gotta take a mulligan.

White Knight?

That’s a killin’.

(Ahh, Greasemonkey? What did I ever do without you?)

Let’s put a positive spin on it shall we?

Everybody in the world benefits when the American economy doesn’t collapse, regardless of how stupid the American method of correction is.

The self-sacrificing American public is to be commended for putting the global good ahead of its own interests for once.

That isn’t even funny, RB.

But now that you say it, are we seeing a country-wide karmic retribution for the debt we incurred by quickly rising to powerful nation status on the back of slave labor?

They built the system that we have benefited from for years, but now the bill is due?

It’s funny TO THE FRENCH. I expect my medal to arrive soon.

But now that you say it, are we seeing a country-wide karmic retribution for the debt we incurred by quickly rising to powerful nation status on the back of slave labor?

My faith in karma is compromised by the lack of lightning-strike deaths in the political class.

Quick, painless death does not provide the kind of retribution they deserve, maybe?

Well, if ass-cancer disproportionately strikes Republicans I am not aware of a study saying so. And if there’s anything karma’s about, it’s solid science.

I’m just trying to figure out why we shouldn’t take to the streets and hang the whole lot of ’em from the lamp posts.

So in times like these I retreat to my Eastern Philosophies.

I’m just trying to figure out why we shouldn’t take to the streets and hang the whole lot of ‘em from the lamp posts.

Personally, I’d be very concerned about collateral damage and mistaken identities.

I have to wear suits to the office.

Personally, this bothers me more than just about anything. The damn AIG bailout was largely to the benefit of Goldman Sachs.

The damn country is now a wholly-owned GS subsidiary.

You may want to switch to business casual in the coming months, actor…

Until America loses its kinky status-quo fetish, reinstates Glass-Steagall & puts some CEOs & CFOs in tres chic orange jumpsuits, it won’t matter much what Obama does – bad bank, nationalization, or free ponies for all – because there is no magic spell to turn shit into deodorant, & the folks with the money to revive the economy can smell the stink a mile away, even upwind, & they much prefer dishing it out to taking it. Unfortunately, they’re quite happy to let everything crash-dive – other folks’ pain is easy for them to bear, especially when it comes with once-in-a-lifetime prices on labor, land & stocks with dirt-cheap interest-rates.

The GOP has a secret weapon to take back the White House … they’re just waiting for enough Americans to become forgetful & desperate enough before they unleash it.

Sarah Palin won’t win in 2012.
This guy will.

We go to Vegas and I put all my $1,000 on Red, my buddy puts his $1,000 on Black. Do the math: no matter what turns up, black or red, we split $800 in profits and the govt loses $800. It’s bulletproof

Wait… hold on. What about 00??? That’s a huge risk you’re taking neglecting 00. Much huger than the government risk.

So, on the one hand, there’s the “toxic assets”. I’m thinking this jargon refers to the collateralized debt obligations (Mix-mastered mortgage debt blended with creme de Visa with a dash of municipal bond). Yes?

Then there’s the “liabilities” – the “bad bets”. These were the credit default swaps, basically insurance policies written (by AIG, et al) against the failure of the CDOs.

So, the folks who invested in the CDOs were like guys betting that the Detroit Lions would go 8-8. Maybe it’s more accurate to say that they were betting that NO NFL team would go winless. Then, they hedged that bet with AIG. And, of course, AIG may have laid off some of those bets with other players – perhaps even some of the folks who bet on the CDOs to begin with.

So, the Lions went 0-16 and now AIG has to pay out on all those bets. So, bailing out AIG is sorta like subsidizing a bookie? Am I understanding this correctly?

The question, then, for me, comes down to, who was it that made the original bets on (investments in) the CDOs? Besides the hedge funds, investment banks? Commercial banks? Pension funds? College endowments? And maybe some of these also took the bets that AIG was laying off?

And, natcherly, most of these transactions/wagers were leveraged?

Aww, crap. My ears are starting to bleed again.

You may want to switch to business casual in the coming months, actor…

Or at least shop at JC Penney.

And, of course, AIG may have laid off some of those bets with other players – perhaps even some of the folks who bet on the CDOs to begin with.

The analogy of credit default swaps to wagers is apt. Most every big and small financial firm got into it and covered their positions by making opposite bets- just like a bookmaker laying off bets to avoid overexposure on any given position. Most banksters with CDS’s also hold CDS’s on opposite positions so their net risk exposure is next to nothing.

As I understand it, AIGFP’s big fuckup was their failure to lay off their bets at all. They bet large on their own CDS’s and didn’t buy anyone else’s to cover in case of loss.

If they were mafia bookies, they’d be at the bottom of a hole in the woods for that level of irresponsibility. If they were a Vegas casino, well, they’d never have been allowed to do that. As I understand it, the casinos’ books are examined and regulated precisely to avoid that sort of thing. Any casino that failed to lay off bets sufficiently to avoid insolvency would have lost its license- even if it were lucky enough to win its unbalanced bets. The only people in gaming who rely on luck are the suckers, er, the customers.

Also, on table games, casinos are required to keep cash reserves on the premises equal to the number of chips in play on the floor- so they can pay off every bet in the house in the unbelievably unlikely event that every bettor in the place were to win their bets and cash in their chips, all at the same time.

Comparisons of Wall Street to casinos are really unfair to casinos. Casinos are well regulated.

National Socialist Party Rant:

“A state is a means to an end..”
A. Hitler Mein Kampf

I rather hope we can , bring back the full force of the Office of Thrift Supervision .and raise the Resolution Trust Corporation from the ashes….

But if anyone suggests using Wellsfargo rather than BOA for the holding company you are ill advised….

Wellsfargo goes down the tubes, you think people will notice then ?!?!?

KEEP UP THE GREAT WORK

OMG! Lie-berals don’t want to shovel cash into investment banker pockets!! They are JUST LIKE HITLER!

OMG! Blacky Hussein X wants to shovel cash into the pockets of investment bankers!! He is JUST LIKE HITLER!

OMG! You know who else was JUST LIKE HITLER?
HITLER, THAT’S WHO! By being just like Hitler, all you folks are JUST LIKE HITLER!

So you’re saying you DON’T like the little mustache?

You are cracking me up even though it is serious.

How DARE you criticized God-Emperor Obama’s chosen plan to save us all from economic apocalypse! Don’t you know HE has given us Hope for Change???