Washington's $5 Trillion Tab Elizabeth Moyer, 11.12.08, 05:15 PM EST Fighting the financial crisis has put the U.S. on the hook for some $5 trillion a report says. According to CreditSights, a research firm in New York and London, the U.S. government has put itself on the hook for some $5 trillion, so far, in an attempt to arrest a collapse of the financial system. http://www.forbes.com/home/2008/11/12/paulson-bernanke-fed-biz-wall-cx_lm_1112bailout.html
I suppose it would be considered impolite to ask what securities are anchoring the 5T and rising debt. regards f9
They are refusing to say who is getting the money as well so much for oversight!! You would think it would be a simple Freedom of Information Act request but maybe the gov can find a way to attach national security overtones in there somewhere so it becomes exempt from from such a minor inconvenience as telling the public who is getting there money?
Yes I noticed that Bernie has lost his voice. Did you see Paulson yesterday at the news conference ..... a perfect example of a very very frightened man. regards f9
Directly or indirectly, they're trying to shore-up $50 Trillion in CDSs. They should let those mark to market (basically worthless) and be done with them. Some people screwed up BIG time... let them pay and use fresh capital in fresh enterprise and healing-up existing mortgages. (Or, is this bailout really going to cost $50 Trillion to make whole all of the levered-up dipstick CDS gamblers?) A couple of days ago, the CEO for Toronto Dominion bank was on one of the financial news channels. He said his company's loan business is humming along without a hitch... and that the bank had rid itself of derivatives in 2005(?), noting they were "dangerous". TD's mutual funds, however, have suffered from their holdings in FNM and FRE.
The 50T as I understand it is counting both ends of the CDS I don't imagine these guys are complete morons ... insatiably greedy yes but moronic, no. I am wondering what is going on in the back office that they are not telling us, as clearly the novel idea of chucking a few trillion into a bottomless hole is not working regards f9
Jimmy Rogers said [paraphrasing], "... spending a lot of money trying to prevent the decline will ultimately fail and make things worse... we will have wasted lots of our assets in the process. We should let the bad just fail and use our capital to rebuild after the clean out..." Well, we're not doing that. So where does it leave us if we have to commit another "X Trillions" because the first $5 Trillion was just money down a rat hole??
Lets ask Landis and Makloda, they have been s big supporter of Paulson and Bernake. I bet they would respond like Paulson and Bernake. "THINK HOW BAD IT WOULD HAVE BEEN IF WE DID NOTHING" They will always use this as there cover.
Sharp, severe, more localized and more short-lived... less damaging overall. Couldn't have THAT however.... because Paulson's buddies at GS would have taken it in the neck.
The Lehman unwind proved that total outstanding CDS exposure was not realized, as each derivative seller hedged their loss - through offsetting contracts - all the way up. The total loss on defaulted debt was somewhere around 100 to 150% of debt outstanding. Thats just a guess, but I think an accurate one. If you consider that mortgage defaults caused this mess, and the cost to nationalize and guarentee those mortgages might have been in the 1 Trillion dollar range, then indeed, why have we paid 5 Trillion, thus far, to fix something that only cost a fraction that much?! Like 911, the 2008 Crash brought with it increased Federalized Power and unaccountable largess for the Treasury and Banks, while unprecendented Banking Consolidation has been paid for by us. Everything has been done at the expense of the Taxpayer. Many Banks are now one. Competition is a Sin, mind you. Treasury can now run amok and basically seize and bail whenever to whomever it needs. Given Wallstreet and Government is a revolving door insomuch as the Nations finances are concerned, the result is a complete laize fair private takeover of Public Coffers . Why didn't Paulson buy the bad-mortgages and guarantee? Because there would be no rational to channel untold Trillions more to private banks - with no-recourse, transparency or oversight - to do with whatever they wish. This is a High Seas raping of America not seen ever. Like Gnome said, the Banks are getting rich off our coattails. They made the wrong bet, now we're paying for it. They kept the Premium. And have suffered NONE of the losses. Easiest thing in the world to outlaw CDS, render those contracts null and void, then buy out the mortgages. Yea, we'd stagnate like Japan for awhile. But we ain't see nothin yet.