Only thing worse than keeping TARP is paying it back…& then having to borrow it again

Discussion in 'Wall St. News' started by ByLoSellHi, Jun 11, 2009.

  1. - "The only thing worse than not paying back your TARP money is paying it back…and then having to borrow it again…"

    Wednesday, June 10, 2009

    A Day in the Life…
    (It’s All in How You Look at it)


    I spent a whole glorious hour watching the talking heads on CNBC last night.

    Sixty minutes I’ll never get back as far as I’m concerned…

    It was after the market close, so it was time for a run of loaded interviews that made MSNBC look like C-Span. They were going on about banks repaying TARP funds…and Obama’s Paygo proposal from earlier in the afternoon…

    “Why doesn’t he apply Paygo retroactively to his 787 Billion dollar stimulus package?” Kudlow demands…

    The left-wing lobbyist in the little box gives a chuckle… “I wish we could retroactively apply Paygo all the way back to 2000,” she replied.

    Ooh! She was making a reference to the other guy’s president there…did you catch that?

    Ay…I sighed and drift for a moment…wondering if the world might be a better place without the majority of today’s mass media.

    I mean; the Paygo thing is essentially a joke. I think we can all settle on that. We’re already 11 trillion [56 Trillion if you include unfunded mandates former Comptroller General David M. Walker outlines[ in the hole and Paygo only applies to mandatory spending – like Social Security and Medicare. Those systems are already fatally flawed, so they’re eventually kaput anyway…at least in their current forms.

    And by the time of “Stimulus: Part Deux” this whole thing will be pretty non-issue.
    Is Paygo a tax-trap? No… America’s a tax-trap.

    Paving over yesterday’s mistakes with tomorrow’s tax dollars is the new order of the day. The deadly “tax-borrow-spend” triangle is in place, and we got ourselves a good ole-fashioned street fight between the useful members of society and a mostly-useless group of politicians.

    It makes for a tough time on the individual level…but if you ask me; they’ve already bitten off more than they can chew. When Steve Ballmer talks; you listen. Whether you like the guy or not. And he looked the newest corporate tax scheme in the face, and he said “No dice.”

    Today’s version of American democracy, is reminiscent of the Ouroboros (pictured above)…the snake eating its tail. For Pete’s sake; the politicians get some of their biggest paychecks from American businesses.

    Why make it so much harder on their campaign sponsors? Bad business, that one.

    But of course, Washington has no monopoly on bad business. If they did; then what would all the suits on Wall Street do?

    I’m talking to you this time bailout bankers. And I want to be perfectly clear, so I am putting it in really big type (even though bankers seem to like the most important terms in fine print)…

    The only thing worse than not paying back your TARP money is paying it back…and then having to borrow it again…

    Think about it. You pay back your TARP funds during the rally – mostly with money made from issue of new stock (the “greater fool” principle in action)…and then the clouds come back out and you need another twenty billion.

    Yeah, genius…great move there. Inspired even. Way to justify our consistently bailing you out of failure. I mean…seriously?

    That kind of judgment is almost deserving of being taken out back and shot. But instead; as a testament to America’s commitment to mediocrity…we give ‘em a fistful of billions. Ben stops by and adds a few zeroes to the asset side of their balance sheet.


    Now don’t get me wrong; I object to the fact that TARP legislation makes these banks beholden to the federal government. As Larry Grossman, CFP, CIMA and Managing Director of Sovereign International Assets points out, it actually makes them agents of the federal government.

    It’s a step in the right direction to get them out from under that control. But are these banks really $25 Billion more solvent today than they were a few months ago?

    I just can’t see how that works out. And seeing as how we’re already past the most adverse conditions on the recent “stress test” charade, maybe the banks would do best to hang onto the money. To stay buckled down and be prepared for a period of waning business.

    But if they were that careful…they probably wouldn’t have gotten into this situation in the first place.

    - Matthew Collins, A-Letter Editor