It is not a loan at all. The Fed and J.P. Morgan are creating an investment fund, to be managed by BlackRock:

The New York Fed will take, through a limited liability company formed for this purpose, control of a portfolio of assets valued at $30 billion as of March 14, 2008. The assets will be pledged as security for $29 billion in term financing from the New York Fed at its primary credit rate.

JPMorgan Chase will bear the first $1 billion of any losses associated with the portfolio and any realized gains will accrue to the New York Fed.

The money that the Fed and J.P. Morgan will provide is startup capital for the fund. All of it is referred to as “loans”, but that’s facile. Obviously, somebody will own these assets, bear the risk of carrying them, and realize any gains on the fund’s portfolio.

http://seekingalpha.com/article/…ck-managed- fund

http://www.federalreserve.gov/releases/h3/Current/

arch 27, 2008

The Board’s H.3 statistical release, “Aggregate Reserves of Depository Institutions and the Monetary Base,”
has been modified to include data on the Primary Dealer Credit Facility, which was approved by the Board of
Governors on March 16, 2008, and began operations on March 17, 2008. The release also includes data on
“other credit extensions.” This category includes credit extensions such as the arrangements >>>

involving

JPMorgan Chase & Co. and The Bear Stearns Companies Inc. that were approved by the Board of Governors on
March 14, 2008, and March 16, 2008

See: http://en.wikipedia.org/wiki/Mefo_bills

An imaginary company

Hjalmar Schacht formed the limited liability company Metallurgische Forschungsgesellschaft, m.b.H., or “MEFO” for short. The company’s “mefo bills” served as bills of exchange, convertible into Reichsmark upon demand. MEFO had no actual existence or operations and was solely a balance sheet entity. The bills were mainly issued as payment to armaments manufacturers.

Mefo bills were issued to last for six months initially, but with the provision for indefinite three-month extensions. The total amount of mefo bills issued was kept secret.

Essentially, mefo bills enabled the German Reich to run a greater deficit than it would normally have done. By 1939, there were 12 billion Reichsmark of mefo bills, compared to 19 billion of normal government bonds.

This enabled the government to fund rearmament, and do so in a stealthy manner.

God Bless george Bush!

I also think it was a staged event. Yeah, it’s probably blogger suicide for me to say that, but I’ve spent enough time on the subject to know what I’m talking about.

So when I read articles from the likes of people such as Tom Englehardt, telling me how incompetent this administration has been, I kinda feel like he deserves John McCain. Both barrels.

Many thakns for this post and clever comments and answers.

No more words.

Asuk

Your throwaway comment about lizard brain is more central than you might realize. Crudely speaking, humans have three brains that aren’t terribly well integrated: the old reptile brain (fear, anger, autonomous body functions, sexual impulses), the limbic system (emotional/social behavior, notions of fairness and compassion are limbic brain activities) and the cerebral cortex (higher reason). Brain researchers have found that when two areas of the brain are in conflict in the vast majority of cases, the older area of the brain wins.

Arianna Huffington, not knowing about this research, wrote about appeals by the Republicans to the reptile brain. And we’ve all seen them. I live in NYC and I’m not worried about being a victim of terrorism. I know I am far more likely to die in an auto accident, and I still take cars and cross streets. But there are people in places like Saginaw, Miichigan, who have no rational basis for being worried about terrorists, and yet are afraid.

Similarly, look how willing the public at large has been to accept violations of our civil liberties in the name of security. And why don’t people protest? Because they think it’s ineffectual (probably correct) and are afraid of winding up on a list somewhere. Now that we have star chambers beyond the reach of any US court, that isn’t a trivial concern.

I wish I could track how this media (and therefore popular) fixation on appearance and personality took hold. Someone as dour and ugly as Lincoln would be unelectable today. Is it simply that all leads in Hollywood (and therefore all leaders) are good looking? In most of the rest of the world, there are top actors and actresses who fail to meet the US standards for eye candy.

I cringe everytime I read that voters are worried about character.In the vast majority of cases they are focusing on likeabilty rather than substance.

That is a very good point. If you want to give yourself a fighting chance to think, the last thing you want to do is listen to a candidate on TV. Radio, or printed word helps a lot (that works for me anyway) to filter the emotional BS and distractions irrelevant to the discourse.

That has been my attitude since Barbara Walters interviewed Castro, way back then. She was the first American journalist to get an interview with him, and I remember that at the time, it was deemed a big deal. The thing that struck me like a brick was that 85% of the comments received at ABC were…(drum roll please…) about the fact that BW had changed her hairdo!! The content of the interview? Well…I guess it got lost somewhere in the vortex created by the lizard brains of the masses.

Lessons from leveraging and pains of deleveraging

http://www.todayszaman.com/tz-web/yazarDetay.do?haberno=135986

The financial intermediary institutions, mostly traditional banks which can fund their loans and securities (assets) through either equity capital or debt (liabilities), are highly leveraged, i.e., their total asset to equity capital ratio is very high; the study estimates roughly 12. The study shows that during the last two decades, the asset growth and leverage growth of major commercial banks have been positively correlated. In the pro-cyclical “leverage circle” that helps us understand the nature of financial contagion, during an asset price boom with stronger balance sheets, banks leverage more and increase balance sheet size by lending more. But during an asset price bust, with weaker balance sheets, they deleverage and decrease balance sheet size by lending less.

The study assumes in its baseline scenario that deleveraging by 5 percent and through recapitalization, the banking system will recoup about half of its $200 billion estimated loss. Based on these and other plausible assumptions, the study estimates that the balance sheets of financial intermediary institutions, due to their capital losses from subprime mortgage-related securities, will contract by $1.98 trillion, of which $910 billion will be a reduction in their lending to households and businesses. Such a sharp fall in the supply of credit to non-leveraged borrowers will lead to a drop in the rate of growth of real gross domestic product (GDP) by 1-1.5 percent next year. The study cautions that these scary numbers can get scarier …