naked capitalism

Crust says:

I’m sure McCain believes wool research (a tax earmark in this bill) is every bit as important as important as seal DNA research (a Palin earmark and therefore by definition a good thing). Unlike say bear DNA research (McCain’s favorite earmark bugaboo).

Anonymous says:

Yah, I just called my Congressman Norm Dicks and talked to Colin Sheldon about this addition of Black Lung Hocus Pocus, etc, but they seem to be brainwashed into thinking that worthless derivatives are going to make money for Buffett and that in 5 years, the next President can always ask for more money to pay off these bad obligations.

Re: —There is hereby appropriated to the Trust Fund an amount sufficient to pay to the general fund of the Treasury the difference between

(A) the market value of the outstanding
repayable advances, plus accrued interest; and
(B) the proceeds from the obligations
issued by the Trust Fund to the Secretary of
the Treasury under paragraph (2)(A)(i).

nnyhav says:

Like I said

doc holiday says:

I just occurred to me that this Bailout Proposal is being engineered just like the same pool of assets which created this mess, i.e, we have massive Fannie pools of obligations that are linked to other pools and classes that are backed by pools of collateral, which are all guaranteed and insured by pools of risk free pools that connect unlimited money to unlimited defaults. The scale of this asset pool problem will not be solved by pouring liquidity into a bottomless pit of debt.

Amen and God Bless America

Anonymous says:

Yet Treasuries are well bid though all this today.

So the notion that “the US will be seen as a less than stellar credit long before any debt downgrade were to occur” is not one shared by the Treasury market.

PRICES mean something. Sometimes more than theoretical outcomes.

However, PRICES are conveniently ignored completely when they get in the way of theoretical outcomes.

It isn’t enough to simply say “flight to quality” because that is an inherent contradiction in the argument that states eventual “debt downgrade”.

Markets are more powerful than governments and “mere opinion”.

Anonymous says:

“Markets are more powerful than governments and “mere opinion”.”

Then let the Market save us.

fightingthetide says:

I am very interested in the US credit rating question — it’s clear to me that a literal downgrade is something that may be postponed almost indefinitely, so what is the real test or metric of US creditworthiness? How would you convince a skeptic that we have achieved de facto sub-AAA status, when it comes to that? Grateful for any help on this.

fred55 says:

yield = total return, not current yield

CTMM says:

Can someone wiser point me to data were we can see who is actually buying treasuries, and in what amounts?

As long as we have the printing presses going, whats to stop the treasury dept. from buying it’s own treasuries through some convoluted soi-distant arm of the banking sector to keep prices propped up?

I’m sure people (other countries) would notice eventually, but it seems like you could get away with it for a while…

Sorry if this is a stupid question.

kona says:

I read a book the other day called Predictably Irrational, b yDan Ariely, who teaches behavioral economics. In this, he has experiments about cheating, and how people are hesitant to cheat with cold hard cash — but cheating is easier when steps are placed in-between you and the loot. He uses Ken Lay and Enron as example of off shore entities and SPEs and structure which removes the inclination to be honest.

This is what TARP is all about — it creates distance from the piles of shit that smell and it creates the illusion that there is an honest structure, it engineers the mechanisms where people can’t watch the peas and shells.

The impulse to steal $700 Billion or $7 Trillion that is removed into a structure, will be a new form of government, which will allow corporations to be unaccountable in this socialization of gambling debts — which will become a burden to taxpayers in America from this day forward. America was just sold for $700 Billion, and Congress and The senate sold it to wall street!

EvilHenryPaulson says:

re: United States debt, and ability to service
From The Economist, http://www.economist.com/finance/displaystory.cfm?story_id=12306060
[chart] United States Total Debt to GDP (all government, corporate, household)

FYI, Japan's $100tn smattering of trickle down bailouts would be ~$3tn on a per capita basis.

> Direct stimulus ($300bn once, a second $300bn was delayed but will be ressurected),
> Indirect stimulus (expect various tax cuts as they try to spread/hide the costs of the stimulus),
> Direct bailouts (FDIC money spent, $42bn to Citi, $30bn to to JPM, etc, + expected $700bn,=~$1tn) and
> indirect bailouts (assets the Federal reserve has taken onto its balance sheet)
> we are not far from $2tn at present, although obviously the Fed won't have a 100% loss rate on the crap it is taking for collateral

Keep in mind Japan spent that over a decade and had more room to maneuver because even today their total debt to GDP is less than the United States in large part because of consumer saving

Anonymous says:

America = plutocracy

Democracy DOD = October 1, 2008

May she rest in peace.

Douglas says:

maynardGKeynes at 4:27PM

Is the “pork/earmarks” that folks are hysterical about items that were in the original Bill being amended, or are the “pork/earmarks” items _added_ to the original bill (and hence, the alarm) by the Senate?

That would go a long way towards determining if the “pork/earmarks” do in fact get stripped out, as you claim.

Anonymous says:

Don;

My sentiments exactly…

King Paulson, wherefore art thou?

PrintFaster says:

There is only one of the St Louis fed charts that bothers me: The one that shows that foreigners have quit buying our debt. Our trade balance continues to accumulate, yet somehow the treasury debt did not go up?

Where did the trade balance go? Real assets? Fannie and Freddie debt? Stocks? Commodities?

I think the answer is commodities. The plan with the treasury is to bring back the foreign debt to the US market by cleaning up real estate so that mortgages can be sold off. The real answer may be that that foreigners are shunning all forms of US debt including Ts.

The result can only be price inflation, which is due to pent up monetary inflation which has beend deferred into debt.

The debt chickens are about to roost and they are dropping things everywhere.

FairEconomist says:

Anonymous @ 6:04

1) Dislike for negating contracts especially on that scale
2) We’ll still get massive bankruptcies from companies on the wrong side of the cancel
3) (Probably most important) Many European banks rely on AIG guarantees to treat bonds as regulatory capital. No guarantees = massive undercapitalization in Europe.

Anonymous says:

Hey, maybe they’ll rate on a curve. If the discussions of the mortgage situations and the EU restrictions hold true, our credit may suck – just not as much as euro.

melpol says:

The best way that we can get our economy quickly moving again is not by bailing out the big bad banks with 750 billion dollars but by giving that money to the homeless. It is estimated that there are three million homeless people in the United States that are costing the government billions each year to feed and shelter them. A grant of 250 thousand dollars to each person that can prove that they have been homeless for over a year would cost less money then the amount that the government is ready to waste on bailing out the banks. The results would produce the greatest spending spree in American history and jump start our economy. An added benefit would be that many of the homeless would purchase homes that have been foreclosed and bring added life to the housing market. Some Americans would be envious of the new found wealth of our most unfortunate citizens, but instead they should welcome their large contribution to our economy.