If you trace back the BEA Posting, you see that BEA calls the 2 asset classes 'losses on derivatives.' That sounds like a CDS not an MBO to me.
They should call assets MBSs or CDS. A CDS is a derivative, a contingent asset. An MBS is an actual asset. This is the way BEA labels this. We should not have to play Carnap the Magnificent with an asset class.
So I see where you are going, it is the underlying asset not the derivative that should be labeled as such. Not my label.
Sorry BL, they are not. The Fed holdings are in a previous link. The majority are MBS, which is mortgage backed securities as well as consumer loans which are securitized. Now one can say these are grossly overvalued by the Federal Reserve but one cannot say they are a vehicle, i.e. a CDS, which they are not. A credit default swap is not a CDO. A CDS a little side bet, an insurance policy, against another asset class. Many CDSes were against MBS, packaged up as CDOs, that's the big AIG scandal. But the Fed did not buy up CDSes, they bought the asset classes themselves, these were the securitized tranches, such as CDOs, often packages with mortgages, i.e. a MBS.
I know it's all very confusing and the only reason I've got a handle on it is due to writing up some many posts researching out what the various classes of derivatives were. It's a bitch. Anyone who delves into this deserves grad school credit for the effort. It takes a labyrinth to hide theft, such as the corporate tax code...but let's try to get the Fed holdings correct here.
The $5Trillion in Toxic Asset purchases are already defaulted swaps. The real total is the $6.4 Trillion of CDSs below fair value for 2008 and 2009 (search BEA U.S. International Accounts). A $1.4Trillion tranche is coming. I suspect Germany is behind this, the biggest dog, with the loudest bark.
When your leadership is clueless and corrupt, you engage in this kind of nefarious behavior, that is what you know how to do. Creating credit or jobs is not thought you would ever have.
Banks along the Mexican Border have been engaging in money laundering since the late 1960s. U.S. Banks and Cartel member used to hold lavish parties on both sides.
Every time the Cartel came north to shop in the malls, they would deposit funds in U.S. banks. The Cartels owned the local sherrifs so much so that sheriff-bought whorehouses were sponsored with both labor and drugs.
At one point, with Cartel sponsorship, the Pima County Arizona Sheriff owned every whorehouse between Tucson and the Mexican border.
Well, of course, that was the main reason for the passage of NAFTA back in the '90s. (Labor arbitrage, and big agribusiness was only secondary.)
With the passage of the new bank reporting act back in the late '80s, the money laundering business for the drug cartels fled the Norte Americano banks down south to the Mexican banks.
With the passage of NAFTA, within the year over 90% of Mexican banks had been privatized and majority purchased by those banks predominantly of American origin (although Swiss banks were involved as well).
Thus, the lucrative drug money laundering business was recaptured.
The banksters come out against money laundering (as with that global Anti-Money Laundering stuff from the UN, IMF, etc.) when they aren't the ones profiting from it.
It's no coincidence that the IMF, working through Egmont Group, established all those Financial Intelligence Units (FIUs) at all the offshore finance centers (the USA's is Treasury's FinCen) to recapture money laundering business.
I am still very pissed that Bonddad choose to attack the entire site by name because he didn't like one person's post. So, as far as I'm concerned he can rot in hell for that. Here we are, all writing and working for free in so many words, doing our best and myself at least, I pay close attention to the data, statistics, equations and trends.....and take enormous time checking and looking at raw data...
so that unjustified slanderous attack really pissed me off in case no one noticed.
Aha, I'm not alone in wondering what would be the point of purchasing more toxic assets. Chicago Fed President leery of the same thing.
Seriously, what does this has to do with job creation? Nothing, just like so many other things claim to saved the economy, which are really about feeding the Banksters.
They were not calling it a pull out of economic Armageddon, as I recall it was a "V" full scale "recovery" esp. in denial on the unemployment stats.
So, claiming we have a "bounce", which I'm starting to feel undervalued here, because I certainly wrote up many an analysis showing the "trough" was over. But by absolutes I would never call a "pull back from the abyss" a recovery. whine.
I did a quick search. When Bonddad and NDD were successfully calling the 2009 bounce they were looking at the leading indicators. They were right to do so.
Now the leading indicators are pointing down again. I checked out Bonddad's web site and they haven't mentioned anything about leading indicators.
It's like when I posted "Bonddad versus Bonddad". Before we went into recession he rightly talked about issues like debt. Now he doesn't anymore, eventhough debt is still relevant.
The statistics I'm reporting? I'm overviewing the government statistics and overall, they do not say there is a chicken in every pot. I think I've been on the "economic malaise" double dip camp for a long time and I know I have shown over and over again there is not enough real economic growth to recovery the jobs we need.
The entire Bonddad/NDD being clearly dead wrong on this great "V" recovery has left the station a long time ago. It's truly beating a dead horse.
Come on Tom, over on the left are a host of economics blogs and there are dozens more which are credible to read. The point is to read the statistics accurately, which is what I keep attempting to do and drag a few along with me in the process.
Bonddad and NDD are up today with their usual 'chicken in every pot' world view. Below is a comment that I submitted that EP readers may be interested in.
"You guys should really reflect on the old and true adage: “Lies, Damn Lies and Statistics”.
There is a preponderance of evidence in the papers every day (labor; state, municipal school budgets; cost of college, health services; asset and pension depreciation; etc, etc, etc) all indicating that the “chicken in every pot” statistics you are so fond of reporting on ad infinitum are not measuring the reality of the life for people in the 75 percentile W-2 income category. Their standard of living is dropping precipitously, but you won’t see it if all you do is keep looking at the post WW II economic statistics.
The paradigm has changed! To project the economic future based on 1945-2008 data is like a 1950 economist projecting the future based on pre-WW II statistics."
Yup. Instead of tallying massive losses and foreclosures, they assuredly could cut out the middle man and offer essentially zero interest rate refinancing and even principle hair cuts to keep people in their homes...
but oops, that would affect the Banksters as well as overall prices (as if massive foreclosures and high unemployment does not!)
You keep coming up with these practical common sense "why nots" and if you notice, the Banksters and their inane profits machine, middle class squeeze seems to somehow right there in the middle of it.
"What is really interesting is that one can see the conditions of "mass society" developing here --lack of availability of elites (as in "they just don't get it") and increasing isolation/ powerlessness of non-elites (that's us, folks). Tea Party movement is somewhat chaotic response to conditions, and "mass society" is fertile ground for totalitarianism."
A School of thinkers from Marcuse ('One Dimensional Man') to Orwell have claimed the U.S. has been moving towards totalitarianism since the late '40s. The refusal to end the endless wars, the economic superstate trade zone of the Americas, the loss of privacy, Kill Switch and general loss of liberties of all kinds are the evidence.
The proofs are best understood in terms of the inability to mount any resistance to what can be seen as a host of
disasters created entirely by undemocratic elites.
Much of this is culture. Keep a society medicated by narcotics, mass media, bread and circuses, and you really get some effective control of behavior. How else do we account for 'Health Care Reform' before the desperate need to fix the economy? Keep them medicated. Afghanistan War underwrites a flow of heroin 10 times the crop size in 2001. Just as the Cambodian Junta in 1970 supported itself entirely through heroin trade.
If the Fed is committed to "rebuilding capital," our focus should not be on the capital of banks, but rebuilding the capital of the American people. A direct lending facility could create mortgages using the low medium term rates (3% for the 10 year), mark them up enough to cover costs and provide a loss reserve, and refinance existing mortgages without all the "false fees" of the banksters. Servicing could be outsourced to banks and properly regulated. Properly conceived, these new mortgage pools could be more efficient and, as bank foreclosure inventories are absorbed, allow more American families to keep their homes, rebuild their capital (equity), and thus become mobile. No, this is not a simple problem, but the Treasury and the Fed should not exist for the convenience and wealth of Wall Street and commercial banks. The direct mortgage lending idea does not solve the problem of scarcity of commercial lending, but it might take a significant chunk of the housing dilemma off the table and lead to reallocation of bank activity into more productive areas.
Krugman pointing to something of a third depression (not as bad as the 1930s but still destructive) and Roubini pointing to looming slowdown in US and worse in Eurozone.
What is really interesting is that one can see the conditions of "mass society" developing here --lack of availability of elites (as in "they just don't get it") and increasing isolation/ powerlessness of non-elites (that's us, folks). Tea Party movement is somewhat chaotic response to conditions, and "mass society" is fertile ground for totalitarianism. Policy makers are counting on recovery to bail them out. The real threat to political stability is sense of economic injustice and diminished hope for the future.
M3 has been falling, and for a while there is still single digit M1, M2 growth. The danger here is that Bernanke believes the theory that all is well if M1 is still growing. So for a period of time you have M1 pushing on a rope with no significant expansion of M2 or M3.
So what do banks do? Do they continue to keep the money in mattresses making insignificant returns of put the money to work, somehow. This scenario occurred at the end of WWII when many believed we were heading back to depression. This period may be like the End of WWII not 1933 as Krugman says.
The facile answer is 'you can't make the banks lend'. True but you can make the Fed do their work for them. or use the Treasury, and Commerce lending facilities. Looking at banks from the standpoint of usefulness, they are increasingly irrelevant if they do not lend, so who needs to save them?
This is incredible, firstly the bill does not really limit private equity and hedge funds but of the little it might, they have 12 years, or until 2022 to "comply".
If you trace back the BEA Posting, you see that BEA calls the 2 asset classes 'losses on derivatives.' That sounds like a CDS not an MBO to me.
They should call assets MBSs or CDS. A CDS is a derivative, a contingent asset. An MBS is an actual asset. This is the way BEA labels this. We should not have to play Carnap the Magnificent with an asset class.
So I see where you are going, it is the underlying asset not the derivative that should be labeled as such. Not my label.
Sorry BL, they are not. The Fed holdings are in a previous link. The majority are MBS, which is mortgage backed securities as well as consumer loans which are securitized. Now one can say these are grossly overvalued by the Federal Reserve but one cannot say they are a vehicle, i.e. a CDS, which they are not. A credit default swap is not a CDO. A CDS a little side bet, an insurance policy, against another asset class. Many CDSes were against MBS, packaged up as CDOs, that's the big AIG scandal. But the Fed did not buy up CDSes, they bought the asset classes themselves, these were the securitized tranches, such as CDOs, often packages with mortgages, i.e. a MBS.
I know it's all very confusing and the only reason I've got a handle on it is due to writing up some many posts researching out what the various classes of derivatives were. It's a bitch. Anyone who delves into this deserves grad school credit for the effort. It takes a labyrinth to hide theft, such as the corporate tax code...but let's try to get the Fed holdings correct here.
The $5Trillion in Toxic Asset purchases are already defaulted swaps. The real total is the $6.4 Trillion of CDSs below fair value for 2008 and 2009 (search BEA U.S. International Accounts). A $1.4Trillion tranche is coming. I suspect Germany is behind this, the biggest dog, with the loudest bark.
When your leadership is clueless and corrupt, you engage in this kind of nefarious behavior, that is what you know how to do. Creating credit or jobs is not thought you would ever have.
Banks along the Mexican Border have been engaging in money laundering since the late 1960s. U.S. Banks and Cartel member used to hold lavish parties on both sides.
Every time the Cartel came north to shop in the malls, they would deposit funds in U.S. banks. The Cartels owned the local sherrifs so much so that sheriff-bought whorehouses were sponsored with both labor and drugs.
At one point, with Cartel sponsorship, the Pima County Arizona Sheriff owned every whorehouse between Tucson and the Mexican border.
NAFTA had some very proud roots and sponsors.
http://www.madcowprod.com/our_story_thus_far.html
It was a CIA plane
Well, of course, that was the main reason for the passage of NAFTA back in the '90s. (Labor arbitrage, and big agribusiness was only secondary.)
With the passage of the new bank reporting act back in the late '80s, the money laundering business for the drug cartels fled the Norte Americano banks down south to the Mexican banks.
With the passage of NAFTA, within the year over 90% of Mexican banks had been privatized and majority purchased by those banks predominantly of American origin (although Swiss banks were involved as well).
Thus, the lucrative drug money laundering business was recaptured.
The banksters come out against money laundering (as with that global Anti-Money Laundering stuff from the UN, IMF, etc.) when they aren't the ones profiting from it.
It's no coincidence that the IMF, working through Egmont Group, established all those Financial Intelligence Units (FIUs) at all the offshore finance centers (the USA's is Treasury's FinCen) to recapture money laundering business.
I am still very pissed that Bonddad choose to attack the entire site by name because he didn't like one person's post. So, as far as I'm concerned he can rot in hell for that. Here we are, all writing and working for free in so many words, doing our best and myself at least, I pay close attention to the data, statistics, equations and trends.....and take enormous time checking and looking at raw data...
so that unjustified slanderous attack really pissed me off in case no one noticed.
Aha, I'm not alone in wondering what would be the point of purchasing more toxic assets. Chicago Fed President leery of the same thing.
Seriously, what does this has to do with job creation? Nothing, just like so many other things claim to saved the economy, which are really about feeding the Banksters.
$11 billion, claiming it's an "accounting adjustment" but taking it from TARP to pay for the bill. Supposedly to "secure votes".
They were not calling it a pull out of economic Armageddon, as I recall it was a "V" full scale "recovery" esp. in denial on the unemployment stats.
So, claiming we have a "bounce", which I'm starting to feel undervalued here, because I certainly wrote up many an analysis showing the "trough" was over. But by absolutes I would never call a "pull back from the abyss" a recovery. whine.
I did a quick search. When Bonddad and NDD were successfully calling the 2009 bounce they were looking at the leading indicators. They were right to do so.
Now the leading indicators are pointing down again. I checked out Bonddad's web site and they haven't mentioned anything about leading indicators.
It's like when I posted "Bonddad versus Bonddad". Before we went into recession he rightly talked about issues like debt. Now he doesn't anymore, eventhough debt is still relevant.
The statistics I'm reporting? I'm overviewing the government statistics and overall, they do not say there is a chicken in every pot. I think I've been on the "economic malaise" double dip camp for a long time and I know I have shown over and over again there is not enough real economic growth to recovery the jobs we need.
The entire Bonddad/NDD being clearly dead wrong on this great "V" recovery has left the station a long time ago. It's truly beating a dead horse.
Come on Tom, over on the left are a host of economics blogs and there are dozens more which are credible to read. The point is to read the statistics accurately, which is what I keep attempting to do and drag a few along with me in the process.
This is not a redistribution of wealth, right? Because I would be against it if it were.
Bonddad and NDD are up today with their usual 'chicken in every pot' world view. Below is a comment that I submitted that EP readers may be interested in.
"You guys should really reflect on the old and true adage: “Lies, Damn Lies and Statistics”.
There is a preponderance of evidence in the papers every day (labor; state, municipal school budgets; cost of college, health services; asset and pension depreciation; etc, etc, etc) all indicating that the “chicken in every pot” statistics you are so fond of reporting on ad infinitum are not measuring the reality of the life for people in the 75 percentile W-2 income category. Their standard of living is dropping precipitously, but you won’t see it if all you do is keep looking at the post WW II economic statistics.
The paradigm has changed! To project the economic future based on 1945-2008 data is like a 1950 economist projecting the future based on pre-WW II statistics."
Yup. Instead of tallying massive losses and foreclosures, they assuredly could cut out the middle man and offer essentially zero interest rate refinancing and even principle hair cuts to keep people in their homes...
but oops, that would affect the Banksters as well as overall prices (as if massive foreclosures and high unemployment does not!)
You keep coming up with these practical common sense "why nots" and if you notice, the Banksters and their inane profits machine, middle class squeeze seems to somehow right there in the middle of it.
"What is really interesting is that one can see the conditions of "mass society" developing here --lack of availability of elites (as in "they just don't get it") and increasing isolation/ powerlessness of non-elites (that's us, folks). Tea Party movement is somewhat chaotic response to conditions, and "mass society" is fertile ground for totalitarianism."
A School of thinkers from Marcuse ('One Dimensional Man') to Orwell have claimed the U.S. has been moving towards totalitarianism since the late '40s. The refusal to end the endless wars, the economic superstate trade zone of the Americas, the loss of privacy, Kill Switch and general loss of liberties of all kinds are the evidence.
The proofs are best understood in terms of the inability to mount any resistance to what can be seen as a host of
disasters created entirely by undemocratic elites.
Much of this is culture. Keep a society medicated by narcotics, mass media, bread and circuses, and you really get some effective control of behavior. How else do we account for 'Health Care Reform' before the desperate need to fix the economy? Keep them medicated. Afghanistan War underwrites a flow of heroin 10 times the crop size in 2001. Just as the Cambodian Junta in 1970 supported itself entirely through heroin trade.
If the Fed is committed to "rebuilding capital," our focus should not be on the capital of banks, but rebuilding the capital of the American people. A direct lending facility could create mortgages using the low medium term rates (3% for the 10 year), mark them up enough to cover costs and provide a loss reserve, and refinance existing mortgages without all the "false fees" of the banksters. Servicing could be outsourced to banks and properly regulated. Properly conceived, these new mortgage pools could be more efficient and, as bank foreclosure inventories are absorbed, allow more American families to keep their homes, rebuild their capital (equity), and thus become mobile. No, this is not a simple problem, but the Treasury and the Fed should not exist for the convenience and wealth of Wall Street and commercial banks. The direct mortgage lending idea does not solve the problem of scarcity of commercial lending, but it might take a significant chunk of the housing dilemma off the table and lead to reallocation of bank activity into more productive areas.
Krugman pointing to something of a third depression (not as bad as the 1930s but still destructive) and Roubini pointing to looming slowdown in US and worse in Eurozone.
What is really interesting is that one can see the conditions of "mass society" developing here --lack of availability of elites (as in "they just don't get it") and increasing isolation/ powerlessness of non-elites (that's us, folks). Tea Party movement is somewhat chaotic response to conditions, and "mass society" is fertile ground for totalitarianism. Policy makers are counting on recovery to bail them out. The real threat to political stability is sense of economic injustice and diminished hope for the future.
M3 has been falling, and for a while there is still single digit M1, M2 growth. The danger here is that Bernanke believes the theory that all is well if M1 is still growing. So for a period of time you have M1 pushing on a rope with no significant expansion of M2 or M3.
So what do banks do? Do they continue to keep the money in mattresses making insignificant returns of put the money to work, somehow. This scenario occurred at the end of WWII when many believed we were heading back to depression. This period may be like the End of WWII not 1933 as Krugman says.
The facile answer is 'you can't make the banks lend'. True but you can make the Fed do their work for them. or use the Treasury, and Commerce lending facilities. Looking at banks from the standpoint of usefulness, they are increasingly irrelevant if they do not lend, so who needs to save them?
This is incredible, firstly the bill does not really limit private equity and hedge funds but of the little it might, they have 12 years, or until 2022 to "comply".
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