but even when a bank goes under the assets are not valued at zero. i.e. if there are bank accounts there, they don't disappear.
Even when a company is bankrupt, to the point of liquidation, those assets being liquidated has value so (it would be easier though) one cannot say $50B is guaranteed gone....although just because there are assets....doesn't mean the taxpayer money isn't totally gone never to reappear either.
So, the priority queue in bankruptcy is bonds, then preferred, then common, so even then it doesn't mean "gone to zero" although it could. I fear more Zombie Citigroup will stay afloat indefinitely never the U.S. taxpayer is never actually repaid.
Then, ya know it terms of what other market manipulations are going on, there are probably indirect losses there as well.
A new bill to demand warrants are on an open market was introduced, H.R. 3232. This is where Treasury got 66% vs. market value.
I'm so glad you researched this out and wrote about it. I just put in a comment what bullshit that MSM "noise" is but I didn't have time to research and trace the "savings" out.
I believe the jump can be traced to Stimulus tax cuts, payouts, esp. to Senior Citizens who pocketed the dough and in terms of "pay off their debts" (uh huh) could that be charge off? i.e. Americans defaulted in record numbers hence the active debt ratio dropped? With 3.2M mortgages this year (projected) in foreclosure, that implies bankruptcy, which will at minimum reduce the official debt load.
And I don't mean to be argumentative. For example, we gave Citigroup - $50 billion. They gave us warrants and preferred stock which has been converted to common stock.
If Citigroup goes under, as common stockholders, we will probably see none of that $50 billion. I could assign a probability of bankruptcy to that $50 billion. But that was my rationale. Same goes for the rest of the TARP recipients.
I agree that there are other aspects of loss and exposure that go beyond the hard numbers. For instance, what is truly the value of this collateral or "valuable assets" that have been offered up in these various programs.
if you can track down what the truth is, esp. considering the midtowng blog post just showing all sorts of horrific reports on the commerical mortgage market, if you can dig out some facts, details, you may be very right.
I just saw a Bloomberg claim that Americans are "paying off their debts" and increasing savings. That is pure bullshit. The increase in savings I believe can be traced to the rebates and tax breaks, esp. to Senior citizens from the Stimulus bill. I don't have time to verify this with references, citations....
and that's what happens, when bloggers lay off, when the public spotlight turns off, out comes the snow job in masse. The shit gets piled high and deep and it really takes a lot of digging from a lot of people who aren't getting paid to do so!
As early as just a few weeks ago S&P downgraded three commercial backed mortgage bonds. This made these securities ineligible for the Fed's Term Asset-backed Securities Loan Facility (TALF). But suddenly they reverse course today and restored the top rating for these bonds. Amazing how that works. This quote is from the article:
“It is a stunning reversal and certainly raises questions concerning the robustness of their revised model,” said Christopher Sullivan, chief investment officer at United Nations Federal Credit Union in New York. “It may engender further uncertainty with respect to ratings outlooks.”
Wow. So now the market really opens up for these bonds. It is like "deju vu all over again".
but have to go into the losses, i.e. Treasury sold warrants at 66% of their market value. AIG paid out $20B @ 100% on CDS to counterparties. But then, we have AIG selling assets, so who gets that money from those sales?
So, one cannot just look at the amounts but what are the real losses. I've scanned through the SIGTARP report to some degree but it's 256 pages, so check out the actual report to see if there are more information.
Meaning there is a strong probability of default risk - that we will not get the money back. And like I said it is just those zombies and Fannie/Freddie and AIG. I wonder whether Wells Fargo can survive.
This is class warfare (there I said it) - it is OK to bail out financial oligarchy to the tune of at least $12 trillion but when it comes to providing health insurance for over 40 million Americans - OH it's too costly.
here to write information up quickly. Frankly I need to review a lot of this to get a real numbers tally. I think your estimates are way, way too low..
but don't you find it all absurd that they are blasting any sort of single payer health claiming it's so expensive with these kind of numbers and you're in the realm where the U.S. truly may never get the money back (unlike the $23.7 trillion estimate, which is very black swan). But even just a few facts that come out is enough to give one a stroke. It's no wonder people go into denial on it for it's so complex, multi-facted and the numbers being reported simply cannot be imagined in size or scale.
Let's look at what is at risk with the zombie banks, Fannie and Freddie and AIG:
1) CIT - $2.3 billion
2) Citigroup - $50 billion
3) Bank of America - $50 billion
4) Fannie and Freddie - $84.9 billion
5) AIG - $69.83 billion
That is $257 billion (if my zeroes are correct) at risk. That would have been a nice down payment on health care reform!
Not to mention the regional banks that received TARP and are at risk because of commercial real estate.
Don't forget that the Fed's balance sheet keeps taking big hits from all these assets it bought in the various Maiden Lane schemes that are practically worth less.
Business lender CIT Group's troubles are raising questions about the Federal Reserve's ability to pinpoint a firm's problems and put it back on the right track.
Wall Street and the Obama Administration love the Fed. But did the Fed drop the ball:
Based on information provided by CIT and its primary regulators, the Fed judged in December that the lender's capital, management and future prospects qualified it as a bank holding company.
Wait, this the great systemic risk regulator. Oh BTW:
The U.S. Treasury Department acknowledged last week that it will likely lose the entire $2.3 billion it pumped into CIT, which would be the first loss suffered under the government's $700 billion financial rescue program.
NY Fed says, based on the stress test, it performed CIT needs $4 billion in regulatory capital.
but have a new blog post coming up to sum up. Your comment is almost identical to what I'm saying, "overinflated number", so what? infinity divided by 12 is still infinity.
“The total potential federal government support could reach up to $23.7 trillion,” he stated.
But in the report accompanying his testimony, Mr. Barofsky conceded the number was vastly overblown. It includes estimates of the maximum cost of programs that have already been canceled or that never got under way.
It also assumes that every home mortgage backed by Fannie Mae or Freddie Mac goes into default, and all the homes turn out to be worthless. It assumes that every bank in America fails, with not a single asset worth even a penny. And it assumes that all of the assets held by money market mutual funds, including Treasury bills, turn out to be worthless.
It would also require the Treasury itself to default on securities purchased by the Federal Reserve system.
You almost get the feeling that they fed the public that number, so when the real number comes out the very next day that people will say, "Whew! The problem isn't nearly as bad as I thought."
When in fact, $4.7 Trillion is a catastrophe of unprecedented amounts.
The federal government has devoted $4.7 trillion to help the financial sector through its crisis, a level of assistance equal to about one-third of the overall U.S. economy, a watchdog report said Monday.
Yeah, that's a major goal here too, but another way to do that is to submit the post to share engines (see all of those buttons) and yet another way is to post a reference in a comment on other sites(has to have relevance, part of discussion) and even in article comment sections.
For in "preaching to the choir" EP has a pretty varied audience but DK is a world onto itself. I mean nothing wrong with it but DK is is one of those sites "onto itself" in terms of community whereas the financial blogosphere and others are more widespread....then things can travel viral, which has happened with some posts on EP. Other posts are referenced as articles. i.e. NDD's Great Depression series is in the reference section of Business Week. We have numerous of those.
Also, I think I need to incorporate twitter, this seems to be so popular.
Anyway, I see the stats and DK publishes the stats in a "high impact diary" section plus there are other ways of getting to them, so, I'm just letting you know. DK is massive but that's because there are so many posts on a daily basis, but most posts also have a shelf life of 24 hours max. EP shelf life is long lasting, at least 1 year and that's because of all of the search SEO I have.
I'm always working on ideas for building up the EP community (which we need more of) SEO, getting more traffic reads.
Yup, it means there exists, against all odds, at least one HONEST inspector general in the United States' government. This is truly monumnetal, epic and conceivably gnarly.
Normally, I don't waste my valuable time on the likes of Newsweek, Time, The Economist, or any other media stuff which I am unable to verify (SHOW ME THE DATA! as an old prof use to yell at us.), but the other day, while getting a haircut, I happened to peruse an older copy of Newsweek, and a completely nonsensical column (pure tripe) by Robert J. Samuelson, who couldn't comprehend a wit of economics if it bit him in the posterior, caught my eye.
Samuelson made the fallacious claim that unless we (always that imperious we) rescued the financial sector, the economy would stay depressed. Of course, anyone with at least two neurons to rub together understands that this financial sector is the cause, the major vector, of this situation. Samuelson should go back and reread (or probably just read for the first time) Jean-Baptiste Say, along with Henry George, Thorstein Veblen, and John Kenneth Galbraith, of course! (The financial sector doesn't create jobs - it simply robs the rest of us via securitization and derivatives, leveraged buyouts based upon securitized derivatives, and jobs offshoring.)
Samuelson mentioned that while the bankers may be "inept" we shouldn't be completely averse to them (or words to that effect). Now these "inept bankers" walked away with billions, and the banks are technically insolvent - so I wonder where all the money went???
(Insert "Things that make you go hmmmmmmmmmmm..." here)
Obviously, to judicious-thinking people, the way to pay for single payer/universal healthcare is simple: Paulson, Rubin, Greenberg, Cayne, Crittendon, Summers, Geithner, Dimon, Peterson, Schwarzmann, Kravis, and on and on and on.
you are right in page read terms, but I honestly think that in terms of impact that's probably not true.
And I honestly, there's a problem with preaching to the choir. You aren't going to save any souls that way.....
I crosspost because if I'm going to write something that's in depth, I want to spread it widely. I'm not going to do that for something I tag for instapopulist, but if I spend 3-4 hours on something I want to try to get it out to as many people as possible.
And if you don't have commenters you don't see that it's being read. Is there a way to put a page view count at the bottom of posts?
If you want to have a real impact, you can't stay in a bubble.
The problem with the blogosphere is that a division of labor has been established. You have to post at those places that have a broader focus if you want to have an impact.
I always post first at Economic Populist, and try to tweak the title so Technorati doesn't ring it up for daily kos.
we don't want all posts on EP over on agent orange, also it's kind of a "select" audience.
FYI in terms of reads, per post, believe this or not, but unless you get a the top of the recommended list, EP usually gets more reads per post than DK, probably because we're all econ. Even on the rec list, we've gotten more reads. We just have more lurkers, won't venture out to comment.
More pick off the other economics people (who are in depth, fact based, analytical) and get them over here! ;)
Midtown. Keep it up. And please crosspost to Big Orange.
I don't know if you've seen this, but thanks to the magic of globalization our less than stellar CRE market (and other casinos) are starting to rub of on European banks that invested during the bubble. Germany is facing the possibility of a credit crunch.
Officials at the Finance Ministry have prepared another version of an emergency financing plan, which calls for the government-owned KfW development bank to take action, instead of the Bundesbank. Before the crisis began, KfW and the banks through which it channels its loans onto the market each bore half the credit risk. In exceptional cases, KfW may assume 80 percent of the risk, while the other bank assumes the remaining 20 percent. In the future, however, KfW's share could be even higher, perhaps even 100 percent, according to the Finance Ministry's latest plans. The Economics Ministry is fashioning similar schemes.
Some plans are even more radical, including the possibility of KfW lending directly to businesses in the future. The funds for the new loans would come from the existing stimulus programs.
The plan could indeed benefit some cash-strapped companies, but it can hardly replace a functioning money and capital market. As Merkel has learned from her visits to small and mid-sized businesses, companies are the first to suffer when banks are not functioning properly.
I know it isn't the market, but perhaps the Good Germans are about to show us a way the destructive power of big finance can be broke. Let the bad banks die, and raise up the functioning local credit unions (Sparkassen) in order to create credit for the real economy.
the total you are reading is just US Treasury funds (TARP) and associated programs.
That's $3 trillion. Separately the Fed. committed about $12 trillion in loans, additional programs, then there are homeowners programs, FDIC, SEC, etc.
I lost track myself at the Fed tally of $12 trillion so this was a shock to me too.
You can create an account if you want to discuss. I will try to write up some details from tomorrow's hearing to try to find out some factual tally.
Before I get my underpants all in a twist, I wonder if someone who perhaps wrote that document shifted a digit to the right (or is it left?) when they read it. Anyway, in the report on page 3 is a table. At the bottom of that table is a row labeled "total", and the figures are said to be in billiions of dollars.
Total | | $2,365.0 – $2,865.0 | $699.0
Is someone writing the report misreading 2.3-2.8 Trillion as 23-28 trillion?
Hey, it's still an unimaginably large figure to me, but maybe this HUGE figure of $27T is just a typo made out 10x larger than the table says it is?
Does anyone else see that, or am I misreading the table?
but even when a bank goes under the assets are not valued at zero. i.e. if there are bank accounts there, they don't disappear.
Even when a company is bankrupt, to the point of liquidation, those assets being liquidated has value so (it would be easier though) one cannot say $50B is guaranteed gone....although just because there are assets....doesn't mean the taxpayer money isn't totally gone never to reappear either.
So, the priority queue in bankruptcy is bonds, then preferred, then common, so even then it doesn't mean "gone to zero" although it could. I fear more Zombie Citigroup will stay afloat indefinitely never the U.S. taxpayer is never actually repaid.
Then, ya know it terms of what other market manipulations are going on, there are probably indirect losses there as well.
A new bill to demand warrants are on an open market was introduced, H.R. 3232. This is where Treasury got 66% vs. market value.
I'm so glad you researched this out and wrote about it. I just put in a comment what bullshit that MSM "noise" is but I didn't have time to research and trace the "savings" out.
I believe the jump can be traced to Stimulus tax cuts, payouts, esp. to Senior Citizens who pocketed the dough and in terms of "pay off their debts" (uh huh) could that be charge off? i.e. Americans defaulted in record numbers hence the active debt ratio dropped? With 3.2M mortgages this year (projected) in foreclosure, that implies bankruptcy, which will at minimum reduce the official debt load.
And I don't mean to be argumentative. For example, we gave Citigroup - $50 billion. They gave us warrants and preferred stock which has been converted to common stock.
If Citigroup goes under, as common stockholders, we will probably see none of that $50 billion. I could assign a probability of bankruptcy to that $50 billion. But that was my rationale. Same goes for the rest of the TARP recipients.
I agree that there are other aspects of loss and exposure that go beyond the hard numbers. For instance, what is truly the value of this collateral or "valuable assets" that have been offered up in these various programs.
if you can track down what the truth is, esp. considering the midtowng blog post just showing all sorts of horrific reports on the commerical mortgage market, if you can dig out some facts, details, you may be very right.
I just saw a Bloomberg claim that Americans are "paying off their debts" and increasing savings. That is pure bullshit. The increase in savings I believe can be traced to the rebates and tax breaks, esp. to Senior citizens from the Stimulus bill. I don't have time to verify this with references, citations....
and that's what happens, when bloggers lay off, when the public spotlight turns off, out comes the snow job in masse. The shit gets piled high and deep and it really takes a lot of digging from a lot of people who aren't getting paid to do so!
Talk about very strange: S&P Restores Top-Rating to Commercial Mortgages
As early as just a few weeks ago S&P downgraded three commercial backed mortgage bonds. This made these securities ineligible for the Fed's Term Asset-backed Securities Loan Facility (TALF). But suddenly they reverse course today and restored the top rating for these bonds. Amazing how that works. This quote is from the article:
Wow. So now the market really opens up for these bonds. It is like "deju vu all over again".
but have to go into the losses, i.e. Treasury sold warrants at 66% of their market value. AIG paid out $20B @ 100% on CDS to counterparties. But then, we have AIG selling assets, so who gets that money from those sales?
So, one cannot just look at the amounts but what are the real losses. I've scanned through the SIGTARP report to some degree but it's 256 pages, so check out the actual report to see if there are more information.
Meaning there is a strong probability of default risk - that we will not get the money back. And like I said it is just those zombies and Fannie/Freddie and AIG. I wonder whether Wells Fargo can survive.
The numbers come from ProPublica's website.
This is class warfare (there I said it) - it is OK to bail out financial oligarchy to the tune of at least $12 trillion but when it comes to providing health insurance for over 40 million Americans - OH it's too costly.
here to write information up quickly. Frankly I need to review a lot of this to get a real numbers tally. I think your estimates are way, way too low..
but don't you find it all absurd that they are blasting any sort of single payer health claiming it's so expensive with these kind of numbers and you're in the realm where the U.S. truly may never get the money back (unlike the $23.7 trillion estimate, which is very black swan). But even just a few facts that come out is enough to give one a stroke. It's no wonder people go into denial on it for it's so complex, multi-facted and the numbers being reported simply cannot be imagined in size or scale.
Let's look at what is at risk with the zombie banks, Fannie and Freddie and AIG:
1) CIT - $2.3 billion
2) Citigroup - $50 billion
3) Bank of America - $50 billion
4) Fannie and Freddie - $84.9 billion
5) AIG - $69.83 billion
That is $257 billion (if my zeroes are correct) at risk. That would have been a nice down payment on health care reform!
Not to mention the regional banks that received TARP and are at risk because of commercial real estate.
Don't forget that the Fed's balance sheet keeps taking big hits from all these assets it bought in the various Maiden Lane schemes that are practically worth less.
CIT's troubles raise Fed supervision questions
Wall Street and the Obama Administration love the Fed. But did the Fed drop the ball:
Wait, this the great systemic risk regulator. Oh BTW:
NY Fed says, based on the stress test, it performed CIT needs $4 billion in regulatory capital.
but have a new blog post coming up to sum up. Your comment is almost identical to what I'm saying, "overinflated number", so what? infinity divided by 12 is still infinity.
The NY Times breaks down that number and it looks a lot less imposing.
You almost get the feeling that they fed the public that number, so when the real number comes out the very next day that people will say, "Whew! The problem isn't nearly as bad as I thought."
When in fact, $4.7 Trillion is a catastrophe of unprecedented amounts.
Yeah, that's a major goal here too, but another way to do that is to submit the post to share engines (see all of those buttons) and yet another way is to post a reference in a comment on other sites(has to have relevance, part of discussion) and even in article comment sections.
For in "preaching to the choir" EP has a pretty varied audience but DK is a world onto itself. I mean nothing wrong with it but DK is is one of those sites "onto itself" in terms of community whereas the financial blogosphere and others are more widespread....then things can travel viral, which has happened with some posts on EP. Other posts are referenced as articles. i.e. NDD's Great Depression series is in the reference section of Business Week. We have numerous of those.
Also, I think I need to incorporate twitter, this seems to be so popular.
Anyway, I see the stats and DK publishes the stats in a "high impact diary" section plus there are other ways of getting to them, so, I'm just letting you know. DK is massive but that's because there are so many posts on a daily basis, but most posts also have a shelf life of 24 hours max. EP shelf life is long lasting, at least 1 year and that's because of all of the search SEO I have.
I'm always working on ideas for building up the EP community (which we need more of) SEO, getting more traffic reads.
Yup, it means there exists, against all odds, at least one HONEST inspector general in the United States' government. This is truly monumnetal, epic and conceivably gnarly.
Normally, I don't waste my valuable time on the likes of Newsweek, Time, The Economist, or any other media stuff which I am unable to verify (SHOW ME THE DATA! as an old prof use to yell at us.), but the other day, while getting a haircut, I happened to peruse an older copy of Newsweek, and a completely nonsensical column (pure tripe) by Robert J. Samuelson, who couldn't comprehend a wit of economics if it bit him in the posterior, caught my eye.
Samuelson made the fallacious claim that unless we (always that imperious we) rescued the financial sector, the economy would stay depressed. Of course, anyone with at least two neurons to rub together understands that this financial sector is the cause, the major vector, of this situation. Samuelson should go back and reread (or probably just read for the first time) Jean-Baptiste Say, along with Henry George, Thorstein Veblen, and John Kenneth Galbraith, of course! (The financial sector doesn't create jobs - it simply robs the rest of us via securitization and derivatives, leveraged buyouts based upon securitized derivatives, and jobs offshoring.)
Samuelson mentioned that while the bankers may be "inept" we shouldn't be completely averse to them (or words to that effect). Now these "inept bankers" walked away with billions, and the banks are technically insolvent - so I wonder where all the money went???
(Insert "Things that make you go hmmmmmmmmmmm..." here)
Obviously, to judicious-thinking people, the way to pay for single payer/universal healthcare is simple: Paulson, Rubin, Greenberg, Cayne, Crittendon, Summers, Geithner, Dimon, Peterson, Schwarzmann, Kravis, and on and on and on.
you are right in page read terms, but I honestly think that in terms of impact that's probably not true.
And I honestly, there's a problem with preaching to the choir. You aren't going to save any souls that way.....
I crosspost because if I'm going to write something that's in depth, I want to spread it widely. I'm not going to do that for something I tag for instapopulist, but if I spend 3-4 hours on something I want to try to get it out to as many people as possible.
And if you don't have commenters you don't see that it's being read. Is there a way to put a page view count at the bottom of posts?
If you want to have a real impact, you can't stay in a bubble.
The problem with the blogosphere is that a division of labor has been established. You have to post at those places that have a broader focus if you want to have an impact.
I always post first at Economic Populist, and try to tweak the title so Technorati doesn't ring it up for daily kos.
we don't want all posts on EP over on agent orange, also it's kind of a "select" audience.
FYI in terms of reads, per post, believe this or not, but unless you get a the top of the recommended list, EP usually gets more reads per post than DK, probably because we're all econ. Even on the rec list, we've gotten more reads. We just have more lurkers, won't venture out to comment.
More pick off the other economics people (who are in depth, fact based, analytical) and get them over here! ;)
Midtown. Keep it up. And please crosspost to Big Orange.
I don't know if you've seen this, but thanks to the magic of globalization our less than stellar CRE market (and other casinos) are starting to rub of on European banks that invested during the bubble. Germany is facing the possibility of a credit crunch.
I know it isn't the market, but perhaps the Good Germans are about to show us a way the destructive power of big finance can be broke. Let the bad banks die, and raise up the functioning local credit unions (Sparkassen) in order to create credit for the real economy.
On MTGM.
Yet another issue, plain running out of funds.
You're having an influence middle, MTGM usually covers finance (although he lives in PA).
the total you are reading is just US Treasury funds (TARP) and associated programs.
That's $3 trillion. Separately the Fed. committed about $12 trillion in loans, additional programs, then there are homeowners programs, FDIC, SEC, etc.
I lost track myself at the Fed tally of $12 trillion so this was a shock to me too.
You can create an account if you want to discuss. I will try to write up some details from tomorrow's hearing to try to find out some factual tally.
Before I get my underpants all in a twist, I wonder if someone who perhaps wrote that document shifted a digit to the right (or is it left?) when they read it. Anyway, in the report on page 3 is a table. At the bottom of that table is a row labeled "total", and the figures are said to be in billiions of dollars.
Is someone writing the report misreading 2.3-2.8 Trillion as 23-28 trillion?
Hey, it's still an unimaginably large figure to me, but maybe this HUGE figure of $27T is just a typo made out 10x larger than the table says it is?
Does anyone else see that, or am I misreading the table?
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