a last hurrah for the cowboy mafia
November 28, 2008 1 Comment
as if we didn’t see it coming…
Who wanted to hear from dismal economists warning that the whole thing was, in effect, a giant Ponzi scheme?
so do we really have to give away $100 billion to the folks sitting at the top of the pyramid?
The federal government theoretically will be repaid what it’s loaned except for $100 billion in losses incurred from buying some assets above market value.
because it sounds like the government is trying to prop up fake assets that never really existed. and it ultimately looks like a stick-up, what with the fate of the economy tied up in whether the cash keeps flowing…
Q: But will all this work?
A: It’s better than doing nothing. And letting firms such as Citigroup fail would send wider shock waves through the economy that could cost millions of jobs.
I understand that the damage caused to the economy needs to be fixed as a first priority, but while we are at it, can’t we just seize these criminal operations under organized crime statutes and send all the architects to prison? It looks like there was crime, after all…
thanks to the accounting scandals, they were actually withdrawing from the market during the height of the housing bubble — the vast majority of the loans now going bad came from the private sector.
or would that just make the global market go batshit crazy? According to Paul Krugman, a government taking ownership stakes in failed institutions is a good idea…
because seriously, this is ridiculous:
Yesterday, the Washington Post and Bloomberg News both reported on the astronomical sum of money — the Post put it at almost $900 billion — that the Federal Reserve is quietly lending to banks and other financial institutions hit by the financial crisis.
Unlike with the $700 billion in bailout money allocated to the Treasury Department, the Fed won’t reveal basic details about the program: for instance, which institutions are getting that money, how much they’re getting, or which assets are being used as collateral on the loans.
according to the AP, the economic crisis is getting worse, and spreading into commercial mortgages:
… there are ominous signs of a new crisis – one that could turn out the lights on malls, hotels and storefronts nationwide.
Even as the holiday shopping season begins in full swing, the same events poisoning the housing market are now at work on commercial properties, and the bad news is trickling in. Malls from Michigan to Georgia are entering foreclosure. [...]
“It’s a toxic drug and nobody knows how bad it’s going to be,” said Paul Miller, an analyst with Friedman, Billings, Ramsey, who was among the first to sound alarm bells in the residential market.
Unlike home mortgages, businesses don’t pay their loans over 30 years. Commercial mortgages are usually written for five, seven or 10 years with big payments due at the end. About $20 billion will be due next year, covering everything from office and condo complexes to hotels and malls.
not to worry, the Bush Administration is on it:
Nov. 24 (Bloomberg) — Treasury Secretary Henry Paulson, less than a week after indicating he would let the Obama administration decide how to use the second half of the $700 billion financial fund, is considering asking for the money.
the irony is like a fine wine…
“You have systemic fear everywhere,” said David Winters, who manages $3 billion as chief executive officer of Wintergreen Advisers LLC in Mountain Lakes, New Jersey. “People don’t know what to believe” and “confidence is completely drained out of the system.”