Report: US Gov.'t MADE Money on Bank Bailout

[PandaBear]

Originally Posted By: Ursae_Majoris

And if they fail again, will the new group of investors be left holding the bag, again?
Who would trust GM not to renege on their promises? I would not want it, and I will pull my money and invest them somewhere else if any of my mutual funds buy the new GM stock.


Everything including junk is worth buying if the price is right, that's the rule of investment. Don't want to buy it? Someone else will.

 

[PandaBear]

Originally Posted By: tonycarguy
Moreover, in nominal terms the gov hasn't profited from its TARP investments. It has destroyed the value of the dollar with its monetary policy, so that 8.5% return is basically 0% when adjusted for the dollar's declining value. It's just financial hocus pocus


The lowered credit rating of letting so many big corp defaulting will achieve a similar result, which is the decline of dollar's value.

The only way around it is to let your bank collapse, including the healthy small banks, your health insurance, your retirement fund, your tax increased, your job eliminated to cut cost, your kids public education eliminated, to keep the book balanced.

But in the end, either directly out of your pocket (only the US tax payer or citizens) or indirectly out of your pocket with devaluation of dollar (which is shared among all holder including Japan and China). The choice is obvious.


US dollar is already devalued during the boom, it is just hidden until now.

 

[Mustang2008Z]

The U.S. Government will make the money off the banks, then burn it on some silly project instead of saving it.

 

[RedByrd]

I'd have to double check, but foreign aid only makes up 1-2% of expenditures, so getting rid of it entirely wouldn't make that big of a difference. (Of course, I have a problem with sending money to non-democratic countries, but that's off topic).

It's well known that inflation helps debtors and hurts creditors, which undoubtedly helped in this case. But until we find some figures that allow us to accurately quantify inflation, price levels, and such, statements like "8.5% return is basically 0% when adjusted for the dollar's declining value" are really hocus pocus.

 

[d00df00d]

Originally Posted By: FusilliJerry82
Made money on those companies coming out of TARP. I'll believe they made money on the whole thing when I see it.

Good call. Thanks for the correction.

 

[eljefino]

So "the man", an incredibly vague cloud of puppeteers clustered around wall street, manages to keep the dollar slipping so we're forced to invest it to keep even. The gov't is suffering and trying to retain real value just like you & I are. Bankers and investors own everything and are basically abusive pimps to whom we keep returning, not knowing any better.

 

[Gary Allan]

Originally Posted By: eljefino
So "the man", an incredibly vague cloud of puppeteers clustered around wall street, manages to keep the dollar slipping so we're forced to invest it to keep even. The gov't is suffering and trying to retain real value just like you & I are. Bankers and investors own everything and are basically abusive pimps to whom we keep returning, not knowing any better.


Pretty much. Spin up that cage. Hoosierdaddy.

 

[mikeg5]

they should have let the companies sink. let us all learn the valuable lesson. you know this is just going to happen again. you have to fail in order to succeed. but greed over ruled judgment.

 

[mikeg5]

Originally Posted By: eljefino
So "the man", an incredibly vague cloud of puppeteers clustered around wall street, manages to keep the dollar slipping so we're forced to invest it to keep even. The gov't is suffering and trying to retain real value just like you & I are. Bankers and investors own everything and are basically abusive pimps to whom we keep returning, not knowing any better.


lol nice

 

[Gary Allan]

Originally Posted By: mikeg5
they should have let the companies sink. let us all learn the valuable lesson. you know this is just going to happen again. you have to fail in order to succeed. but greed over ruled judgment.


Yes. Cull the herd. Now don't think for ONE MINUTE that things would be ANY better. There would be the total collapse of the charade that we've been living for quite some time in "over extension". People would be whining and 'itching just as much. Stuff would be even worse.

Right now you're forced to dance with the devil since it's the best worst deal going. Even when it also has a toll to pay down the road. Too many people have approach avoidance syndrome. They know what they have to do, but can't bring themselves to endure the suffering required to remedy some things. So, they engage in the same foolish behavior since it feels better.

How do you get a 10' pole into a 2' opening? Maneuver the opening into a position where the consequences of not fitting it means that a forced 12' pole will be the result.

 

[eljefino]

Well and when are we going to "punish" wall st for bailing them out? Punitive taxes on the executive salaries over 20 million etc? People want their pound of flesh but it will be argued that it punishes the good, self made men, yadda yadda.

It's like a company salesman who brings in record business but snorts coke and fraternizes the secretary. Do you fire him or ignore him?

 

[65cuda]

I guess the company could increase it's insurance limits and if the sec. wants it a weapon to use against the salesman. Just because a person brings in the money doesn't make looking the other way right. Unless company policy allows the coke and the fraternizing with the sec, you warn him then fire him.

 

[eljefino]

but how do you insure wall st operations that are too big to fail? That's how this whole mess started, mortgage backed securities.

They're like a 20-something brat whos rude to their parents then, "moooom, my car needs a transmission"...

 

[javacontour]

The question is how do you want your pain. I argue that the amount of pain under the curve will be greater if we keep doing what we just did, bailing out those to big to fail.

Would a massive failure of the banking system been painful? Yep. But if those who got us into that mess are bailed out, that means they are still around to mess up things again.

If the banks fail, those clowns don't have jobs and the banks that did not make foolish bets in the market rise to the top.

So we would have intense pain in the short run, but for a short period of time.

As I've said before, our economy is addicted to the crack of easy credit. So what did the federal government do? It gave the addicted economy another fix of credit-crack. The economy is still addicted.

When the talking heads indicate the solution is loosening up on credit, doesn't that set off big red flags?

It does to me.

Shouldn't the solution really be spend less than you make, save, live with-in your means, etc? Of course it should. But no elected official, in either party, is willing to step up and say what we are doing is not sustainable.

We cannot continue to borrow from our future to pay for today or even worse, to pay for our past. But that's what we are doing. Our government borrows from the SSI "trust fund" to pay current bills as well as to service past debt.

Folks did the same by borrowing on what their house was "worth" so they could pay down credit cards, or buy a new car or a boat, or take a trip to Europe, etc.

Since incomes were not rising as fast as home values, eventually it blew up.

Seems the numbers are being cherry picked. I'm sure there are some cases where the fed is making money on it's TARP investments. But what does the whole portfolio look like, especially when inflation is considered. So far, inflation isn't too bad. But I think a lot of money is still on the sidelines. What happens as more and more folks gain confidence and open their wallets? Will inflation remain in check?

How bad will the next crisis be? Since we refuse to learn the lesson that you cannot have sustainable growth by borrowing, how long until the next credit fueled bubble bursts?

 

[Shannow]

Originally Posted By: eljefino
but how do you insure wall st operations that are too big to fail? That's how this whole mess started, mortgage backed securities.


Given that the outstanding derivatives are many times the US GDT, it's impossible to cover all of the potential risk, even if it was desirable to do so.

You can't possibly cover it, and to let it implode would take everything else with it...