Nouriel Roubini: The banking system is "effectively insolvent"

[Winehole23]

Roubini Predicts U.S. Losses May Reach $3.6 Trillion (http://www.bloomberg.com/apps/news?pid=20601087&sid=aS0yBnMR3USk&)



By Henry Meyer and Ayesha Daya
Jan. 20 (Bloomberg) -- U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” said New York University Professor Nouriel Roubini (http://search.bloomberg.com/search?q=Nouriel+Roubini&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), who predicted last year’s economic crisis.



“I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” Roubini said at a conference in Dubai today. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.”



Losses and writedowns at financial companies worldwide have risen to more than $1 trillion since the U.S. subprime mortgage market collapsed in 2007, according to data compiled by Bloomberg.



President Barack Obama will have to use as much as $1 trillion of public funds to shore up the capitalization of the banking sector, following the $350 billion injection by the Bush administration, Roubini told Bloomberg News. Congress last year approved a $700 billion rescue fund, of which half remains to be disbursed.



Bank of America Corp. (http://www.bloomberg.com/apps/quote?ticker=BAC%3AUS), the largest U.S. bank by assets, posted a quarterly loss of $1.79 billion last week, its first since 1991, and received $138 billion in emergency government funds. Citigroup Inc. (http://www.bloomberg.com/apps/quote?ticker=C%3AUS) posted an $8.29 billion fourth-quarter loss, completing its worst year, and plans to split in two under Chief Executive Officer Vikram Pandit (http://search.bloomberg.com/search?q=Vikram+Pandit&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1)’s plan to rebuild a capital base eroded by the credit crisis.



‘Bankrupt’ System



“The problems of Citi, Bank of America and others suggest the system is bankrupt,” Roubini said. “In Europe, it’s the same thing.”



Stocks in Europe, Canada and Brazil dropped yesterday on speculation government efforts to shore up the financial industry will fail to stem the deepening global recession. The U.K.’s Royal Bank of Scotland Group Plc (http://www.bloomberg.com/apps/quote?ticker=RBOS%3ALN) said it expects to post a loss of as much as 28 billion pounds ($41 billion) for 2008 and the government got ready to raise its stake in the lender.
Oil prices will trade between $30 and $40 a barrel all year, Roubini predicted.



“I see commodities falling overall another 15-20 percent,” Roubini said. “This outlook for commodity prices is beneficial for oil importers, it’s going to imply that economic recovery might occur faster, but from the point of view of oil exporters, this will be very negative.”



Oil has tumbled 77 percent from its July high of $147.27 as the global economy sinks into recession, straining the budgets of crude exporters. Saudi Arabia, Oman and Dubai, the second- largest sheikdom in the United Arab Emirates, have said they will post budget deficits this year.
Crude oil for February delivery fell to $32.70, down 10.4 percent from last week’s close and the lowest since Dec. 19, on the New York Mercantile Exchange today. The contract traded at $33.37 a barrel at 10:45 a.m. London time.

[SnakeBoy]

I wonder how he came up with the 3.6 trillion figure. Seems higher than some of what I've read about.

[whottt]

Good to see both Bank of America and Citibank taking it up the rear on this one...always good to see a gouger and a corrupt lender getting effed and going under. Hopefully Americans will take their banking and loans elsewhere...you know, to better banks. Now I just want to see HSBC getting theirs.

[SnakeBoy]

Hopefully Americans will take their banking and loans elsewhere...you know, to better banks.

Which ones would those be and how would you know. The Fed is "watching" about a hundred banks that are in trouble but they're not giving out the names.

[DarkReign]

Which ones would those be and how would you know. The Fed is "watching" about a hundred banks that are in trouble but they're not giving out the names.

Why would they? The banks that are receiving payments from the bailout flat-out refuse to say where the money is going.

This bailout of the financial industry will be the downfall of our nation, IMO. It wont be so much the bailout per say, but the abuse and expectation associated with it when some other industry starts to fail. Pathtic really, but necessary.

[FreeMason]

I hope bank of america gets wiped off the face of the planet. through free market system

These big banks are horrible w/ treating customers right.

[whottt]

Which ones would those be and how would you know. The Fed is "watching" about a hundred banks that are in trouble but they're not giving out the names.

Pick ones with sound lending practices and fair credit card offers...I'd say most local credit unions are better about this than most banks.

Bottom line...where you put it, is not as important as where you take it out from.

If you are looking for the safest place for your money from total economic collapse...well probably Bank of America, Citibank or HSC are the best...but your money isn't really protected because they have practices designed to strip it from you themselves...

Just find a small bank you like better...if we start doing that, they'll become the big banks and replace corrupt multinational(and national) banks...that are responsible for this fiasco in the first place.

[The Reckoning]

as a student, wfc treats me riiiiight :tu

[MiamiHeat]

Just find a small bank you like better...if we start doing that, they'll become the big banks and replace corrupt multinational(and national) banks...that are responsible for this fiasco in the first place.

but then they will turn into the larrge corrupt multinational banks.

where do you think all of these big banks started?

[whottt]

And when they do so, you pull your money out of them and go find a new small bank...No PHD in Rocket Science required.

[RandomGuy]

Roubini Predicts U.S. Losses May Reach $3.6 Trillion (http://www.bloomberg.com/apps/news?pid=20601087&sid=aS0yBnMR3USk&)



By Henry Meyer and Ayesha
Jan. 20 (Bloomberg) -- U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” said New York University Professor Nouriel Roubini (http://search.bloomberg.com/search?q=Nouriel+Roubini&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), who predicted last year’s economic crisis.
“I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” Roubini said at a conference in Dubai today. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.”
Losses and writedowns at financial companies worldwide have risen to more than $1 trillion since the U.S. subprime mortgage market collapsed in 2007, according to data compiled by Bloomberg.

President Barack Obama will have to use as much as $1 trillion of public funds to shore up the capitalization of the banking sector, following the $350 billion injection by the Bush administration, Roubini told Bloomberg News. Congress last year approved a $700 billion rescue fund, of which half remains to be disbursed.

Bank of America Corp. (http://www.bloomberg.com/apps/quote?ticker=BAC%3AUS), the largest U.S. bank by assets, posted a quarterly loss of $1.79 billion last week, its first since 1991, and received $138 billion in emergency government funds. Citigroup Inc. (http://www.bloomberg.com/apps/quote?ticker=C%3AUS) posted an $8.29 billion fourth-quarter loss, completing its worst year, and plans to split in two under Chief Executive Officer Vikram Pandit (http://search.bloomberg.com/search?q=Vikram+Pandit&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1)’s plan to rebuild a capital base eroded by the credit crisis.


My gut says this guy is right.

I think the losses are going to be greater than any of the big banks wants to own up to.

All of which points to further extremely tight credit markets as lending institutions clamp down on new loans.

I honestly wonder if there will be any large banks left in 5 years.

My wife and I got a letter from the Frost Bank CEO yesterday, thanking us for being customers and trying to reassure us that the bank is OK.

I have glanced through their annual statements in my trips through the lobby in San Marcos (they have a couple on a table next to some newspapers), and I have a sneaking suspicion that they are on the hook for more losses than they are admitting.

[RandomGuy]

I wonder how he came up with the 3.6 trillion figure. Seems higher than some of what I've read about.

That seems higher than we have been hearing about, but since just about every bit of solid news about the scope of losses tends to be bigger than was expected, it would be a safe assumption that the ultimate scope of the losses will be larger as well.

[2centsworth]

Roubini Predicts U.S. Losses May Reach $3.6 Trillion (http://www.bloomberg.com/apps/news?pid=20601087&sid=aS0yBnMR3USk&)



By Henry Meyer and Ayesha Daya
Jan. 20 (Bloomberg) -- U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” said New York University Professor Nouriel Roubini (http://search.bloomberg.com/search?q=Nouriel+Roubini&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1), who predicted last year’s economic crisis.



“I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” Roubini said at a conference in Dubai today. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.”



Losses and writedowns at financial companies worldwide have risen to more than $1 trillion since the U.S. subprime mortgage market collapsed in 2007, according to data compiled by Bloomberg.



President Barack Obama will have to use as much as $1 trillion of public funds to shore up the capitalization of the banking sector, following the $350 billion injection by the Bush administration, Roubini told Bloomberg News. Congress last year approved a $700 billion rescue fund, of which half remains to be disbursed.



Bank of America Corp. (http://www.bloomberg.com/apps/quote?ticker=BAC%3AUS), the largest U.S. bank by assets, posted a quarterly loss of $1.79 billion last week, its first since 1991, and received $138 billion in emergency government funds. Citigroup Inc. (http://www.bloomberg.com/apps/quote?ticker=C%3AUS) posted an $8.29 billion fourth-quarter loss, completing its worst year, and plans to split in two under Chief Executive Officer Vikram Pandit (http://search.bloomberg.com/search?q=Vikram+Pandit&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1)’s plan to rebuild a capital base eroded by the credit crisis.



‘Bankrupt’ System



“The problems of Citi, Bank of America and others suggest the system is bankrupt,” Roubini said. “In Europe, it’s the same thing.”



Stocks in Europe, Canada and Brazil dropped yesterday on speculation government efforts to shore up the financial industry will fail to stem the deepening global recession. The U.K.’s Royal Bank of Scotland Group Plc (http://www.bloomberg.com/apps/quote?ticker=RBOS%3ALN) said it expects to post a loss of as much as 28 billion pounds ($41 billion) for 2008 and the government got ready to raise its stake in the lender.
Oil prices will trade between $30 and $40 a barrel all year, Roubini predicted.



“I see commodities falling overall another 15-20 percent,” Roubini said. “This outlook for commodity prices is beneficial for oil importers, it’s going to imply that economic recovery might occur faster, but from the point of view of oil exporters, this will be very negative.”



Oil has tumbled 77 percent from its July high of $147.27 as the global economy sinks into recession, straining the budgets of crude exporters. Saudi Arabia, Oman and Dubai, the second- largest sheikdom in the United Arab Emirates, have said they will post budget deficits this year.
Crude oil for February delivery fell to $32.70, down 10.4 percent from last week’s close and the lowest since Dec. 19, on the New York Mercantile Exchange today. The contract traded at $33.37 a barrel at 10:45 a.m. London time.

I'm pretty familiar with Dr. Doom. He has been predicting a catastrophic meltdown for years. Not here to say everything he has to say is wrong, but he isn't any different than David Tice who has been shorting the market for years. David is looking good now, but he consistently lost 20 to 30% for many years before he profited off the bear.

In this case, Dr. Doom and his assessment of "Toxic" assets are probably correct. However, people are wrong in thinking these "toxic" assets will take down the country. Absent another domestic terrorist attack, I bet we recover fully over the next 4 years!

[Winehole23]

r.In this case, Dr. Doom and his assessment of "Toxic" assets are probably correct. However, people are wrong in thinking these "toxic" assets will take down the country. Absent another domestic terrorist attack, I bet we recover fully over the next 4 years!Depending on what you mean by the bolded, I might agree with you.

If you mean that normal GDP growth will be restored after a few years -- with a serious, multiyear recession intervening -- that seems plausible enough. The main worry then, presuming deflation does not occur (a big if IMO), will be whether inflation targeting measures are the right size and well timed. Turn off the spigot too soon, the economy could be thrown back into recession; too late, and hyperinflation could destroy the purchasing power of the US consumer with a quickness. Too big, and we're fucked either way.

By then, we'll have years of trillion dollar government deficits under our belt, trillions more of socialized financial risk, and the biggest treasury bubble ever. In other words, unprecedented indebtedness in the face of increasingly unsupportable entitlements.

Let's hope nothing happens to cause a run on treasurys, because with normal capacity and demand restored, the fuel/food bubble will reinflate. In the face of peak oil and AGW hysteria, there's no way we can afford currency collapse. Hopefully, Obama will have picked the right technologies to support in the meantime, Americans will have learned something about conservation and thrift, and nothing else will have happened to cause another catastrophic loss of confidence in the USA.

This scenario assumes we get all the breaks. Which is not impossible.

But how likely would that be?



OTOH, if you mean that the economy will return to pre-recession levels of consumption and credit...

...I want some of whatever you're smoking, 2centsworth. I just can't see it without the psychotropic dose.

I want to believe you, 2cents...but I just can't.

[2centsworth]

Depending on what you mean by the bolded, I might agree with you.

If you mean that normal GDP growth will be restored after a few years -- with a serious, multiyear recession intervening -- that seems plausible enough. The main worry then, presuming deflation does not occur (a big if IMO), will be whether inflation targeting measures are the right size and well timed. Turn off the spigot too soon, the economy could be thrown back into recession; too late, and hyperinflation could destroy the purchasing power of the US consumer with a quickness. Too big, and we're fucked either way.

By then, we'll have years of trillion dollar government deficits under our belt, trillions more of socialized financial risk, and the biggest treasury bubble ever. In other words, unprecedented indebtedness in the face of increasingly unsupportable entitlements.

Let's hope nothing happens to cause a run on treasurys, because with normal capacity and demand restored, the fuel/food bubble will reinflate. In the face of peak oil and AGW hysteria, there's no way we can afford currency collapse. Hopefully, Obama will have picked the right technologies to support in the meantime, Americans will have learned something about conservation and thrift, and nothing will have happened in the meantime to cause another catastrophic loss of confidence in the USA.

This scenario assumes we get all the breaks. Which is not impossible.

But how likely would that be?



OTOH, if you mean that the economy will return to pre-recession levels of consumption and credit...

...I want some of whatever you're smoking, 2centsworth. I just can't see it without the psychotropic dose.

I want to believe you, 2cents...but I just can't.

you extrapolated what I wrote to mean a long-term. do a quick search of 2cents and economics and you'll have more of a sense of where I stand.

When I said fully recover, I was talking about a washout of the sub-prime mortgages and a Dow of about 12k or so, with GDP of about 3-4%.

Longer-Term the challenges are way more discouraging.

[Winehole23]

When I said fully recover, I was talking about a washout of the sub-prime mortgages and a Dow of about 12k or so, with GDP of about 3-4%.You do know that the total subprime market is just a crumb next to all the sideways bets, no? A washout in subprime is necessary, even salutary. That's not what to be afraid of.

[whottt]

What exactly is a winehole anyway?

[Winehole23]

Default, deflation, debt-deflation.


Would that really be the worst thing imaginable? Bad debt gets killed, malinvestment seeks productivity, and economic forces combine. The currency is stabilized and strengthened, giving savers and investors both commercial incentive.

Sure the rich get richer, and the displacement of labor may occasionally threaten the public order, but shouldn't we at least consider the option of deflation, considering some of the possibilities of the Keynesian route: ever more heartbreaking deficits, hyperinflation and currency collapse leading to national default?

Rather than rule it out beforehand, the wisdom of doing very little and letting the system discover its equilibrium, ought to receive some attention. Instead, it is a taboo. Not even to be looked at. And definitely not to be mentioned.

Didn't we get through deflation from 1930-1934? Why couldn't we do it again?

[Winehole23]

What exactly is a winehole anyway?Generally, I try to guide the bottle to my mouth, but if it's bubbles i sometimes aim it at a girl.

[SnakeBoy]

Rather than rule it out beforehand, the wisdom of doing very little and letting the system discover its equilibrium, ought to receive some attention. Instead, it is a taboo. Not even to be looked at. And definitely not to be mentioned.


That brings to mind a quote from an article that has been stuck in my head lately.


At this stage, Americans do not boldly face the future…they want protection from it. And so the feds flex every flabby muscle trying to hold it back. Of course, no one can stop the future. Birds gotta fly. Fish gotta swim. And the future's gotta happen.

[Winehole23]

At this stage, Americans do not boldly face the future…they want protection from it. Yep. We're pretty wussed out. We're all a bunch of safety queens.

I think that could change though. The future's gonna happen with or without us.

Improvise, adapt, overcome.

[Kobe24Forever]

those who actually thinks the gdp will restored itself in 4 years are totally out of touch with reality, quite honestly, naturally resources like oil and gas are in a slump because of the current economic crisis, but those are unreplenishable resources meaning at most the drop in price is temporary, what that means is that, commodities like oil is always safe, why else do you think obama, made his speech about trying to move towards the sci fi world of solar powered car so soon? to diminish usa dependent of oil, but will it work? uh no, not when countries are already beginning to discuss ways to cut off ties with the us dollars, and when obama masterplan of creating emplyment is through useless ventures like expanding transportation, and poruing 600 billion into housing extates that loses 3 trillion, that wont work, america is fucked one way or another, that's the realistic way of looking at things, job decline will explode through this year and the next, it's not going to recover itself, if you believe so than good luck, keep buying into what the media conglomerates like cnn, abc <--fucking disneyland news lol, wants you to believe, you think these companies are doing it for american people, they are feeding you what they need to fill their own pocketbooks, at the end of the day, americans = a bunch of sheeps brainwash and controlled by mass media.

[Kobe24Forever]

the main fact is that americans are living beyond their means, their gdp are totally inflated because of how much they earn each time putting a huge dent through their own economy, so if ur a economist and take this in, ford and general motors, their workings still go on strike despite alot of them earning more than surgeons, now lets take a skilled worker from mexico who earns 1/20 of the salary americans are earning and then compare that to what naturalized americans demand, that they dont deserve, you see the death of a corperation, in short, the workers union are play a major responsibility in a corperations demise, so they go on strike because they dont get their 300k yearly paycheck, which in turns these sheeps feed to empower corperations that control mass media for entertainment, now you get an economy that cannot possibly sustain inself without incurring massive debt, the only way for america to recover is to scrap their gdp system, decrease the lifestyle in which they are enjoying, stop getting feed by these brainwashing media to believe everything is ok just to fill up their coffers, in the end, the world has stopped buying the bullshit, they wont be soliciting countries to buy their bonds anymore, through the illusion of consumerism, americans are living beyond their means and getting fat, it's probably time for them to actually suffer a little to trully appreciate what it means to earn what you work for, not having things prepared to you on a platter through ur flawed economic strategy of corporate monopoly.

[DarkReign]

Paragraphs and space bars. This isnt a grammar lesson or even an attempt at sentence structure.

Its a readability issue.

[byrontx]

Good to see both Bank of America and Citibank taking it up the rear on this one...always good to see a gouger and a corrupt lender getting effed and going under. Hopefully Americans will take their banking and loans elsewhere...you know, to better banks. Now I just want to see HSBC getting theirs.

I am with Whott on this one. Those companies sucked. I switched to Frost years ago and have not been disappointed. The regional banks are more responsive to customers.

[2centsworth]

You do know that the total subprime market is just a crumb next to all the sideways bets, no? A washout in subprime is necessary, even salutary. That's not what to be afraid of.

The subprime market is the foundation of the collapse and that's why I agree with Obama's plan on helping stem forclosures.

That institutions borrowed, purchased and sold derivatives is another matter. There will be a tremendous washout and pain through that the process, but the net sum total of those bets are zero excluding transaction cost.

The unwinding of this mess is inflationary on its own, but with the downside pressure placed on commodities this should hopefully be a wash. The trick is being able to recognize the recovery and reducing money supply at the same time. Irrational exuberance is just as bad as the irrational fear that we're suffering through now.

There is a huge entitlement timebomb waiting to explode, but the federal government has done a very Enronesque job of creating off balance sheet liabilities to hide the bad news.

That's my 2cents, maybe too hopeful, but I'm not going to run with the heard neither.

[SnakeBoy]

The subprime market is the foundation of the collapse

Not just subprime. And we probably can't talk about "the collapse" in the past tense yet.

If you have 12 minutes to spare...

w_r-ASDViF8

[SnakeBoy]

I guess the 3.6 trillion isn't an overstatement.


Timothy Geithner, President Obama's pick to head the Treasury Department, said Wednesday that the administration is considering setting up a "bad bank" to purchase toxic loans from troubled banks in a new program that could cost taxpayers $3 trillion to $4 trillion.
http://washingtontimes.com/news/2009/jan/22/geithner-raises-idea-of-bad-bank/

[Winehole23]

Good to see both Bank of America and Citibank taking it up the rear on this one...always good to see a gouger and a corrupt lender getting effed and going underToo big to fail.

We're the ones taking in the end:


Timothy Geithner, President Obama's pick to head the Treasury Department, said Wednesday that the administration is considering setting up a "bad bank" to purchase toxic loans from troubled banks in a new program that could cost taxpayers $3 trillion to $4 trillion.

[2centsworth]

Timothy Geithner, President Obama's pick to head the Treasury Department, said Wednesday that the administration is considering setting up a "bad bank" to purchase toxic loans from troubled banks in a new program that could cost taxpayers $3 trillion to $4 trillion.

that's what we were told about the original 700 billion. buy the toxic assets for 30 cents on the dollar, hold them and hope to get at least 30 cents later.

[RandomGuy]

I am with Whott on this one. Those companies sucked. I switched to Frost years ago and have not been disappointed. The regional banks are more responsive to customers.

Smaller and regional banks have also not relaxed their lending standards to produce marketable mortgages to sell to Wall Street.

I am going to guess that the larger of the regional banks will be absorbing quite a few of the more choice leftovers after the big banks are euthanized.

[Winehole23]

[/b]that's what we were told about the original 700 billion. buy the toxic assets for 30 cents on the dollar, hold them and hope to get at least 30 cents later.They didn't need the TARP for that, because they could already do the same thing at the Fed pawnshops. So the TARP became a slush fund for crappy banks, while banks leveraged as much of their illiquid assets as they could at emergency facilities like the TAF against $2 trillion of real money. And they're not done yet. Not even close.

[2centsworth]

They didn't need the TARP for that, because they could already do the same thing at the Fed pawnshops. So the TARP became a slush fund for crappy banks, while banks fobbed off as much of their illiquid assets as they could unload at emergency facilities like the TAF in exchange for $2 trillion of real money. And they're not done yet. Not even close.

Fed can't own real estate notes without express authorization is my understanding. They can lend and create money.

TARP was sold as a fund to buy toxic assets. King Paulson sold us out and should do 2 years in a federal penitentiary because of it.

[ChumpDumper]

Timothy Geithner, President Obama's pick to head the Treasury Department, said Wednesday that the administration is considering setting up a "bad bank" to purchase toxic loans from troubled banks in a new program that could cost taxpayers $3 trillion to $4 trillion.
http://washingtontimes.com/news/2009...a-of-bad-bank/Kind of an RTC redux, but we let the banks get too big to allow them to fail like we did the thrifts back in the day.

[Winehole23]

[/b]that's what we were told about the original 700 billion. buy the toxic assets for 30 cents on the dollar, hold them and hope to get at least 30 cents later.Pricing is a bitch. If we pay the mark to market (i.e., the fantasy value assigned by the banks; there is no market for these assets now; MBS's and CDO's are all presumptive turds at present), we lose our shirts. Too deep a discount, and the banks lose theirs.

My gut says we'll pay a price well over the true value of financial dark matter and sustain a heavy loss. Otherwise, the bailout won't work.

[Winehole23]

Fed can't own real estate notes without express authorization is my understanding. They can lend and create money.The Fed has talked about getting authorization to issue its own debt.


TARP was sold as a fund to buy toxic assets. King Paulson sold us out and should do 2 years in a federal penitentiary because of it.If Americans understood economics, the penalty might be much worse than that.

A trillion here, a trillion there, and pretty soon you're talking about serious money.

[2centsworth]

Pricing is a bitch. If we pay the mark to market (i.e., the fantasy value assigned by the banks; there is no market for these assets now; MBS's and CDO's are all presumptive turds at present), we lose our shirts. Too deep a discount, and the banks lose theirs.

My gut says we'll pay a price well over the true value of financial dark matter and sustain a heavy loss. Otherwise, the bailout won't work.

we'll pay more than the current value which I hear is down to about 15cents on the dollar. If done wisely :lol, we could break even.