What is Digg?162 Comments
- strafefire, on 03/12/2008, -6/+97Dear American Taxpayer,
I'd like to thank you for saving my yacht. You guys are SO ***** awesome! Seriously.
I mean, I KNEW that giving all those loans to people who could not afford them wasn't the brightest idea, but with housing prices the way they were, and the fact that my boys and I figured out a way to sell that debt to other idiots -- I mean business partners -- We were rolling in so much dough that I actually was able to propose to my THIRD wife!
Man she's hawt! Seriously, she's got an ass that just goes on for days...
Too bad that idiot Johnathan put those money back guarantees on the SIVs. That *****! It almost ended EVERYTHING!
But then YOU, the American Taxpayer stepped in! w00t!
And I thank you!
So now the rates that we are charged from the central bank are OUTRAGEOUSLY low. And you'd think that we'd pass those savings on to our borrowers, right?
***** NO! Seriously, I got a couple of babies to feed, a bunch of alimony payments to make, my C class Mercedes is not as fast as my neighbor's Porsche, so I have got to upgrade now, My three vacation houses do not have maids in them right now (man do I miss Rosalina. She would do things with a cucumber that my second wife would NEVER dream of), and my country club dues were a little past due.
So, thanks American Taxpayer. You guys are ***** stupid -- I mean, awesome!
Sign,
Your friendly "neighborhood" multinational banking conglomerate.
P.S. I just realized that I need one of those motorized flat screen HDTV thingys that I just saw on digg:
http://digg.com/hardware/What_Every_Man_Wants_in_B ...
So, in order to get one of those for every room in every one of my homes, I am going to have to raise ATM rates to $3.75. Thanks for being soooooo understanding! - magoghm, on 03/12/2008, -2/+73From the article: "The plan basically allows Wall Street's biggest institutions to put up troubled assets as collateral for loans, use the new capital to make money in the market, and then pay back the loan up to 28 days later."
Also from the article: "The Fed is basically going to take the bad loans off the banks' books, and the market seems to be loving that idea."
They are going to solve their problems in 28 days? I don't think so.
This sounds to me too much like: "I give you the opportunity to make your bad loans disappear from your books for 28 days, and instead you'll have lots of cash. As this is happening in March, you'll be able to have magnificent results in your financial reports for the first quarter of 2008. And it won't cost you too much, just a small interest on the money I'll loan to you".
That's the Fed's solutions to the problems with economy? Help the banks cook the books? - jeffiek, on 03/12/2008, -4/+55Wait a second. The FED has $200 billion sitting around in a closet doing nothing?
Or did they just print some funny money? - inactive, on 03/12/2008, -4/+32Fed Rally on Garbage Paper!
'Before we continue, let's understand what the Fed actually did: Rather than merely expanding the existing Term Auction Facility (TAF), they went several steps further. They created a new credit facility, the Term Securities Lending Facility (TSLF). Then, they empowered the TSLF to accept a broad range of private collateral -- "AAA" private mortgages in addition to those that are agency paper. '
Why did they do this?
-New pressures on ALL agency spreads;
-Rising mortgage rates despite FOMC rate cuts;
Ongoing limited credit availablility;
-Dramatic widening spreads between mortgage-backed paper and US Treasuries
The good news is this will help brokers and banks; the bad news is it will do nothing to help the Housing market, or stop the decline in House prices. Nor will it help resolve the inverted pyramid of derivatives that sits atop Housing. And, one has to believe it will only add to inflationary pressures.
No recession at any cost seems to be the Feds' philosophy in light of the latest massive cash infusion to Banks... - inactive, on 03/12/2008, -0/+27ink is expensive these days.
- inactive, on 03/12/2008, -2/+29"the Fed -- acting with the European Central Bank, the Bank of Canada and the Swiss National Bank -- agreed to loan investment banks money in exchange for debt"
This is like getting a credit card to pay your credit card bills. - Waiting2awake, on 03/12/2008, -2/+23 Just printed it, and bailed out todays crooks with our grandchildrens cash.
This people seriously need to be made an example of. - inactive, on 03/12/2008, -3/+23I should start printing dollars on my inkjet, they're worth about the same as real ones! Paper money FTL
- airiox, on 03/12/2008, -5/+21They are devaluing the dollar on purpose. They will make it so worthless that American's will be begging to replace it with a Canadian, US, Mexican unified currency. If you have money sitting in your bank account, withdraw it now and visit your nearest jeweler to convert it into Gold and Silver.
- inactive, on 03/12/2008, -2/+17Trouble is the recession is already here, and it is driven by too much debt. This is not a problem of liquididty, it is a probem of debt. More short term debt will cause a momentary recovery followed by a deeper fall in markets, particularly monetary markets.
The dollar continues to dive and US industry cannot stop it because so much of our manufacturing is now gone that we cannot take advantage of the low dollar. What is our "service economy" going to sell to China? Starbucks franchises? - magoghm, on 03/12/2008, -0/+14Under real capitalism those business would go bankrupt very fast. We don't have capitalism, what we have is corporatism.
- RPliberty, on 03/12/2008, -5/+18Like Ron says, if printing money is the answer to all financial woes, why not print enough to eliminate the need for American citizens to work at all?
- airiox, on 03/12/2008, -3/+15They just printed it.
- macwac, on 03/12/2008, -4/+16In other words the fed just nationalized a bunch of properties for 28 days until the banks can pay it back? all of that money was just printed.. and what do we do if the banks make even worse investments and the markets falls further and they lose the money loaned to them? loan them more printed money? how much of the stock market is now owned by the government? - it seems they've been pumping in billions upon billions the last 5 months.
- scottmc, on 03/12/2008, -6/+18The Fed just prints more money, and the dollar just keeps sinking. Seems Ron Paul warned us all about this...
- Yellow22, on 03/12/2008, -0/+11Lot of misunderstanding about how this actually works. While these loans have a duration of 28 days, they aren't limited to 28 days. So broker/bank goes to the Fed with "AAA" rated mortage backed securities which the Fed accepts as collateral and offers an even exchange of US treasuries. At the end of the 28 day period the 2 parties don't swap back the MBS and treasuries, the exchange is simply renewed (rolled over) for another 28 day period, ad infinitum. In this way, the Fed turns an illiquid asset (MBS) for which there are no buyers at the moment into a liquid asset (US treasuries). Think of how a juggler might only be able to hold 2-3 balls in their hands, but can keep 7 or 8 in the air in constant rotation and you'll start to grasp what's actually happening. Then again most people are financially/economically/monetarily illiterate so YMMV.
- yunus, on 03/12/2008, -1/+12Or increasing your credit line while gambling. Sure you lost the last 100 bets in a row but if you keep increasing your bet eventually you will win and make a ton of money right?
- Strawgate, on 03/12/2008, -0/+10I hope your not serious, the problem is americans are spending money they dont have, giving them more money they shouldn't have doesn't solve the problem.
- Anth, on 03/12/2008, -1/+10Say hello to $150 oil! The sinking American Dollar isn't going to get any stronger this way...
- groverblue, on 03/12/2008, -0/+9that's my ***** money they are giving away! I don't even own a ***** HOUSE!
- VitriolAndAngst, on 03/12/2008, -1/+10Oh, well then, since you called the "MONEY" by a different name, that makes it completely OK.
Look, I work at a Financial Services company. It's either an asset or a debt. It's ALL MONEY. Treasury Securities have to be paid -- almost like these bad Collateraiized Debts, only, they still have value. So the Government, traded TAXPAYER backed financial instruments, for some paper that is going to be written off, and ultimately ALSO paid for by the Taxpayer -- they just doubled our debt and made a tidy profit for the banks. Wake the hell up. - inactive, on 03/12/2008, -1/+9Lol yeah that's pretty much it. They are gambling the entire currency on future growth that is very unlikely to happen.
They've been making the same mistake since the 1920's. They still don't get that more money doesn't mean more growth. It just means your dollar is worth that much less. And in a global economy, that's pretty much the worst possible thing that can happen.
Debt incurred with a high currency, reimbursement with a low currency... They just made the debt bigger for short term "relief". - BEloftyIRONS, on 03/12/2008, -0/+8It's the perfect plan. You pay your bills with a credit cad. Then you pay your credit card with the credit card. Then you use the credit card you already payed off to pay for the other credit card, repeat. How can you loose?
- brjohnson789, on 03/12/2008, -0/+7I think the 'hope' is that the financial markets will calm down a bit and get everything settled. To me the problem is that the whole liquidity problem started because of write-downs of CDOs etc due to mortgage defaults rising. Well mortgage defaults are still going up, and based on the number of ARMs resetting still this year the defaults should increase further, meaning the CDOs will need to be further devalued. How many more times can the Fed just loan out a couple hundred bil? As many times as they want; no matter what they will not let the big banks fail, mark my words. They would first destroy the currency and most people's savings before letting the banks take the entire hit. God forbid we have a free market here.
- Turambar, on 03/12/2008, -0/+7this comment made me happy and sad simultaneously.
i'm sure that counts as some form of win. - scottmc, on 03/12/2008, -3/+10Here's Ron Paul on this story: http://www.youtube.com/watch?v=5lDlhuelnX0
- johnpaul191, on 03/12/2008, -0/+6it sounds like the financial version of a perpetual motion machine.... and like the perpetual motion machines, it never seems to work.
maybe people that try are only able to keep that fixed amount of debt in rotation. if they add to card A, card B won't pay it off and the cycle collapses? I really don't know. - jmpeagle, on 03/12/2008, -2/+8the last time they did this was in 1934....kind of scary about their belief of the imminent future is
- dupswapdrop, on 03/12/2008, -0/+6Come on now lets all pull together and help out them rich bankers! You lose your home and get zip, they lose what amounts to a nickel and get millions.
- elcob32, on 03/12/2008, -2/+8The Fed is not the government. The Fed is owned by several anonymous foreign bankers, and have been working to screw the American tax payer since before income taxes, and before they were initially founded.
- brjohnson789, on 03/12/2008, -0/+6What we have is 'fascism'
- netant, on 03/12/2008, -0/+6Actually, it may be worse. It sounds like its using the busted CDOs & SIVs as COLLATERAL to the loans. If the market makes another downturn, and the banks can't return the loan, the reserve banks could be, in theory, stuck with the worthless paper.
On one hand, the reserve banks are privately owned, so its shareholders would be the one's burned. BUT given that, I find it hard to believe the shareholders would agree to getting burned. So, on some level, the American public will be holding the *****.
What it REALLY means is that the con artists that took bad mortgages, packaged them into derivatives, and got false ratings for them, are getting their asses bailed out with the free money, without even letting the bank suffer a profit loss for their actions. That cannot be good.
Other than America's currency being hyperinflated into worthless paper, I am not seeing the downside. Is it a possible solution to the credit crunch, or merely a delaying action, so the crooks can scamper away on the taxpayers' dime? - netant, on 03/12/2008, -0/+6Well, it was a seeming turnaround improvement, until the economy fell flat on its face in 1937
- alpinecow, on 03/12/2008, -3/+8The Fed is lending TREASURY SECURITIES not cash. The system open market account (SOMA) has around $700 billion in securities at any given time and Interest earned on those securities is returned to the Treasury Department.
- manstein01, on 03/12/2008, -1/+6Well done dude.
- netant, on 03/12/2008, -2/+7I dugg you up, even though I sorta disagree with some minor details.
Whether there is a problem with liquidity, depends on how you define liquidity and debt. Presuming the problem is the subprime loans (and its looking like its merely the trigger, not the entire problem), if you inflate the money supply, while letting the banks make money off of free money from the Fed, you could string it out to the point where the bad loans become less significant as a percentage of the economy, in exchange for the American dollar to lose a large percentage of its value.
More short term debt from who? Where? Short term debts doesn't matter as long as its invested in such to create an increase in GNP. The only thing to cause a fall in markets (which isn't the central issue anyway) is lowered investor confidence, an error in where the investors thought the market would be, or decrease in economic activity. Value in the money markets is simply whether there's the right amount of fiat currency to represent the public's perceived value of the currency.
I don't see the dollar diving as a PERMANENT loss of purchasing power, which you seem to be thinking. Yes, our manufacturing has gone overseas, and in theory that means we don't benefit from the cheap dollar to export cheaper goods. But you make the presumption the only thing that can be exported is manufactured products. What should happen is that the rational investor would build more industry to service the customers in that market, and surplus its production if its allowed to move that product overseas. If you're GM, your sorta screwed. If you're Toyota, you merely take all that worthless dollars that aren't doing anything, invest in building factories in Kentucky, or whereever, and then you're still making a profit selling cars in the US with cheaply produced US labor, and can make even more money selling those cars overseas. And the same thing applies to all countries with a currency surplus in dollars. What is our "service economy" going to sell? Who cares, all the big players are international corporations anyway, the US sold its economic sovereignty a long time ago. - explnx, on 04/27/2009, -0/+5How about they stop giving out money that doesn't exist and let the economy run its natural cycle.
- Waiting2awake, on 03/12/2008, -0/+5 Shhh you are thinking to much and drawing lines to connect issues, that people will just feel better not knowing they are connected.
Here, have a cookie, you'll feel right as rain. - KyleRayner, on 03/12/2008, -1/+6Well why dont you just explain it for everybody, Professor Economy, sir? Or was that just another worthless post in a sea of worthless posts?
- inactive, on 03/12/2008, -0/+5You lose when something unpredicted happens and you have to spend money you don't have and can't get more credit.
- peaceninja, on 03/12/2008, -1/+5acc to the comments, everyone says that the feds are going to print new money but this isnt the case...the government is just making more debt. anyways, each article i read seems to explain it differently, and as a finance laymen it sounds completely different to me each time. NPR put it best last night: The Feds are trading T-bills in exchange for the defaulted loans held by the banks so that the banks will have better quarterly reports. Does this sound right to you finance experts?
- JoshuaLowe, on 03/12/2008, -0/+4One of the funniest and most true things ever posted on Digg.
- NelsonR, on 03/12/2008, -0/+4All an illusion stalling the inevitable. Who pays for another bailout for Wall St. and the Banks?
You!!
More phony money, more devaluation of the dollar, more inflation and you thought you had it bad. Got to love the economics of the entire situation and the leaders in charge. Just saw Diesel now $3.89 a gallon and groceries skyrocketing in price, why? Commodity investing by, again our wall street, no sweating at work tycoons. You pay for their sweet portfolios. They care not, it's the present now and they pay for our elected officials party machines. - VitriolAndAngst, on 03/12/2008, -2/+6Well the Fed knows exactly what they are doing.
What they are doing is removing the bad debts and letting the banks make more profits. The taxpayer will have to pay off the taxpayer. The banks will safely move all their money offshore while we are left with all the debt. This is just more of the Leveraged Buyout of America.
Get used to toll roads owned by Chinese corporations. - Namakemono, on 03/12/2008, -0/+4No need to read any further, you win.
- Yellow22, on 03/12/2008, -0/+41) the Fed has no authority to put "restrictions on the lending industry", that would be the job of our legislators who appear to have all but abdicated their role as such, 2) Alan Greenspan created the whole charade, at one point in early 00's encouraging everyone to take out 2nd mortgages on their houses to prop up consumer spending and to take advantage of low variable interest rate loan products.
- Look4Truth, on 03/12/2008, -0/+3Band Aid on a severed artery.
- theutopian, on 03/12/2008, -1/+4The Federal Reserve is not part of the Federal Government.
- JebBlack, on 03/12/2008, -0/+3Most american's have no idea....they've been robbed!
- magoghm, on 03/12/2008, -0/+3I have a proposal: let's switch from using real numbers for money to using complex numbers. At least complex numbers have a real part and an imaginary part, which might be more realistic way to look at money :)
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