On Mar 10, 2009, at 10:01 AM, Lawrence Sica wrote: > > On Mar 10, 2009, at 12:42 PM, Chris Gehlker wrote: > >> >> On Mar 10, 2009, at 8:03 AM, Charles Bennett wrote: >> >>> I think, it's just tough shit. It all needs to be public if they >>> intend to use public funds. >> >> Amen > > well I tend to disagree here. Not everything needs to be > immediately public.
Nobody said "everything needs to be immediately public". The argument was that the disposition of the TARP funds needs to be public. > > >>> >>> When the government wants to use my money to bail out a private >>> institution then they damn well tell me who, how much and why. >>> >>> "You can't handle the truth", is not an acceptable excuse no matter >>> their fear of the public's reaction. >> >> It's not acceptable and it doesn't make sense. The banks can't be >> afraid that there will be a run when we find out they're insolvent. >> The already admitted they were insolvent when they took the TARP >> money. What they are hiding is what they did with the money. It's >> likely that they paid it out in various forms of executive >> compensation, paid it to foreign financial institutions who they had >> insured against defaults[1], or used it to prop up their stock prices >> by buying their own shares. What they didn't do was lend it to small >> business. Their refusal to disclose what happened to the money tells >> us almost as much as disclosure would. > > > No, they are hiding two things. One is who got the money. The > other is what happened to it. The latter will be harder to pin down > I am guessing because my hunch is it was poorly accounted. Well, If you really believe that the banks simply lost track of the money you need to explain why we should give them more as opposed to arresting the executives and seizing their assets. If you personal financial advisor told you 'Sorry, I seem to have misplaced your money. I don't know what happened.' would your impulse really be to cover it up? > > >>> >>> Might it cause a run on the bank? Perhaps. OTOH, that may be >>> just what SHOULD happen if the bank is near failure anyway and we >>> could save the tax payers money >>> for FDIC coverage. >> >> This is the core issue. The banks and the government maintain that >> the >> 'toxic assets' are undervalued. No one argues that they are worth >> what >> the banks paid for them but they do argue that they are worth way >> more >> than what they would sell for now. So their solution is to keep the >> banks afloat with public money until the market for 'toxic assets' >> recovers. The market itself and a remarkable consensus of liberal and >> conservative economists outside the government think that the current >> market value of the toxic assets is about as high as it's going to >> go. >> This implies that the only reasonable course of action is to shut >> down >> the big banks and make new, smaller banks from the parts that weren't >> involved with gambling on derivatives. > > Except you cannot just do that. Obviously you *can*. Sweden did. Japan did. The US did to hundreds of institutions after the S&L debacle and they do it to a smaller bank on the average of twice a month. There was a documentary on TV last night showing how they do it. > You really need to see how intertwined this has become in many > places. It's not just some bad investments. It's a confluence of > things that has caused this. > > An example it looks like AIG was helping some european banks skirt > capital restrictions by loopholing. This has caused further > ramifications as AIG started having trouble. > > The day wamu went down a lot of ppl went to pull their money out. > Considering the current structure of the banking system you can't > just break up the larger banks into pieces so simply. It's a lot > more than the toxic assets. Nobody is arguing that there wasn't a lot of fraud going on. But fraud alone is not sufficient to explain the crisis. It's also very confusing when you say "It's a lot more than the toxic assets." and then mention two forms of toxic assets in the next sentence as "factors causing this". What do you mean by "shenanigans regarding risk" if not CDSs CDOs and the like? But these things are precisely "toxic assets". > You really had a number of factors causing this including sub-prime, > cds (the larger problem), liquidity issues, and a bunch of > shennanigans regarding risk. > > This is a great quote from the site you mentioned that brings home > the point. > > "n short, this is what has been going on during the last few weeks. > The key characteristic of such a crisis is that banks can be hit by > bank runs - and go bankrupt - even if their assets are worth more > than their liabilities. The Fed has vastly expanded the amount of > money it is willing to lend to banks and the range of collateral it > is willing to take in an effort to provide the short-term funding > banks need to fend off bank runs. In the longer term, though, the > Fed is a relatively small player combined to the entire market for > short-term credit, and the problem will not go away completely until > that market is working properly again." > > This is why saying who got what publicly at this time can be a bad > thing. If anything the little confidence that may be present for > the system has to be maintained. I think eventually the information > does need to be made public, I am just not sure now is the best > time. There is a lot going on behind the scenes as it is to deal > with this. Most of it people will not understand and this could > lead to panic reactions. Examples of what they are doing is the > fact they are releasing repo funds twice a week now instead of just > on Thursdays. Also there is now a 7 year bond out, and there may > be more coming. I've heard talk of anything from a 1 year to a 40 > year bond. I do like his take on CDS btw. It's pretty much a clear > example of why things have happened regarding CDS. But now you are > seeing all the other crap coming out from the ponzi schemes, to the > creative accounting, to the pure ignoring of problems (socgen and > the one merrill trader). You need to tie this together, Larry. The question isn't 'Do you banks have a lot fewer assets than you claim?' which goes to confidence. The question is 'What did you do with the TARP money?'. To the latter question I can't imagine a more confidence destroying answer than "I won't tell you." unless it's "I don't know." --- Neither a man nor a crowd nor a nation can be trusted to act humanely or to think sanely under the influence of a great fear. -Bertrand Russell, philosopher, mathematician, author, Nobel laureate (1872-1970) _______________________________________________ OSX-Nutters mailing list | [email protected] http://lists.tit-wank.com/mailman/listinfo/osx-nutters List hosted at http://cat5.org/
