Comments on: The Stickup Note http://www.delawareliberal.net/2009/03/02/the-stickup-note/ Ground zero for all things political in Delaware Thu, 09 Feb 2012 16:46:52 -0500 http://wordpress.org/?v=2.9.1 hourly 1 By: Morning Line - March 3, 2009 : Delmarva Dealings http://www.delawareliberal.net/2009/03/02/the-stickup-note/#comment-100636 Morning Line - March 3, 2009 : Delmarva Dealings Tue, 03 Mar 2009 16:04:36 +0000 http://www.delawareliberal.net/?p=14674#comment-100636 [...] Interesting take on the bank bailout from DelawareLiberal.  While I’m sure we won’t agree on the solution, we do agree on at least this part of the problem. [...] [...] Interesting take on the bank bailout from DelawareLiberal.  While I’m sure we won’t agree on the solution, we do agree on at least this part of the problem. [...]

]]> By: Unstable Isotope http://www.delawareliberal.net/2009/03/02/the-stickup-note/#comment-100603 Unstable Isotope Tue, 03 Mar 2009 15:12:23 +0000 http://www.delawareliberal.net/?p=14674#comment-100603 I agree Cassandra. I think it's the uncertainty about these so-called toxic assets which is delaying the bottoming out (of the stock market at least) and delaying the recovery. As long as the banks think they're going to get something for them through a bailout we'll continue in this uncertainty for a while. I agree Cassandra. I think it’s the uncertainty about these so-called toxic assets which is delaying the bottoming out (of the stock market at least) and delaying the recovery. As long as the banks think they’re going to get something for them through a bailout we’ll continue in this uncertainty for a while.

]]> By: cassandra_m http://www.delawareliberal.net/2009/03/02/the-stickup-note/#comment-100602 cassandra_m Tue, 03 Mar 2009 15:09:44 +0000 http://www.delawareliberal.net/?p=14674#comment-100602 UI, I think you are right about this backdoor nationalization. Citigroup they bought a large share of at $3.00+ per share when it was trading at about $1.00+ per share. Crazy. UI, I think you are right about this backdoor nationalization. Citigroup they bought a large share of at $3.00+ per share when it was trading at about $1.00+ per share. Crazy.

]]> By: cassandra m http://www.delawareliberal.net/2009/03/02/the-stickup-note/#comment-100599 cassandra m Tue, 03 Mar 2009 15:06:55 +0000 http://www.delawareliberal.net/?p=14674#comment-100599 Part of the "too big to fail" problem is in pricing the toxic assets. It is very difficult for investors to know what to price as long as no one really knows how to value those assets. In many ways, not working at valuing those assets is the equivalent of not opening your mail when you know you have a delinquent bill. The assets that are being unwound and sold are going for 5 to 20 cents on the dollar, which means GIANT Haircuts all around. Too many of them are trying to preserve the illusion of some solvency which they can't do once that stuff gets a real market price. Part of the “too big to fail” problem is in pricing the toxic assets. It is very difficult for investors to know what to price as long as no one really knows how to value those assets.

In many ways, not working at valuing those assets is the equivalent of not opening your mail when you know you have a delinquent bill. The assets that are being unwound and sold are going for 5 to 20 cents on the dollar, which means GIANT Haircuts all around. Too many of them are trying to preserve the illusion of some solvency which they can’t do once that stuff gets a real market price.

]]> By: Unstable Isotope http://www.delawareliberal.net/2009/03/02/the-stickup-note/#comment-100598 Unstable Isotope Tue, 03 Mar 2009 15:06:17 +0000 http://www.delawareliberal.net/?p=14674#comment-100598 Brian, I think we're actually getting backdoor nationalization right now. AIG is already being broken into pieces as we speak. A lot of the issue with the AIG bailout is that the money is just going to the banks (Goldman Sachs was a big beneficiary). I hate to say it, but I think Geithner and Summers need to go, or they need to get some more diverse voices on their team. Brian,

I think we’re actually getting backdoor nationalization right now. AIG is already being broken into pieces as we speak. A lot of the issue with the AIG bailout is that the money is just going to the banks (Goldman Sachs was a big beneficiary).

I hate to say it, but I think Geithner and Summers need to go, or they need to get some more diverse voices on their team.

]]> By: liz http://www.delawareliberal.net/2009/03/02/the-stickup-note/#comment-100594 liz Tue, 03 Mar 2009 14:39:22 +0000 http://www.delawareliberal.net/?p=14674#comment-100594 I agree with Shoe Thrower! I have heard other economists say we should just end it and start over...it would end the worldwide depression that will occur anyway if we don't. Why is the guvmint buying up the toxic's and not just nationalionizing the banks so we have the profit as well? I agree with Shoe Thrower! I have heard other economists say we should just end it and start over…it would end the worldwide depression that will occur anyway if we don’t. Why is the guvmint buying up the toxic’s and not just nationalionizing the banks so we have the profit as well?

]]> By: anon http://www.delawareliberal.net/2009/03/02/the-stickup-note/#comment-100590 anon Tue, 03 Mar 2009 14:23:08 +0000 http://www.delawareliberal.net/?p=14674#comment-100590 A few targeted bailouts are fine if they help a critical company get back to health. But the mass bailouts are beginning to backfire; they are creating moral hazard on an unprecedented scale. At this point it's just a money grab. Bail out individuals, not corporations. Let the corporations fail and liquidate the investors; let new businesses emerge from the ashes to compete for consumer dollars. A few targeted bailouts are fine if they help a critical company get back to health. But the mass bailouts are beginning to backfire; they are creating moral hazard on an unprecedented scale. At this point it’s just a money grab.

Bail out individuals, not corporations. Let the corporations fail and liquidate the investors; let new businesses emerge from the ashes to compete for consumer dollars.

]]> By: Brian Shields http://www.delawareliberal.net/2009/03/02/the-stickup-note/#comment-100584 Brian Shields Tue, 03 Mar 2009 13:50:43 +0000 http://www.delawareliberal.net/?p=14674#comment-100584 STI: I agree, it is money well wasted. I am still in the "Screw them, let 'em fail" camp. STI: I agree, it is money well wasted. I am still in the “Screw them, let ‘em fail” camp.

]]> By: Brian Shields http://www.delawareliberal.net/2009/03/02/the-stickup-note/#comment-100583 Brian Shields Tue, 03 Mar 2009 13:49:46 +0000 http://www.delawareliberal.net/?p=14674#comment-100583 Why can't companies that are "too big to fail" be broken up as part of their governmental assistance? Why can’t companies that are “too big to fail” be broken up as part of their governmental assistance?

]]> By: anon not atrios http://www.delawareliberal.net/2009/03/02/the-stickup-note/#comment-100571 anon not atrios Tue, 03 Mar 2009 11:58:46 +0000 http://www.delawareliberal.net/?p=14674#comment-100571 Someone should telegraph the WH: take the banks, dump top management (including Geitner) and the stockholders and start lending. Someone should telegraph the WH: take the banks, dump top management (including Geitner) and the stockholders and start lending.

]]> By: Shoe Throwing Instructor http://www.delawareliberal.net/2009/03/02/the-stickup-note/#comment-100558 Shoe Throwing Instructor Tue, 03 Mar 2009 06:15:05 +0000 http://www.delawareliberal.net/?p=14674#comment-100558 Brian; not meaning to nitpick, your correct in all you said, but it`s not mortages alone, it`s also derivitive swaps and loans of all types that are turning toxic. Which is why I feel we are throwing money into a black hole for no future benefit for anyone except the bank employees and stockholders. Brian; not meaning to nitpick, your correct in all you said, but it`s not mortages alone, it`s also derivitive swaps and loans of all types that are turning toxic. Which is why I feel we are throwing money into a black hole for no future benefit for anyone except the bank employees and stockholders.

]]> By: Brian Shields http://www.delawareliberal.net/2009/03/02/the-stickup-note/#comment-100554 Brian Shields Tue, 03 Mar 2009 05:36:21 +0000 http://www.delawareliberal.net/?p=14674#comment-100554 <i>What is causing the problem is banks have too many toxic assets on their books. A toxic asset is another name for a loan that cannot be paid. And the unemployed are more likly to be in that situation.</i> Toxic assets = bad mortgages When the home goes into foreclosure, it turns the "asset" "toxic." To fix that, they write it off as bad debt, and take a loss. What the banks want is a new way to absolve them of these toxic debts without taking a loss on them. They want to sell them off to the government, and let THEM take the loss when they fail. Seeing as though the gov't has ways of changing the rules that banks don't, that is why they want that to happen. In other words, take my bad decisions, change the laws to renegotiate the mortgages and take the hit for us, please. Until then, we're stuck, and have no money to lend. Or... just keep giving us cash, and we keep taking the loss as we write the debt off the books. Our investors run like scared sheep, and we we lose more investors, which cause more to run like scared sheep... and the cycle continues. What is causing the problem is banks have too many toxic assets on their books. A toxic asset is another name for a loan that cannot be paid. And the unemployed are more likly to be in that situation.

Toxic assets = bad mortgages

When the home goes into foreclosure, it turns the “asset” “toxic.”

To fix that, they write it off as bad debt, and take a loss.

What the banks want is a new way to absolve them of these toxic debts without taking a loss on them.

They want to sell them off to the government, and let THEM take the loss when they fail. Seeing as though the gov’t has ways of changing the rules that banks don’t, that is why they want that to happen.

In other words, take my bad decisions, change the laws to renegotiate the mortgages and take the hit for us, please. Until then, we’re stuck, and have no money to lend.

Or… just keep giving us cash, and we keep taking the loss as we write the debt off the books. Our investors run like scared sheep, and we we lose more investors, which cause more to run like scared sheep… and the cycle continues.

]]> By: Shoe Throwing Instructor http://www.delawareliberal.net/2009/03/02/the-stickup-note/#comment-100552 Shoe Throwing Instructor Tue, 03 Mar 2009 04:08:16 +0000 http://www.delawareliberal.net/?p=14674#comment-100552 Capitilism without capital is impossible, world wide socialism could be the only choice left. Trillions of dollars of capitol are going up it smoke on a monthly basis. If you think about the decade of the 30`s we basicly lived under socialism, only the government created jobs, no new wealth was created by the private sector. They built the empire state and the chrysler buildings but neither made a profit till the 1950`s Television and central air could not be marketed because there was no disposable income. It`s not the best alternitive but it beats having homeless totals in the hundreds of millions. Capitilism without capital is impossible, world wide socialism could be the only choice left. Trillions of dollars of capitol are going up it smoke on a monthly basis. If you think about the decade of the 30`s we basicly lived under socialism, only the government created jobs, no new wealth was created by the private sector. They built the empire state and the chrysler buildings but neither made a profit till the 1950`s Television and central air could not be marketed because there was no disposable income. It`s not the best alternitive but it beats having homeless totals in the hundreds of millions.

]]> By: Unstable Isotope http://www.delawareliberal.net/2009/03/02/the-stickup-note/#comment-100551 Unstable Isotope Tue, 03 Mar 2009 03:46:38 +0000 http://www.delawareliberal.net/?p=14674#comment-100551 Yeah STI, I have no idea if 20% is enough. It's a scary thought that maybe it isn't. Yeah STI, I have no idea if 20% is enough. It’s a scary thought that maybe it isn’t.

]]> By: Shoe Throwing Instructor http://www.delawareliberal.net/2009/03/02/the-stickup-note/#comment-100547 Shoe Throwing Instructor Tue, 03 Mar 2009 03:21:03 +0000 http://www.delawareliberal.net/?p=14674#comment-100547 U.I., I agree but how much would work, would 20% be enough, I don`t know. A few people on the economic blogs have been proposing that the whole world be declared bankrupt and we all start over. That`s not as far fetched as it sounds because corporations and businesses as well as government and individuals are not going to be able to pay back their debt. U.I., I agree but how much would work, would 20% be enough, I don`t know. A few people on the economic blogs have been proposing that the whole world be declared bankrupt and we all start over. That`s not as far fetched as it sounds because corporations and businesses as well as government and individuals are not going to be able to pay back their debt.

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