How about this scenario: You take the risk, you put up the money, you ensure that no one out- maneuvers me in the marketplace, you pay me a ridiculous salary and you take on my future obligations for an unending period of time. In return, when any profits or money comes in, I’ll keep it.
This is the scenario now unfolding as Goldman, JP Morgan and scores of other banks are “giving back TARP”. As a taxpayer who was against giving them so much money with no concessions to begin with, I’m happy to hear it. Now, in addition, how about paying the taxpayers for the risk we took on. Banks are welcome and should pay back TARP, but that does not mean they get out of their future obligations. Let them give back TARP and still give the government the equity stakes. That way, taxpayers get their principle back, but benefit from any upside as compensation for taking on the risk, paying bank executives’ bonuses, and putting up money to shore up their balance sheets in the first place.
Some banks are complaining that they never wanted or needed TARP. Well, that may be. In that case, you should not have any finding the money you didn’t need since it’s probably just sitting in an account waiting to be given back. Separately, you should know that I also did not have any say in whether to give you TARP in the first place, but such are the mechanics of living in a society with a representative government – sometimes you have to give up some upside, for the benefit of having the government structures in place that allow you to do business in the first place.
I was against the intervention to begin with, but we intervened. Now, the least that I’m owed is some compensation for the risk I was forced into.
Nov. 10 (Bloomberg) — The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.
Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would comply with congressional demands for transparency in a $700 billion bailout of the banking system. Two months later, as the Fed lends far more than that in separate rescue programs that didn’t require approval by Congress, Americans have no idea where their money is going or what securities the banks are pledging in return.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahdVHk_Ccoeg&refer=home
The Treasury Department and the Federal Reserve were near a deal to
abandon the initial bailout plan and invest another $40 billion in the
company … When the restructured deal is complete, taxpayers will
have invested and lent a total of $150 billion to A.I.G., the most the
government has ever directed to a single private enterprise. … The
revised deal, which may be announced as early as Monday morning
http://www.nytimes.com/2008/11/10/business/economy/10aig.html?_r=1&oref=slogin
SAN FRANCISCO
(MarketWatch) — The Chinese government is preparing an economic
stimulus package to jump-start slowing economic growth, Chinese
official media reported Friday.
The “large” economic stimulus package will be released after the
decision is made at the annual Central Economic Working Conference
slated for late November in Beijing, the China Daily reported on its
Web site Friday, citing the Hong Kong-based Wen Wei Po newspaper. It
did not specify how large the package could be.
http://www.marketwatch.com/news/story/China-said-preparing-stimulus-package/story.aspx?guid={5ABAA3A7-F385-4CF7-AD45-4DD4BAF1A6B1}
Posted by email from thehardtrade2′s posterous
Even if GM implements the planned operating actions that are substantially within its control, GM’s estimated liquidity during the remainder of 2008 will approach the minimum amount necessary to operate its business. Looking into the first two quarters of 2009, even with its planned actions, the company’s estimated liquidity will fall significantly short of that amount
unless economic and automotive industry conditions significantly
improve, it receives substantial proceeds from asset sales, takes more
aggressive working capital initiatives, gains access to capital markets
and other private sources of funding, receives government funding under
one or more current or future programs, or some combination of the
foregoing.
emphasis added
Posted by email from thehardtrade2′s posterous
Ford Has $2.98 Billion Operating Loss as Sales Plunge
Nov. 7 (Bloomberg) — Ford Motor Co., with U.S. sales
shredded by the worst financial crisis since the Great
Depression, posted a third-quarter operating loss of $2.98
billion and said it used up $7.7 billion in cash.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aysNwuvCVmpw&refer=home
Posted by email from thehardtrade2′s posterous
A total $33.6 trillion of transactions are outstanding on
governments, companies and asset-backed securities worldwide,
based on gross numbers, the DTCC said in the report released on
its Web site yesterday. After canceling out overlapping trades,
investors have taken out a net $22.7 billion of contracts based
on Italy’s debt, $16.7 billion against Spain and $12.5 billion on
Deutsche Bank of Frankfurt, the report shows.
http://www.bloomberg.com/apps/news?pid=20601087&sid=auQSTZnaO5JY&refer=home
Posted by email from thehardtrade2′s posterous
“I am deeply disappointed that a number of financial institutions are
distorting the legislation that Congress passed at the president’s
request to respond to the credit crisis by making funds available for
increased lending,” Rep. Barney Frank said in a statement.
“Any
use of the these funds for any purpose other than lending — for
bonuses, for severance pay, for dividends, for acquisitions of other
institutions, etc. — is a violation of the terms of the Act.”
Posted by email from thehardtrade2′s posterous
The financial crisis spreading like wildfire across the former Soviet bloc
threatens to set off a second and more dangerous banking crisis in Western
Europe, tipping the whole Continent into a fully-fledged economic slump.
Currency pegs are being tested to destruction on the fringes of Europe’s
monetary union in a traumatic upheaval that recalls the collapse of the
Exchange Rate Mechanism in 1992.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3260052/Europe-on-the-brink-of-currency-crisis-meltdown.html
Posted by email from thehardtrade2′s posterous
Oct. 31 (Bloomberg) — Abdullah Hajeri led a march on the
Emir’s palace in Kuwait this week, demanding the oil-rich
nation’s ruler stop stocks from plunging. Adnan Mohammed Saleh,
down the Persian Gulf coast in Dubai, said he wants more
government protection from the global financial crisis.
“Every day the market is crashing,” said Saleh, a 42-year-
old trader, staring dumbfounded last Tuesday as company names
scrolled across the Dubai Stock Exchange’s outdoor ticker in red.
http://www.bloomberg.com/apps/news?pid=20601109&sid=a2df9V.O__gc&refer=home
Posted by email from thehardtrade2′s posterous
“Why am I being punished for having bought a house I
could afford? I am beginning to think I would have rocks in my head if
I keep paying my mortgage.”
Todd Lawrence, homeowner, outside Norwich, Conn.
“If the lunch truly is free, the demand for free lunches will be large.”
Paul McCulley, PIMCO
“If
the government says, ‘Prove that you can’t afford your house and we’ll
redo your mortgage,’ then people are going to try to qualify.”
Peter Schiff, President of Euro Pacific Capital
“I guess they are forcing me to deliberately stop paying to look worse than I am. Crazy, don’t you think?”
Anonymous Countrywide borrower, Los Angeles
Posted by email from thehardtrade2′s posterous
General | Yaron Sadan | 
April 18, 2009 12:53 pm | 
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