Good interview

[bills_fan]

Sucker bet with that definition, as they're very likely to increased FDIC funding. How about no more extraordinary intervention which will require another law. I'll take that for $50.

 

 

Do you define creating a regulatory structure for the CDS market as extraordinary intervention?

[GG]

Do you define creating a regulatory structure for the CDS market as extraordinary intervention?

 

Absolutely not. Putting CDSs on an exchange is long overdue and should be part of regular oversight of .... (I'll get back to you)

[TPS]

Sucker bet with that definition, as they're very likely to increased FDIC funding. How about no more extraordinary intervention which will require another law. I'll take that for $50

I'd define it as an amount of money necessary to intervene over the 6 months after this $700 billion runs out. If you include FDIC, I"m willing to put the over-under at $1 trillion? I'll take the over.

[GG]

I'd define it as an amount of money necessary to intervene over the 6 months after this $700 billion runs out. If you include FDIC, I"m willing to put the over-under at $1 trillion? I'll take the over.

 

To fund the increase in the deposit guarantee, another $500 bn may be needed, so no I'm not going to take that bet.

[TPS]

To fund the increase in the deposit guarantee, another $500 bn may be needed, so no I'm not going to take that bet.

Which means you wouldn't take a bet of half a trillion without the FDIC?

[GG]

Which means you wouldn't take a bet of half a trillion without the FDIC?

 

I'd take the bet that $700bn is all that is needed, and another extraordinary request to Congress for more money will not be necessary. The request to increase FDIC funding is already baked in.

[TPS]

I'd take the bet that $700bn is all that is needed, and another extraordinary request to Congress for more money will not be necessary. The request to increase FDIC funding is already baked in.

So we have to ignore any trillion dollar taxpayer liability that goes through the FDIC, and the only thing you're willing to bet against is that Paulson, or whoever the T-Sec is, won't come back to Congress with a tin cup?

 

The only wrench at the moment in this bet is who wins the election. But, since I'm really playing with your $50, then I'm willing to bet that, within 6 months after inauguration, the next administration will need to put together another costly rescue package. Can we include another stimulus package of tax cuts as part of that resuce?

[erynthered]

I'm willing to bet that, within 6 months after inauguration, the next administration will need to put together another costly rescue package. Can we include another stimulus package of tax cuts as part of that resuce?

 

 

Thats what I was telling my wife last night.

[GG]

So we have to ignore any trillion dollar taxpayer liability that goes through the FDIC, and the only thing you're willing to bet against is that Paulson, or whoever the T-Sec is, won't come back to Congress with a tin cup?

 

The only wrench at the moment in this bet is who wins the election. But, since I'm really playing with your $50, then I'm willing to bet that, within 6 months after inauguration, the next administration will need to put together another costly rescue package. Can we include another stimulus package of tax cuts as part of that resuce?

 

The goal of this rescue package is to prevent a collapse of the financial system and get private capital back into the credit markets. It has nothing to do with reinvigorating the economy and stimulating consumer demand and should have nothing to do with the bet. Obviously, a full turnaround will need consumer participation, but without a healthy banking sector, no fiscal stimulus will help.

 

You're behaving like Congress, "yes we see a collapse of the banking industry in front of us, so why don't we help out wooden arrowhead manufacturers? Ah, good plan."

[TPS]

The goal of this rescue package is to prevent a collapse of the financial system and get private capital back into the credit markets. It has nothing to do with reinvigorating the economy and stimulating consumer demand and should have nothing to do with the bet. Obviously, a full turnaround will need consumer participation, but without a healthy banking sector, no fiscal stimulus will help.

 

You're behaving like Congress, "yes we see a collapse of the banking industry in front of us, so why don't we help out wooden arrowhead manufacturers? Ah, good plan."

No, rather, WE are acting more like Congress--you want to throw out the FDIC obligation, I want to include any rescue plan that might include tax cuts, which is a cost to the public. How about anything targeted at bailing out Wall Street? Which could include another AIG-type bailout?

[GG]

No, rather, WE are acting more like Congress--you want to throw out the FDIC obligation, I want to include any rescue plan that might include tax cuts, which is a cost to the public. How about anything targeted at bailing out Wall Street? Which could include another AIG-type bailout?

 

The stimulus package that's been rumored has nothing to do with the rescue package and has been talked about before the $700bn plan. Similarly, the increase in the FDIC funding was not proposed by Paulson & Bernanke. I thought your question was will the $700bn be enough to rescue the financials? My answer is probably. But if you insist on turning this into, will the $700bn be enough to return the economy back into positive, then the answer is obviously no.

 

As for your rediscovered populist bent, what is this Wall Street you speak of? For all the handwringing about the fat cats, the market actually worked, and Wall Street as you knew it for 70 years is defunct in a matter of months. Now, the challenge is to stop the further collateral damage.

[TPS]

The stimulus package that's been rumored has nothing to do with the rescue package and has been talked about before the $700bn plan. Similarly, the increase in the FDIC funding was not proposed by Paulson & Bernanke. I thought your question was will the $700bn be enough to rescue the financials? My answer is probably. But if you insist on turning this into, will the $700bn be enough to return the economy back into positive, then the answer is obviously no.

 

As for your rediscovered populist bent, what is this Wall Street you speak of? For all the handwringing about the fat cats, the market actually worked, and Wall Street as you knew it for 70 years is defunct in a matter of months. Now, the challenge is to stop the further collateral damage.

I'm fine with it focused on Wall Street, including all FIs. Are you fine with "any additional (past the $700) monetary bailout" of the financials?

[GG]

I'm fine with it focused on Wall Street, including all FIs. Are you fine with "any additional (past the $700) monetary bailout" of the financials?

 

Yes, I am saying that Fed & Treasury will not go back to Congress to ask for any more extraordinary authority to prop up the financial sector.

[TPS]

Yes, I am saying that Fed & Treasury will not go back to Congress to ask for any more extraordinary authority to prop up the financial sector.

I have a feeling things are going to happen too quickly, so I'll post-pone the bet until after the election; which should actually save you, unless you insist on making the bet now...?

[GG]

I have a feeling things are going to happen too quickly, so I'll post-pone the bet until after the election; which should actually save you, unless you insist on making the bet now...?

 

What's the point of the bet? The world will end well before November.

 

The one question that I have is to people who claim that the rescue package will not solve the undercapitalization problem. If the government will trade good treasuries for bad MBSs, wouldn't that instantly raise the banks' capital?

[TPS]

What's the point of the bet? The world will end well before November.

 

The one question that I have is to people who claim that the rescue package will not solve the undercapitalization problem. If the government will trade good treasuries for bad MBSs, wouldn't that instantly raise the banks' capital?

Depends where the assets are located. Are they buying bad assets off the balance sheet, or are the banks going to be off-loading assets from off-balance sheet holdings? Also, I don't know if this will get banks start to lending again? Does it end the confidence problem?

[GG]

Depends where the assets are located. Are they buying bad assets off the balance sheet, or are the banks going to be off-loading assets from off-balance sheet holdings? Also, I don't know if this will get banks start to lending again? Does it end the confidence problem?

 

Doesn't really matter where they're located as long as they're the ones that are causing the losses to be recognized. Getting rid of them should restore some confidence and just as importantly bring private equity back in the game. I wouldn't expect a rush back to lend, but I certainly hope that the short term funding markets return to normalcy and take it from there.

[TPS]

Doesn't really matter where they're located as long as they're the ones that are causing the losses to be recognized. Getting rid of them should restore some confidence and just as importantly bring private equity back in the game. I wouldn't expect a rush back to lend, but I certainly hope that the short term funding markets return to normalcy and take it from there.

Back to your question: if the losses are already recognized, then it will only restore (some) capital if Paulson buys the assets at a premium...gee, wonder who he's going to "represent" in this case?

 

Apparently the stock market isn't impressed either.

[Dwight Drane]

Thanks for the support TPS. I tried to warn Buffalonians what was in store. Anyone that reads a history of my posts might see them in a different light in hindsight.

 

Guys....now that the financial disaster is out in the open, you have to think what the next steps will be. There is NO way for the US to save face. I quit my job months ago and have turned down others because I feel the most important thing right now is to protect oneself and family. Throw the bible out of it. Look at my early posts and you will see there is no religious undertone. It was only as this unfolded that it became clearer to me that we could be in the middle of something like that getting ready to take place.

 

I've never said quit living your life or to run to some bunker. I've said to protect yourself. I've said to be careful. Now more than ever, we all need to do this. Like I said....pretend a blizzard or hurricane is on the way. Don't play politics, because we were sold out by both sides over the years. This is about power now. Ask yourselves who has power over what and who right now.

 

I've said all along I hope I am wrong. It doesn't look that way right now. We are being held hostage....LITERALLY! This is about to go Tom Clancy I believe. Please stay sober and use your best judgement if things start to unravel.

[GG]

Back to your question: if the losses are already recognized, then it will only restore (some) capital if Paulson buys the assets at a premium...gee, wonder who he's going to "represent" in this case?

 

Apparently the stock market isn't impressed either.

 

The whole point of the rescue is to buy the assets at a value that exceeds an accountant's guess of what the mark to market value is and its more probable economic value. Financials get a double boost - remove deteriorating assets and get cash. Since the government won't mark down the assets, it will have more time to wait out the crisis.