Good Morning Folks,
I put this in the comments last night, but I wanted to make sure everyone watched this segment from Larry Kudlow's show.
Karl Denninger does a nice job explaining the repercussions of this below. Our rescue plan does nothing but guarantee that hundreds of billions of dollars will go right out of the country to bailout foreigners that bought our subprime sandwiches. In return. they will continue to buy our treasuries.
As I have said before, the game is over if foreign countries stop buying our treasuries. This is why Paulson and Bush are desperate to stop this. They have told the Senate that they will veto this bill without the provision that allows the Treasury to put buy back these subprime sandwiches, and put them onto our own balance sheet at the cost of the taxpayers.
We are not bailing out America with this bill. We are bailing out the world!
Do you have any desire to watch the US buy other countries bad debts with your taxpayers dollars? We cannot allow this bill to pass.
Here is the the section in the bill that allows The Treasury to buy this garbage:
"SEC. 112. COORDINATION WITH FOREIGN AUTHORITIES AND CENTRAL BANKS.The Secretary shall coordinate, as appropriate, with foreign financial authorities and central banks to work toward the establishment of similar programs by such authorities and central banks. To the extent that such foreign financial authorities or banks hold troubled assets as a result of extending financing to financial institutions that have failed or defaulted on such financing, such troubled assets qualify for purchase under section 101."
16 comments:
It looks like the rescue plan is going to get rammed through.
I am sick to my stomach today. There is no looking back now.
The data continues to be awful. ISM came in at 43. Thats a terrible number.
I hope China enjoys our money! O'bama and McCain are both voting yes. What sellouts. I wish there was a third party.
Rep. Paul Ryan, R-Wis is the man. It's good to know there are at least some representatives that are looking out for the people..I've seen 3 or 4 that actually tell it like it is.
Jeff, I told you. Why are you listening to these Denninger idiots? Can't you see this guy is pathetic? America caused the mess, it has to clean it up and pay for it. That is fair. You didn't complain a few years ago when the foreigners were paying for your debts. Why do you think gas is so cheap in the US? Wake up Jeff and get ready the open the check book. LOL
JD
Yea I know. At least we know whats really behind this facade.
Its amazing to me that the politicians can get away with this.
Why are we not told the truth?
Frustrating.
It seems like we have been blackmailed by foreign banks and there is not much we can do right now but pay up. What would happen to us if China, Russia, etc stopped buying US Treasuries? Financial Armageddon?
John
I was listening to Kudlow. Denninger is right on this one.
They did the same shadow banking over there that we did here. We did not create this mess. They were just stupid enough to copy it.
Their banks are more overleveraged and took more risk thatn we ever did. They took the game to a new level
The fact that I now have to pay for their mostakes too is just plain wrong.
Gas isn't cheap anymore!
anon
Unfortunately it will be Armegeddon for us and the rest of the world if they stop buying treasuries.
We are getting blackmailed by the foereign central bankers IMO.
The fact we are caving into them tells you how screwed we all are.
This is going to be so fricking ugly for the whole world once we run out of money to save the world.
We are about out of cash, and Armegeddon will then arrive because the world is as screwed as we are.
Jeff,
What's happening to bond markets? They seemed to have peaked back in March of this year, but they have declined ever since.
I thought they were the safe haven as the market crumbled?
Josh
Long term, would we be any worse off if we just flipped off these foreign banks and let them keep the subprime junk that they chose to buy? Even if they then punished us by not buying our Treasuries.
Log
Investors are still piling into treasuries. Yields are still very low. There has been a huge flight to safety here.
There is some concern here about the safety of treasuries as we continue to dig ourselves deeper and deeper into debt.
The mortgage backed paper that was guaranteed after we nationalized Fannie/Freddie isn't performing very well because of how the badly the non US guaranteed MBS securities(subprime sandwiches) are performing.
No one knows what the these assets are worth and I think this concern is hurting prices on the Fannie/Freddie paper.
There will be a point where there is a bond market dislocation if we dig too deep into debt. Expect treasury demand then to drop and yields will then go through the roof.
This day may soon be arriving.
Anon
That is exactly what I think we need to do. If we are toast either way, lets keep our money in the USA! This is their problem not ours. They didn't have a gun to their head when they made these decisions.
We will need it in order to recover from this mess. I totally agree with you.
Gas isn't cheap anymore!"
Are you kidding me? Gas is about $4 a gallon. In Europe it is more than double! In many countries esp. with currencies pegged to the dollar it is even more expensive than that. America pays oil with the printing press. You should see what's going on in the world not just in your neighbourhood.
JM
take into account taxes included in the price of gas in your country and you have an answer
"cheap" or "expensive" are relative concepts and depend also on historical levels :D
P.S. I am not from US ;)
John
Good luck man. Happy investing!
In one of my countries which pumps oil we have the same price tag for gas than in the US. So don't tell me gas is expensive in the US. You pay with your Petrodollar aka printing press. (Sidenote: I live in two countries.) ;-)
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