Everyday I wake up hoping that our politicians will see the light and realize that we are heading down the wrong path. I woke up once again this morning with the same hopes. Today they were quickly dashed once I flipped on the computer and clicked onto Bloomberg.
I need to repeat part of my post from yesterday before I get to this because I am absolutely irate about the TALF. We need to torpedo the TALF. Wall St is once again going to be allowed make billions at our expense thanks to our friends in DC. My god, the founding fathers would roll over in their grave if they saw what was happening in this country right now.
The TALF could possibly become the greatest transfer of wealth in the history of this nation. I am totally appalled that the Fed/Treasury would introduce legislation that would allow hedge funds to make billions of dollars with literally zero risk at our expense. All of the risk is put back on the taxpayer after the hedge funds rake in their billions of profit. The fact that the Fed could even think of such an idea at a time when every American is struggling is absolutely piggish and disgusting.
Remember folks, here is the game. Via the TALF: The hedgie's are allowed to leverage up to 20-1 and buy securitizations that are worth close to zero at say .80 on the dollar. This allows the banks to get rid of the garbage on their balance sheets at artificially high prices which reduces their losses.
Any real capitalistic/moral nation would force the banks to take the losses now instead of passing the losses onto the taxpayer down the road. I guess our nation wants to head down a different path. I mean geez: why should they take the losses when we are dumb enough to sit back and take them ourselves right? Ok sarcasm now off
Back to the game:
The hedgie's make double digit returns on the securitizations that are highly leveraged. This leverage allows them to make huge profits in a very short period of time before the asset drops in value. So once the asset drops in value, the TALF sstates that the hedge funds can only lose what they put in. So if they put in $50 million and make $100 million before the asset drops in value their only exposure is the $50 million. So they basically walk with $50 mil in their pocket.
So what happens to these same securitizations that continue to plummet in value down to their real price of say .20 on the dollar once the hedgies are out? It goes back to the Fed/Treasury balance sheet: In other words the taxpayer.
So people, once again Wall St gets rich and we take the losses. How is this crap allowed to happen as our economy falls off a cliff? Is their any morality at all in DC or Wall St anymore? where are the cops? HOW IN THE HELL IS THIS ALLOWED TO HAPPEN?????
Ok Rant off
Here is the scoop on the pigmen's next potential $1 trillion pot of goldIt appears that Obama is going to ask Congress for an additional $1 trillion dollars in aide for the banks:"Feb. 8 (Bloomberg) -- President
Barack Obama’s struggle to push an economic stimulus bill through Congress may seem easy compared to what he’ll encounter when he returns to Capitol Hill for additional funds to rescue the banking system.
Obama will likely need to ask Congress for more money to recapitalize banks, as much as $1 trillion on top of the roughly $300 billion remaining in the current Troubled Asset Relief Program, according to an estimate by former Federal Reserve economist
Ward McCarthy. That will be an even tougher sell for the new president than the stimulus plan, which is headed for a Senate vote this week after passing the House with no Republican support.
That package, at least $780 billion of spending and tax cuts aimed at boosting consumer demand and creating jobs, is just a part of what it will take to pull the economy out of the 14- month-old
recession. The stimulus will be effective only if credit markets, currently frozen by illiquid assets clogging banks’ balance sheets, begin to function again.
“It will take an enormous effort to build broader public support” for another bank rescue plan, said
Thomas Mann, a congressional scholar at the Brookings Institution in Washington. “Had the stimulus gone through swimmingly it would have made it easier.”
Treasury will probably propose a combination of buying toxic bank assets, providing guarantees for other assets, and making additional capital infusions to banks, said McCarthy, now a principal at Stone & McCarthy Research Associates, an economic research firm in Skillman, New Jersey. New funding for the banking system will be all the harder to justify because the original TARP, which so far has provided almost $400 billion to more than 360 banks, hasn’t shown much in the way of tangible benefits.
“They continue to assume that if you do something and it hasn’t worked, you have to continue to do more of it,” said Representative
Darrell Issa, a Republican from California. “That’s the definition of insanity.”
Obama and his staff struggled last week to win support for the stimulus package from several moderate Republicans in the Senate, including
Susan Collins and
Olympia Snowe of Maine and
Arlen Specter of Pennsylvania.
Support for another round of cash for ailing banks may be even tougher to win after reports last week raised new questions about the cost and effectiveness of the assistance provided already.
$78 Billion Overpayment
The chairman of the TARP’s Congressional Oversight Panel told the Senate Banking Committee that Treasury paid $254 billion of TARP funds for bank equity worth $176 billion, an overpayment of $78 billion. And even after the infusions of taxpayer funds, a majority of U.S. banks still made it tougher for consumers and businesses to get credit at the end of 2008, a Feb. 2 Federal Reserve report showed.
Such findings give ammunition to lawmakers such as Utah Republican Senator
Bob Bennett of Utah who say they were misled about how the TARP would work.
“Can we believe what we are told next time?” Bennett said at the Senate committee hearing. “Those of us who decided we were going to take the political risk of voting for this the first time will be faced with a constituency that will say, ‘Fool me once, OK, but don’t fool me twice.’”
Final Take:Here we go again! Notice the section that I highlighted above. Uhhhh...Haven't we already tried this before?
The banks burned through the first round of injections from the TARP faster than a hot knife through butter. Why should we throw another $1 trillion into this black hole?
I also see no mentioning of any repercussions or punishments being doled out to the fraudsters that created this mess. This is total bullsh*t. A march to Washington needs to happen and fast. The fat cat elites of this nation are going to rob whats left of our nation's wealth if they are not stopped.
My guess here is there is no chance this recovery package passes in its current form. You can read the quotes up above from some of the politicians. They are all agitated by the lack of transparency around the first TARP. Congress was fooled once, they won't be fooled again. I expect much harsher regulations for Wall St this go around, and Congress will want to know exactly how this additional money is spent(that is if they ever approve it).
I think there is a slight chance that this recovery plan never gets passed. There seems to be more and more resentment towards the banks in this country. I think Congress and the people will want blood before we give these fraudsters another dime!
Lets hope there is some sense of decency and morality left in Congress to put a stop to all of this. They need to stand up to the pigmen on Wall St. before they rob and destroy whats left of this country. The TALF and the bailouts must stop immediately. This money is all being wasted and we will badly need it down the road as we head into a depression
I wish I had a special potion that allowed me to bring back our founding fathers from the dead.
This nonsense would have been stopped in its tracks long ago if they were alive today.
