are you for or against the recent government financial bailouts?

[LegendKiller]

Originally posted by: Firebot

Originally posted by: LegendKiller
One thing everybody should keep in mind...

We will be buying these assets on a DISCOUNT. The assets YIELD INTEREST. If you amortize the discount over the holding period, or just sell the assets, WE WILL MAKE MONEY.

The only reason why banks can't hold the assets and get the return themselves is because they are being squeezed. Trust me, they'd rather make money than sell for a loss.

Make money + keep job + save the economy = WIN!

700$ billion doesn't grow on trees. You pay INTEREST on that 700$ billion and that money has to be borrowed from somewhere (hint China). That 700$ billion is called debt in itself, even though the assets purchased (if you can call bad debt that) themselves may yield some interest.

While the final tally may not be 700$ billion, it sure as heck isn't going to be making money unless the interest and sales offset the massive interest the taxpayers will be paying for an extra 700$ billion in debt. This is also the Bush administration we are talking about.

If the US was running a surplus it would be a different story, but it sure as heck isn't.

The assets we are buying bear interest. The interest rates are 3-8% above the 3-5% interest that treasuries cost. If we buy at a discount, that discount is effectively more interest borne by the receivables.

It's pretty simple logic. If I have an asset that bears 8% interest, I fund it with 5% interest, I get 3% spread. If I buy at a discount of 30% and the asset lasts 5 years, then I get 6% more interest per year. Thats 9% interest, ABOVE FUNDING, PER YEAR.

 

[LegendKiller]

Originally posted by: her209
I am for the people responsible for the mess getting what they deserve.

Then you are for losing your own job. This isn't an isolated problem. It *WILL* bring down the economy.

 

[SagaLore]

Originally posted by: LegendKiller

Originally posted by: SagaLore
I don't think any tax money should go towards this. Let the successful companies that haven't failed buy up those that have. That is out the market should work.

So you like your job?

Yep, I sure do. But I'm a bad example if you want to go that route. My job will be unaffected by this screwup.

 

[SagaLore]

Originally posted by: LegendKiller
Then you are for losing your own job.

The government won't save the economy or your job. If you want to respond that way to every post in this thread, then give us some good facts backed up by evidence that if the government doesn't step in, we'll all lose our jobs.

 

[her209]

Originally posted by: LegendKiller

Originally posted by: her209
I am for the people responsible for the mess getting what they deserve.

Then you are for losing your own job. This isn't an isolated problem. It *WILL* bring down the economy.

And what happens if the banks get bailed out and I still lose my job? Tough shit?

 

[waggy]

Originally posted by: her209

Originally posted by: LegendKiller

Originally posted by: her209
I am for the people responsible for the mess getting what they deserve.

Then you are for losing your own job. This isn't an isolated problem. It *WILL* bring down the economy.

And what happens if the banks get bailed out and I still lose my job? Tough shit?

yeap tough shit. nobody cares if you lose your house, cars, life savings etc. nobody will bail you out.

in fact they will bitch because you are not paying more in tax's (those ceo's need there fucking bonus!).

though it seems half the economist on TV are for it and half against the bail out.

but so far now it seems nearly all are for accountability and oversight.

 

[LegendKiller]

Originally posted by: SagaLore

Originally posted by: LegendKiller

Originally posted by: SagaLore
I don't think any tax money should go towards this. Let the successful companies that haven't failed buy up those that have. That is out the market should work.

So you like your job?

Yep, I sure do. But I'm a bad example if you want to go that route. My job will be unaffected by this screwup.

One way or another, it will.

 

[LegendKiller]

Originally posted by: SagaLore

Originally posted by: LegendKiller
Then you are for losing your own job.

The government won't save the economy or your job. If you want to respond that way to every post in this thread, then give us some good facts backed up by evidence that if the government doesn't step in, we'll all lose our jobs.

Bailing out the economy is never a bad idea. Think of this.

If the economy contracts by 5%, just 5%, then we've erased $700BN in GDP, and probably another 700BN in wealth through the market. It might still happen, but if we faced the likely scenario, a depression...

If the economy contracts 20%, which probably wouldn't be too far off for a depression that would happen in this situation, our economy, per year, would contract 2.8TR.

Hmmm, spend $700BN, which we WILL get repaid. Or, definitely, lose 2.8TR, PER YEAR.

 

[91TTZ]

Originally posted by: LegendKiller

Originally posted by: 91TTZ
Against it. A free market must be allowed to correct itself, that's the only way it can remain free. You can't have a market based on risk/reward and then have the government jump in when the "risk" portion of that equation wins.

There's no such thing as a free market inside of actual ability.

Tell me, is it a free market if we allow our system to burn and bring the world down with us? They are slaves to us because we can't fix our shit.

If some people lose their money it's not going to bring the entire world down. Sure, it'll be a lot of people and the world economy will take a temporary hit, but it's only temporary. It will again reach equilibrium.

You're seeing a lot of people in danger of losing their money because a lot of people borrowed beyond their means. These are the people who will lose money. The market will adjust and it will reach a more sustainable point, meaning that people won't be able to borrow beyond their means anymore.

The sky isn't falling.

I think one underlying problem is that it's become the norm in American culture for people to live beyond their means. They want their McMansion and their expensive car that they can't really afford. The average person is too fat, too lazy, and too risk averse. They want everything handed to them and they don't want to work hard for it. They're living in a temporary bubble that's about to pop.

Most people won't want to accept the risk that comes with taking out loans or investing money. They want to reap the profits when a risky venture pays off, but they want someone to bail them out when it doesn't pay off.

People are going to have to accept reality sooner or later.

 

[BoberFett]

Originally posted by: BlahBlahYouToo

Originally posted by: PrinceofWands

Originally posted by: BlahBlahYouToo

Originally posted by: PrinceofWands

Originally posted by: BlahBlahYouToo

Originally posted by: PrinceofWands
Against. I'm opposed to corporations period, and especially opposed to the government using tax dollars to support them when they failed entirely due to their own greed and stupidity. The government doesn't bail out an individual when they screw up, and individuals actually matter (unlike corporations).

this is much, much deeper than just corporations. credit markets will be frozen. NO ONE will be able to borrow any money - corporations, small business, INDIVIDUALS!

sigh... clearly many are not aware of all the consequences.

Good. People should almost never spend money they don't have in their hands. Nothing else should ever be able to borrow money (with the possible exception of governments in EXTREME emergencies, and I'm not entirely convinced of it even then).

i take it you don't aspire to ever own a home, or maybe even a car.
and perhaps you don't like getting paid every 2 weeks as well.

I would prefer to be paid daily, for the work I did.

I already own a home and two cars. The home was inherited, so I can't claim much there. The cars I paid cash for...well, one I paid cash for, the other I had to float a couple grand on the loan for about 60 days.

I already said I make an exception for first home mortgages, as almost no one would ever be able to pay cash the first time. Cars are trickier, but very few people should need to do it on loan.

paid every day you say? if you let the credit markets freeze, you might not know when your next paycheck will come.

credit is what makes the financial world go round.

Are the paychecks where YOU work financed over 30 years with no proof of assets or income by your employer? If so, you might want to find a new job.

 

[91TTZ]

Originally posted by: BlahBlahYouToo

credit that gets paid back is what makes the financial world go round.

Fixed.

 

[BoberFett]

Originally posted by: Viper GTS

Originally posted by: LegendKiller
One thing everybody should keep in mind...

We will be buying these assets on a DISCOUNT. The assets YIELD INTEREST. If you amortize the discount over the holding period, or just sell the assets, WE WILL MAKE MONEY.

The only reason why banks can't hold the assets and get the return themselves is because they are being squeezed. Trust me, they'd rather make money than sell for a loss.

Make money + keep job + save the economy = WIN!

Finally an answer to the question I asked a hundred posts ago.

With this answer I can vote for supporting the bailout.

Viper GTS

You do realize, of course, that if these "assets" had the value that LK claims SOMEBODY FUCKING ELSE WOULD BUY THEM.

The fact that nobody in their right mind is snapping them up by the billion means all that paper will end up on a roll in the congressional bathrooms.

 

[Firebot]

Originally posted by: LegendKiller

Originally posted by: Firebot

Originally posted by: LegendKiller
One thing everybody should keep in mind...

We will be buying these assets on a DISCOUNT. The assets YIELD INTEREST. If you amortize the discount over the holding period, or just sell the assets, WE WILL MAKE MONEY.

The only reason why banks can't hold the assets and get the return themselves is because they are being squeezed. Trust me, they'd rather make money than sell for a loss.

Make money + keep job + save the economy = WIN!

700$ billion doesn't grow on trees. You pay INTEREST on that 700$ billion and that money has to be borrowed from somewhere (hint China). That 700$ billion is called debt in itself, even though the assets purchased (if you can call bad debt that) themselves may yield some interest.

While the final tally may not be 700$ billion, it sure as heck isn't going to be making money unless the interest and sales offset the massive interest the taxpayers will be paying for an extra 700$ billion in debt. This is also the Bush administration we are talking about.

If the US was running a surplus it would be a different story, but it sure as heck isn't.

The assets we are buying bear interest. The interest rates are 3-8% above the 3-5% interest that treasuries cost. If we buy at a discount, that discount is effectively more interest borne by the receivables.

It's pretty simple logic. If I have an asset that bears 8% interest, I fund it with 5% interest, I get 3% spread. If I buy at a discount of 30% and the asset lasts 5 years, then I get 6% more interest per year. Thats 9% interest, ABOVE FUNDING, PER YEAR.

Bernanke has already made it clear there will be no discount, but a premium paid

Federal Reserve Chairman Ben Bernanke signaled on Tuesday that the Treasury would purchase such assets for a premium on the "fire sale" prices they are fetching in the current illiquid market.

He even indicated Treasury might pay as much as the higher "hold-to-maturity" prices at which commercial banks mark investments they don't intend to sell or trade.

"If the Treasury bids for and then buys assets at a price close to the hold-to-maturity price, there will be substantial benefits," Mr. Bernanke said. "First, banks will have a basis for valuing those assets and will not have to use fire-sale prices. Their capital will not be unreasonably marked down."

Not only is this the opposite of a 30% discount or anything close to that, those assets are still plummeting. Also note that the assets only bear interest, if there is interest being collected. Not being able to collect while being forced to bear depreciating foreclosed assets is the reason why all these banks are going belly side up in the first place.

Heck, any argument of a discount falls when Paulson himself has said the deal will be based on a 'hold to maturity' price rather then market price or even a discount. That's a premium, not a discount.

The government isn't planning to buy the banks profitable assets here either. This is the worst of the worst. A bailout is much different then a buyout. Anyone who believe the US is gonna come out ahead on this deal are dillusional. That's about as ridiculous as the retards supporting and believing the Iraq war would have made oil prices drop for the common citizen.

Now that the whole brainwashed fantasy about some 'discount fire sale' is blown up, are you still supporting this deal?

 

[BoberFett]

Originally posted by: LegendKiller

Originally posted by: Pocatello
I'm against it. This administration and Congress have not convinced me why we should give Wall Street $700 billions. Wall Street has to face the consequences from the seeds they've sown. Another thing, the US government is too good at throwing our hard earned money into black holes.

Isn't your job enough?

Look, it's pretty simple. United we stand, divided we fall.

How about throwing something in about Al Qaeda or WMD or maybe gays with the rest of your rhetoric.

 

[JS80]

Originally posted by: LegendKiller

Originally posted by: SagaLore

Originally posted by: LegendKiller

Originally posted by: SagaLore
I don't think any tax money should go towards this. Let the successful companies that haven't failed buy up those that have. That is out the market should work.

So you like your job?

Yep, I sure do. But I'm a bad example if you want to go that route. My job will be unaffected by this screwup.

One way or another, it will.

He must think healthcare sector is immune from a great depression.

 

[LegendKiller]

Originally posted by: BoberFett

Originally posted by: Viper GTS

Originally posted by: LegendKiller
One thing everybody should keep in mind...

We will be buying these assets on a DISCOUNT. The assets YIELD INTEREST. If you amortize the discount over the holding period, or just sell the assets, WE WILL MAKE MONEY.

The only reason why banks can't hold the assets and get the return themselves is because they are being squeezed. Trust me, they'd rather make money than sell for a loss.

Make money + keep job + save the economy = WIN!

Finally an answer to the question I asked a hundred posts ago.

With this answer I can vote for supporting the bailout.

Viper GTS

You do realize, of course, that if these "assets" had the value that LK claims SOMEBODY FUCKING ELSE WOULD BUY THEM.

The fact that nobody in their right mind is snapping them up by the billion means all that paper will end up on a roll in the congressional bathrooms.

You do realize (but you really don't, but I'll keep up with your attitude), that the banks won't sell it until they have to. Why sell at $20 what you know is worth $30?

 

[waggy]

Originally posted by: Firebot

Originally posted by: LegendKiller

Originally posted by: Firebot

Originally posted by: LegendKiller
One thing everybody should keep in mind...

We will be buying these assets on a DISCOUNT. The assets YIELD INTEREST. If you amortize the discount over the holding period, or just sell the assets, WE WILL MAKE MONEY.

The only reason why banks can't hold the assets and get the return themselves is because they are being squeezed. Trust me, they'd rather make money than sell for a loss.

Make money + keep job + save the economy = WIN!

700$ billion doesn't grow on trees. You pay INTEREST on that 700$ billion and that money has to be borrowed from somewhere (hint China). That 700$ billion is called debt in itself, even though the assets purchased (if you can call bad debt that) themselves may yield some interest.

While the final tally may not be 700$ billion, it sure as heck isn't going to be making money unless the interest and sales offset the massive interest the taxpayers will be paying for an extra 700$ billion in debt. This is also the Bush administration we are talking about.

If the US was running a surplus it would be a different story, but it sure as heck isn't.

The assets we are buying bear interest. The interest rates are 3-8% above the 3-5% interest that treasuries cost. If we buy at a discount, that discount is effectively more interest borne by the receivables.

It's pretty simple logic. If I have an asset that bears 8% interest, I fund it with 5% interest, I get 3% spread. If I buy at a discount of 30% and the asset lasts 5 years, then I get 6% more interest per year. Thats 9% interest, ABOVE FUNDING, PER YEAR.

Bernanke has already made it clear there will be no discount, but a premium paid

Federal Reserve Chairman Ben Bernanke signaled on Tuesday that the Treasury would purchase such assets for a premium on the "fire sale" prices they are fetching in the current illiquid market.

He even indicated Treasury might pay as much as the higher "hold-to-maturity" prices at which commercial banks mark investments they don't intend to sell or trade.

"If the Treasury bids for and then buys assets at a price close to the hold-to-maturity price, there will be substantial benefits," Mr. Bernanke said. "First, banks will have a basis for valuing those assets and will not have to use fire-sale prices. Their capital will not be unreasonably marked down."

Not only is this the opposite of a 30% discount or anything close to that, those assets are still plummeting. Also note that the assets only bear interest, if there is interest being collected. Not being able to collect while being forced to bear depreciating foreclosed assets is the reason why all these banks are going belly side up in the first place.

Heck, any argument of a discount falls when Paulson himself has said the deal will be based on a 'hold to maturity' price rather then market price or even a discount. That's a premium, not a discount.

The government isn't planning to buy the banks profitable assets here either. This is the worst of the worst. A bailout is much different then a buyout. Anyone who believe the US is gonna come out ahead on this deal are dillusional. That's about as ridiculous as the retards supporting and believing the Iraq war would have made oil prices drop for the common citizen.

Now that the whole brainwashed fantasy about some 'discount fire sale' is blown up, are you still supporting this deal?

so they want to pay more then they are worth? great idea.

like i said the one thing that kills me ont his is no oversight or accountability.

though wish the govermetn would give me 700 billion without telling them when or how i spent it. hell i would settle for 10 million.

 

[JS80]

Originally posted by: 91TTZ

Originally posted by: LegendKiller

Originally posted by: 91TTZ
Against it. A free market must be allowed to correct itself, that's the only way it can remain free. You can't have a market based on risk/reward and then have the government jump in when the "risk" portion of that equation wins.

There's no such thing as a free market inside of actual ability.

Tell me, is it a free market if we allow our system to burn and bring the world down with us? They are slaves to us because we can't fix our shit.

If some people lose their money it's not going to bring the entire world down. Sure, it'll be a lot of people and the world economy will take a temporary hit, but it's only temporary. It will again reach equilibrium.

You're seeing a lot of people in danger of losing their money because a lot of people borrowed beyond their means. These are the people who will lose money. The market will adjust and it will reach a more sustainable point, meaning that people won't be able to borrow beyond their means anymore.

The sky isn't falling.

I think one underlying problem is that it's become the norm in American culture for people to live beyond their means. They want their McMansion and their expensive car that they can't really afford. The average person is too fat, too lazy, and too risk averse. They want everything handed to them and they don't want to work hard for it. They're living in a temporary bubble that's about to pop.

Most people won't want to accept the risk that comes with taking out loans or investing money. They want to reap the profits when a risky venture pays off, but they want someone to bail them out when it doesn't pay off.

People are going to have to accept reality sooner or later.

Did you know there was a run on money markets? If there is no rescue contagion will spread through ALL credit and it WILL bring the global economy down. It would be like Tyler Durden blowing up all financial records and everyone starting from zero.

 

[LegendKiller]

Originally posted by: Firebot
Not only is this the opposite of a 30% discount or anything close to that, those assets are still plummeting. Also note that the assets only bear interest, if there is interest being collected. Not being able to collect while being forced to bear depreciating foreclosed assets is the reason why all these banks are going belly side up in the first place.

Heck, any argument of a discount falls when Paulson himself has said the deal will be based on a 'hold to maturity' price rather then market price or even a discount. That's a premium, not a discount.

The government isn't planning to buy the banks profitable assets here either. This is the worst of the worst. A bailout is much different then a buyout. Anyone who believe the US is gonna come out ahead on this deal are dillusional. That's about as ridiculous as the retards supporting and believing the Iraq war would have made oil prices drop for the common citizen.

Now that the whole brainwashed fantasy about some 'discount fire sale' is blown up, are you still supporting this deal?

I don't think that this gets done at a premium of HTM level. It simply can't get done. If it does, there will be more "asks".

keep in mind, that even at par, there is still the spread between interest income, and interest expense, that will make money.

This is a negotiation, what we saw initially will be completely different from what is passed.

 

[BoberFett]

Originally posted by: LegendKiller

Originally posted by: BoberFett

Originally posted by: Viper GTS

Originally posted by: LegendKiller
One thing everybody should keep in mind...

We will be buying these assets on a DISCOUNT. The assets YIELD INTEREST. If you amortize the discount over the holding period, or just sell the assets, WE WILL MAKE MONEY.

The only reason why banks can't hold the assets and get the return themselves is because they are being squeezed. Trust me, they'd rather make money than sell for a loss.

Make money + keep job + save the economy = WIN!

Finally an answer to the question I asked a hundred posts ago.

With this answer I can vote for supporting the bailout.

Viper GTS

You do realize, of course, that if these "assets" had the value that LK claims SOMEBODY FUCKING ELSE WOULD BUY THEM.

The fact that nobody in their right mind is snapping them up by the billion means all that paper will end up on a roll in the congressional bathrooms.

You do realize (but you really don't, but I'll keep up with your attitude), that the banks won't sell it until they have to. Why sell at $20 what you know is worth $30?

If these "assets" are so profitable (as you claim) why would the banks sell them at all? If liquidity is the only problem then where's the crisis? Why can't the banks just borrow more money? Hell, that's exactly what the plan is anyway. Buy questionable paper with borrowed money and hope it pans out, eh?

 

[LegendKiller]

Originally posted by: BoberFett

Originally posted by: LegendKiller

Originally posted by: BoberFett

Originally posted by: Viper GTS

Originally posted by: LegendKiller
One thing everybody should keep in mind...

We will be buying these assets on a DISCOUNT. The assets YIELD INTEREST. If you amortize the discount over the holding period, or just sell the assets, WE WILL MAKE MONEY.

The only reason why banks can't hold the assets and get the return themselves is because they are being squeezed. Trust me, they'd rather make money than sell for a loss.

Make money + keep job + save the economy = WIN!

Finally an answer to the question I asked a hundred posts ago.

With this answer I can vote for supporting the bailout.

Viper GTS

You do realize, of course, that if these "assets" had the value that LK claims SOMEBODY FUCKING ELSE WOULD BUY THEM.

The fact that nobody in their right mind is snapping them up by the billion means all that paper will end up on a roll in the congressional bathrooms.

You do realize (but you really don't, but I'll keep up with your attitude), that the banks won't sell it until they have to. Why sell at $20 what you know is worth $30?

If these "assets" are so profitable (as you claim) why would the banks sell them at all? If liquidity is the only problem then where's the crisis? Why can't the banks just borrow more money? Hell, that's exactly what the plan is anyway. Buy questionable paper with borrowed money and hope it pans out, eh?

Hmmm...maybe because there's really no money to borrow?

This really isn't about money, per se, it's about time. The banks don't have time to wait for this to normalize. The Fed/Treasury does and they don't have mark-to-market pricing.

I will tell you this. The banks better fix this shit, fast, if they get some relief. If they don't, then I'll be calling them out myself.

 

[SagaLore]

Originally posted by: LegendKiller
Bailing out the economy is never a bad idea. Think of this.

If the economy contracts by 5%, just 5%, then we've erased $700BN in GDP, and probably another 700BN in wealth through the market. It might still happen, but if we faced the likely scenario, a depression...

If the economy contracts 20%, which probably wouldn't be too far off for a depression that would happen in this situation, our economy, per year, would contract 2.8TR.

Hmmm, spend $700BN, which we WILL get repaid. Or, definitely, lose 2.8TR, PER YEAR.

You're just making numbers up. EXAMPLES please to back up your position.

GDP is the total market value of all final goods/services produced in the US within the year.

The formula for GDP is consumption + gross investment + government spending + (exports - imports).

Where does the bailout money come from? Taxpayers. That lowers consumer's ability to spend, whether its now or later. If we push it to later, then that means the Gov needs to borrow. From who? They're bailing out the companies they need to borrow from.

So then what... all the fake money gets pumped into the failing financial companies. Those companies still need to recover now that they're still in business, but their source of income is investments. Everyone is already in debt, and can't afford to buy homes or build businesses. They can't invest in risky people/businesses because this is how they got into this mess. So now what?

If the failing financial companies are worth anything, the successful financial companies will buy them up. Let them. They'll make it work.

If you're so concerned about the GDP, then take that $700BN and let the government spend it on something that actually encourages economic growth by giving people jobs and consumers something to buy.

FYI, here is the GDP trend:

Q4 2006 - up 2.5%
Q1 2007 - up 0.6%
Q2 2007 - up 4.0%
Q3 2007 - up 4.9%
Q4 2007 - up 0.6%
Q1 2008 - up 1.0%
Q2 2008 - most likely up 3.3%

Most of this positive growth is due to exports, personal consumption, and government spending.

 

[Firebot]

Originally posted by: LegendKiller

Originally posted by: Firebot
Not only is this the opposite of a 30% discount or anything close to that, those assets are still plummeting. Also note that the assets only bear interest, if there is interest being collected. Not being able to collect while being forced to bear depreciating foreclosed assets is the reason why all these banks are going belly side up in the first place.

Heck, any argument of a discount falls when Paulson himself has said the deal will be based on a 'hold to maturity' price rather then market price or even a discount. That's a premium, not a discount.

The government isn't planning to buy the banks profitable assets here either. This is the worst of the worst. A bailout is much different then a buyout. Anyone who believe the US is gonna come out ahead on this deal are dillusional. That's about as ridiculous as the retards supporting and believing the Iraq war would have made oil prices drop for the common citizen.

Now that the whole brainwashed fantasy about some 'discount fire sale' is blown up, are you still supporting this deal?

I don't think that this gets done at a premium of HTM level. It simply can't get done. If it does, there will be more "asks".

keep in mind, that even at par, there is still the spread between interest income, and interest expense, that will make money.

This is a negotiation, what we saw initially will be completely different from what is passed.

This deal is not meant to be a business deal. This is a bailout and a very suspicious one at that, to take away depreciating assets from the bank's hands. I'd really like to see some numbers where it says the bailouts in the early 80's became profitable. It sure as heck didnt happen by buying assets at a premium.

You need to ask yourself why these assets are illiquid. It's because nobody wants them. If these assets were as profitable as you claim, then the banks wouldn't be in the pickle they are and they would be keeping them for their own profitability.

The housing bubble burst is far from over too.

 

[LegendKiller]

Originally posted by: Firebot

Originally posted by: LegendKiller

Originally posted by: Firebot
Not only is this the opposite of a 30% discount or anything close to that, those assets are still plummeting. Also note that the assets only bear interest, if there is interest being collected. Not being able to collect while being forced to bear depreciating foreclosed assets is the reason why all these banks are going belly side up in the first place.

Heck, any argument of a discount falls when Paulson himself has said the deal will be based on a 'hold to maturity' price rather then market price or even a discount. That's a premium, not a discount.

The government isn't planning to buy the banks profitable assets here either. This is the worst of the worst. A bailout is much different then a buyout. Anyone who believe the US is gonna come out ahead on this deal are dillusional. That's about as ridiculous as the retards supporting and believing the Iraq war would have made oil prices drop for the common citizen.

Now that the whole brainwashed fantasy about some 'discount fire sale' is blown up, are you still supporting this deal?

I don't think that this gets done at a premium of HTM level. It simply can't get done. If it does, there will be more "asks".

keep in mind, that even at par, there is still the spread between interest income, and interest expense, that will make money.

This is a negotiation, what we saw initially will be completely different from what is passed.

This deal is not meant to be a business deal. This is a bailout and a very suspicious one at that, to take away depreciating assets from the bank's hands. I'd really like to see some numbers where it says the bailouts in the early 80's became profitable. It sure as heck didnt happen by buying assets at a premium.

You need to ask yourself why these assets are illiquid. It's because nobody wants them. If these assets were as profitable as you claim, then the banks wouldn't be in the pickle they are and they would be keeping them for their own profitability.

The housing bubble burst is far from over too.

Nobody is buying them because nobody is buying ANYTHING. That's what you don't get, the market is shutting down.

I had a $200MM deal I was about to do. It was a AAA bond backed by an asset that, in the last 15 years, has sustained a maximum of 0.07% losses, which was a bankruptcy of a huge company. It had an average of 0.02% losses, of which 0.0056% affected my deal specifically. Since the facility was concentrated among obligors, it had high enhancement.

My enhancement would have been 19%, or 3,392x average losses. 50% of the obligors were investment grade companies. The assets were physical items, which were secured. The servicer has a BBB rating and 60 years doing this activity. Their business, by nature, is very low risk. However, it is business essential, and drives the activities of 60% of the Fortune 500.

18 months ago, that same bond, would have yielded 30bps over my cost of funds plus 15bps up front. I negotiated to charge them 120bps, plus 50bps up front.

The ROE of that deal would have been about 2000%. Yes, 2000% return on equity.

I had to turn it down. Why? Because my boss' boss didn't want to "take the risk". Yeah, sure. Risk?

You'd think, at 2000% ROE, that somebody would do it, wouldn't you?

Nope, nobody is touching it.

I had another deal pitched to me, it would have yielded 8000% ROE with very little risk.

Nope, can't do that, too much "risk".

NOBODY is lending anything. Why? Because everybody is hording equity for the next "mark to market", or the next LEH or BSC to blow up, hurting everybody.

Something has to bend.

What do you think happens when that company can't get financing? What happens to the goods and services it provides to 60% of the Fortune 500? If it can't provide them, then the Fortune 500 has to reduce their own business.

What happens then? People lose jobs. That's what happens.

 

[SagaLore]

Originally posted by: LegendKiller
I had to turn it down. Why? Because my boss' boss didn't want to "take the risk". Yeah, sure. Risk?

Tell us how the government bailout will change your boss' mind.