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Geithner Seeks Private Investment for Toxic Assets (Update1)
“We have to reach a point where investors and consumers have greater confidence in our financial system,” Philadelphia Federal Reserve Bank President Charles Plosser said in an interview. “Without that, these institutions will not be able to attract new capital or be able to fully resume their important role in providing credit.”
...
The FDIC is expected to play a role either running or financing some bad bank type of unit that takes on illiquid securities, which may sell its own government-backed debt, the people said.
I know what I am about to suggest might seem a bit crazy and outlandish, but bear with me. I'm about to go way out on the limb here and I would appreciate some support.
Has the government given any thought to dropping two terms that tend to not inspire confidence? "Bad bank" and "toxic assets" just doesn't seem like things I'd ever want to invest in.
Couldn't the government at least attempt to slap some lipstick on the pigs? I mean really, you have to admire the honesty but enough is enough. We're in a crisis right now.
Why not "not so good bank" and "really not all that good for you assets"? That would at least be a start. We could then move to structured investment loss vehicles (SILVs) and undercapitalized debt obligations (UDOs). I still wouldn't invest, but at least somebody might.
If we don't get this ponzi scheme restored soon, we may never get it restored. Then where will we be? Abandoning retirement? Don't answer that. It's a rhetorical question.
Madoff victim, aged 90, abandons retirement
(Reuters) -- Ian Thiermann, age 90, has abandoned retirement and now works the aisles of a grocery store to make ends meet after losing his life savings of $750,000 to Madoff. He now hands out fliers hawking avocados and pork ribs at a supermarket in Ben Lomond, California. Thiermann, owner of a pest-control company in Los Angeles before retiring 25 years ago, enjoyed returns of 10 to 12 percent each year on his savings for about 15 years...
Isn't 10 to 12 percent each year roughly what the financial experts told us that we would make in the stock market over the long-term? You guessed it. That's another rhetorical question.
September 30, 2008
Your Money and the Stock Market
Investors planning to keep their money in the stock market for the long term have come to expect returns in the region of 10 percent, the historical average for the 20th century. But since 2000, returns have been significantly lower. From the start of 2000 through the end of this past May, annual returns for the S&P 500 Index were 1.1 percent. Since then, things have only gotten worse.
The S&P 500 closed at 1,398.26 on May 29, 2008.
The S&P 500 closed at 1,164.74 on September 30, 2008 (16% loss).
The S&P 500 closed at 869.89 on February 9, 2009 (38% loss).
Hotels: Occupancy Rate Increased 2.8% Year-over-year
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From STR: U.S. hotel results for week ending 13 April
Helped by the total solar eclipse, U.S. hotel performance increased from
the previous week, according...
6 hours ago
3 comments:
Stag,
"Bad bank" and "toxic assets" just doesn't seem like things I'd ever want to invest in.
"Certified pre-owned" did wonders for the reputation of the "used" car industry.
If we don't get this ponzi scheme restored soon, we may never get it restored.
A few thoughts.
First, "the beatings will continue until moral improves."
Second, "a crisis is a terrible thing to waste" (Rohm Emmanuel).
Third, "we can't handle the truth. We want this ponzi scheme, we need this ponzi scheme" ......
In the weird but true category, GE has net tangible assets of only $13 billion (~10% of its stock holder equity). GE's net tangible assets have fallen 50% since 12/31/05. GE has $83 billion of goodwill on its balance sheet.
AAA baby! The few, the proud.... It really is a faith based system.
http://finance.yahoo.com/q/bs?s=GE
Stag,
http://en.wikipedia.org/wiki/United_States_budget_process
I'm thinking maybe the government can fix the eCONomy after all if we apply some serious Reagonomics.
Consider that the $700 billion in TARP spending is by far the largest component of government spending. All we need to do is make the TARP permanent. Make it another entitlement program. Besides, we now all recognize that bankers are entitled to their bonuses.
Entitlement growth is/has been the engine of the American eCONomy since 1980.
http://en.wikipedia.org/wiki/United_States_public_debt
We need to embrace the magic of supply side eCONomics. In other words, we need more fuzzy math. Deficits don't matter.
mab,
First, "the beatings will continue until moral improves."
I watched Geithner speak today while simultaneously watching the stock market. I was SO reminded of the time my boss's boss told me that he just gave a coming to Jesus speech and nobody came.
All we need to do is make the TARP permanent.
Let's really have fun with it. Let's index it to the price of gold.
That way we can let the government go head to head with all those gold advertisements on TV. As capitalists, we should embrace the competition. It either marks the top of a precious metal bubble or it marks the coming collapse of the global economy as we know it. Who knows!
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