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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerU.S. Treasury Secretary Geithner is expected to give out details of his toxic asset purchase plan, which includes forming public-private partnership. The cost of the program is estimated at $1 trillion!
Before you can even think of spending another $ 1 trillion bailing out the banks, you have three major problems to take care of:
1. JP Morgan Chase & Co (NYSE: JPM) is holding $ 87.7 trillion of CDSs "off the books." Citigroup Inc (NYSE: C) and Bank of America Corp (NYSE: BAC) are holding another $43 trillion of CDSs "off the books." That's $130.7 trillion "off the books" for just three banks. CDSs, CDOs and CLOs are over the counter (OTC) transactions. Bank regulators do not determine the dollar value of these transactions. If you don't even look at the transactions, how can you determine the extent of the problem? This is why the title of this post says it is foolhardy to spend $1 trillion of taxpayer money when you don't even know the extent of the problem.
3. Until Congress passes a law forcing banks to put all their transactions "on the books," nothing should be done.
Banks have been stonewalling the Treasury and the Federal Reserve just to get more taxpayer money.
For goodness sake, stop! Stop now before you bankrupt this country. Take the $1 trillion and form a "good bank" and let everyone put their money in this bank. A $1 trillion bank would show the world that we have a strong, solvent banking system to take care of America's needs.
As for the greedy bankers who got themselves into trouble, let them take their lumps or join the ranks of the unemployed. It's time to end this craziness once and for all.
The Treasury seems to be saying: "we know we have a massive problem, let's throw another $1 trillion at it and see what happens." But the American people will not stand for wasting another $1 trillion. American tolerance for bailing out the greedy bankers to the tune of another $1 trillion is at the breaking point.
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Reader Comments (Page 1 of 1)
3-16-2009 @ 1:46PM
bob schick said...
cmon, you're 10 years old, right?
3-16-2009 @ 1:55PM
Iridium said...
This is also why this current rally on Wall Street is foolhardy. Sure any company can say it is running at a profit before it has to write off expenses.
In reality the banks are a long way from profitable and haven't made one dime this year.
We have a major problem with the CDSs being held off the books. It is a powderkeg just waiting to explode. I am a firm believer that the bailout was done to keep the major banks from having to disclose the extent of the CDS problem. If one massive bank failed they would have to open the books and we would find out that the entire global economy is nothing but a sham.
When they meant that the failure of one of these banks would cause massive destruction it meant that we would find out that trillions of dollars of economic development never really happenned at all. It was just debt that was traded around.
3-16-2009 @ 2:27PM
BHarrison said...
Somehow it appears that no matter what is done, investors are going to get little if any return in their investments in T-Bills, and the stock market is just too risky.
It somewhat appears that people will be limited to whatever monies that hey may have now, at best. So, if there are no returns on investments, how does the government expect economic activity to increase?
Why would a rasonable and prudent person invest in ANYTHING in the markets that provides ZERO interests or returns, or in highly risky stocks or funds when there are no incentives to invest?
This is certainly a "catch-22" situation . . . a specialty of our politicans and bureaucrats.
3-16-2009 @ 8:04PM
cabo79 said...
More BS, The banks will dump their bad loans on us and just hoard the money that they will be overpaid for the bad loans that the idiots made. What happened to the new SBA provisions that were in the Senate version of the bailout bill? Bought off? (political contribution). Our current form of government is paralyzed by their need for pay offs. (political contributions) They can't do a thing for fear of loosing their pay offs (political contributions). The only way to end this BS is to go to term limits. You cannot have a Free Society without rules, laws, a police force to catch the bad guys and prisons to put them in. The same goes for a Free Market capitalist society, you have to have rules, regulations, a police force and prisons to put the bad guys in. Our government is not capable of maintaining a Free Market. Too many political contributions (pay-offs), it is obvious laws are bought and sold. Folks we need to correct this. It happens over and over. The Hill is one big club, and we are not members. We need a major change to end this club or professional politician form of government. We need TERM LIMITS and real campaign finance reform.
How about one 3 year term for Congressmen, one six year term for Senators and three, three year terms for President. No past Congressman can run for President or the Senate and no past Senator can run for Congress or President. We need an end to the professional politician form of government. It can only get worse.
3-16-2009 @ 11:40PM
blogs11111 said...
Connie, your blogs are always so informative and interesting. I wish they made the headlines.
3-17-2009 @ 1:40PM
Massimo GIANNINI said...
Take the $1 trillion and form a few "good banks" as I have been suggesting since October 2008, and let everyone put their money in this bank and invest in it.