WSJ Editors Don't Seem to Like Obama's Plans

[VolsNSkinsFan]

So the big banks are sitting on their cash. Until that changes nobody is going to do anything.

they arent sitting on cash, they are buying US Treasury Bonds. Awesome isnt it? Getting cash from the govt and buying us govt debt, and round and round we go

where it stops nobody knows

 

[BigPapaVol]

they arent sitting on cash, they are buying US Treasury Bonds. Awesome isnt it? Getting cash from the govt and buying us govt debt, and round and round we go

where it stops nobody knows

it stops when the gov't actually uses those funds to absorb toxic assets or limits the use of those funds to offsetting bad assets at the bank level and requires new lending to equal the amount of that offset.

 

[BigPapaVol]

I have no doubt that tax decreases across the board or a national tax holiday would get things moving faster than anything Obama has done yet.

he frankly has no interest in things moving quickly today.

 

[droski]

Let me guess, if we had a Republican President the markets would be going up and there would be no deficit spending

i would have settled for the market not dropping 25% in the last two months personally.

 

[BigPapaVol]

Let me guess, if we had a Republican President the markets would be going up and there would be no deficit spending

I guarantee you we would not be touting about $2 trillion in new spending and the foundation for federalized healthcare as an added little benny.

Root for whomever you'd like, but you can take that to the bank.

 

[droski]

The TARP idea was the right one, but the idiots have essentially abandoned it and turned it into a big bank loan program.

TARP or relaxed mark to market is the only way to go. I don't like the relaxed mark to market because it's not a true solution for those assets. TARP is.

relaxed mark to market temporarily is a much easier solution. to go buy all the bank assets would create huge liabilities and if you are only buying a % the banks undoubably would dump the crap on the treasury.

 

[BigPapaVol]

relaxed mark to market temporarily is a much easier solution. to go buy all the bank assets would create huge liabilities and if you are only buying a % the banks undoubably would dump the crap on the treasury.

I think the toxic asset program is sensible because there is a very reasonable likelihood that those assets gain all or more of their marked down value, so the gov't ends up with a war chest to sell off. RTC did it.

 

[droski]

I think the toxic asset program is sensible because there is a very reasonable likelihood that those assets gain all or more of their marked down value, so the gov't ends up with a war chest to sell off. RTC did it.

so you do what? you force the banks to sell all their assets? what's considered toxic and what isn't? at what prices? it's a huge mess. and you'd need a couple of trillion at least. i'd agree that they will probably make money, but can you imagine the hand wringing?

 

[GASOUTHERNVOL]

it almost seems like the Barackstar wants a government takeover of Citi and BoA. IF he did not he would NEVER mention a government takeover, all that is going to do is drive investors away and the stock to drop (like it has) making it inevitable that the bank will be taken over by the fed...

 

[BigPapaVol]

so you do what? you force the banks to sell all their assets? what's considered toxic and what isn't? at what prices? it's a huge mess. and you'd need a couple of trillion at least. i'd agree that they will probably make money, but can you imagine the hand wringing?

No, you let the banks choose a % of the assets that are already written down. They've already eaten those losses, but you're precluding more. Since they choose, you ain't in that mess. The amounts are determined by total deposits or total assets.

 

[droski]

No, you let the banks choose a % of the assets that are already written down. They've already eaten those losses, but you're precluding more. Since they choose, you ain't in that mess. The amounts are determined by total deposits or total assets.

the banks then will obviously dump their crappiest assets on the treasury and the ones they think wont recover meaning the treasury will eat big losses. the fact is the banks are the ones with the best information as to how fairly priced these assets are.

 

[WA_Vol]

The bank we have our home loan through contact us yesterday and said they would drop out interest rate a half a percent if we sign up for automatic bill payment.

Interesting, I'm tempted to drop my automatic bill pay, miss a couple of payments, then see if they might offer to refinance for free at a lower interest rate.

Which is one of the problems with this mess, people who play by the rules are not getting any breaks.

 

[BigPapaVol]

the banks then will obviously dump their crappiest assets on the treasury and the ones they think wont recover meaning the treasury will eat big losses.

and that's fine. Frees up the most capital for the bank. That's what we're after. The Treasury might eat big losses, but that's the purpose of the program, but the intrinsic value in the property will recoup them something for simply being patient.

The RTC did this exact thing at it took 20 years to finally iron it all out, but it ended up being a very successful program. Why we aren't copying it, I don't know.

 

[WA_Vol]

I guarantee you we would not be touting about $2 trillion in new spending and the foundation for federalized healthcare as an added little benny.

Root for whomever you'd like, but you can take that to the bank.

Bush's drug benefit plan for seniors, wouldnt that be considered a form of federalized healthcare?

I'm not seeing a lot of differnce between either party with regards to spending at the moment.

 

[droski]

and that's fine. Frees up the most capital for the bank. That's what we're after. The Treasury might eat big losses, but that's the purpose of the program, but the intrinsic value in the property will recoup them something for simply being patient.

The RTC did this exact thing at it took 20 years to finally iron it all out, but it ended up being a very successful program. Why we aren't copying it, I don't know.

but why eat the losses if you can just change the accounting rules temporarily?

 

[volinbham]

obama just said he doesn't follow the stock market because it "just goes up and down and you can't dictate policy" on these random movements. apparently he hasn't realized it's been down almost every day since he suggested this "stimulus" package.

I saw these comments - he's so divorced from reality or simply doesn't care what happens as long as his agenda goes through.

 

[droski]

Bush's drug benefit plan for seniors, wouldnt that be considered a form of federalized healthcare?

yes it was a horrible idea. once again just because bush is an idiot that doesn't mean we can't criticize when obama is being an idiot.

 

[BigPapaVol]

Bush's drug benefit plan for seniors, wouldnt that be considered a form of federalized healthcare?

I'm not seeing a lot of differnce between either party with regards to spending at the moment.

Bush did that much to his own detriment and conservatives won't be going there in the future, after what it did to Bush's credibility with his own party. He sold his soul to win reelection and it creamed the party for years.

You're right on spending, but Bush was an anomaly as a R with R congress, which proved to be the fox and henhouse.

I never, ever again want to see a president supported by a sympathetic congress. I want a law passed in that vein.

 

[VolsNSkinsFan]

but why eat the losses if you can just change the accounting rules temporarily?

ding ding ding we have a winner!!

 

[WA_Vol]

yes it was a horrible idea. once again just because bush is an idiot that doesn't mean we can't criticize when obama is being an idiot.

:lol:

 

[BigPapaVol]

but why eat the losses if you can just change the accounting rules temporarily?

because you can't magically put that cat back in the bag someday. Those who get hammered by that change down the road will have a very good argument for gov't bailout because the gov't induced the problem by changing it then changing it back at a very inopportune time.

 

[vols4sure]

Interesting, I'm tempted to drop my automatic bill pay, miss a couple of payments, then see if they might offer to refinance for free at a lower interest rate.

Which is one of the problems with this mess, people who play by the rules are not getting any breaks.

Ah, the new American way spoken from the democrat. No motivation to do what they are supposed to do. Are you one of the liberals that argue no one wants to be on welfare? How about making all your payments for the pride of not taking any government assistance.

 

[joevol320]

Bush's drug benefit plan for seniors, wouldnt that be considered a form of federalized healthcare?

I'm not seeing a lot of differnce between either party with regards to spending at the moment.

the whole drug plan was a mess and alot of conservatives blasted him on that.

 

[droski]

because you can't magically put that cat back in the bag someday. Those who get hammered by that change down the road will have a very good argument for gov't bailout because the gov't induced the problem by changing it then changing it back at a very inopportune time.

so you give them a one time only account (similar to a held to maturity account) where they can put whatever assets they want and those assets wont be held to mark to market. they have to take realized losses, but cannot mark up or mark down these assets.

 

[BigPapaVol]

so you give them a one time only account (similar to a held to maturity account) where they can put whatever assets they want and those assets wont be held to mark to market. they have to take realized losses, but cannot mark up or mark down these assets.

so what's the ultimate disposition of the assets?