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View Diary: Big Banks Planning To Profit From Debt Ceiling Crises. (37 comments)

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  •  Except in this case the banks are betting against (4+ / 0-)

    the US credit. In the end doesn't that mean the tax payers will foot the bill? Sure, there are going to be some bond traders making money off other bond traders but the real hit will be the increased cost of borrowing the money to us (or US) down the road. Bond traders will dick each other over for millions, maybe billions. But the end result will cost the tax payers billions, maybe trillions.

    Spite is the ranch dressing Republicans slather on their salad of racism

    by ontheleftcoast on Tue Oct 15, 2013 at 02:08:26 PM PDT

    [ Parent ]

    •  Banks will have Credit Default Swaps (3+ / 0-)
      Recommended by:
      ontheleftcoast, a2nite, FarWestGirl

      to insure their other investments.  So they'll be sticking it to the people who relied on the government money, while their other investments will be well hedged.  They'll be laughing all the way...

      •  to the bank? No, wait, er.. WTF?! (2+ / 0-)
        Recommended by:
        pollwatcher, FarWestGirl

        Where DO banks hoard their ill-gotten lucre?

        Spite is the ranch dressing Republicans slather on their salad of racism

        by ontheleftcoast on Tue Oct 15, 2013 at 02:20:03 PM PDT

        [ Parent ]

      •  pollwatcher - how is the proposed financing (5+ / 0-)

        using as collateral a receivable from the US government, any different than the hundreds of millions of receivable financing done every day by US banks?

        "let's talk about that"

        by VClib on Tue Oct 15, 2013 at 02:24:13 PM PDT

        [ Parent ]

        •  not much difference I'd guess, BUT (2+ / 0-)
          Recommended by:
          phonegery, FarWestGirl

          the people who normally get paid by the government won't be getting the money that many will desperately need.  So they're basically facing a liquidity crises, which the banks will gladly step in and provide the liquidity, using the Gov IOU as collateral.

          It's kinda like what my uncle Bruno used to do in Chicago when people were desperate for cash, although my guess is that collecting on defaults might be a little different.

        •  It's not providing the financing/liquidity that's (1+ / 0-)
          Recommended by:
          Tonedevil

          objectionable, that could be a very useful act, it's the taking advantage of, (admittedly we're assuming this, but it seems a well founded assumption), those who can't defend themselves, (during a manufactured crisis), that rubs the wrong way.

          Basically the difference between a relatively benign parasite and a pathological and rapacious one.

          Information is abundant, wisdom is scarce. ~The Druid.
          ~Ideals aren't goals, they're navigation aids.~

          by FarWestGirl on Wed Oct 16, 2013 at 11:46:40 AM PDT

          [ Parent ]

          •  FarWestGirl - it is not taking advantage (1+ / 0-)
            Recommended by:
            FarWestGirl

            of anyone to offer a receivables line of credit. At this moment there are already hundreds of millions lent to businesses of all sizes based on US government receivables and billions lent on other receivables. Most companies borrow the cost to make and ship a product and pay off that line when the customer pays 30, 60, or 90 days later. The federal government isn't a particularly fast payer in normal circumstances. So if some US banks are going to expand existing credit lines, or offer new ones to companies who might be short of cash because of longer payouts by the federal government, what is bad about that? This is normal, everyday, commercial banking, and at very low interest rates.

            "let's talk about that"

            by VClib on Wed Oct 16, 2013 at 02:20:10 PM PDT

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            •  Agreed, if providing that service for a reasonable (1+ / 0-)
              Recommended by:
              VClib

              return is what happens. The feds are notoriously slow pays, not as bad as UPS, afaik, but bad enough, and offering a stopgap to tide over legitimate interests is perfectly fine.

              The question arises if/when the banks use their position to unfairly rake the low end, desperate folks out of what little they have. I'm not against them providing a service and earning an honest profit thereby, just abusing the little guy who is over a barrel and can't say no or defend themselves, that's all.

              Information is abundant, wisdom is scarce. ~The Druid.
              ~Ideals aren't goals, they're navigation aids.~

              by FarWestGirl on Wed Oct 16, 2013 at 05:26:20 PM PDT

              [ Parent ]

    •  scary read? (0+ / 0-)

      disclaimerror: me. hayyp holloween.. i dunno what, who, why, this below article but.. it is some... interesting to the noodles.. maybe some opening to a new type of thriller novel? bolding private'tization by me..

      Under pressure from Wall Street and the Federal Reserve, the choices of the US government are limited to the following options: “State programs can either be downsized, phased out or transferred out of the public purse to the private corporate sector, implying in all cases the layoff of tens of thousands of public employees.”
      http://rt.com/...
      •  i dunno.. (0+ / 0-)

        but flip it on the other side.. if you reverse all these dire predictions & squash the sequester.. lose the keys.. & do a bunch of other needed financial reforms.. it's all good right? once we kick-the-gop-cans in the middle of road where then they are flattened & picked up to be recycled into new laptops?

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