In the Eighties, Reagan set up the RTC to clean up after the S&L Scandal. The FDIC paid the depositors and the S&Ls were placed in a clearinghouse and sold off. The difference back then was we had he money to solve the problem. Now - not so much. But it's gotta be better than Biden and Pelosi's half measures.
Biden and Pelosi are talking about taking even more money out for TARP.
But now, they're using strong language like "ownership stake."
I'm gonna let you in on a little secret Nancy and Joe, the way I understand it, and I am by no means an expert, but if you bothered to check their ledgers I wouldn't have to, but - For what we're paying, it's entirely likely we should own the banks outright, and then some. For two reasons:
- Their capital is largely based on holdings in toxic assets, whose value is plummeting.
- That capital creates a huge negative value that the banks aren't reporting because these "vehicles aren't regulated" and they can play with the numbers. Many, if not most, of the Mortgage Backed Securities are illegal because they are improperly formed and backed. The banks and brokerages are therefor, subject to Truth in Lending and Securities laws.
So, please Nancy and Joe, tell Timmy and Gary to try and figure out what they're paying for before they spend OUR money (that could be used on healthcare, food, schools, sewers, water treatment, ashpond regulation) on these "banks", because I think we can do a bit better than some stocks.
Hell, Reagan did. But, we had money in our banks back then.
The losses to come due to toxic assets is in the trillions. Many Prime loans, auto loans, and credit cards are on the verge of tanking. The credit swaps to hedge the gamble on these loans are tanking. I believe Nationalization is a foregone conclusion. There are two questions: How? and How long?
Will it be a permanent nationalization or set up like RTC to expire after it's served its purpose?
We don't have the assets in savings in banks to secure the money necessary to buy out the Toxic Assets, because we've been putting it into crap 401(k)s and IRA's. So, will it be paid for by monetizing the costs which would be like lighting a match to inflation's fuel if Obama's stimulus is successful or is it possible to just wipe the slate clean and let the investors suffer their losses and call for the blood of the perpetrators?
I keep writing about the TARP. I just can't let go of the waste. It reminds me of a Temple of the Dog song "I'm Goin' Hungry."
Well, I don't mind stealin' bread
From the mouths of decadence -
But I can't feed on the powerless
When my cup's already over-filled....
Yeah...
But it's on the table, the fire's cookin';
And the farmin' babies of the slaves are workin'.
Blood is on the table and the mouths are chokin'...
But I'm goin' hungry.