[Marxism] Bank bailout list
sartesian at earthlink.net
Thu Nov 26 08:38:24 MST 2009
Bloomberg is a little bit off in their numbers-- which represent total
potential obligations-- not current obligations.
For example the 1 trillion for the PPIP is the theoretical maximum possible
commitment of the program, provided banks offer up most of their MBS, ABS,
etc. etc. for sale. Actual amount of transactions so far? I think it's
around $40 billion, as banks, helped by a change in accounting rules, are
carrying this junk on their books at face value, or cost, and are loathe to
take the proverbial haircut in putting this paper into any market. Sure $40
billion is real money [or not] but significantly less than 1 trillion.
As for the $700 + stimulus program-- latest numbers are that about $250
billion has yet to be distributed and Geithner et al are looking to divert
those funds to pay down the debt-- or more likely pay the interest on the
debt when refunding gets more and more problematic.
FDIC has not drawn on its $500 billion credit line with the Treasury yet--
but it will as the insurance fund technically has slipped into the red; it
is on the hook to share significant losses on assets of failed banks taken
over by "healthy" banks, and who knows what happens when and if banks that
took advantage of the Temporary Loan Guarantee Program can't re-fund in the
markets when that debt comes due?
The numbers are big, but not that big. Yet. Things can always get worse.
FNMA and FMAC are the black holes of the asset-backed universe, soon to be
joined by the FHA, and... couple of the Federal Home Loan Banks are already
below their mandated capital requirements.
A year or two ago, the Wall Street Journal ran an article on "defensive"
investments in tough times, starting the article with acknowledging that
"canned goods and firearms" seem like a solid bet.
Happy New Year. Same as the old year.
----- Original Message -----
From: "Shawn Redden" <wsredden at gmail.com>
To: "David Schanoes" <sartesian at earthlink.net>
Sent: Thursday, November 26, 2009 10:01 AM
Subject: Re: [Marxism] Bank bailout list
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