From a recent Deutsche Bank research note (bolded portions added for emphasis):
“One main stumbling block to the purchasing of troubled assets has been pricing, specifically how does the government price a diverse set of assets in a way that does not put the taxpayer on the hook. However, this should not be the standard by which we judge the efficacy of the plan, because a more prolonged deterioration in the economy will result in a higher terminal unemployment rate and a greater deterioration of the tax base. As such, the decline in tax revenues will crimp many of the essential services provided by the government. Ultimately, the taxpayer will pay one way or another, either through greatly diminished job prospects and/or significantly higher taxes down the line to pay for the massive debt issuance required to fund current and prospective fiscal spending initiatives. We think the government should do the following: estimate the highest price it can pay for the various toxic assets residing on financial institution balance sheets which would still return the principal to taxpayers.”
Pretty clear, eh? Either buy our toxic assets now, deferring the cost over the next generations of citizens, or risk a prolonged period of unemployment. Your choice.
You see, if I thought that “dimished job prospects” meant only that, then I might be for just letting the banks take their own medicine. The truth is that “diminished job prospects” is a euphemism for social unrest, in my opinion.
Regardless, the taxpayer is on the hook for this mess. Any one saying anything to the contrary is a liar.
To see the original blog that broke this story, go here:
The Baseline Scenario: Robbery Note — From the Banking Oligarchs this Morning
The Planet Money Blog on NPR also has a good story on it:
Tax Payer Beware: Bank Bailout Will Hurt
What can one say but “douchebags”? But this is at the crux of the matter – either with pay an appropriate value for the assets, and the banks get further writedowns and further deterioration in their balance sheets (thus needing more capital from the government), or we overpay for the assets which means that tax payers will likely never see a dime on the “investment”. Fucked either way.
Pathetic. Did you hear that the government is now contemplating nationalizing the 401K in order for people to get guaranteed returns year over year? I’m waiting for every house to have a “government servant” so I can get my ass wiped whenever I feel like it.
This makes me sick.
Off to go throw up…..yet again.
Fuck, Im so sick and tired of all this bullshit.
@ZMoose12; it will be an option, but not forced onto people if it does come to fruition.
Douche nozzle extortionists.
Fuck em!! Let em fail!
As I’ve heard, shazbot… Quite disgusting, option or not =/
I think the only folks angry at the ‘guaranteed return’ on 401k will be the traders who made tonnes of money betting against Steve (the neighbour) and his 401k.
Giving the banks a ‘taste of their own medicine’ would likely repeat the whole Lehman disaster.
I think plenty of the people that were sold the ‘401k boondogle’ would sign up rather quickly for some ‘assured returns’ after seeing their balance drop by 40% because they weren’t educated enough to know to invest outside the US for the last 10 years.
In fact, a quite popular opinion might be summarised thusly: “We loaned Wall Street our money for our retirement. It’s time we got it back”.
I know that is definitely on the mind of CBs everywhere but most especially places where warehouses of US Pesos sit dormant waiting to be spent on stimulus actions.
It really doesn’t matter much that Geithner is hiding under his desk and afraid to come out with a comprehensive bank nationalization plan.
As it become clear Obama’s plan to bankrupt the country by borrowing and spending to try to pay for nationalized healthcare, nationalized education, and eventually nationalized banking (probably late 2010), then social unrest is a near certainty.
25 years without social unrest has turned you all into soft pussies. We need trickle up poverty. It is required to make you all man the fuck up. Roving bands of maurading looters firing random shots through the living room window of your house on the cul de sac while setting your luxury import car on fire will make you all man up.
Mock him if you want, but I think Devildog gets it.
More truth for you if your interested. I know you’ll be interested in the parts with Fibonacci and Mandelbrot:
http://video.google.com/videoplay?docid=-6030443037963555139