Wed 2009-12-16 12:39 EST
The architect of America's banking bailout has revealed for the first time the chaos behind the scenes at the US Treasury during the creation of the controversial $700 billion (>>425 billion) Troubled Asset Relief Program (Tarp).
Dr. Housing Bubble Blog Fri 2009-11-20 08:25 EST
Last week, foreclosure Hall of Fame member and government stepchild Fannie Mae announced a stunning $18.9 billion loss. Remember last year when we were told that bailing out the enormous Government Sponsored Entities that we would be turning a profit? Well that didn't exactly pan out and both Fannie Mae and Freddie Mac have been a vortex for taxpayer money. With that said, Fannie Mae announced a ``lease for deed'' program that will essentially convert struggling homeowners to that feared word, renters. In the same week after Attorney General Jerry Brown sent his letter to the top option ARM wheelers and dealers in California, Wells Fargo came out with its ingenious solution. Wells Fargo has decided, at least as it stands, to convert their Pick-A-Pay option ARMs into glorious interest only loans for periods of six to ten years.
deed; delays; Dr. Housing Bubble Blog; Fannie Mae; financial future; leased; New Thing Called Renting; Option ARM Scenarios; Wells Fargo Announce Creative Mortgage Solutions.
Jesse's Café Américain Fri 2009-11-20 08:01 EST
...the key to coming out of a crisis permanently is not how quickly and dramatically one inflates the money supply, or even how long one maintains it, and how many stimulus programs one can create, but rather how quickly and capably a country can reform, can change the underlying structures that caused the problem in the first place. Japan has been doing it slowly because of its embedded kereitsu structure and government bureaucracy supported by a de facto one party system under the LDP. In the 1930's the impetus for reform was overturned by a strict constructionist Supreme Court and an obstructionist Republican Congress. The story of our time might be the perils of regulatory and political capture.
Jesse's Café Américain; Krugman declared; Maginot Line Completed; mission accomplished.
zero hedge Thu 2009-11-19 10:38 EST
the Federal Reserve established and refined a program that permitted banks to pledge virtually any security as collateral, including not just investment grade bonds and higher ranked securities, but also stocks of companies, the riskiest investment possible, and a guaranteed way for taxpayer capital to evaporate in the context of a disintegrating financial system, all with the purpose of bailing out Wall Street's major institutions. On two occasions last year: on March 16, 2008, and subsequently on September 14, 2008, the Federal Reserve first established what is known as the Primary Dealer Credit Facility (PDCF), and subsequently amended it, so that the Fed, in becoming the lender of last resort, would allow any collateral, up to and including stocks, to be funded by the Federal Reserve's credit facility, in order to prevent the $4.5 trillion repo financing system from imploding. By doing so, the Federal Reserve effectively gave a Carte Blanche to primary dealers to purchase any and all equities they so desired, with such purchases immediately being funded by the US taxpayer, via the PDCF. In essence, this was equivalent to the Fed purchasing equities by itself through a Primary Dealer agent.
equity markets; Fed's interventions; overview; Primary Dealers Credit Facility; Zero Hedge.
Credit Writedowns Mon 2009-10-26 09:20 EDT
Below is a YouTube clip featuring Elizabeth Warren, the chair of Congress' oversight panel of TARP (the Troubled Asset relief Program), the bailout started by Hank Paulson and passed by Congress. In it she talks about her fears regarding the lack of real regulatory reform in the world of finance and how this is setting [...]
became; credit writedowns; middle class; Thanksgiving dinner; Turkey; Warren.
Fri 2009-10-23 08:55 EDT
(Goldman Sachs, Financial Times, The Wall Street Journal, Rolling Stone, John Rogers, John Whitehead, AIG, Neil Barofsky, Troubled Asset Relief Program, Morgan Stanley, Hank Paulson, Lloyd Blankfein, John Thain, Lehman Brothers, Standard & Poor's, Tim Geithner, JPMorgan Chase, Jon Winkelried, David Solomon, Richard Friedman, Jamie Dimon, Robert Rubin, Dan Jester, Eric Dinallo, Hank Greenberg, Edward C. Forst, Neel Kashkari, Edward Liddy, Stephen Friedman, Sidney Weinberg, TARP, Joseph --Stiglitz, Lucas van Praag, Frank Suozzo, Mike Morgan, Matt Taibbi, Edith Cooper, Byron Trott, Warren Buffett, Barney Frank, John Thornton, Michael Lewis, Larry Summers, Barack Obama, Rahm Emanuel, Robert Hormats, Eliot Spitzer) Inside Goldman Sachs, America's most successful, cynical, envied, despised, and (in its view, anyway) misunderstood engine of capitalism. [2009-07-26]
2009-07-26; Goldman Sachs evil; good; just; New York magazine.
Jesse's Café Américain Sun 2009-10-11 15:55 EDT
As part of their program of 'quantitative easing' which is another name for currency devaluation through extraordinary expansion of the monetary base, the Fed has very obviously created an inflationary bubble in the US equity market...The monetary stimulus of the Fed and the Treasury to help the economy is similar to relief aid sent to a suffering Third World country. It is intercepted and seized by a despotic regime and allocated to its local warlords, with very little going to help the people...quantitative easing that is not part of an overall program to reform, regulate, and renew the system to change and correct the elements that caused the crisis in the first place, is nothing more than a Ponzi scheme...The most probable path is a lingering death for the dollar over the next ten years, with a productive economy that continues to stagger forward under the rule of the financial oligarchs.
Case; deflation; Equities; implosion; Jesse's Café Américain; Speculative bubbles; Stagflation.
The Economic Populist - Speak Your Mind 2 Cents at a Time Sat 2009-10-10 13:19 EDT
New America Foundation, Policy Director of the Economic Growth Program, Michael Lind is on a roll. He's pulling in a host of economists and policy formulators who really are speaking truth, interviewing them an' putting 'em on the Internets. You're going to love these interviews with Thomas Palley, Ralph Gomory, Pat Choate and Peter Morici.
economic populist; Friday Movie Night; Michael Lind Presents; Mind 2 Cents; speaking; Time.
The Full Feed from HuffingtonPost.com Sat 2009-10-10 13:01 EDT
The Obama administration's effort to help homeowners avoid foreclosure may not achieve its goal of helping 3 million to 4 million borrowers and may simply delay mortgage defaults for many, a government watchdog group says. The Congressional Oversight Panel, charged with making regular assessments of the $700 billion financial rescue fund enacted last year, said the Treasury Department should consider whether to improve the current $50 billion program or adopt new programs to meet an expected rise in foreclosures fed by increased unemployment...
com; Elizabeth Warren; full Feeds; HuffingtonPost; Obama's Loan Relief Plan; Serious questions remain.
zero hedge Sat 2009-10-10 11:57 EDT
...the Federal Reserve has faced two historically unusual constraints on policy. First, the financial crisis, by increasing credit risk spreads and inhibiting normal flows of financing and credit extension, has likely reduced the degree of monetary accommodation associated with any given level of the federal funds rate target, perhaps significantly. Second, since December, the targeted funds rate has been effectively at its zero lower bound (more precisely, in a range between 0 and 25 basis points), eliminating the possibility of further stimulating the economy through cuts in the target rate. To provide additional support to the economy despite these limits on traditional monetary policy, the Federal Open Market Committee (FOMC) and the Board of Governors have taken a number of actions and initiated a series of new programs that have increased the size and changed the composition of the Federal Reserve's balance sheet. I thought it would be useful this evening to review for you the most important elements of the Federal Reserve's balance sheet, as well as some aspects of their evolution over time. As you'll see, doing so provides a convenient means of explaining the steps the Federal Reserve has taken, beyond conventional interest rate reductions, to mitigate the financial crisis and the recession, as well as how those actions will be reversed as the economy recovers...
Calculated Risk Mon 2009-09-21 15:03 EDT
"We could be facing a triple whammy at the end of the year: the expiration of the tax credit, the end of the Fed mortgage-buying program and rising foreclosures.'' says housing economist Thomas Lawler
Calculated Risk; ending; Faces; Housing; triple whammy; years.
Minyanville Sun 2009-09-20 11:17 EDT
This morning in the Wall Street Journal Wells Fargo CEO John Stumpf is quoted saying ``If it's not a government program it's basically not getting done.'' While Stumpf's comment was targeted to the mortgage market and associated with a plea for Fannie Mae (FNM) and Freddie Mac (FRE) to raise their size limits so as to be able to pick up more jumbo mortgages I believe he nailed the current state of our economy: ``If it's not a government program it's basically not getting done.''...But to me, there's a fundamental flaw to the notion that the government can create a sustainable economic recovery...I kept coming back to a comment from Bennet Sedacca: ``They (the government) can make 'em bounce, but they can't make 'em fly.''
Thu 2009-09-17 09:31 EDT
Mainstream economics rediscovers Hyman Minsky; ``Instability,'' he wrote, ``is an inherent and inescapable flaw of capitalism.''...Minsky drew his own, far darker, lessons from Keynes's landmark writings, which dealt not only with the problem of unemployment, but with money and banking...Minsky argued that Keynes's collective work amounted to a powerful argument that capitalism was by its very nature unstable and prone to collapse. Far from trending toward some magical state of equilibrium, capitalism would inevitably do the opposite. It would lurch over a cliff...Minsky spent the last years of his life, in the early 1990s, warning of the dangers of securitization and other forms of financial innovation, but few economists listened. Nor did they pay attention to consumers' and companies' growing dependence on debt, and the growing use of leverage within the financial system... Minsky...argued for a ``bubble-up'' approach, sending money to the poor and unskilled first. The government - or what he liked to call ``Big Government'' - should become the ``employer of last resort,'' he said, offering a job to anyone who wanted one at a set minimum wage. It would be paid to workers who would supply child care, clean streets, and provide services that would give taxpayers a visible return on their dollars. In being available to everyone, it would be even more ambitious than the New Deal, sharply reducing the welfare rolls by guaranteeing a job for anyone who was able to work. Such a program would not only help the poor and unskilled, he believed, but would put a floor beneath everyone else's wages too, preventing salaries of more skilled workers from falling too precipitously, and sending benefits up the socioeconomic ladder.
Wed 2009-09-16 19:19 EDT
Almost everyone is aware that federal government spending in the United States is scheduled to skyrocket, primarily because of Social Security, Medicare, and Medicaid. Recent "stimulus" packages have accelerated the process. Only the naively optimistic actually believe that politicians will fully resolve this looming fiscal crisis with some judicious combination of tax hikes and program cuts. Many predict that, instead, the government will inflate its way out of this future bind, using Federal Reserve monetary expansion to fill the shortfall between outlays and receipts. But I believe, in contrast, that it is far more likely that the United States will be driven to an outright default on Treasury securities, openly reneging on the interest due on its formal debt and probably repudiating part of the principal. Treasury default considered likely.
default; economic; liberties; libraries; likely; U. S. treasuries.
Calculated Risk Fri 2009-09-04 19:23 EDT
John Burns Consulting sent out a note today titled: FHA Likely To Be The Next Shoe To Drop"The FHA's aggressive lending programs have continued throughout the housing downturn, causing its market share of the mortgage industry to grow from 2% in 2005 to 23% today. ... The FHA insurance fund, however, is likely running dry. ...
Jesse's Café Américain Thu 2009-08-27 10:45 EDT
Welfare for Wall Street is just another phase of the 'trickle down' approach that seems to be so popular with the financerati. If "Cash for Clunkers" had involved subsidized loans for cars administered by the banks it would have been touted as the greatest thing since sliced bread by the coporate media and mainstream infomercials, instead of being slammed on a daily basis as a troubled, pointless giveaway program.
Jesse's Café Américain; new deal; Programs Subsidizing Subprime Lenders; Wall Street.
