Re TPM: Yep, It Was Really That Bad
TPM Reader MH makes the case that Lehman's collapse was really that bad and we can't let it happen again ... -- TPM front page
Does he? He makes confusions from the very beginning: "it's not always clear where the counterparty risk lies" is not relevant to the following "so it[']s often not clear how bankruptcy rules will apply to them". That's extraneous to Lehman prior to collapse. The simple point he does make is that people ignored the possibility of counterparty default. They assumed that all bets would be paid off one way or another. That's crazy, it's like saying "there's no risk but there's profit" in a system where profit (and loss) comes from risk taking.
He makes a muddle of it.That is one-sided fear-mongering at work. It encourages moral hazard without end. Letting Lehman go under shook out a lot of irrationality from the markets. That's a good thing, except to those invested in [long on] irrationality.
The fear people have now--and justifiably so, I think--is that the only thing keeping the financial system functioning at all right now is the assumption that the major governments of the world will not allow any other major counterparties to default. If even one of them is allowed to fail, that assumption immediately goes out the window and suddenly everyone will have to assume that any major counterparty could fail at any moment. If that happens, everything will grind to a hault again.
It wasn't, and isn't, that bad, unless we rush to make it that bad. Yes, it is complicated and yes it was unknown to many (though some gamblers clearly profited off it and people like Soros knew better than to get caught up in it). Now there is no excuse since everyone has had their individual noses rubbed in it. AIG has been spending government money unwinding its worst positions (probably carelessly thus costing more than necessary). Who else is at risk now?
We should always assume that a major counterparty, at any level, could fail at any moment. That's like, duh, in prudent economics. While it is true that we would do well to establish SOME systemic limits (people talk about putting CDS on a formalized exchange for instance), the phrasing of the comment has it all wrong unless it's intended as fear-mongering rhetoric.
Don't shy away from the important questions. Who else is at risk now, and to what extent? Who benefits from scare talk? Why funnel money to crooks and gamblers now?
The Fed is engaged in insane monetary inflation, printing money like there was no risk involved.
Politicians are always reactive.
March 20, 2009 4:09 PM | Reply | Permalink
Politicians with vision are proactive even if they like all humans are also reactive. Some have their vision aimed at self-service, others at public service.
I read that Obama was described as a "visionary minimalist". There's a cutely ambiguous phrase!
http://www.tnr.com/politics/story.html?id=8200e5c2-a250-4532-b318-6182083b698e
March 20, 2009 5:52 PM | Reply | Permalink
Nice one Eds. I didn't find that TPM post very illuminating either. I still don't have a very settled position on AIG, Lehman, or Stearns. However, there is a meta-point that really is too little addressed. There is no consistency or clarity about principles governing financial policy ever since it dawned on everyone that this was a major crisis. After Stearns it was a given that the govt wouldn't let any major player go under. Then Lehman happened. Then it seemed clear that the govt had 'learned its lesson' and would guarantee all the major players. Now, once again, that guarantee is uncertain. This creates the volatility and the danger to the system.
So one thing they should do is declare that only exchange traded CDS would be honored. That should get the glacial pace of restructuring and transparency in the CDS market to speed up somewhat.
I'm sure there are other principles such as these (guaranteeing no bondholders, guaranteeing all deposits, money markets, etc.) that would be useful. Its not essential Which principles they establish, but establish SOMETHING for God's sake. Anyway, just an idea...
March 20, 2009 4:09 PM | Reply | Permalink
Exchange trading is part of a systemic solution in the long run, but it misses the main point I keep trying to not so subtly state:
Essentially all CDS is gambling.
I see your point about the instability of uncertainty (it's an obvious one to me). The question remains: How much short term instability/pain is good for us in the long run? Trying to soothe the pain could be exactly the wrong approach, and this is what Paulson tried to do, buying up toxic assets of unstable and uncertain value at prices well above what the market would pay. Buffet's amendment was a bit better (run auctions on small amounts) but still stunk to me.
I almost regret my strong (for me) efforts to get stock injection taken seriously instead of demanding in no uncertain terms that more facts be put on the table, last Sept. But so far stock injection hasn't been bad except that now it's been diluted ad hoc (no more interest payments means free ride, and convertibility at whim is wrong).
March 20, 2009 5:48 PM | Reply | Permalink
This whole paragraph was opaque to me
"I almost regret my strong (for me) efforts to get stock injection taken seriously instead of demanding in no uncertain terms that more facts be put on the table, last Sept. But so far stock injection hasn't been bad except that now it's been diluted ad hoc (no more interest payments means free ride, and convertibility at whim is wrong)."
but then again, I'm being told I'm willfully obtuse today. Must be my traditional Friday vodka shots kicking in...
What do you mean by 'more facts on the table'?
And what do you mean the stock injections haven't been bad. They were always going to get wiped out. Unless you think the banks are somehow solvent... I don't get it!?!
As for cleaning up the CDS market, see, I don't think it is only of long-term interest. The unknown unknowns wreaking havoc in the market right now have a lot to do with the opaque nature of CDS exposure. Get them on an exchange and that changes immediately. You get standardized contracts, no worries about counterparties, and everyone's risk position becomes clear...
March 20, 2009 7:03 PM | Reply | Permalink
"I almost regret my strong (for me) efforts to get stock injection taken seriously instead of demanding in no uncertain terms that more facts be put on the table, last Sept. But so far stock injection hasn't been bad except that now it's been diluted ad hoc (no more interest payments means free ride, and convertibility at whim is wrong)."
-- What do you mean by 'more facts on the table'?
Decisions are made with and without facts, or if you prefer "knowledge of all the facts". I could not find out enough factual information in Sept. to form a solid model of the alleged "Armageddon" etc. That was partly my prior sloth/ignorance and partly that Paulson et al were simply not telling us much. I prefer to have more facts rather than fewer facts "on the table" when making a serious decision (to support or fight a political action).
Got that?
-- And what do you mean the stock injections haven't been bad.
Haven't been "all that bad" I should have said. They did apparently restore some measure of confidence and liquidity. But I was misinformed about the seniority, it seems. I thought they were super senior, that the investment had priority over bondholders, that it was "safe". Now it seems the government gets wiped out before the prior bondholders take a haircut.
And yes, I don't know what the currently imaginary but likely soon to be real further losses will be. I don't even have enough facts to make my own judgment as to the magnitude much less the details. But I remain firmly against funneling money to crooks and gamblers! Nobody seems to take that seriously, dunno if it seems too simplistic, too radical, or too obvious. Well, not "Nobody" but too few, far too few who might make a difference.
From The Wilderness,
little ol' me
March 20, 2009 7:57 PM | Reply | Permalink
"But I remain firmly against funneling money to crooks and gamblers! Nobody seems to take that seriously, dunno if it seems too simplistic, too radical, or too obvious."
I'm just trying - between sips - to frame this point. Me - I'm firmly against it as well. But that to me means letting all the big banks default (with some debt for equity swap). As soon as one goes, the rest will follow by domino effect. You need some kind of bankruptcy mechanism in place, and there is no effort to create this mechanism. What I've said elsewhere is that Geithner might be taking this approach, but with a gently-gently manner to it - incremental 'equitization'. Don't think that will work. And I don't think he has the balls to do it the harsh way.
I don't know if I'd have the balls to do it the harsh way either, though. It seems the 'facts' you'd like to have, regarding knock-on effects etc., just aren't knowable at this point. Geithner doesn't have a clue what would happen if he tried some hard-ball. So he's wimping out. Hence my call "VOLCKER!"
March 20, 2009 8:10 PM | Reply | Permalink
No, future facts are not real facts. I lack facts, sound data known to the bankers and maybe to Geithner. The domino effect "facts" are not unimportant but they are not facts yet.
"As soon as one goes, the rest will follow by domino effect. "
Scare talk. Really. Seriously. Even if there is some truth, it remains scare talk. I'm pissed off at being fed scare talk and am on a "hunger strike". If I had a key to Geithner's office, I'd be there to corral him (verbally).
You're painting a false dichotomy. The problem is that AIG is paying out on gambling debts. This needs to be dealt with. Collateral damage (pun noted) is secondary and some effort should be made to minimize it. But first things first, please.
March 20, 2009 8:22 PM | Reply | Permalink
Maybe this is the vodka speaking, but I don't think anyone has those 'real facts'. Not the bankers, not Treasury, not the SEC. The stress test will give some very rough approximation, but getting a handle a bank's net loss in some hypothetical unestablished future has in the present situation a high level of indeterminacy to it. Anyway, please don't call me a centrist shill for saying the above, or I'll just down the bottle...
March 20, 2009 8:26 PM | Reply | Permalink
No WF guy says the tests are asinine.
I think the banks know a lot more that they are letting on. It's not rock solid facts, it IS very much like rocket science (thus physicists in economics).
There is a dearth of factual info available to me. But acting morally doesn't require all the facts. It's just that it helps to have more of the right facts sooner.
March 20, 2009 8:36 PM | Reply | Permalink
ok, the vodka was exagerating: you're right - the banks do know a lot more. But you see the point - much of the value of their assets depends on the solvency of counterparties to insurance contracts, or 'bets' if you prefer.
On the other hand you are also exagerating (who is WF guy, btw.?) when you say the tests are assinine. They worked fine in Britain in the fall, though they failed to test sufficiently pessimistic scenarios.
March 20, 2009 10:33 PM | Reply | Permalink
WF = Wells Fargo
March 20, 2009 11:06 PM | Reply | Permalink
you got a link?
March 20, 2009 11:07 PM | Reply | Permalink
Why, you too drunk to do this yourself? :-)
http://www.google.com/search?q=asinine+wells+fargo
March 20, 2009 11:13 PM | Reply | Permalink
reply down at the bottom...
March 20, 2009 11:38 PM | Reply | Permalink
Isn't the entire justification for CDSes that they're supposed to be an insurance policy against default? That seems like the opposite of gambling.
What I don't understand is why it's OK to buy a policy on someone else's portfolio. That seems like letting mobsters take out life insurance on their rivals. A logical end result could be that they would all start trying to kill each other for the fast score. The entire mechanism seems designed to create chaos, not efficiency.
Why do we want to continue to allow this at all? Maybe a better solution would be to eliminate CDS contracts all together. The practice is barely a decade old - it's difficult to say the market won't function without them. I'd say it's looking like a failed experiment.
March 20, 2009 7:54 PM | Reply | Permalink
Right!
"buy a policy on someone else's portfolio"
that sure looks like gambling to me.
There is an element of gambling even in insurance. The insurance company is gambling that it won't have to pay off big, the insured is gambling that the company will have to pay off big (otherwise why pay for the insurance)?
But if you put up $22 million to bet that Lehman will fail, and you collect $1 billion, how is that not gambling even if not crooked? Why should the government pay you off? At most you should get your premium back when AIG gets in trouble and gets bailed out.
"Isn't the entire justification for CDSes that they're supposed to be an insurance policy against default?"
Not entire. They are bets against default, yes, sometimes. But they don't change the probability of default, they only change the cost of default, by paying out premiums so someone else can take part of the risk. Risk involves probability AND cost.
This is important, in moral economics, or economics morality. It's the difference between playing a children's game and playing with a loaded gun.
March 20, 2009 8:05 PM | Reply | Permalink
I was being a little sardonic - trying to imply that the original concept had been completely distorted; Of course any investment is gambling.
The CDS thing seems to be gambling - with a table that is really really easy to fix and no pit boss.
To extend your hypothetical, what if you put up 22 million betting Lehman's would fail and then you hired people to talk bad about them in the press and lobbyists to ensure they didn't get a bailout?
March 20, 2009 8:33 PM | Reply | Permalink
"rent seeking" is a term I learned from Ellen a month ago or so. If Paulson or Eisman et al did that, let's get them accommodations down the hall from Bernie Madoff.
I didn't mean to lecture you, just didn't know how to read your Q!
March 20, 2009 8:39 PM | Reply | Permalink
and no, I wouldn't say that any and all investment is gambling, that would be going too far.
Investment is risky, not gambling (gambling can be risky unless you fix the bet, but not all investment is gambling).
March 20, 2009 8:43 PM | Reply | Permalink
A credit default swap to protect against a possible bad debt serves a useful financial purpose. These parallel bets by third and fourth parties serve no purpose that's obvious to my tiny mind and thus seem more correctly designated gambling.
March 20, 2009 11:05 PM | Reply | Permalink
That is part of the distinction, yes.
But even hedging is gambling in a way which is different from value investing. It's betting against your first bet (betting that the investment will fail, else why buy the insurance). This is not to say that it's not useful. Of course it's not "black and white", and sometimes a good investment involves having several "irons in the fire" even if they conflict a bit.
Thanks for stopping by!
March 20, 2009 11:11 PM | Reply | Permalink
Agree
March 21, 2009 7:10 AM | Reply | Permalink
eds says, "The Fed is engaged in insane monetary inflation, printing money like there was no risk involved."
In today's Krugman he seems to think inflation is a good thing to get us out of the crisis. But then he states, "The problem may come when the economy recovers, and inflation starts to become a problem rather than a hoped-for outcome."
Seems to me that most Keynesian economists and our government are only looking for short term "answers" and "solutions" and not looking toward the future and the very real possibility of ruining our dollar.
I guess it’s political expedience?
March 20, 2009 5:16 PM | Reply | Permalink
I think that's a bit simplistic. It's intellectual failings combined with excess investment in dubious ideologies, leading to expedience.
Krugman strikes me as a good critic, but he often gives mixed messages so it's easy to get it wrong. I do understand the idea that printing money is okay, even if I reject it as immoral. There are moral solutions. What I don't know is how political leadership is making their decisions. That could well be a matter of political expedience.
One of my favorite quips:
Delusions Of Expediency, or How To Avoid Responsibility For Social Disintegration By Acting Without Principle Under The Pretenses Of Utility
That's the title of an SRL show from about 1987.
March 20, 2009 6:49 PM | Reply | Permalink
test line 1
test line 2
test line 4
test line 7
It looks like TPM just turned double line breaks into single breaks, changing the formatting...
March 20, 2009 6:51 PM | Reply | Permalink
just realized as well. what's up with that...?
March 20, 2009 7:16 PM | Reply | Permalink
March Madness?
Rehearsal for April 1?
Accident when updating blog software?
Could be blog specific, I checked other comments, they look okay. But I don't see or know of anything which would do this, like broken HTML in a blog post or comment might affect the rest of the page (I have seen that at TPM).
Your turn. :-)
March 20, 2009 7:46 PM | Reply | Permalink
At first I thought it was too many vodka shots... hahah.
Don't ask me. I've just barely figured out how to insert images through the source code (thanks to you, btw.)
anyway, need more vodka, just got told off as a 'centrist shill' by a crazy vegetable on another blog... rough!
March 20, 2009 7:54 PM | Reply | Permalink
Vodka is a vegetable! You are what you drink. :-)
shill... hmmm, I used that term re TheraP. She blew a fuse twice over! Weird.
btw, the spacing is not fixed, I'm triple spacing now, when I remember to do so, to keep readability!
test that was 5 spaces.
March 20, 2009 8:09 PM | Reply | Permalink
oooh... I missed that exchange! I don't even know what the word means. But it has an impact.
test that was 7 spaces.
Vodka's a vegetable?! I have no clue on these things. I used to think onions grew on trees, hell. city boy...
March 20, 2009 8:14 PM | Reply | Permalink
Vodka comes from potatoes.
Reagan taught us that ketchup is a vegetable.
You do the math!
hmmm maybe empty paragraphs are not rendering as anything and the line feeds are being ignored? Here are 4 tags with a single char. in eachYour seven spaces shows like my five spaces as a simple double space. The source code shows some oddities. I think the script which formats the text field for posting is messed up. Paragraph tags are not working right. The script converts even numbers of line breaks to p tags - here are 8 tags in a column:
a
b
c
d
looks like it.March 20, 2009 8:33 PM | Reply | Permalink
I think my vodka is grain-based. If I do some integrational math does that make me.... toast?
March 20, 2009 10:40 PM | Reply | Permalink
Only if it's dry heat and you get hot under the collar!
March 20, 2009 11:08 PM | Reply | Permalink
LOL! Verrry gouud, as my thesis advisor would say...
March 20, 2009 11:11 PM | Reply | Permalink
Sort of OT, but the 1T dollar printing thing made one other question pop up in my mind: When I first started looking in to the whole CDS thing, my first reaction (and still my belief) was that they were essentially printing money without the government's authority. If I understand it right, it seems they basically injected it into the IMF (I think that's where the non-money money that churns as revenue streams sits? If not, whatever ... that's what I mean).
This is still fuzzy for me ... but it looks like this was done without any country "printing" it so the money didn't show up as official inflation anywhere even though it was technically circulating. If I've got that right, aren't we all (the various nations) sort of playing chicken over who's going to print the money? And is the act of physically printing it even that significant if much of it has already technically been circulating for half a decade?
March 20, 2009 8:16 PM | Reply | Permalink
"printing money" is different from printing currency. It's shorthand.
The Fed prints money by creating dollars as a bookkeeping entry. I don't know how much control the Feds have over the Fed. Bernanke as Chair of the Fed is a government appointee but beyond that and some reporting requirements I think the Fed is pretty autonomous.
March 20, 2009 11:20 PM | Reply | Permalink
I'm pretty sure the Federal Reserve is autonomous.
My point was that the way they did it, ultimately you could (and we did) end up with far more CDS liability than there was underlying capital. That seems to be the source of the real hole we're in. These guys ditched their CDS liabilities to people who didn't have the capital to cover the losses by trading them as securities (any revenue stream is an asset eh?), pretended the risk was covered, thereby freeing up their same pool of capital to do it again and again. But everyone has been exchanging these things at face value, cashing them in for currency, etc. From the outside, it looks essentially the same as someone getting a printing press and making themselves batch after batch of assets without ever producing more capital. It seems this "money" has been circulating in increasing amounts since 2000/2001.
Wasn't the act of creating X new "dollars" on the books essentially accepting - or monetizing - a portion of this counterfeit money the banks have been trading among themselves for years? I mean, if there were NEVER unique assets that backed some of these things, there was never any real money to begin with.
At this stage it appears these capital injections are the government agreeing to accept the funny money these assholes have been producing. Since it's international, it seems like whichever country creates new currency entries in their respective nation's ledgers are padding this into the country's money supply (even if it's never physically printed) which my pea-sized knowledge of economics translates into creating inflation.
So aren't we really fighting with the other nations over who is going to eat this? Can't the winners and losers in this international battle be determined by who ends up creating more money and injecting it into the system?
The other point I'm wondering about: if indeed we've been spending and earning based on these assetless assets, haven't we really already taken the inflationary hit - exemplified by flat earnings for 90% of Americans in the face of skyrocketing costs for everything - even if on the books the economists weren't calling it inflation? And does this have any bearing on (either to reduce or amplify) the real-world impact of booking 1T+ in new dollars?
I don't necessarily expect answers ... I'm kind of spewing on your thread trying to get my head around the questions (sorry).
One thing is painfully clear - the tools they are using to manage and describe our economic system are woefully inadequate and don't account for a fraction of the bullshit they pull on "Wall Street" (and it's international analogues).
March 21, 2009 2:14 PM | Reply | Permalink
Fuck! The preview works fine - but when the comments post everything is ALL FUCKED UP!
March 21, 2009 2:20 PM | Reply | Permalink
Yes, there must be some glitch on this page which takes out double line breaks. :( I wrote to TPM help as soon as I noticed it. And no complaints here about your rant content!
On topic: "end up with far more CDS liability than there was underlying capital"
Exactly. The house was taking leveraged bets (think roulette) unrelated to capital assets in reserve, and also taking side bets. There could have been 1000x more at stake on one real MBS or sliced CDO etc. than even the inflated market value of the property at the top. The idea that anyone should get their bet paid off is ludicrous and paying it off with government money is criminal. And to make it worse, it could be that some bets were placed as uncreditworthy IOUs in the first place, basically a ripoff bet. And now the house has written its own IOUs to the winners after collecting some but not nearly enough cash and legit IOUs from the losers. So the house is getting real money from the government and the Fed, some of which real money is losing its reality (monetary inflation devalues the existing money supply).
re printing press, no. Don't conflate credit with money. People may have been passing DEBT around for decades AS IF it were money. Anyone can create debt. Debt is imaginary money, and if sound it is based on good credit. An IOU is not money. The Fed's IOUs are real money, everything else is debt.
That said, your "funny money" would be the gambling IOUs, and yes, it does seem that the government is doing the swap you describe. I find it outrageous that we are funneling money to crooks and gamblers. I regret that I am not articulate enough to make this clear to everyone in the world (not that I have such delusions, just sayin'). I can't even make it clear enough to folks who read TPM, with rare exceptions it seems.
March 21, 2009 3:32 PM | Reply | Permalink
If you couldn't already tell, well yes I am! So thank you very much.
Read the article - it seems the man doth protest too much. Why is it assinine?
"We do stress tests all the time on all of our portfolios," Kovacevich said. "We (have) shared those stress tests with our regulators, forever. It is absolutely asinine that somebody would announce we're going to do stress tests of banks and we'll give you the answer in 12 weeks."
- i.e. it's supposedly assinine because the bank already TELLS the regulators they're solvent. What more could you want...?! hahah.
March 20, 2009 11:36 PM | Reply | Permalink
Well, what makes you think the new stress tests will be done differently?
I have no evidenced reason to believe K. is speaking in bad faith there, do you? Of course WF isn't Citi... and Citi does have Travelers, so if Travelers was doing what AIG did, good luck to them in the sarcastic sense.
March 21, 2009 2:21 AM | Reply | Permalink
Eds, I usually find it best not to put the name of a bank executive and the words 'good faith' too close together. It tends to create a great big semantic black hole which can suck the meaning out of a whole paragraph...
March 21, 2009 11:20 AM | Reply | Permalink
That leaves the first paragraph, the one ending with a question mark, for you to answer!
March 21, 2009 3:36 PM | Reply | Permalink
Well I don't know how all these programs are going to fit together. But the stress-test - even a lousy one - along with the public-private asset purchase, should get us to decent evaluation of a lot of the stuff on the books. Hopefully enough to justify putting them in receivership...
March 21, 2009 3:46 PM | Reply | Permalink
Here is a comment I posted re Krugman:
"Your comment is awaiting moderation." so I am copying it here instead of just linking to it (no comments show yet). Also I notice that the TPM "line break problem" has now spread to another post of mine, the blog post itself! Weird.
http://krugman.blogs.nytimes.com/2009/03/21/despair-over-financial-policy/
Hmmm…. I’m afraid I agree only in part. I think the G. plan stinks but not necessarily for K’s reasons (see K’s next post “More on the bank plan” for more on his thinking). Is despair the same as capitulation, the time to become a bull in a market?
Stripping out the “panic” language, there are legit questions as to whether assets are undervalued by the market or overvalued by those who hold them. I read that the market thinks some stuff is worth 30% of face, banks think it’s worth 60%. That huge spread isn’t “panic” but it is crazy. Surely a sound plan would find a way to reduce the spread. That’s what Treasury should be doing. Whether the “stress tests” will do this, or by contrast they are a smokescreen which misses the essence of a solution, I don’t know. I’m skeptical because stress tests are not aimed correctly.
Why, if the G. plan fails, will the administration have no further recourse? K thinks it will take political capital. But if the country is in dire shape, Necessity itself replaces ordinary capital (not that I want things to get worse). As Necessity is the mother of invention, maybe the problem is that G is trying to ignore Necessity and thus coming up with rehashed uninventive solutions — that could be K’s point in my words. But K is not calling for inventive solutions (and certainly not providing any that I’ve seen), he’s calling for Sweden redux. While this might be okay, it’s not new.
Does G. have a Plan B? What would be K’s Plan B? In fact, what is K’s Plan A?
What is K’s current view on what it truly wrong with the financial system? I mean, he does say there is panic and there are overvalued assets in principle. He says there is no reason for the panic/confidence component now (I don’t 100% agree). It is obvious that there is a huge valuation spread. But systemically, what is wrong and susceptible to adjustment or redirection?
The money supply at arond $3T is dwarfed by market debt at about 10x that (plus other debt). Is this a “systemic” problem or just a slightly bloated debt economy?
Here’s my crazy idea — let banks run even though they are technically insolvent. Change the rules, but not recklessly. But isolate the true banking interests from the holding company interests and liabilities. Citi as a bank is one thing. Citi as a conglomerate is a nightmare. Insurance companies, investment houses, and banks are different.
March 21, 2009 4:30 PM | Reply | Permalink
You're going to have to develop on that crazy idea some time, because in that form it does sound crazy. So suspend MTM accounting or not? Maybe it doesn't make a difference, because 'letting them run' just means an indefinite government backstop. Ok. But, I presume, only a backstop of their legit banking activities. I don't really see how you get the rules and regulations so finegrained as to be able to ensure gamblers and unproductive financial activity does not happen with govt money flowing without limit.
As for G's plan, it seems a bit silly in that there is no motivation for banks to unload this stuff. Demand for toxic assets will rise given the funding, and the prices will probably be quite generous compared to any estimate of 'real value'. Basically it's structured so that the government effectively owns the securities and writes call options on them that are sold to hedge-funds and such. And likely out-of-the money options. But there is no incentive for banks to offer these assets for sale.
March 21, 2009 5:00 PM | Reply | Permalink
This thread reads like Endgame. I guess I will be the parent in the garbage bin. That makes Obey Clov and eds Hamm. The discussion would be enlightening if the facts were not being deliberately obfuscated by our Masters.
March 21, 2009 10:41 AM | Reply | Permalink
Let me understand this. Maybe I'm a little fucked up. But I'm funny how? Funny like a clown? I amuse you? I'm here to fucking amuse you? What do you mean, funny? How am I funny...?!!!
March 21, 2009 11:12 AM | Reply | Permalink
uh...just in case
http://www.youtube.com/watch?v=s4jz00Eelbk
March 21, 2009 11:14 AM | Reply | Permalink
Ouch!
"the struggle of Hamm to accept the end can be compared to the refusal of novice players to admit defeat, whereas experts normally resign after a serious blunder or setback."
Who are our Masters? I helped produce the play in college but had to look it up on wikipedia. It's not that I have early Alzhiemers (I hope), but having a vague past and no apparent future is too close for comfort somehow. I do have a parent like that.
March 21, 2009 3:43 PM | Reply | Permalink