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Treasury seeks to expand definition of "troubled assets" covered by bailout

Monday, September 22, 2008, 2:07 PM

I know things are moving fast, but I object to retroactive editing of online articles without any indication that this has been done.

I captured the quote (below) from this article in Bloomberg earlier, but it no longer exists in the linked article.  You can still find this quote in the Google cache, but I don't know how long it will remain there either.

Quote:

"The Treasury's thinking is to make it as big and wide as possible so they have the flexibility to act if need be,'' said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors, which manages about $108 billion. "There have been losses on a whole range of U.S. debts and as the economy deteriorates in response to the housing slump those losses could escalate.''

Treasury officials now propose buying what they term troubled assets, without specifying the type, according to a document obtained by Bloomberg News and confirmed by a congressional aide.

This quote caught my attention (and quick capture) because of its blunt honesty and potential implications.  Let's think of all the types of debt that could reasonably be considered as  "troubled" by the mortgage meltdown.

  1. Auto loans.  Certainly anybody who is losing money on a house might be at risk of not paying off their auto loans, so these are clearly linked.
  2. Credit card loans.  Ditto above.
  3. Corporate bonds.  Well, certainly it can be argued that if we weren't in the midst of a gigantic housing bust, corporations would be doing better.  So these are 'linked,' I guess.
  4. Municipal bonds.  Who could argue that municipalities are not worse for the wear due to the housing bust?
  5. Etc. and so forth.

I think that the fact that this sort of statement/speculation even snuck through provides enough "smoke" that we have to consider it likely that the behind-the-scenes situation is far more grave than has been let on.

Any expansion of the bailout to "troubled loans" will simply mean the end of the dollar as we know it. You can set an egg timer on it.

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19 Comments

joe2baba's picture
joe2baba
Status: Martenson Brigade Member (Offline)
Joined: Jun 17 2008
Posts: 807
whoa
i think we are all overreacting. i called a good friend of mine who is pretty high up in the treasury and asked if any of the guys from enron, worldcom or tyco were involved in fixing all this and he said no they were all in jail. boy i feel a whole lot better now.
northernsoul's picture
northernsoul
Status: Member (Offline)
Joined: Jun 16 2008
Posts: 16
$1,000,000,000 per word
Chris, you missed the joke! The plan is 3 pages long. Using 12 point text that is about 700 words.... ...0r to put it another way about $1,000,000,000 per word. "The three-page rescue plan sent to Congress Sept. 20 empowers Treasury Secretary Henry Paulson to purchase mortgage- related securities from U.S. financial companies." Northern Soul
jeffgerritsen's picture
jeffgerritsen
Status: Member (Offline)
Joined: Aug 10 2008
Posts: 10
Surly my friend you Jest!
Surly my friend you jest!

What your friend in the treasury dept didn't tell you was they only put the figureheads in jail. The worker bees who implemented all of the past scandals didn't even get their hands slapped - and they are the ones running the show.

Wow, what a time to be alive!

World wide financial collapse (its starting to look like it), Peak oil, and climate change - all happening now! This is the E-ticket of all E-ticket rides in recorded human history!

Now does that put things in perspective?

Jeff
cannotaffordit's picture
cannotaffordit
Status: Gold Member (Offline)
Joined: Jun 12 2008
Posts: 273
It just ain't fair
Well, Well. Isn't all this just fun and games? Here we are, 72-years-old and having worked all our lives and saved, saved, saved, so we could enjoy a pleasant retirement. Of course, we have no debt whatsoever and haven't had for a long time because we tried to "do it right." Now here we are... ...dependent on our IRA's, (with fixed amounts that we thought we could withdraw to live on for modest survival) and now its looking like we're going to have to sell our home at a huge loss (even though no mortgage) and move into a trailer park or something to try to stretch what will be left of our investments, and with the reduced value of our dollars, until we die. Well thank you to all those wonderful people we have elected to represent the best interests of the American people in Washington D.C. You bunch of liars, thieves and religious hypocrits! Although my wife and I made good decisions - didn't get involved in crazy mortgages, saved appropriately, didn't get involved in credit card debt and didn't spend more than we made - it all did us no good. Our food, medicines, insurance, taxes, fuel, utilities, etc. are spiraling upward just like everybody else. Who the hell is going to bail us out? Don't we at least deserve as much consideration as those corporate and government leaders who have made millions and billions on this new (now 30-year-old) economic theory? It just ain't fair. And I can see now why some people, especially in other countries, have taken up arms. Ben
doggett's picture
doggett
Status: Member (Offline)
Joined: Jul 29 2008
Posts: 6
Northern soul?
Just out of interest ... is that Northern soul as in J J Barnes, Frank Wilson, etc?
joe2baba's picture
joe2baba
Status: Martenson Brigade Member (Offline)
Joined: Jun 17 2008
Posts: 807
jest
yes of course it was a jest
joe2baba's picture
joe2baba
Status: Martenson Brigade Member (Offline)
Joined: Jun 17 2008
Posts: 807
Fair?
no it is not fair. and it is getting time for a real CHANGE. this bill is going to pass. they will blather about mainstreet and helping a few of us indigents, who got this way because of them. but the deal is done. barclays buys lehman sans bad paper we buy everyone else sans assets. these are the geniuses we elected. i have written to them till my fingers got numb. i hope they are getting a very big cut from the boys on the street. the root of all this is the federal reserve act of 1913 when the real coup took place and a few families took over. the only candidate who had a snowball's chance in hell of doing anything was ron paul but guess what he could not field dress a moose. i can really only blame myself and the american people who went to sleep. some friends of mine the other night said not to worry the dollar is solid it is backed by gold. one of whom currently has about 20 million in the stock market. i swear it is the truth. i have met the enemy and it is us. i am staying in the woods and stocking up on ammo. ben i feel your pain. ps i wonder if they have gotten all the gold out of ft knox and the ny reserve yet that's all that was left of reality. lets write them and ask for an honest audit. by oh how about hank and ben 2 guys we can trust.
miranda's picture
miranda
Status: Bronze Member (Offline)
Joined: Apr 29 2008
Posts: 28
"ps i wonder if they have
"ps i wonder if they have gotten all the gold out of ft knox and the ny reserve yet that's all that was left of reality." ******* From my window I can see the Wall Street helicopter landing pad. You wouldn't believe the amount of helicopter traffic the last week. Sure, there must have been lots of meetings, but some of those choppers looked to be flying kinda low. It was hard not to imagine them filled with bags of gold...
rritter2000's picture
rritter2000
Status: Member (Offline)
Joined: Sep 21 2008
Posts: 13
Still More Questions
Does anyone know if the newly proposed “Bailout” legislation includes terms by which the secretary could introduce a new fiat currency – ala the Amero? Also, does anyone know what company supplies the paper stock for the Bureau of Engraving and Printing? Might be a good one for your Hedge Fund list...
LAClimber's picture
LAClimber
Status: Member (Offline)
Joined: Apr 3 2008
Posts: 24
Counter Proposal Excerpts from CNN
"The proposal, offered up by Dodd, would require companies who sell assets to Uncle Sam to give the government shares in the company, according to a draft obtained by CNN. The Senate Democrats' proposal would also require the government to come up with "a systematic approach for preventing foreclosures and ensuring long-term, sustainable homeownership through loan modifications and use of the HOPE for Homeowners Program" on the mortgages it buys in the bailout." So our $700Billion will be used to -clean up balance sheets -help homeowners and others refinance their loan terms. In return, we get equity in an otherwise failing company? I like Dr. Martenson's idea to leave the bad equities on their balance sheets as a reminder. Another fun couple of days coming up!
cybernytrix's picture
cybernytrix
Status: Member (Offline)
Joined: Sep 11 2008
Posts: 18
Sleight of hand
After reading some article on Bloomberg, all this simply seems like a big scheme to get the stock to rally - especially JPM and GS stocks. Any readers here who can decipher Bush's speech and hidden messages???
cannotaffordit's picture
cannotaffordit
Status: Gold Member (Offline)
Joined: Jun 12 2008
Posts: 273
RE: reading Bush's speech
Sure, we can all decipher it. Whatever he says is a batch of lies. Ben
bobb dobbs's picture
bobb dobbs
Status: Bronze Member (Offline)
Joined: Apr 22 2008
Posts: 31
"King Henry!" Rep Jim McDermott nails it!
This YouTube clip may give you a little hope since at least one guy on the hill gets it. http://www.youtube.com/watch?v=AWf3NLCAEs8
Acorn's picture
Acorn
Status: Member (Offline)
Joined: Aug 22 2008
Posts: 1
A Matched Preferred Stock plan for government assistance
Chris; what do you think of this "A Matched Preferred Stock plan for government assistance" see:- http://blogs.ft.com/wolfforum/2008/09/a-matched-preferred-stock-plan-for-government-assistance/#more-186
northernsoul's picture
northernsoul
Status: Member (Offline)
Joined: Jun 16 2008
Posts: 16
Northern Soul?
As in "I've seen the light" and "Build a foundation" Yes. Northern Soul
EndGamePlayer's picture
EndGamePlayer
Status: Platinum Member (Offline)
Joined: Sep 2 2008
Posts: 546
Too Predictable
So they want this bill passed - what will they do to get it done? Watch for the media to play along as they have been all week - talking like the bail out is a done-deal. How about a "human suffering story" of people's tragedy caused from the "banking collapse" (which is really that 1% crying cause they lost a little opportunity to stick it too the American people 1 more time before Bush leave's office). Or, will they come up with some tragic "alt story" that diverts attention away from the bail out bill so the house can pass the it when no one is looking? I'd put my money on - the bill gets debated (to make a few politicians look good like they "fought the fight"), then the bill gets passed and it doesn't even show up in evening news.
rlee's picture
rlee
Status: Silver Member (Offline)
Joined: Sep 18 2008
Posts: 148
Get an inch, take a yard
This is nothing more than simple greed. The plan called for holding back knowledge, creating fear, and then "saving the day". It has become very apparent that the powers at the helm of this fabulous money making scheme are students of Hermann Goering who has taught them well. Consider two of his most famous - and all so true - quotes: “Education is dangerous - Every educated person is a future enemy”, and the best of all: (read this one while replacing the word 'war' with the words 'financial collapse'!) “Naturally the common people don't want war; neither in Russia, nor in England, nor in America, nor in Germany. That is understood. But after all, it is the leaders of the country who determine policy, and it is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is to tell them they are being attacked, and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same in any country.” This is true for any crisis as evidenced by it's extension to financial collapse. Why the human race continues to repeat the errors of the past still boggles my mind. Remember the definition of Insanity: "The repeating of a course of conduct while each time anticipating a different result". I've got my "E" Ticket, this ones gonna be a Wild Ride!!!
blaquehorse's picture
blaquehorse
Status: Member (Offline)
Joined: Sep 18 2008
Posts: 3
Surely, this is a game of ...!
I am not one for conspiracies, but all this seems a little bit contrived. With all the so called great minds out there surley SOMEONE saw this coming or wanted this to happen. Which therefore begs the question - What is really at play here? Is there another agenda round the corner? Or are we being played with somebody else's strings? Or is everybody in the financial and political arena a buffoon like GW, surely that would be giving the man too much CREDIT (oh forgive the pun once again!). I dare say we will find out over the coming days and weeks!!!
doggett's picture
doggett
Status: Member (Offline)
Joined: Jul 29 2008
Posts: 6
Northern soul?
So now it's just "Keep on keeping on" then?

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