Timmy needs more power??!!!!????

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mpelchat's picture
mpelchat
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Posts: 214
Michael Höhne's picture
Michael Höhne
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Joined: Nov 16 2008
Posts: 119
Re: Timmy needs more power??!!!!????

What did you expect? Germany passed a bill into law allowing banks to be nationalized. This law is meant to be active only for a few months and the reason for it is Hypo Real Estate. HRE received bailout money of more than 100 billion Euros so far and it's said they have derivatives in an order of 1 trillion. Entire Germany has a GDP of roughly 2.5 trillion.

I do understand the worries about letting such an institution fail, but on the other hand many smaller companies, including banks, are not bailed out. They are going straight into insolvency. This adds up to multiple billions. As far as banks are involved, the German deposit protection fund guarantees the deposits up to multiple millions per account. Of course that only works in small scenarios.

If such an institution goes bankrupt, then the counterparties (not necessarily the private investors) face a big loss in money. If these counterparties are banks themselves, then they are in real trouble because of fractional reserve banking. If a bank has to write off 10 billion, then they need 100 billion fresh money to balance their sheets. But there is no such money besides the one created out of thin air. So either print ten times or even more the money defaulted on to save the banks, or cancel loans worth 100 billion. Or they have to default on their own, which of course creates a chain reaction. As far as I have understood, this is what "too big to fail" means.

Now if there is enough money in these insurances (deposit protection fund, guess that's the same idea as FDIC), then we can safely let the big institutions go bankrupt. In the end we have to pay for it, but it's just a matter of how we pay. We can print money for bailouts or we can print money to pay ourselves as part of the protection fund. Either way we have to print money. But at least the companies most involved have to pay the highest price: they go out of business. Instead of letting that happen, we socialize these losses by giving it to the taxpayers.

I know there's more involved here, mortgages for instance. But if you can pay the debt, then you will find a bank willing to continue the contract. If you can't afford it, then you have to default on it anyway. It's all about the status quo and becoming more ridiculous every month.

There's only one institution per state that is too big to fail. And that is us, the people. Everyone else should be allowed to bite the bullet and die.

mpelchat's picture
mpelchat
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Posts: 214
Re: Timmy needs more power??!!!!????

Well said, however the point is the grab for power not failure of our economy.  No offence intended but we are heading for a socialism that we did not vote on or approved of.  I am not against socialism if that is what the peole want.  We are not being given a choice.

DrKrbyLuv's picture
DrKrbyLuv
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Posts: 1995
Re: Timmy needs more power??!!!!????

What ever happened to the Constitution and the rule of law?

Larry

SkylightMT's picture
SkylightMT
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Re: Timmy needs more power??!!!!????

I think nationalization of AIG is absolutely what is needed. It really is too big to fail, and its self-interested parties too concerned about their own well-being to possibly manage the agency with the big picture in mind. The feds should have pushed for this last year. A whole lot time and money has been wasted letting them remain private.

VeganDB12's picture
VeganDB12
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Posts: 756
Re: Timmy needs more power??!!!!????

I remember when Paulson put out TARP 1 (the 3 page version) he wanted basically unlimited powers, the ability to deputize anyone with the same powers at will, and full protection from. Prosecution if he screwed up. It is starting to look like Tim is just finishing Hank's original plan. Scary.
Regards
Denisé

DrKrbyLuv's picture
DrKrbyLuv
Status: Diamond Member (Offline)
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Posts: 1995
Re: Timmy needs more power??!!!!????

Geithner & Goldman Sachs Connections

“Neither did it look good when Geithner — himself a protégé of
notorious Goldman alum John Thain, the Merrill Lynch chief who paid out
billions in bonuses after the state spent billions bailing out his firm
— picked a former Goldman lobbyist named Mark Patterson to be his top
aide,” writes Matt Taibbi in Rolling Stone.

In February, Congresswoman Waters received a lot of attention after telling “the heads of J.P. Morgan Chase, Bank of America, Goldman Sachs and five other powerhouses
at a prior House hearing, “To the captains of the universe sitting here
before all of us, all of my political life I have been in disagreement
with the banking industry.” 

mpelchat's picture
mpelchat
Status: Silver Member (Offline)
Joined: Sep 10 2008
Posts: 214
Re: Timmy needs more power??!!!!????

Capitalism to protected Socilism  ((the only ones protected are the Socialists best buds)).

http://finance.yahoo.com/news/Administration-unveils-apf-14755720.html

Ok let me get this straight:

The government is going to take over or he calls it "regulate" the firms that are too big to fail with a panel of regulators that he would appoint with no oversight.  He is a Goldman Sach's guy, hmmmmmmm, seems to me that he would put "his people" into these regulator's positions would he not.  So it would be business as usual with all the risks to be taken from the spending.....,sorry, ... I mean bail out plan.  Or more interestingly, our ((the people's)) money. 

!!!!Even more interestingly, they will get our money from us no matter what.  If taxes are taken we pay direct, if they do not take taxes,  they will simply print the money and take it in the way of inflation!!!!

One more simple question:  Would most been done with the FDIC taking the firms that are too big to fail apart and selling off the good assets and taking care of the bad?  I am sorry again, the people that spend a in total over 2 million dollars in campaign funds per person on capital hill would lose there gamble...  I misspoke again... Investments.

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