Article

2009-12-08 Economy

'Sometimes I think, was it real?' The American bailout nightmare

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Posted by tipper 2009-12-08 07:30|| || Front Page|| [6 views ] Top

#1 At the weekend Timothy Geithner, the Treasury Secretary, said that he expected running the bailout to cost $141 billionâ $200 billion less than originally thought â as banks repaid their bailouts more quickly than expected.

So far the Tarp has received $71 billion in repayments, with a further $45 billion due to be paid soon by Bank of America.

President Obama is considering using some of the $200 billion freed up from the Tarp on job stimulus programmes.

"Freed up"??

Hey - put it back where you got it. Pay off the IOUs written to our kids.

Besides, TARP is not some slush fund. It's illegal to use those funds for anything but emergency support of the financial system.

Posted by KBK 2009-12-08 13:36|| 2009-12-08 13:36|| Front Page Top

#2 The reason the financial system is in trouble is the collapse of the housing bubble. I can't say it better than Karl Denninger: the only solution to the housing mess is for house prices to contract to, on average, three times average incomes or less.

Every program from the government - literally every one - has been aimed at preventing this.

The reason is simple: Those who funded the bubble machine would be rendered insolvent - in some cases many times over - if the truth about home values was to be recognized.

Therefore, every program has been one sort of "extend, pretend and lie" or another. All of them.

Now we are finally getting people in the so-called "expert business" opining on what I have said since this crisis began: loan-to-value ratios are too high, and until they fall foreclosures will continue.

What regulators and lawmakers need to understand is this: Prices will fall - one way or the other. We are only able to determine who bears the loss of making these unsound loans, not whether the losses are ultimately recognized. All the bailouts have done is kick the problem down the road a few months at a time.

Posted by Anguper Hupomosing9418 2009-12-08 17:03|| 2009-12-08 17:03|| Front Page Top

#3 Another article on Kashkari said they got dry heaves worrying about it. He has now bought a cabin on the Truckee River and chops his own wood--apparently he doesn't have much confidence it will turn around and is becoming self-sufficient.

Posted by Lumpy Elmoluck5091 2009-12-08 20:07|| 2009-12-08 20:07|| Front Page Top

#4 That other article.

Posted by KBK 2009-12-08 22:08|| 2009-12-08 22:08|| Front Page Top

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