So if toxic assets aren’t worth anything, who are the private sector people that are going to buy them?*
*Yes, I can be horribly mean and snarky. A lot. But I really don’t know the answer to this, nor, from what I understand, do many smart people who have degrees in business and economics. It’s not meant as an insult, it’s meant as a serious question, because the new administration is taking questions from bloggers and everyone and stuff.
Personally I imagine President Obama would answer this question pretty well, if someone can ask it.
Considering obama has a predetermined list of reporters to call on, why would he let someone ask him a question like that. That’s exactly why he has a predetermined list in the first place, to avoid tough questions.
It’s good to see even you are starting to question the obama.
Are your taxes paid up?
re 1: You mean he knows what he’s doing ? What a fake!
Even in foreclosure bad paper isn’t wortheless. There is a house behind it. If it is only worth $120,000 and the loan made was $300,000 back when the house was worth $400,000, then the bad paper is worth at least $120,000. More or less. Cost of kicking out owners, etc. But most will gladly walk away.
Obama, like a great many other people, presumably knows the answer to that question. Everybody on Wall Street is scared shitless of the answer.
The real problem is that if there’s a true accounting of the actual worth of all the derivatives they’re holding, it’ll show that every fucking major bank in the country (and probably quite a few of the little ones) is insolvent. Even after Uncle Hank and Uncle Bennie let ’em suck all that money from the gubmint teat.
That would lead to the horrendous possibility of the FDIC actually doing its Goddamn job and seizing them all.
Jon,
So if toxic assets aren’t worth anything…
The premise of the question isn’t accurate. The problem isn’t that the paper is worthless. Were that the case, then we’d all be able to assess bank balance sheets, and the path forward would be clear.
The problem is that we don’t know what the paper is worth. CDO’s are comprised of tranches, which means we don’t know how any institution’s paper ought to be apportioned amongst the various kinds of loans out there. The problem is dynamic, and follows the rate of change in the mortgage default rate (think about the mathematics of a “rate of change in the rate of change”).
It’s almost like a MasterCard commercial. TARP? $700b. Stimulus? $800b. The CDO’s on J. P. Morgan’s balance sheet? Priceless.
Marvin–
I give Obama a lot of credit…
Obama is determined to make sure Americans are all paying their taxes..
ONE NOMINEE AT A TIME!!
Cynical, is he gonna check his political approved and withdrawn appointees each year to see if they paid their taxes?
Here is the old Democratic favrit Chucky I Use Political Operatives to Illegally Get Dirt Schumer in action
“the American people really don’t care”
Jon, One Question Mr Preznit:
“Why did you allow Tim TurboTax Geithner to speak to America with a soiled sheet of paper; which caused the stock market to tank?”
Jon, One Question Mr Preznit:
“Why haven’t you taken Nancy Pelosi and Harry Reid to the Woodshed since they wrote TARP1 per the US constitution and it was a miserable failure?”
@10:
Hyprocrite puddy: Why haven’t you taken Bush and Paulson to the woodshed for not adhering to the oversight of TARP1? Why are you asking the wrong questions? Why do you support corrupt republicans?
Here is another republican caught in the finally advancing Abramoff scandal – notice how it has been delayed by 6 years by the Bush “justice” department.
Yup – the cozy relationship between republicans and the forced labor, forced abortions, Indian gambling and Russian oil tycoons supported by Abramoff are finally coming to light. The GOP and its ties to corruption are long and deep. Ralph Reed and Grover Norquist (old buddies of Jack) laundered money for him. Karl Rove had him on speed dial. Tom Delay did his bidding and now the other republicans in charge who did favors for him are coming to light.
http://hosted.ap.org/dynamic/s.....TE=DEFAULT
Dr Correctnotright:
Huh? Again you haven’t been paying attention. I’ve talked and talked and talked about Paulson on this blog. I gave his pedigree, who his friends are, who he promoted in Treasury, and how is is a Democratic… Where have you been? Either asleep or drinking Steve’s Stupid Solution. I heard Steve stopped making it but you can find it in many Democratic establishments in the Greater Seattle Area. I guess you just had another swig…
I guess the US Constitution means nothing to you. The Legislative branch writes the bills. The president signs them. Spending Oversight comes from a well crafted bill. Since the Democratic were in power when the bill was crafted and Senator Barack Obama signed on… I rest my case.
Regarding DeLay and Rove, your side have been after both of them for a long long time. RDS and DDS part of the xDS sickness on this blog…
Fascinating how Barry RItholz’ take on yesterday’s stock market plunge echos my own comment yesterday.
Yeah right, becuase you talk and talk – that makes the republican appointed Paulson who did the bidding of Bush, a democrat. You crack me up.
And don’t bring up the constitution to me until you justify torture, illegal wiretapping, illegal black holes of Gitmo and illegal “extraordinary rendering” for torture in other countries.
Did you even look at the bill that President Bush submitted to congress for TARP and that HAD to be rushed through? Guess not.
Did you even look at the congressional testimony theat the Bush admisnitration failed to use the oversight put in the bill? Guess not.
Before you make fallacious arguments, maybe you should know a fact or two.
Regarding Rove and DeLay:
DeLay is indicted and Rove will be indicted soon too – when the real Justice department is operating again.
Guess you didn’t read the link about the corruption in the Abramoff scandal that is just NOW being fully investigated. Another republican in charge of money during the time of republican control is in trouble for lobbyist ties – and you keep denying the obvious about republicans and corruption – the two words are synonymous.
@ 14
Oh, Puddy’s means of convincing himself that people he doesn’t like are democrats is some of the more amusing stuff to hit the comment threads here. My personal favorite: the people buying and selling commodities on the New York Mercantile Exchange are democrats. Why? Because the NYMEX is in New York.
The distance between what Puddy thinks he’s proved and what he’s actually proved is a gulf so vast we’d need one of Star Fleet’s ships in order to traverse it in our own lifetimes.
It goes like this:
If we (the taxpayers) buy the banks’ bad assets, at booked value, we take the write down. We’re screwed.
If we (the taxpayers) buy them at market value, then we admit the banks are insolvent (they are, BTW) and then they take a write down or BK. Think Lehman and WashMut, ten fold. We’re screwed.
If we do nothing, credit will not thaw, and what’s left of our industry can’t get loans to make stuff. That means more layoffs, etc, see the spiral Obama referred to. We’re screwed.
Add in: the pending default of Alt-A loans (market size about the size of subprime), the continues losses in the derivatives market, the retreating of banks out of the international financial community (See: RBS), and the Chinese going short on Treasuries (will they finance 2 trillion good dollars after bad?), and we have insult to injury. We’re screwed.
Our Treasury secretary doesn’t want to be the one to make “last call”, just as the New York Fed didn’t want to do it in the late 1920’s, for the same reason; no one wants to be the scape goat.
We are truly fucked and any Democrat that says we have a solution is whistling past the graveyard. As for the ideologues that got us into this mess, they’d better head for the Bahamas. If those bonuses are what will keep them out of meddling in our government and our economy ever again, I’ll consider it worth every dime.
The real solution is what was mentioned in the FT a couple of days ago: take all of the good assets, create a public bank, and let the private banks fail. At least then we can have a financial structure in place (one that is solvent and will lend) when the old ones fail. Emphasis on “will fail”.
Sorry your memory is so bad Dr. Correctnotright. Really I am. Maybe a shrink can help you with your memory issues.
But I’ll say this Paulson gave to Democratic people and was a close protoge to Robert Rubin. I’ve already posted this information three times here. If you and Don Joe choose not to process campaign contributions or political appointments fine. Stay ignorant. He appointed Democratics to treasury positions who were close friends of Rubin.
NUFF Said!
Obama has no idea how many “toxic loans” are left or how many more will come forth.
The more Obama can tank our economy the more power he will obtain from his followers these are the beggars they believe anything can be fixed by throwing more money at a problem.
His advisers have no plan, Obama never had a plan, and after hearing Obama actually say he inherited this crises like where was he and his Democrat party who ran this country since 2006. After hearing Treasury Secretary Tim Geithner yesterday I have all the confidence now that we elected an idiot.
The majority of Americans are against his stimulus give away package.
To have Barney frank, Dodd, Shcumer, Reid, and the rest of the demons who bankrupted our country tell private industry how to run their company is hilarious.
Wake up America stop being sheep!
Since on 37-38% of Americans approve this plan Don Joe and Dr Correctnotright will say “Let’s have Gallup take a poll!”
Well the 38% was from Gallup and the 37% was from Rasmussen. Rasmussen must be wrong because Puddy got the result he’s looking for.
What twin fools.
Yeah DeLay was indicted late September 2005. What has happened since then Dr NotRight?
Funny how the Democratic made sure Blagojevich disappeared faster than this DeLay “indictment”.
@ 18
But I’ll say this Paulson gave to Democratic people and was a close protoge to Robert Rubin.
Which neither proves that Paulson is/was a Democrat any more than in proves Paulson is/was a Republican. You really do have a serious problem with understanding the concept where the facts you cite do not support the conclusion you want to reach.
@ 20
Don Joe and Dr Correctnotright will say “Let’s have Gallup take a poll!”
Wrong again, moose breath:
What did you say earlier about people who don’t read?
President Barack Obama says Caterpillar’s chief executive has told him the company will rehire some laid-off workers if the stimulus bill passes.
I just told my next door neighbors kid I’ll rehire him to mow the lawn if it passes.
That’s democrat codespeak for “we are in control of the educational system and have successfully dumbed down the voters to the point they can’t even understand what we are doing to them.”
Hey Jon:
I know a fair number of very smart people in the financial and banking industry. Some who’ve been laid off, some who are being kept, some in DC lib think tanks and not a single one of them believes this huge steaming pile that the new administration is serving up will do a thing. Obama can “Hope” for “change” all he wants but these are the people that are doing real time analysis as well as looking at actual history and they are scared to death.
@17 – Good on ya buddy.
If there were any “smart people” in the financial and banking industry, they would have recognized the problem early and bet against it; making them very rich (like some did). The current crop of whiners are just as clueless now, as they were then.
The reason the assets are “toxic”, is that they have been diced and mixed to the point that no one can know what they contain without very expensive research. In the end, time will tell who the losers are in this game of duck duck goose.