Fun at the ZLB, and below!?

[fhl]

But it is fact! That is why I stated it "as if it were fact", because it is!!! Institutions were "bailed out by the federal government." Exactly as Dingle predicted! (I'm still waiting for your list of economists that thought all those major financial institutions should just be allowed to fail.) You've assumed that because those academic economists had concerns about Paulson's plan, as well they should have!, that they thought it was a good idea that all these gigantic financial institutions just go belly up all at the same time! I hardly think so!

We are not getting anywhere with this exchange, so let's move on.

Let me just start over. I presented a list of economists that said investors should not be bailed out. What else does that mean other than the banks should be allowed to fail? Do you have an answer for that other than, 'you hardly think so?' The economists said 'investors'. They did not limit it to bank investors. If the gov't took over the bank, they would still be bailing out the derivitive investors. But they said investors should not be bailed out.

Now it's your turn. Tell me one of those other ways they were not going to let the banks fail if the investors in the banks and derivitives were not bailed out.
I'm not going to wait around for a response because there is no other option other than let the banks fail. I'll give you a hint. If the gov't took over the banks, then the derivitive investors were bailed out. And the economists said no investors should be bailed out. So don't try that bs.

re: your statement that dingle was correct. So now your trying to finagle it so that what dingle "really meant" is that the gov't would bail out the banks, not that they were really too big in fact to fail. Nice try, but i'm not falling for it.

 

[piezoe]

You didn't read the actual letter from the economists, that's obvious. Why don't you start there? The letter that in the first paragraph states "we agree with the need for bold action to ensure that the financial system continues to function." I hardly think letting the worlds largest banks all go under at the same time would ensure that the 'financial system continue[d] to function.' The economists were expressing their concerns that 1) investors not be bailed out along with the banks. [They were rescued to a slight extent in that their stock did not go all the way to zero, except for the common of non-surviving banks, which were many.]; 2) That the purchase of assets not be opaque. [it wasn't, all the assets purchased were identified right down the the specific MBS, etc.]; 3) That time be allowed for debate in Congress as to what the best course was. [This suggestion of the economists was not followed!]

No where in the letter do the economists suggest that the banks should simply be allowed to fail! No responsible economist would sign such a letter.

 

[fhl]

You didn't read the actual letter from the economists, that's obvious. Why don't you start there? The letter that in the first paragraph states "we agree with the need for bold action to ensure that the financial system continues to function." I hardly think letting the worlds largest banks all go under at the same time would ensure that the 'financial system continue[d] to function.' The economists were expressing their concerns that 1) investors not be bailed out along with the banks. [They were rescued to a slight extent in that their stock did not go all the way to zero, except for the common of non-surviving banks, which were many.]; 2) That the purchase of assets not be opaque. [it wasn't, all the assets purchased were identified right down the the specific MBS, etc.]; 3) That time be allowed for debate in Congress as to what the best course was. [This suggestion of the economists was not followed!]

No where in the letter do the economists suggest that the banks should simply be allowed to fail! No responsible economist would sign such a letter.

In other words, you're saying that when the economists wanted no investors to be bailed out, what they really meant is that they wanted any and every investor in the entire world to be bailed out except investors in banks. yeah, that makes perfect sense.

 

[fhl]

You didn't read the actual letter from the economists, that's obvious. Why don't you start there? The letter that in the first paragraph states "we agree with the need for bold action to ensure that the financial system continues to function." I hardly think letting the worlds largest banks all go under at the same time would ensure that the 'financial system continue[d] to function.' The economists were expressing their concerns that 1) investors not be bailed out along with the banks. [They were rescued to a slight extent in that their stock did not go all the way to zero, except for the common of non-surviving banks, which were many.]; 2) That the purchase of assets not be opaque. [it wasn't, all the assets purchased were identified right down the the specific MBS, etc.]; 3) That time be allowed for debate in Congress as to what the best course was. [This suggestion of the economists was not followed!]

No where in the letter do the economists suggest that the banks should simply be allowed to fail! No responsible economist would sign such a letter.

from an article written in fortune in 09
read it and weep, pie

Let big banks fail, bailout skeptics say


"Columbia University professor Joseph Stiglitz and MIT professor Simon Johnson warned the Joint Economic Committee of Congress that the current government policy of propping up troubled financial giants could impede an economic recovery.

The third skeptic, Federal Reserve Bank of Kansas City President Thomas Hoenig, said policymakers must allow troubled firms to fail rather than propping them up, a la AIG (AIG, Fortune 500). He said banks must be treated consistently, regardless of their size or connections, for the sake of restoring confidence to markets and normal function to the economy.

"Rather than letting the market system objectively discipline the firms through failure and stockholder loss," Hoenig said of the current approach to bailouts, "we tend to micromanage the institutions and punish those within reach.""

http://archive.fortune.com/2009/04/21/news/too.big.fortune/index.htm?postversion=2009042112


When you've started from an assumption that transferring insured deposits to solvent institutions will wreck the entire banking system, it leads you to all sorts of logical fallacies, pie. Like no investor bailouts means some investor bailouts.

 

[piezoe]

from an article written in fortune in 09
read it and weep, pie

Let big banks fail, bailout skeptics say


"Columbia University professor Joseph Stiglitz and MIT professor Simon Johnson warned the Joint Economic Committee of Congress that the current government policy of propping up troubled financial giants could impede an economic recovery.

The third skeptic, Federal Reserve Bank of Kansas City President Thomas Hoenig, said policymakers must allow troubled firms to fail rather than propping them up, a la AIG (AIG, Fortune 500). He said banks must be treated consistently, regardless of their size or connections, for the sake of restoring confidence to markets and normal function to the economy.

"Rather than letting the market system objectively discipline the firms through failure and stockholder loss," Hoenig said of the current approach to bailouts, "we tend to micromanage the institutions and punish those within reach.""

http://archive.fortune.com/2009/04/21/news/too.big.fortune/index.htm?postversion=2009042112


When you've started from an assumption that transferring insured deposits to solvent institutions will wreck the entire banking system, it leads you to all sorts of logical fallacies, pie. Like no investor bailouts means some investor bailouts.

Hoenig is right, of course when he said, or wrote, ""we tend to micromanage the institutions and punish those within reach."" It's a natural tendency, not an absolute. We tend to forget the huge number of banks that were allowed to fail because they could not come up with enough collateral in spite of the Fed's generous offer. Their stockholders' equity went to zero. But even in the case of the too big to fail banks the stockholders lost virtually all their investment if they sold out at the bottom. Those who held, took risks and came out damaged, but not annihilated. In the case of the TBTF banks we must recognize that they had enough assets to meet their reserve requirement, but the assets could not be marked to market because the market had collapsed. This is where the Fed very wisely stepped in and did their own evaluation of those assets and bought them at a discount and credited the banks reserve accounts. The assets purchased were never worthless, but by mark to market rules there was no way to mark them.

What I think I would have preferred is Soros' suggested solution which would have been to leave the troubled assets with the banks and let them work through them in good time, and instead replenish their equity, which as Soros pointed out "was where the hole was."

We can all be thankful for a well managed Fed, at the time at least, that got us through the worst. What is troubling is the Fed's insouciance under Greenspan, and the early days of Bernanke, that got us into this mess.

The stock holders were not bailed out, except for a few who took huge risks and held through the crisis in the case of the surviving banks. What's rather clear is that we should prevent any privately owned institution from getting into a position where if it were to fail it would bring down the entire financial system. This, sadly, for us libertarians, means we have to learn to live with a certain amount of regulation.

 

[Tsing Tao]

We can all be thankful for a well managed Fed, at the time at least, that got us through the worst.

 

[fhl]

ECB will swallow more than a whopping 140% of gross German issuance!

Where's covertasilly when you need him to exhort the brilliance of the QE strategy and to explain to us how dense the tea party's strategy for balancing the budget is because there....won't be enough bonds to invest in!

Hit yourself on the head a few times and try to make sense of that!

 

[Tsing Tao]

Where's covertasilly

Last seen spewing economic "brilliance" here:

http://www.elitetrader.com/et/index.php?threads/fed-patient.290344/

 

[Ricter]

Consumer Price Index
24 Mar 2015

Highlights
"A comeback in energy put CPI inflation back into positive territory. Overall consumer price inflation rebounded 0.2 percent in February after falling a sharp 0.7 percent the month before. The February figure matched expectations. This was the first rise in the CPI since October. Energy gained 1.0 percent after plunging 9.7 percent in January. Gasoline prices rebounded 2.4 percent in February after plummeting 18.7 percent in January, Gasoline increased for the first time since June 2014. Food rose 0.2 percent after no change in in January.
"Excluding food and energy, consumer price inflation came in at 0.2 percent for both February and January. Analysts forecast a 0.1 percent gain.

"On a seasonally adjusted basis, the headline CPI was down 0.1 percent in February on a year-ago basis compared to down 0.2 percent in January. Excluding food and energy, the year-ago rate was 1.7 percent versus 1.6 percent in January. In addition to shelter, the indexes for used cars and trucks, apparel, new vehicles, tobacco, and airline fares were among those that increased. The medical care index was unchanged, while the personal care index declined.

"Overall, CPI inflation marginally firmed with energy starting to move out of what the Fed calls transition. Still, inflation is very low and points to no change in Fed policy in April."

 

[Tsing Tao]

Consumer Price Index
24 Mar 2015

Highlights
"A comeback in energy put CPI inflation back into positive territory. Overall consumer price inflation rebounded 0.2 percent in February after falling a sharp 0.7 percent the month before. The February figure matched expectations. This was the first rise in the CPI since October. Energy gained 1.0 percent after plunging 9.7 percent in January. Gasoline prices rebounded 2.4 percent in February after plummeting 18.7 percent in January, Gasoline increased for the first time since June 2014. Food rose 0.2 percent after no change in in January.
"Excluding food and energy, consumer price inflation came in at 0.2 percent for both February and January. Analysts forecast a 0.1 percent gain.

"On a seasonally adjusted basis, the headline CPI was down 0.1 percent in February on a year-ago basis compared to down 0.2 percent in January. Excluding food and energy, the year-ago rate was 1.7 percent versus 1.6 percent in January. In addition to shelter, the indexes for used cars and trucks, apparel, new vehicles, tobacco, and airline fares were among those that increased. The medical care index was unchanged, while the personal care index declined.

"Overall, CPI inflation marginally firmed with energy starting to move out of what the Fed calls transition. Still, inflation is very low and points to no change in Fed policy in April."

No one thinks there would be any policy change in April - and no one has thought that it would change in April - ever.