Geithner Bailout Details

[zzt]

Quote from DblArrow:

If it is a form of bankruptcy why not just let the existing system handle that?

I am not convinced the government will let go of the companies once they have them. I think too many people think it is a good idea for the gov to tell the execs how much they can make.

I construe socialism with the government ownership and control of private business. As the people no longer control the gov, I cannot agree that it is nationalism.

Because usually theres a market for distressed assets, & in this case theres none. I guess what i am getting at is that the only model of a succesfull solution to a banking crisis similar to the one we have now, is that of the swedish govt after their banking crisis of the early 1990's.

Definitions of socialism and whatever else aside, if a model exists that has worked in the past, lets just get on with it and stop trying to create a new, more complex and untested solution.

 

[AAAintheBeltway]

Who dreamed that conservatives would be backing Axelrod? At least now we understand why Wall Street backed Geithner so hard and got republicans to drop their opposition to his nomination. One hand washing the other. Both dirty.

Basically this is the Bush plan. Let taxpayers pick up the tab, let bank exec's keep their jobs and perks and insulate shareholders from the consequences of a bad investment.

 

[DblArrow]

Quote from Charlie_Sheen:



I think we agree on the nationalization issue. Besides - countries would want to "nationalize" profitable and productive concerns. Like Exxon-Mobil, which makes billions - not AIG and BAC (w/MER and CFC in its bowels) which loses billions.

In other words, with nationalization, the govt says "give me your valuable assets - or else ..." ... not "give me your most pathetic, money losing, toxic debt ridden companies - or else ..."

Except for the fact that Clinton (Hillary) and others in the democrat party, have called for a "windfall profits tax"; I think one could make an argument for a taking here, if they were to get their way.

Being perhaps a little to cynical - government takeover of business is most certainly easier when the business is in trouble than when it is not. The masses are probably more willing to accept it at this point.

 

[4XQs]

The biggest CHANGE we've seen so far has been with the Republicans. Whilst W still was President they were actively contributing to help solve the problems, but after Obama took over they're now playing partisan tactics: Let the Dems take the blame for every political measure trying to tackle the problems.

There's no alternative from the Republicans, it's just a no.

Of course the party in power cannot sit by and do nothing like the Republicans do.

 

[Mav88]

'no' is an alternative, and probably a better one.

 

[canuckrookie]

Quote from Covertibility:

The wiping out of shareholders comment probably relates to the idea of creating another RTC. The RTC would take over the bank, wipe out everyone, buy the bad assets at a certain price which in turn recapitalizes the bank and is then set free back into the system.

Of course this makes sense which means it won't happen. According to the Capitalist Creed, "Privatize the profits, socialize the losses," taxpayer money is the more ideal way to fix things. We have the Underpants Gnomes working at the Federal Reserve and Treasury Departments. (can't believe there was a wiki definition for that).

Step 1 Use taxpayer money
Step 2 ?????
Step 3 Financial system fixed

Agreed, and agree with other comments on wiping these banks clean. They are so screwed up though with so many interrelationships I wonder how something like that would actually be implemented. Anyway that would of been the right way to go. This throwing tax dollars and a never ending black hole is economic ritual suicide.

 

[DmanX]

Quote from pcvix:

Change?

http://www.nytimes.com/2009/02/10/business/economy/10bailout.html?pagewanted=1&_r=1

"And for all of its boldness, the plan largely repeats the Bush administration’s approach of deferring to many of the same companies and executives who had peddled risky loans and investments at the heart of the crisis and failed to foresee many of the problems plaguing the markets."

Change is merely that Barack Obama is the first half-black, or more approriately, bi-racial president.

If you go by racist slave rules (1/10th black blood = black), then he's the first black president. In which case not much has changed except on the surface.

 

[stock_trad3r]

Quote from MrDODGE:

This really doesn't sound much different than what Bush and Paulson did with TARP1.

http://www.nytimes.com/2009/02/10/business/economy/10bailout.html?pagewanted=1&_r=1&hp

doesn't matter

buy the dip.

 

[Charlie_Sheen]

Quote from DblArrow:

Except for the fact that Clinton (Hillary) and others in the democrat party, have called for a "windfall profits tax"; I think one could make an argument for a taking here, if they were to get their way.

Being perhaps a little to cynical - government takeover of business is most certainly easier when the business is in trouble than when it is not. The masses are probably more willing to accept it at this point.

Re: The windfall tax issue - saying a firm's tax bill will be slightly higher if crude oil spends "x" amount of time over $50/bbl or over $70/bbl is completely different than nationalization which essentially says "I now own you completely" or "I am - as of now - your 50% partner" or similar shove ins.

With most of the proposed windfall tax ideas, the govt. would have absolutely no additional participation in the profit stream at current prices. With true nationalization - they would not only participate in the profits, regardless of where the crude market was (and that participation would be much greater compared to a situational tax), they would also either dictate or greatly influence most operational decisions as the owner or major partner in the business.

So let's be clear vs. cynical - Neither the Dems or the Republicans are interested in nationalizing the major integrated energy firms.


Re: taking over weak firms - If the govt. (Dem or Republican) simply wanted to nationalize firms just because they were weak - we'd still be flying around on planes with "Pan Am" "Eastern" and "TWA" logos on the wings. But we aren't.

The banks clearly play an important role in the economy and are in need of some short-term govt. supervision until they somehow get past losing billions of dollars quarter after quarter.