Geithner warns Congress raise debt limit to avoid national catastrophe

January 6, 2011 by · Leave a Comment
Filed under: Economic News 

With all the economic rhetoric  about fiscal and monetary policy, some things never change.   One of them is the pretty straight talk from politicians on the U.S. debt limit when we get ever closer to the new limit.   We stop the talk about cutting deficits and living within our means and bring out “the sky is falling” talk because of the reality of what will happened if we stop issuing debt and refinancing our Treasuries.  You can’t hide this fact and I do like the lack of beating around the bush when it come to this subject.

Yes, we will have grandstanding by both parties on the ideology grounds but when push comes to shove, they all know the score.  The debt will be raised or we will literally have a mini-civil war in this country.  We are too used to this bubble-based living.  Just saying….

Washington Post – Treasury Secretary Timothy Geithner warned lawmakers Thursday that the national debt could hit the legal limit on federal borrowing as soon as March 31, and he urged them to act quickly to avoid a government default that would spark “catastrophic economic consequences that would last for decades.”

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Investors ready to buy U.S. government-backed toxic assets?

March 11, 2009 by · Leave a Comment
Filed under: Opinion 

If you actually analyze the press release, its a load of crap (pardon me) but that is what it is.   The basis of this approach is instead of discovering the “real” price of these “toxic” assets, we would rather have the government provide financing for assets that are worth very little if anything to investors that would not normally purchase these if they did not have government financing.  Here is my favorite quote “Neel Kashkari, who administers the Treasury’s $700 billion Troubled Asset Relief Program, told a U.S. House of Representatives Oversight and Government Reform subcommittee that without financing private investors would pay such low prices for the assets that bank balance sheets would be hurt.”  Let the balance-sheets be hurt, they made bad choices and this is how a market economy deals with them.

News:

A U.S. Treasury-led effort to soak up toxic assets from bank balance sheets could draw in private investors with the right government financing, a senior Treasury official said on Wednesday.

Neel Kashkari, who administers the Treasury’s $700 billion Troubled Asset Relief Program, told a U.S. House of Representatives Oversight and Government Reform subcommittee that without financing private investors would pay such low prices for the assets that bank balance sheets would be hurt.

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Overview of 2009 U.S. bank rescue plan (Bank Bailout)

February 10, 2009 by · Leave a Comment
Filed under: Economic News 

First off, the market is tanking pretty bad.  Not a vote of confidence at any stretch.  At the time of this writing the market is down 4.6%, ouch.  Basically the plan is used to buy toxic assets and use money to help private investors purchase these assets.  

Outside of the mortgage-backed securities, I am not sure what investors are going to buy?  I don’t think I would purchase debt insurance contracts (CDS) in this market, who would want that risk when so many other indicators are pointing towards a global depression.   Plus I still stand by my prediction that the white elephant in the room is the fact that many of these banks are carrying insurance contracts on their balance-sheet (somewhere) that have already gone bust so they are not a real asset, but a liability.  Here is the full overview:

2009 Bank Bailout Overview:

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