Posted on 03/25/2009 11:56:23 AM PDT by Michael Eden
The New York Times offers the following on the Obama Administration's toxic asset relief plan:
WASHINGTON — The Treasury Department is expected to unveil early next week its long-delayed plan to buy as much as $1 trillion in troubled mortgages and related assets from financial institutions, according to people close to the talks.My "favorite" part of all of this is the way the Obama administration is now relabelling "toxic assets" into "legacy loans and securities." Like the Stalinists whose worldview they largely share, liberals love to label people and things, and then change those labels when it becomes convenient for them to do so. But "toxic assets" by any other name are still "toxic assets."The plan is likely to offer generous subsidies, in the form of low-interest loans, to coax investors to form partnerships with the government to buy toxic assets from banks.
To help protect taxpayers, who would pay for the bulk of the purchases, the plan calls for auctioning assets to the highest bidders.
The uproar over the American International Group’s bonuses has not stopped the Obama administration from plowing ahead. The plan is not expected to impose restrictions on the executive pay of private investors or fund managers who participate.
Let me give you my objection in a nutshell: who is going to buy up this toxic mortgage debt (I'm sorry, these "legacy loans and securities")? Are YOU the gentle reader planning to buy up some of this debt? I'm sure not. My point is this: it won't be a bunch of little people buying up this debt; most analysts agree that it will be big institutional investors who jump into this.
That's right. The same institutional investors who have been holding all the toxic debt in the first place.
So, here's the bottom line: the government is going to buy and basically back the same debt to the same people that the government has already bailed out to begin with.
And just who gave these institutional investors the money to play this game? You did, you silly taxpayer! Or more precisely, big government did, with your money.
It's like a gigantic merry-go-round with the same big players that bought up all these toxic assets now being encouraged to sell them to the government and then immediately buy them back again - only this time the federal government is jumping onto the merry-go-round, too.
And the merry-go-round is spinning on sweetheart deal risks.
The Obama administration is talking up the private investor "sharing" the debt: but the big investors will only end up "sharing" somewhere around 25% (and as little as 10%) of the debt; the rest is "shared" by the taxpayers. There is an element of, "heads we win, tails the taxpayers lose." It smacks of the same mentality of Fannie Mae's and Freddie Mac's "profits are private; losses are public" mentality.
As NPR reports:
The government will also promise to cover a significant portion of the potential losses that investors could face. Should a toxic asset investment prove worthless, the private investor may lose only his cash down payment...As hard as it is to believe, this deal actually puts the American taxpayer on an even bigger hook even higher off the ground than he or she was already on....The federal government promises to guarantee most of the financing for the toxic asset purchases. That stands to be hundreds of billions of dollars if the plan achieves its goal of absorbing up to $1 trillion in bad debt.
And as much of a sweetheart deal as this appears to be, the institutional investors may STILL not be willing to get involved. Why on earth would they pass up such a deal? Because many may realize that the same Democrats who just voted to tax 90% of AIG's bonuses can easily vote to become "outraged" over any "excessive" profits institutional investors eventually receive by buying up these toxic assets, and tax them the way the government voted to tax AIG executives.
You can say, "Well, the government can provide a guarantee that it won't come after these profits." And the obvious retort would be, "You mean, just like AIG had for its bonuses?"
How many major investors still want to get in bed with the federal government, given the fact that government has proven that it has a marked tendency to be a major bed hog?
A big problem is that we very likely have not seen the bottom of the housing market. If home values go down further, we will be going through the same phenomenon we just went through all over again - only this time the taxpayer will be even more on the hook than before.
Another problem is that this plan assumes that the toxic asset debt is only $1 trillion; it is most likely at least $2 trillion, and could very well be as high as $4 trillion. CBCNews reports, "Right now, American banks and other businesses have as much as $4 trillion US in financial assets that cannot be sold in the current environment."
The conspiracy theory view (and conspiracy theories are starting to make more and more sense these days) is that Barack Obama actually WANTS the toxic asset relief plan to fail. Rather than stepping out and backing the plan himself, he put already-under-the-gun "Turbo Tax Tim" Geithner out in front of this plan. And if it fails, Obama isn't personally exposed, he fires Tim Geithner, and then he socializes the banks in the name of averting the "crisis." As Ayn Rand put it:
"One of the methods used by statists to destroy capitalism consists in establishing controls that tie a given industry hand and foot, making it unable to solve its problems, then declaring that freedom has failed and stronger controls are necessary."Barack Obama is literally making Atlas Shrugged come alive, as a Wall Street Journal article explains.
Please understand: if this plan fails, it is NOT because "capitalism" failed; it is rather yet another massive government intrusion into the private sector that failed.
Lord knows we don't have nearly enough of that.
At some point, someone’s going to have to get stuck with these assets, and the big loss.
Looks to me like it’s going to be the taxpayer.
(sigh)
So when exactly will actual Americans say “enough?” Enough of the theft of my money. Enough of the socialization of free enterprise. Enough of the loss of my liberty.
Why don’t you offer something constructive, instead of just being a jerk?
If I am saying something that is factually incorrect, or presenting it poorly, point it out. But don’t just do the damn drive by insult.
The only person that looks stupid doing that is you.
The FR section this article appears in is “Bloggers and Personal.” Maybe you could also explain why “a blogger pimping his blog” on such a section is wrong?
Fine. You've said half as well things that are being said twice as much elsewhere. How's that?
If I am saying something that is factually incorrect, or presenting it poorly,
Option B.
Nearly every one of your links has already been posted here in part or in full. Why don't you put your comments in one of those threads instead of cluttering up the forum with yet another blog-pimping vanity post?
L
Why don’t you offer something constructive, instead of just being a jerk?
Fine. You’ve said half as well things that are being said twice as much elsewhere. How’s that?
If I am saying something that is factually incorrect, or presenting it poorly,
Option B.
Nearly every one of your links has already been posted here in part or in full. Why don’t you put your comments in one of those threads instead of cluttering up the forum with yet another blog-pimping vanity post?
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You apparently aren’t so damn good at saying things yourself. You provided me with one option and called it “option B.”
Let me give YOU two options:
Option A: if you don’t like an article, don’t read it. What kind of slimebag writes trivial comments to something like you’re doing? Personally, if an article is a waste of time to me, I move on. I have a feeling people who don’t have giant chips on their shoulders do the same.
Option B: eat a buffet’s worth of fecal matter and die.
I’ve had a number of articles in which people have actually thanked me for writing/posting. Why on earth do you think someone died and made you God? Or even made you the godlike critic who gets to decide who’s written something “half as well” as someone else?
Assuming you actually bother to post articles, would you like it if I started offering MY trivial and angry little insights into your work? You don’t have to worry, because I won’t waste my time. I’m frankly a better and more substantial person than that. And I wish you could be one, too.
I’ll just assume that your mission in life is to be an annoying little gnat and - since you’re not close enough to me to swat the living sh@t out of - move on.
Someone need a hug?
I’ll take one if it’s a pretty lady giving it - with much sincere appreciation.
The other fellow simply needs to pull the giant stick out of his butt.
I really just wanted to talk about toxic assets and why the plan was deeply flawed, rather than some blowhard’s critique of my writing skills, such as they are.
Just make sure you don’t quote any oh his responses - he gets mad!
Blow me, newbie.
I’d say something about not bothering to quote any of his responses because he’s such a crappy writer and nothing he says is worth quoting, but that would simply be being snotty, wouldn’t it?
I get the profound sense you are very much the type who would really like it if I did.
Pull it out in front of me, and I'll make sure you lose it.
Just out of curiosity, is your entire sense of self-esteem bound up in the fact that you've got a longer history lurking around FR like some kind of little piranha than other people?
What a fun thread this turned out to be. /s
Not half as much as you would. I've a feeling it wouldn't be nearly the first time for you, either.
Listen new guy. It's really bad form for newbs to wander in to the forum and start pimping their own blogs. It's most especially bad form for newbs to pimp their blogs when those blogs don't contain a single original thought.
You know, like yours did.
You 'wrote' (such is the pathetic state of prose these days that what you tossed up is even referred to as writing)6 paragraphs and every one has a hyperlink to an article that's already been posted in whole or in part and quite thoroughly discussed here already.
In case you haven't noticed no one here thinks TARP 1, TARP 2, or any future iteration of TARP is a good idea. We've all already decided that it's a very, very bad thing.
We didn't need you popping in with yet another insufferable blog posting masquerading as a VDH piece.
Every single word you posted was done earlier and better by others.
That's my bitch.
Now stuff it.
L
Got sentence structure?
Your thin skin makes you easy to mock, FRiend.
For what it’s worth, I do not see anything in this peice I have an issue with. There is no unsupported pejorative in its opening sentence, unlike the discussion opener we sparred over last time.
If I were to critique the blog article, it would be over style - which is necessarily personal.
Overall, I would rate this article as readable and supportable, from my perspective. (If quoted on that I will deny it, of course! ;-P)
At least we got the entire article for a change.
A mixed blessing at best my friend.
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