Posted on 04/09/2008 6:50:07 AM PDT by Toddsterpatriot
If the $30 billion of securities that belonged to Bear had any value as collateral, why didn't some other outfit offer more than $2 per share for BSC?
Because the $30 billion of securities that belonged to Bear have no more value than Monopoly money?
carolyn
They are off the balance sheet because they don't belong to JPM.
My posting #56 is meant to be addressed to Toddsterpatriot, not you. My apologies.
They didn't bail out LTCM or the rich guys who ran LTCM.
I am not sure why this is aimed at me, I completely agree with you. The FED needs abolished as far as I’m concerned... giving the bankers control of the monetary system has been an absolute disaster.
Total inflation 1789 to 1913 8% (total, not annual).. 1913 to 2008.. total inflation 2100%+... what happened in 1913? The Federal Reserve Bank was created, by a bill written 100% by bankers themselves.
It needs abolished and a return to the gold standard is needed.
Fear.
Because the $30 billion of securities that belonged to Bear have no more value than Monopoly money?
I guess we'll see what value they have.
Of course not.
The Fed attempted to bail out the US financial system.
Bear was taken out back and shot in the head.
The Fed is trying to keep the system liquid. They forgot this minor detail in 1929 and things didn't work out so good.
As a result, we ended up with Roosevelt, the New Deal and the welfare state.
Well, $1,000,000,000 worth does. And the other $29,000,000,000 would if it were not for the guarantee.
Just what we need, more deflation.
The Fed has a portfolio of bonds. Last time I checked it was over $800 billion.
WRONG! The Treasury guaranteed this deal via a memo from Robert Paulson to Bernacke. That memo says that the NY Fed may deduct any losses from their budget. As the FED returns about $30 billion a year (all profits after expenses) to the Treasury, as mandated by law, it may be that next year Treasury gets nothing. This hits the budget of the USA, which is funded by none other than that ultimate sucker: THE US TAXPAYER.
The securities have no "face value". They previously had a higher market value, now have a lower market value, have a model value based on cash flows and expected defaults. But never had a "face value".
Well, $1,000,000,000 worth does.
I'll bet the $1 billion they loaned to the new entity is on their balance sheet.
And the other $29,000,000,000 would if it were not for the guarantee.
They wouldn't have bought Bear if these securities were included, so they wouldn't be on their balance sheet.
Now now, we all know how the game goes. I’m laying a foundation. Let’s not beg the question.
Are we in agreement that it meets the definition of an investment, and not the definition of a loan?
And when the Fed makes a profit on its "bailout," as is expected, and pays extra into the Treasury will you be around then?
The "assett bubble" has been good for speculators. Do we want to live in a casino economy?
I’ll agree with that. I’m not going to argue semantics any more.
It's funded with dollars that would otherwise go to the Treasury.
WRONG!
Really? How large is the Fed portfolio?
The Treasury guaranteed this deal via a memo from Robert Paulson to Bernacke.
Guaranteed? LOL!
That memo says that the NY Fed may deduct any losses from their budget.
The Fed will not deduct losses from the Fed budget. Try again?
As the FED returns about $30 billion a year (all profits after expenses) to the Treasury
Hmmmmm......I thought the Fed was using tax dollars for this? Thanks for clearing that up.
it may be that next year Treasury gets nothing.
Wrong. If the Fed swaps $29 billion in bonds or sells $29 billion in bonds or uses $29 billion in cash from maturing bonds, the Treasury's take would be reduced by the interest on those bonds, not by the value of those bonds.
I agree that it is not an investment in JP Morgan.
I don't care if you define it as a loan to the "enity" or an investment in the "entity".
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