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| User Info | Toxic Assets (PPIP) Death Rattle in forum [Ticker] | |||
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Genesis Posts: 66462 Incept: 2007-06-26 
Royal Flush! 
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http://market-ticker.org/archives/1170-T....
---------- I used to play flute; I wonder if I can play a fife? I incite prosecutors to create "Bubba Sausage Parking Lot" projects Darrell Issa has a middle finger and knows how to use it - Me 2009-06-29 08:33:46
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Swrichmond Posts: 146 Incept: 2009-02-12
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"A look at why the program has stumbled underscores how difficult it has been to solve one of the economy's biggest problems: Mountains of bad debt sitting on the books of the nation's banks." This nagging problem, "mountains of money that has gone missing due to idiotic loans in a credit bubble", has been the problem all along, and no amount of jawboning is gonna fix it. Sadly, jawboning, and printing money, are the only solutions they've got left. What's the next jawbone proposal for "taking toxic assets off the banks' balance sheets"? What's the next proposal for creating value out of thin air? 2009-06-29 08:51:17
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Sisca Posts: 298 Incept: 2008-04-17
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Remember, there are no bad loans and no toxic assets, only mispriced loans and assets. Thats the real issue, forcing the holders of this garbage, to price it as garbage. In the end, that will be the inevitable solution. All of this reminds me of a quoute by Winston Churchill: "America can always be counted on to do the right thing, after it has exhausted all other possibilities." This quote feels as right today as it probably did then. ---------- "If the big spenders get their way, they'll charge everything on your Taxpayer's Express card, and believe me, they never leave home without it." Ronald Reagan 2009-06-29 08:58:01
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Wrstandi Posts: 3 Incept: 2009-01-13 Raleigh, NC
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On Friday, Sen. Richard Burr's office called to tell me PIPP is definitely dead. He also wanted to know if I had any other suggestions on economic policy, seeing as I write a letter a week. Not sure if I should be impressed he cares or if it's like Shawshank Redemption where I should up it to two a week. And, frankly, why am I even impressed that the Sen contacted me? I mean, I am his boss and he's there to serve me. Right? ---------- I've been listening to my gut since I was 14 years old, and frankly speaking, I've come to the conlusion that my guts have sh*t for brains. Last modified:
2009-06-29 09:15:11 by wrstandi
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Tjeffersonsghost Posts: 1824 Incept: 2009-01-26 
Yes, I'd Hit It
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You have life and you have death, you have yin and you have yang, you have capitalism and you have bankruptcy. If bankruptcy is not only part of capitalism but it is actually GOOD for capitalism then why avoid the inevitable? I cant really add to your statement Karl because you summed it up well so Im going to go into WHY I think they are preventing the inevitable. If liquidation occurred prices would go down, and I mean way down. This is a banks worst nightmare because god forbid if people can actually pay for things in cash without being forced to enslave themselves by borrowing from the bank at interest. On top of this all the good ole boy network would suffer. Yes they would have to turn in their Bentley and Castle on the hill and live a more normal life just like we all have to. My prediction? The FED will try to throw all the money it can at this mess and it will fail resulting in much higher interest rates and the inevitable deflation will happen anyways because forced liquidation will happen causing prices to go lower. I said it a few months ago and Ill say it again and that is if you like that house for $300k wait a few years and you might get it for $100k. 2009-06-29 09:12:48
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Genesis Posts: 66462 Incept: 2007-06-26
Royal Flush!
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Quote:If liquidation occurred prices would go down, and I mean way down. This is a banks worst nightmare because god forbid if people can actually pay for things in cash without being forced to enslave themselves by borrowing from the bank at interest. On top of this all the good ole boy network would suffer. Yes they would have to turn in their Bentley and Castle on the hill and live a more normal life just like we all have to. Its really simpler than that. This isn't about debt slavery per-se. It is about the fact that these banks have all this crap on their books at much higher values, and that value is fictitious. As a consequence all their excess capital (times a bunch) is in fact gone, and if they admit this THEY are gone. This is nothing more than attempting to avoid admitting to their own bankruptcy and the fraud that led them to be there. ---------- I used to play flute; I wonder if I can play a fife? I incite prosecutors to create "Bubba Sausage Parking Lot" projects Darrell Issa has a middle finger and knows how to use it - Me Last modified:
2009-06-29 09:18:15 by genesis
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Gmak Posts: 10176 Incept: 2007-07-27
Re-inventing the future at the speed of time.
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The approach of kicking the can shouldn't be surprising. After all, it has been adopted in every banking crisis since time immemorial. Think of the Latam banking crisis starting by the Mexican deval, and the Brady bonds that came out of that. By delaying the accounting recognition of losses, .gov bought enough time for economic growth to essentially save the banks. Time heals all wounds - unless there is no economic growth coming. Unfortunately, that is where we find ourselves now. Delaying will not save the banks because growth will not fix these problems. They will fester until the zombie collapses under its own weight. 2009-06-29 09:18:36
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Rbarreira Posts: 892 Incept: 2009-05-27 Sweden
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When will they be forced to recognize these losses?
2009-06-29 09:22:03
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Mo Posts: 5041 Incept: 2007-06-26 
Florida
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Quote:It is about the fact that these banks have all this crap on their books at much higher values, and that value is fictitious. As a consequence all their excess capital (times a bunch) is in fact gone, and if they admit this THEY are gone. More evidence of the pervasiveness and destructiveness of the current fad of Oprahism: in a nutshell, only what you think, feel and project is important, not the underlying reality. 2009-06-29 09:22:49
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Tjeffersonsghost Posts: 1824 Incept: 2009-01-26
Yes, I'd Hit It
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@KarlQuote:Its really simpler than that. Fair enough, different road same destination and that is the REAL prices will have to be realized whether it's through an actual BK liquidation or through restating actual values so they can be sold on the open market, either way prices are going to have to come WAY down which the bankers do not want. The debt slavery was just my thought on why the bankers dont want prices to go down I mean people paying for houses, cars, etc and not getting loans is bad for business (If your a banker that is) 2009-06-29 09:31:54
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Shrpblnd Posts: 1119 Incept: 2007-08-06
Los Angeles, CA
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I have to wonder as well, how much longer before they are forced to recognize these losses. It's one thing when the loan is simply being held on the books above mark-to-market rates in order to hide the losses. That can be hidden for quite some time. However, when you have a actual default and payments are no longer being made at all, then a real cash flow problem is going to develop very quickly. Our economy is being held up by consumers that are no longer paying their mortgages. These are real losses and they can't be swept under the rug for any lengthy period of time. Last modified:
2009-06-29 09:38:03 by shrpblnd
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Genesis Posts: 66462 Incept: 2007-06-26
Royal Flush!
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Yep Shrp. Cash flow always wins and will force recognition. ---------- I used to play flute; I wonder if I can play a fife? I incite prosecutors to create "Bubba Sausage Parking Lot" projects Darrell Issa has a middle finger and knows how to use it - Me 2009-06-29 09:37:55
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Bubblesee Posts: 3620 Incept: 2007-06-27
nyc
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Gen, The first time I ever went to Japan was around 1990 or so and i can tell you that this is EXACTLY WHAT HAPPENED there. I began hearing story after story of the little guy not being able to pay the big guy, the big guy not being able to pay the bank, the bank not being able to forclose for fear that THEY would go under and the entire situation just freezing up while at the same time operating as if nothing happened. We know what happenned to their economy as a result of this. The question is are we going the route of japan with perhaps an even WORSE result looming? Its hard to tell - but we are definitely starting out that way...... ---------- Ticker Forum Special: "Bennie and the Feds" Melody:Elton John Lyrics:Bubblesee http://www.youtube.com/watch?v=etfVMtCq9Oc (Larry Kudblow eat your heart out) 2009-06-29 09:40:41
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Torgo Posts: 337 Incept: 2009-01-14
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Quote:
I see this kind of statement a lot. I wish someone would explain what is so bad about the Japanese economy wrt the quality of life for the people in Japan? 2009-06-29 09:44:35
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Genesis Posts: 66462 Incept: 2007-06-26
Royal Flush!
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The Japanese people were not in debt to any material degree when they did this - it was all corporate. Their corporations got skull****ed. Our debt is PERSONAL, so guess who's going to get the  treatment over here?---------- I used to play flute; I wonder if I can play a fife? I incite prosecutors to create "Bubba Sausage Parking Lot" projects Darrell Issa has a middle finger and knows how to use it - Me 2009-06-29 09:45:39
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Gmak Posts: 10176 Incept: 2007-07-27
Re-inventing the future at the speed of time.
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What's funny is that even though Canada has escaped "relatively unscathed" in terms of the housing market, get this, household debt continues to grow. In other words, my countrymen and women are taking on more debt because rates have never been lower. If the J6P in the USA gets it and is reducing debt, why can't we? 2009-06-29 09:48:39
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Weaseldog Posts: 282 Incept: 2008-12-11 Texas Banned
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"If the J6P in the USA gets it and is reducing debt, why can't we? " Folks have to feel pain, before they change their behavior. ---------- "You can know the name of a bird in all the languages of the world, but when you're finished, you'll know absolutely nothing whatever about the bird... So let's look at the bird and see what it's doing -- that's what counts." - Richard Feynman 2009-06-29 10:12:52
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Steelhead23 Posts: 280 Incept: 2008-09-09 Portland OR
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I have long agreed that the best possible approach to this massive problem would be to liquidate the debt and start over. Recently, I have been surprised to learn that this was precisely the position of the Hoover Administration during the Great Depression. It seems to me that Keynesianism has run its course - that fluctuations in the business cycle that would otherwise have adjusted the economy through time have in effect been treated with Keynesian monetary policy, thwarting recession after recession, yet never accepting the underlying cause as excess production and capitalization. In fact, these problems never went away, they were merely papered over. Could it be that Irving Fisher and Andrew Mellon were right? That liquidation of debt and excess production is necessary for long-term economic health. For those of you interested in this history, I offer Brad De Long and The London Banker (anon.) Quiz Wednesday. http://econ161.berkeley.edu/pdf_files/Li.... http://londonbanker.blogspot.com/2008/07.... ---------- short em all - let God sort em out! 2009-06-29 10:33:37
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Bubblesee Posts: 3620 Incept: 2007-06-27
nyc
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Torgo: Actually what Japan did was pretty slick from a cosmetic standpoint. Things basically seemed to stay the same in terms of quality of life. The food was still great and people seemed to survive in quite a decent way from what i could see. There was no more BOOM period and that was quite evident - but there also didnt seem to be rampant unemployment, homelessness or other kinds of destitution. I'm somewhat doubtful that we could sustain such "good" results trying what they did over here. The circumstances of how we got into it are different and so is the way our overall economy functions in comparison to theirs. While the Japan economy is still not completely out of the woods from that Bubble - the US would be LUCKY to get to be "another Japan" as a result of the latest bubbles we have blown...... ---------- Ticker Forum Special: "Bennie and the Feds" Melody:Elton John Lyrics:Bubblesee http://www.youtube.com/watch?v=etfVMtCq9Oc (Larry Kudblow eat your heart out) Last modified:
2009-06-29 10:53:30 by bubblesee
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Tjeffersonsghost Posts: 1824 Incept: 2009-01-26
Yes, I'd Hit It
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For the people referencing the Japanese There are a couple BIG differences between us and the Japs 1. They are a creditor nation and we are a debtor nation 2. The actually produce and export things and have a trade surplus, we dont 3. Their people actually have money and pay for things we are in debt up to our eyes Last modified:
2009-06-29 11:09:24 by tjeffersonsghost
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Bozonian Posts: 13051 Incept: 2007-09-01
PFT - Pure F'n Tin
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It's not the banks that are depressing. You'd expect any entity to do what it could to survive. It's the fact that Congress is supporting this crap, regulators are allowing infinite fraud and investors are continuing to support this! WTF?????
---------- If deficits don't matter, then the Federal Government can borrow the money it needs and stop taxing the citizens. Everything I write is my opinion and not to be considered proven fact. Nothing I write should be considered financial advice. Last modified:
2009-06-29 10:54:29 by bozonian
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Bubblesee Posts: 3620 Incept: 2007-06-27
nyc
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Tj: Exactly. Which is why i think we are a bit unrealistic to think we can try the same tactics and get a similar result. We would be VERY lucky to come out of this with only the same pain that Japan sufferred should we continue to go this route. I think we should be realistically looking at the possibility of a MUCH worse outcome under such a scenario..... ---------- Ticker Forum Special: "Bennie and the Feds" Melody:Elton John Lyrics:Bubblesee http://www.youtube.com/watch?v=etfVMtCq9Oc (Larry Kudblow eat your heart out) 2009-06-29 10:57:33
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Sondog Posts: 46 Incept: 2009-05-18
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Karl mentions banks ignoring people who aren't paying. I've heard anecdotal stories of this also. Some having not made a payment in almost a full year and not getting so much as a NOD. A couple thoughts/questions: 1) Anyone want to contribute more anecdotal stories? I'm very curious about how widespread this may be. 2) Doesn't this pose its own new risk? My thought is that the more 'known' this becomes, the more you pressure people to intentionally stop paying. This could start a whole new bubble, but in this case it isn't something you invest IN, it's a bubble where you invest OUT. Wanna 'make' $25,000 in the next year with zero effort? Simply stop paying your mortgage! I should write a book about it and do late nite infomercials... 2009-06-29 11:23:00
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Shrpblnd Posts: 1119 Incept: 2007-08-06
Los Angeles, CA
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Quote:There are a couple BIG differences between us and the Japs Agreed, but there are also a few key differences that work in our favor at ending deflation and recovery, once the marks have been taken and the debt is cleared. The biggest is demographics. Where Japan is old and getting older, the US is still relatively young and can get younger still even if birth rates fall through immigration (hopefully legal). The pain will be sharper here, but recovery may come faster. 2009-06-29 11:30:37
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Genesis Posts: 66462 Incept: 2007-06-26
Royal Flush!
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First you have to take the marks and clear the debt. ---------- I used to play flute; I wonder if I can play a fife? I incite prosecutors to create "Bubba Sausage Parking Lot" projects Darrell Issa has a middle finger and knows how to use it - Me 2009-06-29 11:37:51
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