Hank Paulson is a liar

[The Ozzman]

http://biz.yahoo.com/ap/081112/wall_street.html?printer=1

NEW YORK (AP) -- An already disheartened Wall Street turned sharply lower Wednesday after Treasury Secretary Henry Paulson said the government won't buy banks' soured mortgage assets after all, disappointing investors who hoped to see the bad debt wiped off companies' books. The Dow Jones industrials fell more than 270 points, and all the major indexes dropped more than 2 percent as the market retreated for a third straight session.

Paulson said the government's $700 billion financial rescue package will not purchase troubled assets from banks as originally planned. He said that plan would have taken too much time, and that the Treasury instead will rely on buying stakes in banks and encouraging them to resume more normal lending.

While the market had been pleased by the government's decision weeks ago to buy banks' stock, investors still hoped to see the financial industry relieved of the burden of the mortgage assets whose decline in value helped set off the nation's financial crisis.

Paulson also announced a new goal for the program to support financial markets which supply consumer credit in such areas as credit card debt, auto loans and student loans. He said "with a stronger capital base, our banks will be more confident" to support economic activity.

 

[Dak]

We knew this though.

 

[The Ozzman]

We knew this though.

Some people don't

 

[Dak]

I like how bad debt caused this problem, and the solution is to continue to let people go in debt. Talk about band-aid approaches....

 

[The Ozzman]

I like how bad debt caused this problem, and the solution is to continue to let people go in debt. Talk about band-aid approaches....

I find it hilarious that they called the initial proposal for the bailout TARP

 

[Dak]

TARP = Totally Asinine Repair Proposal?

 

[The Ozzman]

TARP = Totally Asinine Repair Proposal?

Troubled Assets Relief Program

 

[Burning In Hell]

TARP = Totally Asinine Repair Proposal?

I like this one better.

 

[cookiecutter]

I don't what this means but I assume it's more money to rich people.

 

[The Ozzman]

I don't what this means but I assume it's more money to rich people.

lol

 

[cookiecutter]

So is his lying good or bad?

 

[The Ozzman]

It pretty much means the treasury will acquire warrants from the banks, which they can, in turn, convert into shares of stock. Enough of these warrants can produce enough shares of stock whereby the treasury would own the banks outright.

it's bad IMO

 

[cookiecutter]

Cool. So would this be closer to nationalizing the banks? As a person educated in finance do you think this is a good idea?

Btw, my first post was a joke, referencing my tendency to not read threads and then say I assume someone is right. I know you don't always get my humor.

 

[The Ozzman]

So would this be closer to nationalizing the banks?

Yes

As a person educated in finance do you think this is a good idea?

No

 

[cookiecutter]

Hmmm, I would tend to agree with you, but I don't really have the factual basis to hold a firm position. I think just having a more regulated system like they do in Europe or Canada might be the way to go. Canada was actually ranked as having the best banking system in the world recently.

 

[The Ozzman]

Hmmm, I would tend to agree with you, but I don't really have the factual basis to hold a firm position. I think just having a more regulated system like they do in Europe or Canada might be the way to go. Canada was actually ranked as having the best banking system in the world recently.

Well, by nationalizing an industry, the government assumes all debts, liabilities and obligations of said business. Do you really want the government to assume all the liabilities of a bank given how much debt the country has now?

Not only that, you have to worry about delinquent loans, CDs, savings accounts, any credit card accounts the bank might assume, etc.

All the money we have now is just debt. The money in my wallet is debt owed to someone

I just don't think the government is efficient at doing something like this. They have enough on their plate governing the fucking people

Also, I have zero knowledge about Canada's banking industry. If you could find some links, I would like to read about it.

 

[cookiecutter]

All good points which is why I think I agree with you. Here are some links about Canadian banks. I feel pretty good because the vast majority of my money is in RBC right now.

http://en.wikipedia.org/wiki/Banking_in_Canada
http://www.canada.com/topics/news/story.html?id=c3a67e3b-1aef-4daf-a768-a54eedb80185
http://www.theglobeandmail.com/servlet/story/RTGAM.20081106.wharper1106/BNStory/Front

 

[Dak]

I worked for RBC Centura for a little over a year. Working for the American arm sucked ass, not to mention the french canadian snowbird customers that in general all needed the silver spoon removed from their ass.

 

[The Ozzman]

That's a good start for info on the banking industry in Canadia. From what I gathered in the wiki article, the banks actually report to the government. That's nationalization I guess, but it's working well in Canada (except for their debt/GDP ratio being 70%)

 

[cookiecutter]

They are running a surplus though