Translation: The "Fed" Itself Is Close To Insolvency - Taxpayer Bailout? - Tilted Forum Project Discussion Community

host · 04-10-2008, 06:49 AM

Apparently the national debt limit is capped, unless congress authorizes a higher limit, at $10 trillion. (National debt was $5.7 trillion in late 2000....)

The Federal Reserve has, in just a few weeks, lent banks and brokerages nearly half of it's total $850 billion portfolio value. It cannot sell the "collateral" that it accepted in exchange for loaning more than $300 billion to banks and brokerages, because they are not marketable...even when no one is seriously trying to sell the mortgage backed "paper" and other "crap", that the Fed lent against at face value amounts instead of at market value. The newest "paper" that the Fed is accepting are <a href="http://news.google.com/news/url?sa=t&ct=us/0-0&fp=47fef45f43afa7e8&ei=Ii3-R6GsJ4KyyQSv2938Aw&url=http%3A//www.bloomberg.com/apps/news%3Fpid%3D20601087%26sid%3DalBrRvnzgSaM%26refer%3Dhome&cid=1150006413&usg=AFrqEzdJsrMl0FVsSecZ8OrL7IRVBSGUuA">"CLOs"</a>, "Corporate Loan Obligations". In short, the Fed accepts and loans against at face value, the degraded "investment vehicles" the banks and brokerages refuse to sell at huge losses or to "mark to market". If they did that, instead of borrowing from the Fed in this "charade" that transforms these dramatically degraded assets into loans at the value that they were priced at before the credit crisis, most of the prominent banks and brokerages would be insolvent or their stock would be trading at much lower prices, crashing the stock market....

Quote:

http://online.wsj.com/article/SB1207...googlenews_wsj
Fed Weighs Its Options in Easing Crunch
By GREG IP
April 9, 2008; Page A3

WASHINGTON -- The Federal Reserve is considering contingency plans for expanding its lending power in the event its recent steps to unfreeze credit markets fail.

Among the options: Having the Treasury borrow more money than it needs to fund the government and leave the proceeds on deposit at the Fed; issuing debt under the Fed's name rather than the Treasury's; and asking Congress for immediate authority for the Fed to pay interest on commercial-bank reserves instead of waiting until a previously enacted law permits it in 2011.

• The Issue: The Fed has sold or committed a lot of its Treasury portfolio to support markets. Some worry it will soon run out of room to do more.
• The News: The Fed is considering several contingency plans for getting more lending capacity so that won't happen.
• The Bottom Line: The Fed has lots of firepower left before it has to turn to these contingencies.

No moves are imminent because the Fed still has plenty of balance sheet room for additional lending now. The internal discussions are part of a continuing effort at the Fed, similar to what is under way at foreign central banks, to determine its options if the credit crunch becomes even more severe. Fed officials believe the availability of such options largely eliminates the risk of exhausting its stockpile of Treasury bonds and thus losing its ability to backstop the financial system, as some on Wall Street fear.

British and Swiss central banks also are contemplating contingency plans. For now, the European Central Bank is reluctant to consider options that require substantial modifications of its standard tools.

The Fed, like any central bank, could print unlimited amounts of money, but that would push short-term interest rates lower than it believes would be wise. The contingency planning seeks ways to relieve strains in credit markets and restore liquidity without pushing down rates.

The Fed is reluctant to heed calls from some Wall Street participants and foreign officials for the Fed to directly purchase mortgage-backed securities to help a market that still is not functioning normally.

Before the credit crunch began in August, the Fed had $790 billion in Treasury securities on its balance sheet, about 87% of its total assets. <h3>Since then, it has sold or lent about $300 billion. In their place, the Fed has made loans to banks and securities firms to assist them in financing holdings of mortgage-backed and other securities.</h3> Some on Wall Street say the potential for further declines in Fed treasury holdings could leave it out of ammunition.
[Chart]

The Fed holds assets to manage the nation's money supply and influence the federal-funds rate, which banks charge each other on overnight loans. When the Fed buys Treasurys or makes loans directly to banks, it supplies financial institutions with cash; in effect, it prints money. The cash ends up as currency in circulation or in banks' reserve accounts at the Fed.

Since reserves earn no interest, banks lend cash that exceeds their required minimum. That puts downward pressure on the federal funds rate, currently targeted by the Fed at 2.25%. The Fed could purchase securities and make loans almost without limit, expanding its balance sheet. That would cause excess reserves to skyrocket and the federal funds rate to fall to zero. The Fed would contemplate such "quantitative easing" only in dire circumstances. The Bank of Japan took this step this decade after years of economic stagnation.

Weighing the Possibilities

So the Fed is seeking ways to expand its balance sheet without causing the federal funds rate to drop. The likeliest option, one the Fed and Treasury have discussed, <h3>is for the Treasury to issue more debt than it needs to fund government operations. The extra cash would be left on deposit at the Fed, where it would be separate from bank reserves on deposit and thus would have no impact on interest rates. The Fed would use the cash to purchase an offsetting amount of Treasurys in the open market; for legal reasons, it generally cannot buy them directly from Treasury.

Treasury's principal constraint is the statutory limit debt. Treasury debt was $453 billion below the limit Monday.</h3> In the past, Congress always has responded to administration requests to raise the limit, sometimes only after political theatrics.

Fed officials also are investigating the feasibility of the Fed issuing its own debt and using the proceeds to purchase other assets or make loans. It has never done so; the legality is unclear. Some foreign central banks, such as the Bank of Japan, do so.

Another possibility is seeking congressional approval to pay interest on banks' reserves immediately instead of waiting until a 2006 law permits that in 2011. If the Fed paid, say, 2% interest on reserves, banks would have no incentive to lend out excess reserves once the federal funds rate fell to that level.

Congress put off the effective date because paying interest on reserves reduces the Fed profits that are turned over to the Treasury each year, widening the budget deficit. Although preliminary explorations suggest Congress would be open to accelerating the date, the Fed is leery of depending on action by Congress.

The Fed is inclined to use any additional maneuvering room to lend through its existing and recently expanded avenues. Officials are reluctant to buy mortgage-backed securities directly. They worry that such purchases would hurt the market for MBS that the Fed is not permitted to buy: those backed by jumbo and subprime and alt-A mortgages, which are under the greatest strain.

<h3>Moreover, the Fed is not operationally equipped to hold MBS and would probably have to outsource their management.</h3> Such holdings wouldn't help avert foreclosures much, since the Fed would have little control over the mortgages that comprise MBS.

Did I mention that, in addition to lending more than $300 billion to prop up this farce that was once the "vibrant" US economy, envied by the rest of the world, government borrowing, since the last fiscal year ended on 9/30/07, has borrowed $439 billion, and this just fiscal year is just half over...
http://www.treasurydirect.gov/NP/BPD...application=np

the $161 billion in tax rebate checks has not even been borrowed and distributed yet.

If only the Fed's entire $850 billion is lent out by 9/30/08, and no more, the US taxpayers will experience, along with the $700 billion in government borrowing by 9/30/08, a negative change of $1.55 trillion in just one year.

In year ended 9/30/00, the negative change was just $18 billion, or $1.542 trillion less than we may experience, this year.

At what point would you be curious and concerned about these details?

My prediction is that the Fed will exhaust it's portfolio, and instead of that event being perceived for what it actually is....the Fed participating in a deception to prop up the valuations of the stock, and the solvency of the banks and brokerages, to such an extent that the Fed itself has nothing remaining to lend to these criminals, congress will authorize borrowing....increasing the national debt to an amount higher than $10 trillion, permitting the Fed to lose even more than the $850 billion that was it's entire portfolio.

When that new borrowing, authorized by congress begins, this mess will actually have cost taxpayers the $850 billion that was the Fed's portfolio value....nearly half of which is probably already loaned out in this year's bailout, with very little likelihood that banks and brokerages will be able to pay it back, or the much larger borrowed amounts to come....

aceventura3 · 04-10-2008, 07:48 AM

I think the Fed is simply increasing the M1 money supply. This has been a common practice primarily using treasury bonds and notes.

Quote:

The FED's 1st Lever: Open Market Operations

The most common lever used by the FED is open market operations. This refers to FED purchases or sales of US government treasury bonds or bills. The "open market" refers to the secondary market for these types of bonds. (The market is called secondary because the government originally issued the bonds at some time in the past.)

When the FED purchases bonds on the open market it will result in an increase in the money supply. If it sells bonds on the open market, it will result in a decrease in the money supply.

Here's why.

A purchase of bonds means the FED buys a government treasury bond from one of its primary dealers. This includes one of 23 financial institutions authorized to conduct trades with the FED). These dealers regularly trade government bonds on the secondary market and treat the FED as one of their regular customers. It is worth highlighting that bonds sold on the secondary open market are bonds issued by the government months or years before, and will not mature for several months or years in the future. Thus, when the FED purchases a bond from a primary dealer, in the future when that bond matures, the government would have to pay back the FED who is the new owner of that bond.

When the open market operation (OMO) purchase is made, the FED will credit that dealer's reserve deposits with the sale price of the bond (let's say $1 million). The FED will receive the IOU (i.e., bond certificate) in exchange. The money used by the FED to purchase this bond does not need to come from somewhere. The FED doesn't need gold or other deposits, or anything else to cover this payment. Instead the payment is created out of thin air. An accounting notation is made to indicate that the bank selling the bond now has an extra $1 million in its reserve account.

At this point there is still no change in the money supply. However, because of the increase in its reserves, the dealer now has additional money to lend out somewhere else, perhaps to earn a greater rate of return. When the dealer does lend it, it will create a demand deposit account for the borrower and since a demand deposit is a part of the M1 money supply, money has now been created.

As shown in all introductory macroeconomics textbooks, the initial loan, once spent by the borrower is ultimately deposited in checking accounts in other banks. These increases in deposits can in turn lead to further loans, subject to maintenance of the bank's deposit reserve requirements. Each new loan made, creates additional demand deposits and hence leads to further increases in the M1 money supply. This is called the money multiplier process. Through this process, each $1 million bond purchase by the FED can lead to many multiples of an increase in the overall money supply.

The opposite effect will occur if the FED sells a bond in an OMO. In this case, the FED receives payment from a dealer (as in our previous example) in exchange for a previously issued government bond. (It is important to remember that the FED does not issue government bonds, government bonds are issued by the US Treasury department. If the FED were holding a mature government bond the Treasury would be obligated to pay off the face value to the FED, just as if it were a private business or bank.) The payment made by the dealer comes from its reserve assets. These reserves support the dealer's abilities to make loans and in turn to stimulate the money creation process. Now that its reserves are reduced, the dealer's ability to create demand deposits via loans is reduced and hence the money supply is also reduced accordingly.

A more detailed description of open market operations can be found in this NY Fed Fedpoint. (http://www.ny.frb.org/aboutthefed/fedpoint/fed32.html)

http://internationalecon.com/Finance/Fch40/F40-5.php

Marking debt obligations to market is important for short-term holders of debt, if holding to maturity the holder will get face value of the debt assuming no default. If over 5 - 10 - 15- 25 - 30 or so years you think the US real estate market is going to evaporate to zero,there will be no return of the debt, otherwise there will be some return of that debt. If the real estate market drops 50%, the hold of that debt can expect a 50% return of the debt. If the real estate market goes up or is in a range of no default, that debt will be returned plus the interest. Right now the real estate market in most areas has not lost that much value.

host · 04-10-2008, 08:00 AM

hey ace! Did you happen to click on the link to the Bloomberg article on CLO's?

(By the way....what do you think of that black judge, in the video on the other thread? Isn't that something, what he said to the non-blacks, in his courtroom?)

The link is in the first paragraph of the OP. Remember, before last month, the Fed didn't accept crap like MBS and CLOs from brokerages....or anything at all from them...since it hadn't made loans to them since the 1930s.

Consider also, that before last August, the "principle dealers", the banks that sold T-Bills and had borrowing privileges at the Fed discount window, could not lend more than 10 percent of their total reserves, to their brokerage subsidiaries.
The Fed raised that limit, last summer, to 30 percent, for four of the largest US banks.

You do see the progression here, ace? The Fed, before last month, only accepted collateral from primary dealer banks, against loans. The minimum collateral accepted were of the highest quality...... even from banks.

Banks, if they are FDIC members, and they have to be if they insure deposits up to $100,000 per account, are limited to lending 7 times their total assets.
Bear Stearns was leveraged 30 times it's total assets. The Fed is lending to brokerages without regulating them or capping their leverage. which is 4 times the bank leverage cap of 7X....

The taxpayer via, the Fed, is now at risk because the Fed is holding the near worthless paper of the brokerages, and it is lending away it's own assets, which are taxpayer assets....why do you think this OP article is in the WSJ?

It is a trail balloon to test if anything the Fed does will illicit public comment and REAL objection.

aceventura3 · 04-10-2008, 08:38 AM

Quote:

Originally Posted by host

hey ace! Did you happen to click on the link to the Bloomberg article on CLO's?

Yes. We are talking large sums of money, but the market currently needs an injection of liquidity. The US depression during the 1930'S was in part caused by liquidity issues that were made worse by government actions. I support the Fed's current actions.

Quote:

(By the way....what do you think of that black judge, in the video on the other thread? Isn't that something, what he said to the non-blacks, in his courtroom?)

He used poor judgment and should have made his political comments in a different forum. On the other hand what he says has less meaning than applying the law in a color blind manner. If they have evidence of that, I would be more concerned.

Quote:

The link is in the first paragraph of the OP. Remember, before last month, the Fed didn't accept crap like MBS and CLOs from brokerages....or anything at all from them...since it hadn't made loans to them since the 1930s.

Desperate measures for desperate times. People are currently over-reacting similar to the bank runs in the 1930's.

Quote:

Consider also, that before last August, the "principle dealers", the banks that sold T-Bills and had borrowing privileges at the Fed discount window, could not lend more than 10 percent of their total reserves, to their brokerage subsidiaries.
The Fed raised that limit, last summer, to 30 percent, for four of the largest US banks.

Again, this measure is in the Fed's toolbox.

Quote:

The FED's 2nd Lever: Reserve Requirement Changes

When the FED lowers the reserve requirement on deposits, the money supply increases. When the FED raises the reserve requirement on deposits, the money supply decreases.

The reserve requirement is a rule set by the FED that must be satisfied by all depository institutions including commercial banks, savings banks, thrift institutions and credit unions. The rule requires that a fraction of the bank's total transactions deposits (e.g. this would include checking accounts but not certificates of deposit) be held as a reserve either in the form of coin and currency in its vault or as a deposit (reserve) held at the FED. The current reserve requirement in the US (as of March 2004) is 10% for deposits over $45.4 million. (for smaller banks, i.e., with lower total deposits, the reserve requirement is lower).

As discussed above, the reserve requirement affects the ability of the banking system to create additional demand deposits through the money creation process. For example, with a reserve requirement of 10%, Bank A that receives a deposit of $100 will be allowed to lend out $90 of that deposit, holding back $10 as a reserve. The $90 loan will result in the creation of a $90 demand deposit in the name of the borrower and since this is a part of the money supply M1, it rises accordingly. When the borrower spends the $90, a check will be drawn on Bank A's deposits and this $90 will be transferred to another checking account in Bank B. Since Bank B's deposits have now risen by $90, they will be allowed to lend out $81 tomorrow, holding back $9 (10%) as a reserve. This $81 will make its way to another bank, leading to another increase in deposits, allowing another increase in loans, etc, etc. The total amount of demand deposits created thru this process is given by the formula,

DD = $100 + (.9)$100 + (.9)(.9)$100 + (.9)(.9)(.9)$100 + …….

This simplifies to,

DD = $100/(1 - 0.9) = $1000

or

DD = $100/RR

where RR refers to the reserve requirement.

This example shows that if the reserve requirement is 10% the FED could increase the money supply by $1000 by purchasing a $100 T-bill on the open market. However, if the reserve requirement were 5%, a $100 T-bill purchase would lead to a $2000 increase in the money supply.

However, the reserve requirement does not only affect the FED's ability to create new money, it also allows the banking system to create more demand deposits (hence more money) out of the total deposits it currently has. Thus if the FED were to lower the reserve requirement to 5%, the banking system would be able to increase the volume of their loans considerably and it would lead to an substantial increase in the money supply.

Because small changes in the reserve requirement can have substantial effects upon the money supply, the FED does not use reserve requirement changes as a primary lever to adjust the money supply. In fact the reserve requirement has been fixed at the current level since 1992. (although the total deposit amounts affected by the RR are increased each year)

A more detailed description of open market operations can be found in this NY Fed Fedpoint. (http://www.ny.frb.org/aboutthefed/fedpoint/fed45.html)

http://internationalecon.com/Finance/Fch40/F40-5.php

Quote:

You do see the progression here, ace? The Fed, before last month, only accepted collateral from primary dealer banks, against loans. The minimum collateral accepted were of the highest quality...... even from banks.

Yes. I appreciate the Fed responding to inputs rather than being static and doing nothing, or assuming the best.

Quote:

Banks, if they are FDIC members, and they have to be if they insure deposits up to $100,000 per account, are limited to lending 7 times their total assets.
Bear Stearns was leveraged 30 times it's total assets. The Fed is lending to brokerages without regulating them or capping their leverage. which is 4 times the bank leverage cap of 7X....

The taxpayer via, the Fed, is now at risk because the Fed is holding the near worthless paper of the brokerages, and it is lending away it's own assets, which are taxpayer assets....why do you think this OP article is in the WSJ?

It is a trail balloon to test if anything the Fed does will illicit public comment and REAL objection.

Regulators got caught with their pants down. The regulations will tighten. I compare it to a building being on fire. Put out the fire first, then determine the cause, then put into place protective measures to prevent or minimize the risk of future fires.

http://internationalecon.com/Finance/Fch40/F40-5.php

host · 04-10-2008, 11:19 PM

I found an interesting link posted on an economics discussion forum:
http://boards.prudentbear.com/bbs_re...snsa=A#M661747

It resolved to the address of a thread at still another discussion forum, a democratic party supporting site.....

Hmmmm....this guy posted about the same information and opinion as I did in this thread's OP:
http://www.dailykos.com/story/2008/4/10/202233/415

The response to his post exceeded 200 comments. On this forum, there isn't even much interest in clicking on the thread title.

Are our interests here narrowed to a point where threads initiated to examine outspoken black men have become "the draw"....the subject of our collective greatest concern?

The poll displayed on the thread at the other site on the identical subject as I've outlined in this thread....same principle article..... garnered 674 votes.... vs. here....zero votes. As I write this, the thread at the other site is only seven hours old.

I'm a member and an occasional contributor at the other site, too.... and now I'm wondering whether I'd best be shifting my principle participation to over there....from now on, considering that this is a non-partisan topic and spontaneously and coincidentally, a good comparison of the reaction to it, here vs. there, materializes today.

matthew330 · 04-11-2008, 03:36 AM

host, can I borrow that violin you pulled out in the other thread?

ASU2003 · 04-11-2008, 03:55 AM

I think Ron Paul should be the Treasury Secretary. There are some shady things going on. It's almost as if the Fed is trying too hard to prevent the market from doing what it needs to do. Things are overpriced, stocks should come down in price. The government shouldn't devalue the dollar (a move that most Americans don't notice,however it may be considered a good thing for investors in gold or oil if prices just went up). If the stock market went down to 6,000 it might reflect the current outlook on the economy, but I doubt that it will ever happen. There is a far higher percentage of people that have a stake in the market and with the push for 401ks and such, it would make people question that system for retirement as well.

host · 04-11-2008, 06:15 AM

Quote:

Originally Posted by matthew330

host, can I borrow that violin you pulled out in the other thread?

Nice contribution to the discussion, matthew, especially considering you've authored just six threads on all of TFP in the last 156 weeks.
http://www.tfproject.org/tfp/search....archid=1150734

I'm sharing here, and I'm asking why I should bother.....and you're providing feedback. I get your message, thank you, but I'm not learning anything from you, because you're last post and your overall record is representative of what you're giving back to the forum.

I think I posted a pretty decent comparison of the reaction to the same information at a politics forum too interested in irrelevant topics, compared to the reaction at a leading politics forum.

Cynthetiq · 04-11-2008, 06:29 AM

a couple of things host,

we're not daily kos, we dont' get the same kind of traffic nor user base.

intimidating OP, I've tried to read it and understand how to discuss it with you. I get frustrated because I don't understand it and don't know how I can begin to understand it.

I ask you questions to help clarify, you mock them or bury them in a deluge of things that don't appear to me to be related or help answer those questions.

you've tried many ways to spur threads and discussions and at the same time, you've alienated this reader.

sorry host. I don't know what else to say, I'd love to discuss this OP in some manner.

host · 04-11-2008, 06:33 AM

Quote:

Originally Posted by Cynthetiq

a couple of things host,

we're not daily kos, we dont' get the same kind of traffic nor user base.

intimidating OP, I've tried to read it and understand how to discuss it with you. I get frustrated because I don't understand it and don't know how I can begin to understand it.

I ask you questions to help clarify, you mock them or bury them in a deluge of things that don't appear to me to be related or help answer those questions.

you've tried many ways to spur threads and discussions and at the same time, you've alienated this reader.

sorry host. I don't know what else to say, I'd love to discuss this OP in some manner.

No votes on the poll, here, ns. nearly 700 votes there. How does that have anything to do with your "more traffic" point?

Cynthetiq, no threads authored by the first critic to "chime in". No "nurturing" or encouragement towards a frequent contributor to the forum who asks why he should bother anymore....I read you, loud and clear!

Before you posted your critique, did you read any of the 200 plus responses at the link I posted....to the identical information posted in this thread. Somehow, over there, they managed to find a way to understand and to respond and to vote. They aren't all site administrators there....just the average participant, from the look of it.

Doesn't that kind of weaken your take on my "shortcomings", my failure as you see it, to present in a less intimidating, more understandable way?

The same information, exact same article, much more controversial title is posted at the other forum.....your take seems like your usual. They were able to "get it", over there....they were interested, (concerned....it is about an unprecedented crisis...) they voted. Pretty attractive response....to the same effort there, vs. here.

Cynthetiq · 04-11-2008, 06:40 AM

I don't consider myself to the the most intelligent. I only think I'm reasonably smart.

Quote:

Should the Fed Reserve Stop Accepting Falsely Valued Collateral In Exchange for Loans
No, The taxpayer should take on the risk of losing $Trillions
The Fed Should Not Assume the Risk of Privately Owned Banks & Brokerages

I don't understand at all what I'm being asked to vote for.

host, I am not stating anything of the sort, I've just stated you've alienated me as a reader to your posts and discussions. I try to understand and read what you post. I take time to read your links and opinons. I craft responses and try to ask you intelligent questions so that I can clarify and understand better. I do my best to make sure that they aren't snarky in tone or sarcastic.

yet you don't engage me in any substantive manner. you talk over or around what I'm asking or trying to discuss.

yet even with this, you still take the same position and imply that I'm your nemisis in some manner.

host · 04-11-2008, 06:46 AM

Quote:

Originally Posted by Cynthetiq

I don't consider myself to the the most intelligent. I only think I'm reasonably smart.

I don't understand at all what I'm being asked to vote for.

host, I am not stating anything of the sort, I've just stated you've alienated me as a reader to your posts and discussions. I try to understand and read what you post. I take time to read your links and opinons. I craft responses and try to ask you intelligent questions so that I can clarify and understand better. I do my best to make sure that they aren't snarky in tone or sarcastic.

yet you don't engage me in any manner.

yet even with this, you still take the same position that I'm your nemisis in some manner.

Read your response before this latest one. Is it encouraging in the least? How about your latest respones?

Your "take" contradicted the easily observable contrasts evident in my comparison of how the same information is presented and received, at two politics discussion venues.. My example should be a wake up call. It wasn't received that way.

Look at the post and viewer counts on the Jeremiah Wright and "Black judge" threads here. Look at the response to the same information presented in this thread's OP, here, vs. at the linked Kos thread.

Tell me again, that this is my problem. I have the flexibility...the option, to take my show on the road. I asked why I should bother to continue here. There may well be deep flaws in the way I do what I do here, but I showed you that, if there are, it has more to do with what is happening or not happening here, than it has to do with my flaws.

Cynthetiq · 04-11-2008, 06:54 AM

host, you'll believe what you want to believe and nothing I say will change that.

as simple and shocking as this may be... people here may not be interested in financial discussions and more interested in discussions about racial and social standards or simply porn.

I posted a GD thread about The Fed bailout Bear Stearns, should they bail you out too? 19 posts and 215 page views. I tried to keep it very simple. Not many people were interested in discussing it. I don't take it personally. I try to find another way of crafting an OP to discuss it. If people aren't interested in it here, they aren't interested. I can't force someone to discuss a thread any more than you can.

I suggest to you is that you not give up and try a different tact in getting readers and responses to your posts. Maybe start small and educate people a bit more and then debate them at that level you've educated them.

If you want to take your show on the road, that's your choice. I'm not trying to drive you there. I value every member of the board as each one teaches me something.

The_Jazz · 04-11-2008, 07:13 AM

host, I think that the dim bulb in my brain just clicked on as I had a revalation. There is a disconnect between your perceived audience and the actual one. I'll agree with Cyn that this thread is a bit over my head and that I'm not quite sure what you're after with it, but I think that you might be mistaken as to actually WHO reads your threads and what their background is. The posters at dailykos and prudentbear have substantially different backgrounds than the posters at TFP and at TFPolitics.

That's my observation, anyway. I suppose that you will question the "encouragment" here. If that means you have to take your show on the road, such as it is, so be it. It may be the best thing for you since you'll finally find the folks who can take the time to read and understand all of the information you throw at them.

host · 04-11-2008, 07:16 AM

Quote:

Originally Posted by Cynthetiq

host, you'll believe what you want to believe and nothing I say will change that.

as simple and shocking as this may be... people here may not be interested in financial discussions and more interested in discussions about racial and social standards or simply porn.

I posted a GD thread about The Fed bailout Bear Stearns, should they bail you out too? 19 posts and 215 page views. I tried to keep it very simple. Not many people were interested in discussing it. I don't take it personally. I try to find another way of crafting an OP to discuss it. If people aren't interested in it here, they aren't interested. I can't force someone to discuss a thread any more than you can.

I suggest to you is that you not give up and try a different tact in getting readers and responses to your posts. Maybe start small and educate people a bit more and then debate them at that level you've educated them.

If you want to take your show on the road, that's your choice. I'm not trying to drive you there. I value every member of the board as each one teaches me something.

Thank you, Cynthetiq, I want to stay here. I liked the diversity of opinion, here, and I still do.

You're correct, you cannot "make" people interested if they don't have a tendency, in a given subject, and you do have to discuss an issue at a level of proficiency of those who decide to participate....I do need to work on that.

Maybe a thread title.... Gasoline to reach $10/gal soon! would be a better way to frame either your Bear Stearns thread, or this thread. That is what I think that this "process"....the bailouts, is intended to take us to.

I am going to post a thread or two, simultaneously, identically, here and at Kos in the next few days. I am fascinated, because of the experience with this thread...in comparing the way the same presentation and content is received here, vs. there.

aceventura3 · 04-11-2008, 07:31 AM

Host,

1. I prefer discussing issues on the TFP in bite size pieces. Your topics often introduce broad multi-faceted issues. In my responses I try to focus on one point at a time and I try to get to the core of an issue. You often leave my points dangling and unresponded to.

2. The thing I have always respected in great communicators is their ability to present complicated issues in an easy to understand manner with brevity. When I read some of your posts, its like work - which I am taking a break from when I come to TFP.

3) Speaking of great communicators, here is Pulitzer Prize winning cartoonist Mike Ramerez on the topic of your OP.

host · 04-11-2008, 07:40 AM

Quote:

Originally Posted by aceventura3

Host,

1. I prefer discussing issues on the TFP in bite size pieces. Your topics often introduce broad multi-faceted issues. In my responses I try to focus on one point at a time and I try to get to the core of an issue. You often leave my points dangling and unresponded to.

2. The thing I have always respected in great communicators is their ability to present complicated issues in an easy to understand manner with brevity. When I read some of your posts, its like work - which I am taking a break from when I come to TFP.

3) Speaking of great communicators, here is Pulitzer Prize winning cartoonist Mike Ramerez on the topic of your OP.

Cyn, The_Jazz, ace.... by default, you're making the average Kos discussion participant seem much more competent than the average TF Politics forum participant. I am not ready to do that.

Quote:

Originally Posted by The_Jazz

host, I think that the dim bulb in my brain just clicked on as I had a revalation. There is a disconnect between your perceived audience and the actual one. I'll agree with Cyn that this thread is a bit over my head and that I'm not quite sure what you're after with it, but I think that you might be mistaken as to actually WHO reads your threads and what their background is. The posters at dailykos and prudentbear have substantially different backgrounds than the posters at TFP and at TFPolitics.

That's my observation, anyway. I suppose that you will question the "encouragment" here. If that means you have to take your show on the road, such as it is, so be it. It may be the best thing for you since you'll finally find the folks who can take the time to read and understand all of the information you throw at them.

The_Jazz... the OP has an article that amounts to a "trial balloon"...reaction to the inevitability that the Fed will transfer it's entire portfolio into machinations like this...Lehman "packaged" crap that the Fed ORIGINALLY would not accept as collateral....shined up by Lehman, "just for the Fed" to accept and lend against.

The Fed will need trillions of dollars to lend against this "type" of "collateral". Lehman's successful "experiment" belies the new reality that the Fed will accept ANYTHING as collateral....with no regulation of the borrowers.

The Fed is lending Taxpayer's money, (as is what is left of the Fed's portfolio), secured by fictitious collateral.. There is no "real world" market for the crap that the Fed is lending our dollars against!

Quote:

http://www.reuters.com/articlePrint?...39492520080411

Lehman makes move to turn unsold debt to cash: report
Fri Apr 11, 2008 6:27am EDT

NEW YORK (Reuters) - Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research) repackaged unsold debt and used the Federal Reserve's new borrowing facility to convert loans that investors mostly rejected into cash to finance its business, the Wall Street Journal reported.

According to the Journal, Lehman transferred $2.8 billion in loans that included some risky leveraged buyout debt into a new investment entity called Freedom.

Freedom then issued debt securities backed by the loans, and $2.26 billion of the securities got investment-grade credit rankings from Moody's and Standard & Poor's, according to the report.

The bank used some of those securities as collateral for a low-interest, short-term cash loan from the Federal Reserve, the Journal said, citing people familiar with the matter.

The move was meant as a test to see what the Federal Reserve would accept, and the size of the loan was not material, the Journal added, citing a person familiar with the matter.

Lehman representatives and the Federal Reserve could not be reached immediately for comment.

Conflict of interest?

Quote:

http://www.reuters.com/articlePrint?...46902620070830
Lehman hires Jeb Bush as private equity advisor
Thu Aug 30, 2007 5:36pm EDT

NEW YORK, Aug 30 (Reuters) - Lehman Brothers has hired Jeb Bush, brother of the President of the United States, as an advisor to its private equity business, a source familiar with the situation said.

Lehman hired another relative of U.S. President George W. Bush last year--George Walker, a second cousin, who heads up the bank's asset management business.

Jeb Bush is the former governor of Florida.

Lehman Brothers declined to comment.

Cynthetiq · 04-11-2008, 08:14 AM

Quote:

Cyn, The_Jazz, ace.... by default, you're making the average Kos discussion participant seem much more competent than the average TF Politics forum participant. I am not ready to do that.

I'd call it TFP forum participant. Remove the POLITICS part from it.

Quote:

The_Jazz... the OP has an article that amounts to a "trial balloon"...reaction to the inevitability that the Fed will transfer it's entire portfolio into machinations like this...Lehman "packaged" crap that the Fed ORIGINALLY would not accept as collateral....shined up by Lehman, "just for the Fed" to accept and lend against.

The Fed will need trillions of dollars to lend against this "type" of "collateral". Lehman's successful "experiment" belies the new reality that the Fed will accept ANYTHING as collateral....with no regulation of the borrowers.

The Fed is lending Taxpayer's money, (as is what is left of the Fed's portfolio), secured by fictitious collateral.. There is no "real world" market for the crap that the Fed is lending our dollars against!

this helps me understand a bit more what you are trying to bring to bear as a discussion

Quote:

Conflict of interest?

this additional part just disconnected me....I didn't understand the walk or leap you took to get there, or how it is connected to the current pool you've just presented.

edit: also, I've not fully digested or started to discuss the points your educating me on, then you pile more on. I believe that's where it got disconnected for me. I see the connection, it's obvious when reading it. But in trying to digest the whole post, I come up short.

Ustwo · 04-11-2008, 08:28 AM

I for one am shocked that there is more interest and vocal responses with this sort of thing at a radical left wing political website than at the TFP.

aceventura3 · 04-11-2008, 10:50 AM

Quote:

Originally Posted by host

Cyn, The_Jazz, ace.... by default, you're making the average Kos discussion participant seem much more competent than the average TF Politics forum participant. I am not ready to do that.

I think you miss one of key my points: I don't concede competence to anyone, I simply defer to those who may have invested more time into something than I. You falsely assume because I don't invest as much time into your threads as you think I should, that I lack relative competence to those who do. Seems likes you may want to re-think that as you ignore legit responses to your posts.

host · 04-11-2008, 01:56 PM

Quote:

Originally Posted by Ustwo

I for one am shocked that there is more interest and vocal responses with this sort of thing at a radical left wing political website than at the TFP.

What are you saying? Aren't all Americans concerned that the Fed, with the approval of the administration....I assume that the Treasury Secretary, a cabinet level official, is cooperating with the Federal Reserve, with the president's approval.... is socializing the losses of the principle banks and brokerages in the country?

Could you define what a "radical left wing political website" is, and does? How would you describe this forum? How would you describe townhall.com ?

http://www.dailykos.com/section/Diary leads to a place where you, me, or anybody (free regisitration required) can post a thread, just like we do here, and the thread (they call it a diary....) immediately appears for all visitors to the page to see, read, and comment on. If you can support what you post on your "diary", your should have no trouble.

It seems uniquely "American", don't you agree? A place where, at no cost, you can post your opinion....it remains on display until enough subsequent opinions are posted to move it down, and then eventually off the front page.

Isn't that a "grass roots" kind of process, not unlike a town meeting? Can you point to any prominent site that you are familiar with, that offers the entire side of it's front page to the public to post on?

That "one place for all" opportunity isn't offered here: www.tfproject.org ....where else have you seen it offered? How then, does your description fit; "radical left wing political website", compared to what I'm telling you?

Cynthetiq, I can make a case now that the ONLY reason Lehman, stock symbol LEH, is still a "going concern", is because of the sudden implementation of a brokerage bailout policy, led by two men the president appointed....one reports directly to him, the treasury sect'y, and the other is Fed Chairman Bernanke. How does that square with the president's brother being paid by a firm that the president's administration is shoveling cash at, to keep it afloat?

Cynthetiq · 04-13-2008, 01:37 PM

Quote:

Originally Posted by host

Cynthetiq, I can make a case now that the ONLY reason Lehman, stock symbol LEH, is still a "going concern", is because of the sudden implementation of a brokerage bailout policy, led by two men the president appointed....one reports directly to him, the treasury sect'y, and the other is Fed Chairman Bernanke. How does that square with the president's brother being paid by a firm that the president's administration is shoveling cash at, to keep it afloat?

I don't doubt that host, the challenge is as I'm trying to digest the first part, you've already moved the conversation onwards before I have any time to understand or even address the first portions. That's difficult for people to swallow, and may even make them feel stupid. People don't like to feel stupid. If they do, they retreat to topics that don't make them feel stupid like Obama's bowling score.

I was reading something in Newsweek.com and found it rather interesting which lead me back to this thread:

Quote:

In 1993, the late senator Daniel Patrick Moynihan coined the term "defining deviancy down." The prevalence of bad behavior in the underclass, he argued, caused institutions to lower standards and expectations, which effectively socialized the costs of dysfunction. Today, the Federal Reserve is "defining solvency down."

In recent weeks, the Fed has responded to Wall Street's crisis by systematically lowering the standards of what it would accept as collateral for loans. (Historically, only government bonds or bonds backed by Fannie Mae and Freddie Mac were good enough.) But as part of the Bear Stearns deal, it agreed to lend $30 billion against assets of dubious provenance.And guess who bears the risk if that $30 billion can't be paid back? You and me. If write-downs continue, rumor has it, the Fed might start accepting sports memorabilia, Beanie Babies and Pokémon card collections as collateral.

Again, I'm not claiming to know alot about this, but my understanding is trying to understand more because I know it to be important, at least more important than the rest of things that people tend to spend more time on.

matthew330 · 04-13-2008, 06:31 PM

Quote:

Originally Posted by host

Nice contribution to the discussion, matthew, especially considering you've authored just six threads on all of TFP in the last 156 weeks.
http://www.tfproject.org/tfp/search....archid=1150734

I'm sharing here, and I'm asking why I should bother.....and you're providing feedback. I get your message, thank you, but I'm not learning anything from you, because you're last post and your overall record is representative of what you're giving back to the forum.

I think I posted a pretty decent comparison of the reaction to the same information at a politics forum too interested in irrelevant topics, compared to the reaction at a leading politics forum.

That link didn't really lead me anywhere, but I can imagine where it was supposed to go. Why don't you do the same search on yourself over the last 156 weeks. Sometimes Host, less is more. I'll continue reading, periodically adding to the discussion, and periodically calling you out - whenever the fuck I feel like it. I'm allowed to do that without you doing a historical search/comparison of our involvments here. You're not here to learn anything from anyone, that much is clear. You do the occasional drive-by, so please drop the asshole response when someone does it to you.

04-10-2008, 11:19 PM	#5 (permalink)
host Banned	I found an interesting link posted on an economics discussion forum: http://boards.prudentbear.com/bbs_re...snsa=A#M661747 It resolved to the address of a thread at still another discussion forum, a democratic party supporting site..... Hmmmm....this guy posted about the same information and opinion as I did in this thread's OP: http://www.dailykos.com/story/2008/4/10/202233/415 The response to his post exceeded 200 comments. On this forum, there isn't even much interest in clicking on the thread title. Are our interests here narrowed to a point where threads initiated to examine outspoken black men have become "the draw"....the subject of our collective greatest concern? The poll displayed on the thread at the other site on the identical subject as I've outlined in this thread....same principle article..... garnered 674 votes.... vs. here....zero votes. As I write this, the thread at the other site is only seven hours old. I'm a member and an occasional contributor at the other site, too.... and now I'm wondering whether I'd best be shifting my principle participation to over there....from now on, considering that this is a non-partisan topic and spontaneously and coincidentally, a good comparison of the reaction to it, here vs. there, materializes today. Last edited by host; 04-10-2008 at 11:49 PM..

04-11-2008, 06:29 AM	#9 (permalink)
Cynthetiq Tilted Cat Head Administrator Location: Manhattan, NY	a couple of things host, we're not daily kos, we dont' get the same kind of traffic nor user base. intimidating OP, I've tried to read it and understand how to discuss it with you. I get frustrated because I don't understand it and don't know how I can begin to understand it. I ask you questions to help clarify, you mock them or bury them in a deluge of things that don't appear to me to be related or help answer those questions. you've tried many ways to spur threads and discussions and at the same time, you've alienated this reader. sorry host. I don't know what else to say, I'd love to discuss this OP in some manner. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!

04-11-2008, 06:54 AM	#13 (permalink)
Cynthetiq Tilted Cat Head Administrator Location: Manhattan, NY	host, you'll believe what you want to believe and nothing I say will change that. as simple and shocking as this may be... people here may not be interested in financial discussions and more interested in discussions about racial and social standards or simply porn. I posted a GD thread about The Fed bailout Bear Stearns, should they bail you out too? 19 posts and 215 page views. I tried to keep it very simple. Not many people were interested in discussing it. I don't take it personally. I try to find another way of crafting an OP to discuss it. If people aren't interested in it here, they aren't interested. I can't force someone to discuss a thread any more than you can. I suggest to you is that you not give up and try a different tact in getting readers and responses to your posts. Maybe start small and educate people a bit more and then debate them at that level you've educated them. If you want to take your show on the road, that's your choice. I'm not trying to drive you there. I value every member of the board as each one teaches me something. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!

04-11-2008, 07:13 AM	#14 (permalink)
The_Jazz Asshole Administrator Location: Chicago	host, I think that the dim bulb in my brain just clicked on as I had a revalation. There is a disconnect between your perceived audience and the actual one. I'll agree with Cyn that this thread is a bit over my head and that I'm not quite sure what you're after with it, but I think that you might be mistaken as to actually WHO reads your threads and what their background is. The posters at dailykos and prudentbear have substantially different backgrounds than the posters at TFP and at TFPolitics. That's my observation, anyway. I suppose that you will question the "encouragment" here. If that means you have to take your show on the road, such as it is, so be it. It may be the best thing for you since you'll finally find the folks who can take the time to read and understand all of the information you throw at them. __________________ "They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety." - B. Franklin "There ought to be limits to freedom." - George W. Bush "We have met the enemy and he is us." - Pogo

04-11-2008, 07:31 AM	#16 (permalink)
aceventura3 Junkie Location: Ventura County	Host, 1. I prefer discussing issues on the TFP in bite size pieces. Your topics often introduce broad multi-faceted issues. In my responses I try to focus on one point at a time and I try to get to the core of an issue. You often leave my points dangling and unresponded to. 2. The thing I have always respected in great communicators is their ability to present complicated issues in an easy to understand manner with brevity. When I read some of your posts, its like work - which I am taking a break from when I come to TFP. 3) Speaking of great communicators, here is Pulitzer Prize winning cartoonist Mike Ramerez on the topic of your OP. __________________ "Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."

View Poll Results: Should the Fed Reserve Stop Accepting Falsely Valued Collateral In Exchange for Loans
No, The taxpayer should take on the risk of losing $Trillions	0	0%
The Fed Should Not Assume the Risk of Privately Owned Banks & Brokerages	1	100.00%
Voters: 1. You may not vote on this poll

04-10-2008, 08:00 AM	#3 (permalink)
host Banned	hey ace! Did you happen to click on the link to the Bloomberg article on CLO's? (By the way....what do you think of that black judge, in the video on the other thread? Isn't that something, what he said to the non-blacks, in his courtroom?) The link is in the first paragraph of the OP. Remember, before last month, the Fed didn't accept crap like MBS and CLOs from brokerages....or anything at all from them...since it hadn't made loans to them since the 1930s. Consider also, that before last August, the "principle dealers", the banks that sold T-Bills and had borrowing privileges at the Fed discount window, could not lend more than 10 percent of their total reserves, to their brokerage subsidiaries. The Fed raised that limit, last summer, to 30 percent, for four of the largest US banks. You do see the progression here, ace? The Fed, before last month, only accepted collateral from primary dealer banks, against loans. The minimum collateral accepted were of the highest quality...... even from banks. Banks, if they are FDIC members, and they have to be if they insure deposits up to $100,000 per account, are limited to lending 7 times their total assets. Bear Stearns was leveraged 30 times it's total assets. The Fed is lending to brokerages without regulating them or capping their leverage. which is 4 times the bank leverage cap of 7X.... The taxpayer via, the Fed, is now at risk because the Fed is holding the near worthless paper of the brokerages, and it is lending away it's own assets, which are taxpayer assets....why do you think this OP article is in the WSJ? It is a trail balloon to test if anything the Fed does will illicit public comment and REAL objection.

04-11-2008, 03:36 AM	#6 (permalink)
matthew330 Banned	host, can I borrow that violin you pulled out in the other thread?

04-11-2008, 03:55 AM	#7 (permalink)
ASU2003 immoral minority Location: Back in Ohio	I think Ron Paul should be the Treasury Secretary. There are some shady things going on. It's almost as if the Fed is trying too hard to prevent the market from doing what it needs to do. Things are overpriced, stocks should come down in price. The government shouldn't devalue the dollar (a move that most Americans don't notice,however it may be considered a good thing for investors in gold or oil if prices just went up). If the stock market went down to 6,000 it might reflect the current outlook on the economy, but I doubt that it will ever happen. There is a far higher percentage of people that have a stake in the market and with the push for 401ks and such, it would make people question that system for retirement as well.

04-11-2008, 08:28 AM	#19 (permalink)
Ustwo Pissing in the cornflakes	I for one am shocked that there is more interest and vocal responses with this sort of thing at a radical left wing political website than at the TFP. __________________ Agents of the enemies who hold office in our own government, who attempt to eliminate our "freedoms" and our "right to know" are posting among us, I fear.....on this very forum. - host Obama - Know a Man by the friends he keeps.