Obama's Big Bang - the highlights

[w¡n9Nµ7 §£@¥€r 123]

It is 2009 and what appears to be looming, according to one authoritative press report this weekend, is a massive pre-emptive devaluation of the U.S. dollar as Team Obama readies itself to announce the "Big Bang" -- a gigantic bailout of the frozen U.S. economy involving trillions of dollars.

So far, Washington has allocated US$750 billion for banking rescues and another US$825 billion for job creation projects. But that's nothing.

The venerable Financial Times of London described this "Big Bang". My guess is that it was part-speculation and part-trial ballooning by an embattled White House.

Here's what the FT said the "Big Bang" could involve:

* New rules for banks and TARP (the bank bailout fund) which will impose new discipline and rules by disallowing bonuses, large compensation and other perquisites. In essence, the American government will be converting its busted banking and brokerage sectors from a money pit for greedy players into the regulated, moderate salaries handed out by publicly-owned utilities.

* A series of "Bad" banks will be created in virtually all countries, led by the U.S. and Germany, to mop up and hold all the bad debts now held by financial institutions. These assets may never amount to much, but taking them off the bankers' books should eliminate their fears about meeting capital ratios as their debts devalue and their customers go under. This is designed to unfreeze credit again.

* Washington is going to bail out all homeowners in the United States. The U.S. government will guarantee all residential mortgages involving owner-occupants, including mortgages which are dramatically higher than the value of the underlying property.

* In return for removing mortgage loan credit risk, Washington will require banks to stretch out principal repayments to owner-occupants so that they do not exceed, on a monthly basis, more than 38% of family or owner incomes. When values or incomes go up, presumably, adjustments will be made. This will provide a floor to property values, a form of welfare to the unemployed and another unfreezing of bank credit.

Those are the highlights of ... a currency debasement which will involve the printing of trillions of dollars, Euros and all the others.

http://www.huffingtonpost.com/diane-franci...o_b_163632.html

[Peikko 1,575]

Ok, some expert in the VJ community, what the fnuck is a 'bad bank'? I am guessing it's a paper term, a way to create a hole into which to drop toxic loans until they are rendered inert - although I have no clue how that happens. It just seems like everyone will be able to get rid of the ####### off their books and pretend it never happened.

I expect there are a lot of individuals that would like to be able to do just that...

Oh, that's right, that's what the Dems do come tax time

[mox 298]

Ok, some expert in the VJ community, what the fnuck is a 'bad bank'? I am guessing it's a paper term, a way to create a hole into which to drop toxic loans until they are rendered inert - although I have no clue how that happens. It just seems like everyone will be able to get rid of the ####### off their books and pretend it never happened.

I expect there are a lot of individuals that would like to be able to do just that...

Oh, that's right, that's what the Dems do come tax time

You got it in one, that's exactly what a Bad Bank is. It's a bank created out of thin air designed to hold bad assets.

Don't you wish you could do the same? Oh, credit card debt? I'll just transfer that over to my "bad person" account so I can keep my hands clean.

[w¡n9Nµ7 §£@¥€r 123]

There is nothing mysterious about the policy steps that need to be taken to get us out of this mess as quickly as possible. It is not rocket science. In fact, it was successfully carried out by the Scandinavian authorities back in 1991. The banks must be forced to disclose their "toxic" assets (the German banks have about 300 billion euros, the U.K. banks probably 200 billion pounds, and the U.S. banks maybe $800 billion). Then these must be written down to market prices with the hit being taken by shareholders and bondholders -- but not depositors. If that means most banks become insolvent, then so be it.

In effect, this function can be executed by the setting up of a "bad bank," as the Swedes did in the early 1990s. The bad bank clears the toxic assets off the books of banking systems by buying them at market prices and forcing write downs by the banks. A good bad bank forces banks to write down their bad assets and cleanse their balance sheets with those made insolvent being recapitalized, nationalized or liquidated by the state. But it is equally possible to use a bad bank to buy the banks' toxic waste at inflated prices so that the bank can start lending again. That's when it becomes a bad bad bank.

http://online.wsj.com/article/SB123258594265704581.html

[mRx 16]

a way to create a hole into which to drop toxic loans until they are rendered inert - although I have no clue how that happens.

The only way they become inert is when they're paid, and we will be the ones paying it. It won't be paid just by the filthy, greedy, rich who are living in houses made of hundred dollar bills, but also the poorest of the poor who are out on the streets, and everyone in between the extremes.

Direct taxation is a thing of the past, and far too revealing to the public. That's why inflation, the ruthless and hidden taxation, is used primarily instead.

When production (in general) remains constant, and the money supply is expanded, prices rise respectively. The rich will most likely not be affected as bad as the poor; those who will see their costs of living rise before they see their wages rise will suffer the most. And what will they get from the insolvent bank in return for their suffering? A stock in the bank? Gratuities from the bank? Even a job at the bank? Nope. Nothing.

Doesn't seem like a fair trade to me.

[Jasman0717 9]

Ok, some expert in the VJ community, what the fnuck is a 'bad bank'?

They pee on the carpet

[Ban Hammer 13,678]

Ok, some expert in the VJ community, what the fnuck is a 'bad bank'?

They pee on the carpet

[mox 298]

Ok, some expert in the VJ community, what the fnuck is a 'bad bank'?

They pee on the carpet

It really tied the room together too, man.