Net result of financial bailout? $40 to $100 Billion profiit to taxpayers

[Jaskalas]

Sweet, fat cats saying feeding them money worked wonders.

 

[shira]

Nope, not my argument at all and I do not see how my reply could even be remotely considered as such.

A statement was made that the money would be used to pay off the deficit. I stated that would not be the case. What part of that do I need to explain in more detail for you to understand?

Hell they might use the money for something that I completely agree with such as upgrading our energy infrastructure but that doesn't change my point.

I didn't say "pay off the deficit." I said "reduce the deficit."

The deficit is the yearly amount by which the budget exceeds income. It's never "paid off." Additional revenue, however, reduces the amount of the deficit for the year.

I think you're confusing the deficit with the national debt. In order to pay down the national debt, the yearly budget would need to be LESS than the yearly income, and that excess income would need to be used - at least in part - to retire debt.

 

[shira]

yet the bailout was 1 trillion dollars?

what about that 900 billion difference

Are there really this many people who have difficulty with simple math?

Example:

I invest $1 trillion.

I get back $1.1 trillion.

Profit: $100 billion.

You seem to be interpreting the article as saying that the U.S. is getting back a total of $40 to $100 billion. No, that's the excess amount being received.

 

[Darwin333]

I don't need to explain that to you. Use your common sense. I assume that those holding overpriced, mortgage-backed securities took losses on them.

Lol, use my common sense and then you throw out a very wrong assumption. Not to mention that MBS are by far not the only "bad debt" in the system.

I will help you out, a very large portion of that bad debt is being held at par (they are claiming it is still worth face value even though everyone knows it is worth a fraction of that). Why do you think the FDIC was seeing losses of 25% of more when they took over a failed bank? That should NEVER happen unless pure accounting fraud was taking place, which it was except most of that accounting fraud had been recently made legal. Funny how it doesn't really change the actual solvency of the bank (or any other institution) isn't it?

 

[shira]

Sweet, fat cats saying feeding them money worked wonders.

Fortune is a "fat cat?"

 

[Darwin333]

Are there really this many people who have difficulty with simple math?

Example:

I borrow $1 trillion to invest.

I invest $1 trillion.

I get back $1.1 trillion.

Profit: $100 billion.

I do not pay back the $1 trillion I borrowed

I now have $100 billion in my pocket

You seem to be interpreting the article as saying that the U.S. is getting back a total of $40 to $100 billion. No, that's the excess amount being received.

Fixed for ya. You really do not see a problem with the above? Really? Wanna borrow my calculator?

 

[shira]

While the author kind of touches on it, even these modest gains are going to be offset by the need for more funding in the future because the underlying problem was not addressed.

Until there is meaningful financial sector reform, wash, rinse, repeat.

Correct. And the right is pushing hard to abandon reform efforts. And a part of that push is engaging in historical revisionism, pretending that the cause of the meltdown wasn't under-regulated markets.

 

[shira]

Fixed for ya. You really do not see a problem with the above? Really? Wanna borrow my calculator?

The analysis has already taken into account your so-called problem.

READ.

 

[Darwin333]

I didn't say "pay off the deficit." I said "reduce the deficit."

The deficit is the yearly amount by which the budget exceeds income. It's never "paid off." Additional revenue, however, reduces the amount of the deficit for the year.

I think you're confusing the deficit with the national debt. In order to pay down the national debt, the yearly budget would need to be LESS than the yearly income, and that excess income would need to be used - at least in part - to retire debt.

Damn, you caught me in a misuse of terminology. I understand the meaning of the words quite well. I have yet to see you answer the actual question though, I am not talking about actual profit I am talking about the sum total of what we have been paid back.

Either we used the trillion dollars (not part of the profit since that is what we borrowed and then lent) to pay off the original loan.

We spent the trillion dollars to reduce this years deficit (which means we spent a trillion dollars MORE than what this years deficit is because the trillion dollars is mostly part of previous years deficits).

Or you have no clue what the hell happened to the original trillion bucks.

Forget about the profit for a moment and tell me what happened to the money we borrowed and spent for the bailout which by definition must have been paid back in order to make any profit.

 

[Slew Foot]

Good thing GWB bailed out the banks then.

 

[shira]

Damn, you caught me in a misuse of terminology. I understand the meaning of the words quite well. I have yet to see you answer the actual question though, I am not talking about actual profit I am talking about the sum total of what we have been paid back.

Either we used the trillion dollars (not part of the profit since that is what we borrowed and then lent) to pay off the original loan.

We spent the trillion dollars to reduce this years deficit (which means we spent a trillion dollars MORE than what this years deficit is because the trillion dollars is mostly part of previous years deficits).

Or you have no clue what the hell happened to the original trillion bucks.

Forget about the profit for a moment and tell me what happened to the money we borrowed and spent for the bailout which by definition must have been paid back in order to make any profit.

Learn to read. From the article:

The Fed now owns almost $2 trillion more of securities than it did before financial problems surfaced in 2007. A normal financial institution would have had to borrow heavily to add $2 trillion of assets, and interest on that borrowed money would have offset most or all of the income from the added assets. The Fed, though, doesn’t have to borrow: It effectively creates money (which has its own problems) to buy the securities. So the Fed’s income on its added securities is pure profit.

Each year, the Fed turns over most of its annual profit to the Treasury. It’s money that the Treasury can spend, and it reduces the federal budget deficit. From 2007 (when the Fed began expanding its balance sheet to combat financial instability) through 2010, the Fed sent a total of $193 billion to the Treasury. In the previous four years, it sent the Treasury only $91 billion. We’re counting that $102 billion difference as bailout-related profit.

Most Fed analysts expect the size of the Fed’s securities portfolio (and hence its profits) to fall slowly, if at all, this year and next. So we’re estimating that the Fed will send $55 billion of bailout-related profits to the Treasury this year,about what it sent in 2010. To be conservative, we’re estimating the 2012 bailout profit at only $30 billion.

Edit: Of course, you think that owning almost $2 trillion in securities (that, by the way, are going up in value) shouldn't count. Kind of like if you personally spend $1,000 to purchase stock, then the value of the stock you now own shouldn't be counted as an asset. . . . Oh, wait.

 

[fskimospy]

Take housing out of the numbers and get back to me. Last I checked I didn't have to purchase a house every week/day. Food and energy otoh, I sorta do. Oh yeah, didn't wages decrease in that same period of time for a ton of people along with record numbers of people being on fixed .gov incomes/subsidies of one form or another?

Then there is the itsy bitsy issue of untold numbers of poor people worldwide who can't afford food because we are literally exporting inflation to a large number of poor countries. When you make a few thousand bucks a year and the cost of feeding your family rises by double digits, yeah thats a problem. Is your attitude really "fuck em"? Don't get me wrong, their governments had a huge part in their people being vulnerable to our inflation but that doesn't change the end result.

You can pull all the .gov numbers you want to bud, I have oh I dunno just about EVERY commodity to prove my side of the argument. The argument that the cost of goods has doubled but nobody is paying the difference doesn't really hold water with me.

Rush Limbaugh might have told you that liquidity injections were the primary cause of rising food prices, but in reality far more than anything else it was simple supply and demand. (they did prop up prices to a certain extent... that was the whole point) There's a reason why food and oil aren't included in general calculations of inflation, it's because they are highly subject to changing supply and demand calculations.

It's interesting watching conservative economists/radio blatherers who need rampant inflation to have occurred in order to justify their ideology. They continue to desperately search for ways in which they haven't been completely wrong since the outset of this economic crisis. They keep failing. (remember, US bond prices are going to be sky high ANY MINUTE NOW, right?)

 

[blackangst1]

Correct. And the right is pushing hard to abandon reform efforts. And a part of that push is engaging in historical revisionism, pretending that the cause of the meltdown wasn't under-regulated markets.

The right? Really? You do realize, dont you, that a large amount of former Goldman­-Sachs execs are now sitting in Obama's employ? And you do know, dont you, that no changes have been made, nor even looked at, in changing how CDS's are managed, governed, or executed?

The right? lol you're like the antithesis of a Fox News zombie.

 

[Darwin333]

Learn to read. From the article:

Learn to comprehend.

The interest the Fed makes on increasing its holdings (some of which I bet are accounting games on treasury holdings but I am to lazy to check atm) has nothing whatsoever to do with TARP funds or the repayment of TARP funds or to my knowledge TARP in general. That would be what most people where pissed about. Relatively few even know that the Fed has increased their holdings of private securities.

So just to clarify, we are not talking about the money we actually borrowed and spent on the bailouts we are talking about the money the Fed created out of thin air? That is the part you are so happy about turning a profit on?

 

[shira]

Learn to comprehend.

The interest the Fed makes on increasing its holdings (some of which I bet are accounting games on treasury holdings but I am to lazy to check atm) has nothing whatsoever to do with TARP funds or the repayment of TARP funds or to my knowledge TARP in general. That would be what most people where pissed about. Relatively few even know that the Fed has increased their holdings of private securities.

So just to clarify, we are not talking about the money we actually borrowed and spent on the bailouts we are talking about the money the Fed created out of thin air? That is the part you are so happy about turning a profit on?

I didn't post an article on the TARP. I posted an article on the total stimulus, which includes the TARP. Why do you insist on ignoring the article and engaging in this fraudulent argumentation?

Summary: The article states the the TOTAL result of the stimulus will be a $40 to $100 billion dollar profit to the U.S. You and other right-wingers continually criticize the stimulus. You're clearly wrong, but you won't admit it.

To quote what I already quoted above:

This is our count for the entire bailout, not just the 3 percent represented by the massively unpopular Troubled Assets Relief Program. Yes, that’s right — TARP is only 3 percent of the bailout, even though it gets 97 percent of the attention.

 

[Hacp]

This is just like GM paying back all its government debt when it didn't really do that. They didn't count Fanny and Freddie did they?

 

[Darwin333]

Rush Limbaugh might have told you that liquidity injections were the primary cause of rising food prices, but in reality far more than anything else it was simple supply and demand.

LMAO! First time I have been accused of listening to Rush. Psst, I think he is tool too.

(they did prop up prices to a certain extent... that was the whole point)

Not once have I ever read anything by anyone credible that even a small point was to prop up food prices.

There's a reason why food and oil aren't included in general calculations of inflation, it's because they are highly subject to changing supply and demand calculations.

So you are saying that in a global recession that the demand for EVERY commodity has increased to the point of often more than a doubling in the price? The decline in the value of the dollar that those commodities are priced in doesn't have anything to do with it now? Give me a break. We aren't talking just food and energy but ALL commodities.

And I do find it rather funny that you argue we shouldn't use the stuff people MUST purchase every day in order to survive in the calculations but we should use stuff that aren't required.

It's interesting watching conservative economists/radio blatherers who need rampant inflation to have occurred in order to justify their ideology. They continue to desperately search for ways in which they haven't been completely wrong since the outset of this economic crisis. They keep failing. (remember, US bond prices are going to be sky high ANY MINUTE NOW, right?)

I am not a conservative but of course that doesn't fit into your nice cookie cutter argument does it.

As far as bond prices, I am not sure what your point is, as you arguing that they will not raise off their historic lows and will instead remain their for a decade or two?

 

[a777pilot]

No. That $100 billion reduces the deficit.

Any more intelligent responses? Have you EVER written an intelligent response? Or is it that when your blatantly false past claims are vomited up in your face, you just continue to play the diversion game?

Bull shit. That is a bold face lie!

 

[ChunkiMunki]

That's awesome. Corrupt investment banks get bailed out to do business as usual, while the rest of the nation pays for it via depression for the next 20 plus years. Glad to see the Glass/Steagall Act has NOT been reinstated, so we can make a tidy profit at the next bailout. I have used data I think might happen and data I just made up.

 

[Darwin333]

Summary: The article states the the TOTAL result of the stimulus will be a $40 to $100 billion dollar profit to the U.S. You and other right-wingers continually criticize the stimulus. You're clearly wrong, but you won't admit it.

Care to provide an example of how I have criticized the stimulus like the "right wing"?

To quote what I already quoted above:
This is our count for the entire bailout, not just the 3 percent represented by the massively unpopular Troubled Assets Relief Program. Yes, that’s right — TARP is only 3 percent of the bailout, even though it gets 97 percent of the attention.

TARP was a $700B program. If that accounted for only 3 percent then the entire bailout was really 23.3 TRILLION dollars? Thats a whole lotta cake.

 

[shira]

Care to provide an example of how I have criticized the stimulus like the "right wing"?


TARP was a $700B program. If that accounted for only 3 percent then the entire bailout was really 23.3 TRILLION dollars? Thats a whole lotta cake.

Have you even opened the article? Can you even understand plain English:

Now that we’ve relived the history, let’s take a stroll through the numbers. Things have turned out far better than expected because the massive government intervention calmed the markets, and Uncle Sam had to make good on only a tiny fraction of the obligations that taxpayers guaranteed. Uncle Sam bought assets at what turned out to be near-bottom prices during the market panic; the value of Sam’s holdings has since soared. The more than $14 trillion of government investments, securities purchases, and loan guarantees — of which TARP never amounted to more than $411 billion (although it was authorized to spend up to $700 billion) — stabilized the whole financial system.

411,000,000,000 / 14,000,000,000,000 = 0.02936 = 2.9%

 

[Darwin333]

Ok, quick back of a napkin numbers. As part of its $2.8 trillion balance sheet, the Federal Reserves holds $1.6 trillion in Treasury securities, most of which have been added in the last few years.

I still haven't seen the hard numbers on where they claim this profit comes from but I would bet real money that they are including the interest paid on their Treasury holdings in those numbers. That would have been roughly $80B last year.

So basically, if I am right, they are counting money that the Treasury pays the Fed and the Fed returns to Treasury (minus operating costs) as "profit". That is just fucking hilarious.

 

[Darwin333]

Have you even opened the article? Can you even understand plain English:



411,000,000,000 / 14,000,000,000,000 = 0.02936 = 2.9%

I skimmed it. I am looking up the numbers for the source of the so called profit that you are so happy about.

I am 99% sure that it is pure accounting games bullshit but I am still looking for the hard numbers. Basically the Fed is returning the interest payments we are making on the Treasuries the Fed purchased with money they created out of thin air, minus operating costs. I guarantee that is the vast majority of the profit you are all excited about.

 

[Darwin333]

Have you even opened the article? Can you even understand plain English:

I owe you an apology. I should have read the article more clearly.

The Fed’s increased profits come primarily from income on the $1.25 trillion of mortgage-backed securities it bought in 2008-09 to stabilize credit markets (Quantitative Easing 1), and the $600 billion of Treasury securities it bought in 2010-11 (QE2) to hold down interest rates and raise asset values. Even though QE2 is usually considered “economic stimulus,” we’re treating it as part of the bailout because rising asset values have helped stabilize the financial system.

So.... We are paying the Fed interest on Treasuries they purchased from made up money and they are returning that money to us minus operating costs. That is bullshit accounting games in anyones book. Hey, if they buy a few trillion more (with made up money) we can send them a bunch more money (that isn't made up) that they can return, minus operating costs, and we can have this whole deficit thing wiped out in no time!

 

[shira]

Ok, quick back of a napkin numbers. As part of its $2.8 trillion balance sheet, the Federal Reserves holds $1.6 trillion in Treasury securities, most of which have been added in the last few years.

I still haven't seen the hard numbers on where they claim this profit comes from but I would bet real money that they are including the interest paid on their Treasury holdings in those numbers. That would have been roughly $80B last year.

So basically, if I am right, they are counting money that the Treasury pays the Fed and the Fed returns to Treasury (minus operating costs) as "profit". That is just fucking hilarious.

You really do have a problem with math.

You think that counting Fed income from treasuries is hilarious, but you think counting the interest paid by Treasury to the Fed on those notes is a valid part of the deficit.

You have a choice: Either you count both or you ignore both. In either case, the deficit is smaller by the amount of interest paid/earned.

You're also conveniently ignoring that the Fed holds about a $trillion in mortgage-backed securities, which earn interest at a higher rate than treasuries.