h&f 0051 NY Times Reads HustleandFloe… Or, “A Question for a Lottery Winner”

A Rosy Economy on one 700bn Dip

A Rosy Economy on one 700bn Dip

On September 23, in  we looked into the center of the proposed solution to this whole tanked economy thing with hustleandfloe # 0049: Pin The Tail on The Assets, essentially describing the work of HOW any bailout money would be allocated.

Ok, they may not have passed thru here first, but on  October 4, The New York Times echoes (though with corny drama) saying “nothing short of the global economy depends on its success.”

Huh?  That should have been preceded by “In a world where…

Well, the Times is right, though not in a money sense. ($700bn + $149bn for congressmen to waste means nothing vs. the trillions of shaky debt and a non-producing, wage-dependent population in a non-job growth scenario.) They’re dead on in the sense of this being an emotional salve, i.e. getting the nation to “feel good” despite the fundamentals.

The first attempt at allocating the 700 billion had not much of a chance as, according to David Roche, “was geared to let banks get away with blue murder” and too many regular people figured that out and started to riot.

But, I’ll be darned if that new salve still ain’t workin’…  According to the Financial Times:  “The US Congress on Friday passed the Bush administration’s $700bn financial rescue package after a tense week on Capitol Hill, but stocks fell sharply afterwards amid continuing turmoil in the credit markets.”

However there was a slight jump in the midst of all this.  It got eaten quickly: Traders anticipated the passage of the second attempt, bought in early, and, on the news of the passage, immediately sold – just hoarding cash like the rest of the world.  They know that credit markets are going to be junk for a while.  If banks aren’t lending to each other, how much is a small business gonna get?

They still have to come clean on how they’re gonna price these assets, but it’ll be more difficult to apply public pressure.  This math is done in little rooms.  If they buy these bad assets at current market value, then that’s the best we can hope for.  The temptation, however, is to continue in bailout mode and buy this stuff for much more than its worth from the bankers.  How will we know what happens?

This is a lottery winning, still, for the sheisty congressperson and his or her wall street friend.  They get to divvy in private.

THINK: What’s the first question they ask a lottery winner?

The words, in answer, can barely be understood through the giant smile.  I’m gonna buy a house, pay off my debt, blah blah.  Really they don’t want to say, “I’m gonna blow it in Vegas!”

We’re in for the same – an 840 billion dollar plunk doing nothing to mitigate the recession.

Now, do read on… The future of the global economy depends on it.

For Treasury Dept., Now Comes the Hard Part

WASHINGTON — It will be one of the world’s largest asset management firms with an impressive $700 billion war chest. Nothing short of the global economy depends on its success. And the Treasury Department has barely a month to get it up and running.

The bailout bill that President Bush quickly signed into law on Friday must do what financial experts have been unable to do for the last year — put a dollar value on mortgage-related assets that no one wants, move them off the books of ailing banks and unlock the frozen credit markets…  More


~ by ericjhenderson on October 4, 2008.

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