a facility that will help market participants meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA).
The U.S. Treasury Department--under the Troubled Assets Relief Program (TARP) of the Emergency Economic Stabilization Act of 2008--will provide $20 billion of credit protection to the FRBNY in connection with the TALF.
The idea here was to ensure new lending continued rather than buy troubled assets. Importantly loans issued under this program would not create losses for the banks.
I was referring to the program which removed potential bad assets from bank balance sheets in exchange for cash / reserves. I beleive that was called TARP. As you post shows, TARP supported TALF.
Either way, my post hopefully addressed jimbos question.
Which is essentially what I said: bailouts and subsidies for the banks are finance sector. You get it.
The Fed were involved in the smaller amounts for bear stearns and AIG otherwise they were not directly involved with bailouts other than actions designed to keep the credit markets functioning by aiming to prevent deflation.
So if we talk of QE it seems best to keep it restricted to what it has meant in practice - an 'easing' policy that has not directly bailed the banking system in the way it is commonly claimed.
b_b
4 Sep 2015, 06:22 PM
I was referring to the program which removed potential bad assets from bank balance sheets in exchange for cash / reserves. I beleive that was called TARP. As you post shows, TARP supported TALF.
Either way, my post hopefully addressed jimbos question.
Tarp was a treasury program.
QE1 was the small TALF and the 600b GSE MBS program. Those programs have nothing to do with buying troubled assets already out in the market and in trouble but rather newly issued stuff from the market
The shit hit the fan for TARP in september and was voted thru in early October. QE1 began late November 2008
The Fed were involved in the smaller amounts for bear stearns and AIG otherwise they were not directly involved with bailouts other than actions designed to keep the credit markets functioning by aiming to prevent deflation.
So if we talk of QE it seems best to keep it restricted to what it has meant in practice - an easing policy that has not directly bailed the banking system in the way it is commonly claimed. Tarp was a treasury program.
Sure. More about intended consequences and it's prudent to refer to it in institutional speak.
What it means is that if you own a casino you always skim a profit. You never lose on a days play from the punters. If you own a paper asset. You're a punter at their casino.
????
If you are suggesting the US government (via the Fed / Treasury) is the casino, then..... ERROR, ERROR, ERROR,
If I said you owned an IP, bb, would you spend 10 minutes typing out the reasons why you are not an investment property? I implied that the US fed's member banks and by proxy the government Own the casino. The casino is the market structures, the equity markets, the PROPERTY markets, the derivatives markets, the gold markets, etc, etc, etc.
All the markets you can put money into constitute the casino. The Government gets to tax all the 'tables' and gets personal kickbacks as well as graft from their corporate friends (for another time) The Fed's banks control the flow of capital and are the primary partners in the casino with the government and their corporate friends.
You think the fed is independant of the banks that own it's stock, and this is the root of all the mistakes you make in trying to understand why supposedly free markets can get so out of wack they need to be constantly controlled. The truth is there is no such thing as free markets now.
But cheer up! The ASX 200 is up 0.26% today, it's only down 10.49% for the year. Back at the same price it was probably 10 years ago. Of course that's the overall market as it exists today, not accounting for all the companies that turned to shit over that time and were removed from it.
That's how the DOW gets so high. Everytime a company like Enron goes out the door they quickly replace it with an up and coming star. It's why you should NEVER buy individual stocks unless you have inside knowledge, only ever buy the index.
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
Sure. More about intended consequences and it's prudent to refer to it in institutional speak.
It makes sense to describe the situation as it happened rather than describe it in a way that creates meaning that does not exist. The fed for example has never been stuffed full of toxic assets as is constantly been claimed on this forum.
The Fed were involved in the smaller amounts for bear stearns and AIG otherwise they were not directly involved with bailouts other than actions designed to keep the credit markets functioning by aiming to prevent deflation.
So if we talk of QE it seems best to keep it restricted to what it has meant in practice - an 'easing' policy that has not directly bailed the banking system in the way it is commonly claimed. Tarp was a treasury program.
QE1 was the small TALF and the 600b GSE MBS program. Those programs have nothing to do with buying troubled assets already out in the market and in trouble but rather newly issued stuff from the market
The shit hit the fan for TARP in september and was voted thru in early October.
Fair enough. Tarp was treasury program. I'll concede the point (but I was never discussing TALF). Not sure how it changed my original post.
Tarp was successful in preserving bank balance sheets was similar to printing money (in that it prevented the destruction of money).
The following QE programs weee nothing more than an asset swap acting as a mild drag on the economy.
It makes sense to describe the situation as it happened rather than describe it in a way that creates meaning that does not exist. The fed for example has never been stuffed full of toxic assets as is constantly been claimed on this forum.
OK. In that case, you can consider to it be a success and not refer to it as a bailout or subsidy. It was engineered by policy.
QE programs weee nothing more than an asset swap acting as a mild drag on the economy.
This supposes that a vast army of investors did not come off the side lines out of low yielding investments that were held by the Fed and then into something somewhat riskier. Where:
1. There is the psychological implications of the belief the fed is going to create inflation and
2. There is the apparent reality that if you do not invest looking for a profit you are going to be earning almost no interest at all for years to come and
3. All this is happening at a time when the government was doubling the national debt to keep people employed at a time when otherwise it appeared economies would implode more or less overnight.
Even so I am happy to concede that Warren Mosler was basically right about a great many things but even so talking about the failure of QE seems to be like sour grapes to me. QE could have gone much much further but it just never seemed necessary to do that. Nobody can have thought that QE was some kind of magic economy transformation machine.
The main idea is that one way or another a government can always prevent deflation because it does have a printing press and this cannot be news to anybody. Can it?
Terry
4 Sep 2015, 06:53 PM
OK. In that case, you can consider to it be a success and not refer to it as a bailout or subsidy. It was engineered by policy.
??
It was an indirect bailout. The banks however were not directly given handouts in exchange for rubbish assets. Banks and homeowners were bailed out and ordinary savers were stiffed. Cautious/prudent savers became the losing enemy and those who speculated to help create the crisis became the winners. That is at least how it has so far panned out and that was done by design.
It was an indirect bailout. The banks however were not directly given handouts in exchange for rubbish assets. Banks and homeowners were bailed out and ordinary savers were stiffed. Cautious/prudent savers became the losing enemy and those who speculated to help create the crisis became the winners. That is at least how it has so far panned out and that was done by design.
Yes, it was an indirect bailout and it was done by design, and it can be considered a success as its objectives were achieved.
The following QE programs were nothing more than an asset swap acting as a mild drag on the economy.
In the strictest sense, that is true. However cash is more than an asset. It is also a unit of measurement. i.e. everything is priced in cash. When you swap pure financial assets, for example debt for equity, it does not affect the price of either asset. When you swap any financial asset for cash, and you do so in meaningful volumes, you change the market price of the asset. The size of the bond purchases pushed up the price of the bonds (thus lowering the yield), which pushed down rates for all tenors and caused a shortage of credit grade paper available for insurance companies and pension funds, forcing them into other asset classes (like Muni bonds which bubbled everywhere, and equities which double bubbled).
In your first reply to Jimbo. Your charts of corporate profits, are those numbers the P&L bottom line or EPS? Because those are two very different things.
“Talk sense to a fool and he calls you foolish.” - Euripides
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
Forum Rules:
The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.
Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.
Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.
This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.
Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ
Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy