3 Months Later, Cohen's TARP Stinks Even More
I'm no financial expert, but I did have enough brains to understand that buying up toxic securities as a way to keep banks viable was idiotic. There are so many toxic securities and so much further for them to fall, that all the money in the world couldn't save their value. The $750 billion TARP plan was about as useful as putting that money into a giant bonfire and setting it aflame. We should have just nationalized the banks, opened the books, and let the defunct ones go out of business. The government, via the nationalized banks could have kept the credit markets about as functional as they are today anyway.
That $750 billion sure would come in handy now wouldn't? That's the cost of Obama's stimulus plan. Instead, we have banks hoarding money, because they know those damn toxic securities are going push them towards bankruptcy again in the near future. But don't listen to me, pay attention to one of my favorite professional wrestler's wife, Meredith Whitney (She's been right about this stuff since before it all fell apart.)
Congressman Cohen still hasn't come back to this district and apologize for helping to piss away $750 billion worth of highly needed money. Millions already have and millions more Americans will loose their jobs. Where is all the money to pay for unemployment benefits, healthcare, and other social safety nets going to come from? Seems like the only plan left is to print up and sell treasury notes to the Chinese or Arabs. That's not going to work. Arabs don't have any money because oil prices collapsed. The Chinese don't have any money because we aren't buying their crappy products anymore. A few days ago, the German government issued $6 billion in bonds. Nobody bought them, and the Germans are doing better than we are. Who's going to buy trillions of dollars of US bonds? I'll have more faith in Congressman Cohen's judgment if he acknowledges he screwed up or admits he doesn't know what is happening.
posted by polar donkey at 7:46 PM
3 Comments:
Look at Cohen's asset disclosure form and ask yourself why this man is voting on this issue while holding such investments.
9:18 AM
PD,
First of all, let's get it straight--- TARP deals with $700 billion, not $750. Second, only half of it has been allocated so far. The other half will be allocated by the Obama White House.
Second,TARP is not about increasing the value of the troubled assets. I don't know where you get that kind of thinking at all. It was about stabilizing a bankrupt industry. You can talk about that industry making its own mess, and you'll be right. But we don't have the luxury of allowing the financial industry to collapse merely to avoid offending your sense of right and wrong.
Is TARP ideal? No. But it was a lot smarter than allowing the industry to collapse. We don't have that luxury.
I don't see where he owes you or anyone else an apology.
7:21 PM
Here's some quotes from wikipedia about TARP
"TARP allows the United States Department of the Treasury to purchase nonliquid, difficult-to-value assets from banks and other financial institutions."- At this point, no one is buying these toxic securities, so therefore they are worthless. (Note, the SEC suspended mark to market accounting rules for mortgage backed securities. Giving the government and these banks the ability to invent the values of these assets) By buying these imaginary valued securities the government is increasing the value of the them and keeping banks from admitting they are bankrupt.
"Another important goal of TARP is to encourage banks to resume lending again at levels seen before the crisis, both to each other and to consumers and businesses." Ah, this isn't working. Banks are hoarding money to prepare for the next round write-downs. Right before the crisis. Bank holdings were less than $1 trillion. Now they are over $4 trillion, but credit isn't easing. Why didn't we nationalize the banks as done in Sweden in the early 1990's. Those nationalized banks still functioned and they knew what bad debts were out there.
What is really disturbing is that somehow we should still continue to trade collateralized debt obligations in the future instead of banning these economic weapons of mass destruction. Once this crisis passes we can go back to doing the same thing but will have a different outcome then. TARP is insane.
Yes, only $350 had been spent, but what happened today. Obama told the democrats he'd override a veto if they didn't release the rest of the TARP funds. Obama is wrong too. I guess that's what happens when you listen to Bob Rubin and Larry Summers. two of the main guys that got us into this crisis.
So no anonymous, you argument doesn't hold water. It wasn't a choice of letting the banking system collapse or not, it was wisely using tax payers money that will very much be needed in the worsening economic situation. By scaring people, this piece of crap legislation was ramrodded down tax payers throats. Cohen needs to take responsibility for that. Finally, by the end of 2009, we're going to nationalize almost all of these financial institutions anyway, we'll have just piss away $700 billion before hand. Let's see what Cohen has to say about how wise TARP was next November or December. I bet as much as he has to say about it now.
6:14 PM
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