Comments on: Implications of the bail-out on you and me http://www.thickenmywallet.com/blog/wp/2008/09/29/implications-of-the-bail-out-on-you-and-me/ Everything to do with thickening your wallet by entrepreneur turned President of an Investment Company Mon, 15 Mar 2010 15:22:08 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: 45free.com http://www.thickenmywallet.com/blog/wp/2008/09/29/implications-of-the-bail-out-on-you-and-me/comment-page-1/#comment-17057 45free.com Tue, 30 Sep 2008 19:04:33 +0000 http://www.thickenmywallet.com/blog/wp/?p=444#comment-17057 There is a common misconception out there that "wall street fat cats" are getting given 700B of taxpayer money and flying off to some warm tax haven. The treasury is buying assets for which there is currently no liquid market in an effort to unfreeze the credit markets. The marks on these assets are currently not reflective of the ultimate value of them but accounting rules require them to be marked to the "fire sale" price causing a bank to take a capital hit which makes them less likely to lend. Buying this asset allows the bank to lend to the small business looking to make payroll while it waits for its customers to pay or to build a new warehouse or to stock the shelves for the upcoming season. Or it allows J. Public to get a student loan for his kid. Bill Gross of Pimco estimates the government can make 10-15% NET on everything they buy with some fairly conservative assumptions. $70B a year will fund a lot of "earmarks" for the congressmen and women who set up fannie and freddie and pushed the banks to make some of the questionable loans that are currently clogging the market. And hell...it might actually keep a few more people in jobs and hence in their homes. Better not "bail out" those wall street fat cats! Wall street is not without blame here but lets just be clear on what the government is doing. There is a common misconception out there that “wall street fat cats” are getting given 700B of taxpayer money and flying off to some warm tax haven. The treasury is buying assets for which there is currently no liquid market in an effort to unfreeze the credit markets. The marks on these assets are currently not reflective of the ultimate value of them but accounting rules require them to be marked to the “fire sale” price causing a bank to take a capital hit which makes them less likely to lend. Buying this asset allows the bank to lend to the small business looking to make payroll while it waits for its customers to pay or to build a new warehouse or to stock the shelves for the upcoming season. Or it allows J. Public to get a student loan for his kid. Bill Gross of Pimco estimates the government can make 10-15% NET on everything they buy with some fairly conservative assumptions. $70B a year will fund a lot of “earmarks” for the congressmen and women who set up fannie and freddie and pushed the banks to make some of the questionable loans that are currently clogging the market. And hell…it might actually keep a few more people in jobs and hence in their homes. Better not “bail out” those wall street fat cats! Wall street is not without blame here but lets just be clear on what the government is doing.

]]> By: Canadian Capitalist http://www.thickenmywallet.com/blog/wp/2008/09/29/implications-of-the-bail-out-on-you-and-me/comment-page-1/#comment-17053 Canadian Capitalist Mon, 29 Sep 2008 15:15:52 +0000 http://www.thickenmywallet.com/blog/wp/?p=444#comment-17053 Thanks for the link. I agree that whatever we think about the bailout, not acting isn't an option. I find it abhorrent that ordinary taxpayers are footing the bill for Wall Street's excesses. But the costs are of credit seizure might be unbearably high. Thanks for the link. I agree that whatever we think about the bailout, not acting isn’t an option. I find it abhorrent that ordinary taxpayers are footing the bill for Wall Street’s excesses. But the costs are of credit seizure might be unbearably high.

]]> By: Geoff http://www.thickenmywallet.com/blog/wp/2008/09/29/implications-of-the-bail-out-on-you-and-me/comment-page-1/#comment-17052 Geoff Mon, 29 Sep 2008 15:07:08 +0000 http://www.thickenmywallet.com/blog/wp/?p=444#comment-17052 What do you use as an indicator of upcoming inflation - 30 year bond? Cheers What do you use as an indicator of upcoming inflation – 30 year bond?

Cheers

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