What a bunch of horse shit!
Posted on March 17th, 2008 by bile Categories and Tags: Uncategorized, American Enterprise Institute, Bear Stearns, central bank, Congress, corporatism, debt, economics, Federal Reserve, Federal Reserve System, JP Morgan Chase, Lehman Brothers, Peter Walliston, politics, taxes, theft, United States, Wall Street, your moneyhttp://www.forbes.com/feeds/ap/2008/03/17/ap4782535.html
Q. What exactly is the government contributing?
A. To protect JPMorgan from the greatest risks on Bear Stearns’ books, the Federal Reserve agreed to guarantee up to $30 billion of Bear’s most troubled assets - primarily mortgage securities that have plummeted in value and have become tough to sell.
Q: Why would the Fed do that?
A: Experts say the risks of inaction were far greater. With investors backing away from anything linked to the U.S. mortgage market, the Fed aims to prevent the value of those investments from plunging even further, which could cause widespread fallout among big banks. “The problem is that unless the major financial (companies) are kept solvent, the economy will suffer (so much) that everybody’s livelihood will be affected,” said Peter Walliston, a senior fellow at the American Enterprise Institute.
Q. Does this mean my tax dollars are being used to bail out Wall Street?
A. Not exactly. The Fed has vast resources on its own, thanks to its ability to sell Treasury securities that investors consider extremely safe. Still, some fear the mortgage crisis that engulfed Bear Stearns will soon spread to other companies and ultimately test the Fed’s resources, especially after the central bank last week said it would lend up to $200 billion in exchange for mortgage investments.
Q. Might taxpayers ultimately be on the hook?
A. Potentially. The Federal Reserve’s actions could augur much broader government action to stabilize the mortgage market. Calls are growing in Congress for government-funded efforts to help borrowers refinance out of troubled loans.
Not exactly? Potentially? ERRRR WRONG!! How about yes and yes. What are Treasury securities? They are bills of credit. Who pays the interest? Taxpayers do. Who gets hurt when the Federal Reserve inflates the currency to bailout Wall Street? Who pays the inflation tax? Those holding the currency. All the taxpayers hold at least some currency. These people are either ignorant (perhaps stupid is a better adjective given their business) or lairs.
In other news Lehman Brothers closed about 20% below opening. Apparently they have 5 times the liquid assets compared against stockholders equity and therefore better able to handle a drop like this whereas Bear Stearns had very little liquid assets.
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