More specifically, England has decided to spend 35 to 50 billion to buy preferred shares in the largest most troubled banks. Assuming they’re not non-voting that amounts to nationalization. It will increase the banks capital base substantially, thus hopefully directly ensure that they aren’t insolvent and can lend again. I am also hearing that Germany has a similar plan in the works.
Notice that they are not buying up the trash on the banks books (though I’m also hearing rumors that the banks really really wanted them to.)
I’m not convinced this will fix the entire problem, but if you think the problem with banks is that they’re insolvent and that other banks are scared to lend to them, then this at least makes sense. It also means that banks don’t need to keep money aside to buy up other banks in case they fail, since the government is effectively saying "we won’t let banks fail." On the other hand, it still doesn’t deal with the fact that banks don’t want to lend for less than inflation+reasonable profit.
However regulators and the social contract in both Germany and Britain are a lot stronger than in the US, as is the willingness to, oh, lean on people. As a result the banks, now more or less owned by the government, may find it in their hearts to start lending again, as their new lords and masters desire.
We’ll see. It is, at least, a plan that makes sense, as opposed to the Paulson plan, where Paulson could never explain exactly how it was supposed to fix the problem.
Related posts:
- The Next Big Taxpayer Bailout? IMF Could Get Hundreds of Billions for European Banks
- Private Health Insurers Threaten Americans to Prevent Public Plan Competition
- Financial Re-Regulation: Grades are in, and Obama’s Plan Gets a D+
- Pretending to Protect Citizens from Banks
- Cantwell’s “Basic Health Plan”: A Better Exchange, but Not a Public Option
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this year and last year when I was in Europe I was seeing the jitteryness of the financial system on their news…… Is there enough money in the world to fix this mess or should we just them them drown?
Ahh. say it with me “regulation” and “social contract”. They are such soothing words.
I’ll say this too: Screw the Paulson Plan.
Thanks Ian.
It should be an interesting side-by-side comparison to see how the two(ours and their’s) plans fare in the long term…!
Gee, I wonder how many of those bank managers then used some of that “bailout” money to rush off to the healing waters of a Spa like they did here. Just sayin’
Ian:
My understanding (heard on PRI’s This American Life) is that some legislator(s) snuck language into the Paulson plan that allows for, though does not mandate, the option to assume ownership shares in the institutions we bail out. I’m hoping that’s true.
I can’t see how the power of the European example can fail to seep into even our broken media discourse. I think more Americans than ever before may be ready to acknowledge our overseas cousins as the real adults (or at least the older adolescents) in the room.
Taxpayers to banks: That was no gift. We. Own. You. Now.
I mean, that ought to resonate, no?
IMO Paulson’s plan was never intended to solve anything. It was strictly to ensure that his Wall Street cronies didn’t lose any money.
Perhaps this has been mentioned elsewhere at FDL and I missed it, but my recollection is that French mortgages were traditionally either 7 or 15 years. And that the legal enforcements for credit cards are much more stringent than in the US; in addition, they simply don’t permit the number and type of credit cards as in the US. IIRC, France was at the front end of using debit cards with PIN numbers.
But I’m not absolutely certain of my facts; perhaps someone can clarify…?
Btw, Ian, how’s this for bitter irony…
Do you think Mittens, who is spewing on the tee vee, lost a lot so far? He just said that he hasn’t changed his investing. yeah right!
Allows for, but is specifies non voting stock. That’s a big deal. You don’t really own anything you don’t control. Also at discretion. Dodd’s plan at one point specified how much, they took that out. They took it out for a reason. And bear in mind this is essentially the Dem plan, not the Republican one, by the time it passed.
Which is to say, I have little faith in the will to use it and even if they do it is flawed. Could work, but you’d really have to want it to, and if you did, why not put it in properly.
It wasn’t snuck in either, as I say, Dodd actually had a stronger version at one point.
Ian can the congress recind the bailout legislation?
Europeans are going to reign in banks and do it by stock ownership to control the bank policies. They will take the roll of fostering more conservative banking practice. This will protect depositors and stop the Credit default swaps and other derivatives.
Banks need to lend to make money. If the banks were to make loans to government guaranteed projects they could make money at no risk.
The programs loans would have to be huge to help the banks. The programs would have to help our economy be more efficient. The Obama plan for roads and green energy would help.
Nationalize the Bank’s? It’s brilliant.
1. Regulated banks can only sell commodity services. There is no differentiation between any two bank’s services.
2. Once the bank’s are selling a commodity service, they might as well be nationalized, as the banks cannot show why one bank provide better value than another (geographical quirks aside).
3. One can save a “shit load” of money by cutting the advertising and sales budget to zero.
Just like health care.
ko on the case
Sure. More likely to modify, though. And, of course, once the money is spent it’d be moot.
Maybe when the new 111th Congress gets sworn in in January…!
Its working great :)
Off topic:
Candy Crowley is explaining on CNN right now that the new rule for tonight is: AFTER THE CANDIDATE HAS GIVEN HIS ANSWER, THE CAMERA WILL NOT PAN BACK TO HIM SO WE CAN SEE HIS REACTIONS as his OPPONENT IS TALKING.
Hmmmmmm, now who would have come up with that suggestion? Angry Johnny?
KO McCain crowds “kill him, terrorist and treason” yep minority votes just went up.
Dang!
Thanks for the clarification. I do hope the European example clarifies for Americans the need to at least exercise the limited discretion permitted — and what language to revise at the next earliest opportunity.
Digg it
KO says the Secret Service is investigating “kill him”.
Yes and they should investigate the possibility McCain’s people asked racists groups to help fill out the crowds at his and Sarah’s rallies.
Off topic again: *blushing*
Someone (thank you, whoever it was!) on FDL posted a link to a Dkos diary earlier tonight about how prominent republicans in Illinois had no problem with Bill Ayers and said they worked closely with him and Barack Obama with their community organizing for the poor:
http://www.dailykos.com/storyo…..357/622049
It’s a good read, but I wonder if Sarah “Loose Lips” Palin will ever read it? Nope! She’s just a lying stinking sack of crap for the American Taliban!
LOL I know. Poor Johnny. Now he can give Barack Obama the finger and won’t be able to incite violence against Barack as Sarah has been doing. Spit.
Sarah is claiming that America has never done the horrible things Obama has said has Sarah seen the Abu Graid photos?
Dugg you Digg Ian!!
Is the crowd at this debate half Obama half McCain people? If so John might have some trouble without an audience prescreened for loyalty expressing disapproval when he lies.
That might rattle his confidence how will that affect his debate performance?
Dugg:)
Palin/McCain have given the green light to the deranged and mentally bewildered of the right wing to do what is necessary to insure a Republican victory. If you throw a match on gasoline there’s going to be an explosion. Are Palin/McCain trying to channel James Earl Ray? I suppose it’s just a sign of desperation on their part because when Obama wins they know that the day of reckoning will be coming for all the criminals in the Republican Party.
I Dugg this post, but it didn’t show up. What the heck! Clear my cache? LOL
It’s there now. Nevermind. ;-)
just win baby
I think if McCain goes openly racists or if the MSM challenges McCain’s lies especially on taxes which they have not been doing then the GOP will lose moderate voters.
recall Knoxville
“…. The current financial debacle is really not a “liquidity” crisis as it is often euphemistically called. It is a crisis of overgrowth of financial assets relative to growth of real wealth—pretty much the opposite of too little liquidity. Financial assets have grown by a large multiple of the real economy—paper exchanging for paper is now 20 times greater than exchanges of paper for real commodities. It should be no surprise that the relative value of the vastly more abundant financial assets has fallen in terms of real assets. Real wealth is concrete; financial assets are abstractions—existing real wealth carries a lien on it in the amount of future debt. The value of present real wealth is no longer sufficient to serve as a lien to guarantee the exploding debt. Consequently the debt is being devalued in terms of existing wealth. No one any longer is eager to trade real present wealth for debt even at high interest rates. This is because the debt is worth much less, not because there is not enough money or credit, or because “banks are not lending to each other” as commentators often say”
Raven are you posting diaries as Raven333?
After the banks have been nationalized it will be time to nationalize the oil companies. The U.S. may be closer to democratic socialism since the 1st Great Depression. Strike now and don’t look back.
The American Taliban. That’s exactly what the Republicans are.
nope
“….Can the economy grow fast enough in real terms to redeem the massive increase in debt? In a word, no. As Frederick Soddy (1926 Nobel Laureate chemist and underground economist) pointed out long ago, “you cannot permanently pit an absurd human convention, such as the spontaneous increment of debt [compound interest] against the natural law of the spontaneous decrement of wealth [entropy]”. The population of “negative pigs” (debt) can grow without limit since it is merely a number; the population of “positive pigs” (real wealth) faces severe physical constraints. The dawning realization that Soddy’s common sense was right, even though no one publicly admits it, is what underlies the crisis. The problem is not too little liquidity, but too many negative pigs growing too fast relative to the limited number of positive pigs whose growth is constrained by their digestive tracts, their gestation period, and places to put pigpens. Also there are too many two‐legged Wall Street pigs, but that is another matter.”
Someone was posting with a “raven” something and got really shitty when I asked.
There’s no other way to recover than to get close to that.
T. Boone Pickens got his hand out first, didn’t he?
Shows 9 at the top now?? Looks like it worked!
“… What allowed symbolic financial assets to become so disconnected from underlying real assets? First, there is the fact that we have fiat money, not commodity money. For all its disadvantages, commodity money (gold) was at least tethered to reality by a real cost of production. Second, our fractional reserve banking system allows pyramiding of bank money (demand deposits) on top of the fiat government‐issued currency. Third, buying stocks and “derivatives” on margin allows a further pyramiding of financial assets on top the already multiplied money supply. In addition, credit card debt expands the supply of quasi‐money as do other financial “innovations” that were designed to circumvent the public‐interest regulation of commercial banks and the money supply.”
Yes KO linking McCain to the group that sponsored all the death in South America. Please KO say the words Death Squads! Nun Killers! or are you to scared of Pat Buchannan?
Yes KO said Death Squads! Will Pat “I’m a Contra too” push back? I want this discussion!
Aw, shit, I blew Digg up.
Just thought I’d ask.
Not to mention our infrastructure is long overdue for repair/replacement
Bill Ayers also played an important role in educational reform in the city of Chicago earning praise from Republicans, Democrats and Independents. Palin is just playing to the low information or no information voters that respond like Pavolovian dogs when red meat is thrown their way.
“…The agglomerating of mortgages of differing quality into opaque and shuffled bundles should be outlawed. One of the basic assumptions of an efficient market with a meaningful price is a homogeneous product. For example, we have the market and corresponding price for number 2 corn—not a market and price for miscellaneous randomly aggregated grains. Only people who have no understanding of markets, or who are consciously perpetrating fraud, could have either sold or bought these negative pigs‐in‐a‐poke. Yet the aggregating mathematical wizards of Wall Street did it, and now seem surprised at their inability to correctly price these idiotic “assets””
Brokaw, NBC’s go-to-McCain guy.
http://talkingpointsmemo.com/archives/222634.php
Thanks for that! It is very revealing.
NP, is it good?
“….And very important in all this is our balance of trade deficit that has allowed us to consume as if we were really growing instead of accumulating debt. So far our surplus trading partners have been willing to lend the dollars they earned back to us by buying treasury bills—more debt “guaranteed” by liens on yet‐to‐exist wealth. Of course they also buy real assets and their future earning capacity. Our brilliant economic gurus meanwhile continue to preach deregulation of both the financial sector and of international commerce (i.e. “free trade”). Some of us have for a long time been saying that this behavior was unwise, unsustainable, unpatriotic, and probably criminal. Maybe we were right. The next shoe to drop will be repudiation of unredeemable debt either directly by bankruptcy and confiscation, or indirectly by inflation.”
He’s bought and paid for.
How bad was it I commented on the person’s diary a few times it wasn’t bad.
lol, indeed.
I like driving on bridges that don’t fall down:)
swell
Moonies and John McCain KO is Great!
I didn’t know
It’s no biggie, the person is probably horrified someone would think they are me.
I travel a fair amount in Europe and their infrastructure is surpassing that of the United States but then Europeans believe in investments in which all of society benefits. Most Americans are under the illusion that we have the best of everything but if they were to do any travelling to Western Europe and the Scandanavian countries they would see that the U.S. is falling far behind. Maybe the xenophobes will be content shouting “We’re number 42!” We’re number 42!”
The Diary is good but is the guy acting like a jerk to you or something?
And has not been seen around these parts since, you betcha.
same here especially since I have to cross two of them to get home (eek)
It’s a fair question. Questions equal curiosity.
You’re fine.
I know you know how it gets here…ask a question, Duck!
for thingscomeundone @ 62
Gotcha you cast a long shadow at the lake Raven333 probably got tired of people wondering if he was you. Lesson be first or be original with your name picks.
*sigh* They already think we’re dumb as a bag of wet hammers. We seem to prove their point with the past two pres. elections and the ‘close’ pres race this time around
NO NO NO, I said “someone” with Raven in their name, I have not idea, nor do I care, if it’s the same dude.
The US has pushed the idea of fractional reserves much farther than in other countries:
LOAN TO DEPOSIT RATIO
3.5 to 1: United States
1.8 to 1: Russia
1.2 to 1: Germany
1.0 to 1: South Africa, Brazil, Japan, UK
0.8 to 1: China, India
I’m guessing they didn’t know there was already a raven here. Is that a remote possibility?
Yep and always be prepared to say sorry if you overreact to an innocent question:) I know I’ve done that a few times.
FYI, From Reuters yesterday
Bailout bill also lets US govt buy bank shares
Ian, thanks for all you work on this.
Ok but three people with Raven in their names? Maybe you should copyright it before we all get confused.
Done, thanks for the link.
This beauty connects Pinellas and Sarasota Counties. Not the bridge to cross drivin’ a Winnebago in high winds.
raven was my dog,
Ah, TCU, but we know the original and authentic Raven.
And truly, he is without compare.
So then, we must assume the sincerest form of flattery impelled ‘333′ to emulate our own Raven.
That is how I choose to ‘read’ things.
I salute Raven.
Yo! Raven!
Isn’t the tollway that starts at Yee-Haw junction the Sunshine State Parkway?
Dang, that’s a long way from the other morning’s “consider the source” from another admirer!
Has anyone seen Jane on CNN yet? Will you say when you do?
Shit, I dunno.
Oh, baby. That’s me, what’s the phrase du jour? X 10.
And, don’t forget, you can post anything you want if you add the /S.
You don’t have to have a PHD to be mean, and you don’t have to be lacking a heart to say “I Hate” on this site.
sure, specially since I left for a while
Glad you don’t have earthquakes. It’s pretty but it makes me feel dizzy.
McNuts…WORST PERSON IN THE WORLD
I missed that one, Raven.
Ooops, that for Raven at 85. The road itself is I-275 and I don’t know of any tolls on it. I’ve never had to pay any. There are toll entrances to feeder roads in Tampa. Drivin’ over it in a 68 VW is fun, too. Damn, I miss my VW.
I got my fill of those in CA and Japan. Typhoons in the Pacific, hurricanes here, all that shit. I’m still lookin’ for a place where Mother Nature ain’t tryin’ to kill me.
Yes they are. I’ve been calling them that for a long time. It’s why the neocons come after me barking like dogs and saying, “Kay I’m telling the Secret Service what you said! Calling Sarah a retard was treasonous and we all know how the SS will react! Off with your head, Kay!! Be at the Town Square for your public hanging!”. Pathetic, but very entertaining. Calling them the ‘American Taliban’ makes them have to think about what it means and it scares them when they know I’m right and then they prove it 3 seconds later by threatening me, because I’m a girl.
Please don’t take it personally.
Is it time to meditate?
It just might be something else.
From the last thread. I’ve got a Chelsea ship’s clock turned in to staff for survey (disposal) because the hands didn’t line up properly. Duh, how hard is it to fix that? 33 years later and it’s still tickin’. Checked on the serial number and it was made during the Korean War.
LOL.
One of the major problems with the Sunshine Skyway Bridge is corrosion of the steel in the precast concrete segments. Because the segments are hollow, workers were able to enter the bridge superstructure in 2003 and 2004 to reinforce the corroded sections of the bridge, ensuring its future safety.[5] Another problem arose around 2005–2006 when several news bureaus uncovered peeling paint on the bridge’s cables. These paint splotches and patches were a result of touch-ups that were performed over the years but began to show through over recent years. In 2008, FDOT began an overhaul including repainting the cables in their entirety (instead of touching up), rehabilitating the lighting system at the summit of the bridge, as well as repainting the concrete retaining walls [6]
http://en.wikipedia.org/wiki/S…..way_Bridge
My bold Ok we need better planing for the bridge projects we do.
Once water hits the steel in reinforced concrete the water will run down the length of the steel rebar rusting it from inside.
Salt water is worse than regular water it rusts steel faster and softens concrete for a new bridge to have these problems suggests materials and or construction was second hand.
Plus the steel has to be painted and stay painted around saltwater I hope the did not just paint over the rust. They should sand the rust clean then paint.
The Concrete sections where the rebarb is rusting will have to be replaced I don’t know when though.
What does the state bridge inspector say? Never mind its a political job I would want an independent report.
There was a lot more work done than Wiki suggests. I don’t go over it very often. Once every couple years. Nothin’ in Sasarota, as we call it, I want.
I hope the did not just paint over the rust.
Should read
I hope they did not just paint over the rust.
Sorry.
What about cracks on the bridge? Is steel rebarb showing through?
Pakistan’s foreign exchange reserves are so low that the country can only afford one month of imports and faces possible bankruptcy. Islamabad – Officially, the central bank holds $8.14 billion (£4.65 billion) of foreign currency, but if forward liabilities are included, the real reserves may be only $3 billion – enough to buy about 30 days of imports like oil and food. Nine months ago, Pakistan had $16 bn in the coffers. The government is engulfed by crises left behind by Pervez Musharraf, the military ruler who resigned the presidency in August.
Cool, I have a beautiful Schick Stadimeter (sp) from 42 in a wonderful wood box with prefect felt.
I dunno.
We were talkin’ about frugality earlier. I’m still usin’ a Gillette adjustable double edge razor. Plus a mug and brush.
Well, yeah, but you don’t shave the whole face, right.
I seen your cute pix.
Okay, okay, we’ll watch the debate.
:)
Well there is not much I can do I’m not Bill Frist I can’t diagnosis from a distance my dad was the structural engineer not me I just helped rewrite his reports.
I remember what he would have said.
What happened to all that cash Bush gave them? I’ll see you upstairs!