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Old 04-26-2009, 06:15 AM
 
12,869 posts, read 14,006,447 times
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bloomberg:

The Federal Reserve took on more than $74 billion in subprime mortgages, depreciating commercial leases and other assets after Bear Stearns Cos. and American International Group Inc. collapsed.

In its biggest disclosure of the securities accepted to stabilize capital markets, the Fed said yesterday it had unrealized losses of $9.6 billion on the assets as of Dec. 31. The bonds, swaps and notes were taken in from Bear Stearns, once the fifth-biggest Wall Street firm by capitalization, and AIG, which had been the world’s largest insurer.

The losses on securities backed by assets such as home loans in Florida and California signal that U.S. taxpayers may be forced to reimburse the central bank through the Troubled Asset Relief Program, according to Christopher Whalen, managing director of Torrance, California-based Institutional Risk Analytics.

here is the salient point:

“The numbers basically confirm that Treasury is going to have to take some TARP money and reimburse the Fed,” said Whalen, whose financial-services research company analyzes banks for investors. “It is essentially up to the Treasury to get the Fed out of this.

so now the treasury has to bail out the federal reserve!
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Old 04-26-2009, 12:44 PM
 
Location: Backwoods of Maine
7,350 posts, read 9,417,213 times
Reputation: 20450
The Fed always was bankrupt. The Fed was never capitalized, in the sense that other banks are. That's because the Fed is not a bank.

The Fed can afford to take on all the toxic assets out there. They just print the money (yes, out of thin air) to cover the damages. They don't really need TARP money or taxpayer money for anything, when they have the Power of the Printing Press.

As you can see, I'm a really big fan of the Fed!
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Old 04-26-2009, 02:12 PM
 
Location: Great State of Texas
86,067 posts, read 78,933,559 times
Reputation: 27669
Summers just announced that the banks are well capitalized and that the US econmic freefall is "over". He says it so it must be true.

Summers says U.S. economy's freefall has ended (http://news.yahoo.com/s/nm/20090426/ts_nm/us_usa_economy_1 - broken link)
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Old 04-26-2009, 02:16 PM
 
12,869 posts, read 14,006,447 times
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i thought that this was an interesting post from 2006:
Federal Reserve: U.S.<br> headed for bankruptcy

this was the last paragraph:

Given "the fiscal irresponsibility of both political parties," the professor sees the most likely scenario for maintaining solvency as the government simply printing money to pay its bills.

Kotlikoff explains: "This could arise in the context of the Federal Reserve 'being forced' to buy Treasury bills and bonds to reduce interest rates. Specifically, once the financial markets begin to understand the depth and extent of the country's financial insolvency, they will start worrying about inflation and about being paid back in watered-down dollars. This concern will lead them to start dumping their holdings of U.S. Treasuries. In so doing, they'll drive up interest rates, which will lead the Fed to print money to buy up those bonds. The consequence will be more money creation – exactly what the bond traders will have come to fear. This could lead to spiraling expectations of higher inflation, with the process eventuating in hyperinflation."
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Old 04-26-2009, 02:21 PM
 
48,507 posts, read 90,913,821 times
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IU agree thatthe governamnt is basically baksrupot and has been for decades. It is has for ages spent more tha it brough in .That is waht we need to get under cnotrol is the government spending as bad as the consumer have and now far otu spending them in per cent of income.Its eventually going to mean alot of reductions in programs at hte rate its going up.That will meanhigher fees and taxes in the future .
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Old 04-26-2009, 02:39 PM
 
12,869 posts, read 14,006,447 times
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Quote:
Originally Posted by HappyTexan View Post
Summers just announced that the banks are well capitalized and that the US econmic freefall is "over". He says it so it must be true.

Summers says U.S. economy's freefall has ended (http://news.yahoo.com/s/nm/20090426/ts_nm/us_usa_economy_1 - broken link)
what else would a guy who earned 2.7 million in speaking fees from wall street be but a shill for wall street?

here is another alternative scenario for our economy without the wall street slant:
Assessing How Serious the Financial Crisis Can Get -- GuruFocus.com
in part, along with some compelling charts and research to back the theory:

Given that we are currently in a deflationary phase, it is easy to dismiss the case for inflation – and many do. We think that is a mistake. Even a summary tabulation of the unprecedented increases in government debt at this relatively early stage in the crisis make a compelling case for higher inflation, if for no other reason than that it shows clear intent on the part of the government to spend “whatever it takes” to offset the deflationary forces now stalking the land.

The research paints a dismal story of years of economic stagnation. In our view, the trend is now firmly established for dollar debasement, a debasement that will eventually overwhelm the deflationary pressures from collapsing asset values. Therefore, don’t listen to the happy faces on CNBC spouting off, for the umpteenth time since this crisis began, that now is the time to jump back in and buy stocks. It isn’t.

Be extremely skeptical when you hear some pundit pronouncing that this piece of short-term good news or another is an “all clear” signal.
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Old 04-26-2009, 02:55 PM
 
Location: Great State of Texas
86,067 posts, read 78,933,559 times
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floridasandy..I follow roubini and schiff and won't do any "happy" dancing until they say the bottom is in I don't believe any of those clowns on Wall Street, including the ones running the government.
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Old 04-26-2009, 05:42 PM
 
10,494 posts, read 25,155,606 times
Reputation: 6698
Quote:
Originally Posted by texdav View Post
IU agree thatthe governamnt is basically baksrupot and has been for decades. It is has for ages spent more tha it brough in .That is waht we need to get under cnotrol is the government spending as bad as the consumer have and now far otu spending them in per cent of income.Its eventually going to mean alot of reductions in programs at hte rate its going up.That will meanhigher fees and taxes in the future .

People wonder why this country is in trouble, education here is definitely lacking .
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Old 04-26-2009, 06:30 PM
 
Location: Rockland County New York
2,984 posts, read 5,538,546 times
Reputation: 1295
All our great leader has to do is print more money! So don't worry so much. He has all the answers. Once he takes care of the economy he's going to Mexico to cure the sick and make blind people see.
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Old 04-26-2009, 07:09 PM
 
Location: Georgia, on the Florida line, right above Tallahassee
10,474 posts, read 14,876,490 times
Reputation: 6381
Quote:
Originally Posted by Stac2007 View Post
All our great leader has to do is print more money! So don't worry so much. He has all the answers. Once he takes care of the economy he's going to Mexico to cure the sick and make blind people see.
I've heard the wine he makes from water is also quite good.

...
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