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The original statement that you quoted from the article is just wrong. "$12.6 trillion in direct aidgiven to the financial sector." Most of the 12.6 trillion represents pledges for potential future assistance, which may or may not ever be given.
Not according to the footnote you yourself posted:
Quote:
Originally Posted by WilliamSmyth
From the report:
Liquidity provisions that do not require upfront treasury financing have also been made, and could eventually entail fiscal costs (Table 2.1, column D).
Those "eventual" costs haven't been added to the $12.6 trillion total yet.
Not according to the footnote you yourself posted:Those "eventual" costs haven't been added to the $12.6 trillion total yet.
From the IMF report, Table 2.1. (Percentages of GDP). http://www.imf.org/external/pubs/ft/...09/spn0913.pdf
Capital Injection [Col A] 4.6%
Asset Purchase [Col B] 2.3%
Central Bank Support w/ Treasury Backing [Col C] 0.7%
Liquidity Provisions/Other [Col D] 41.9%
Guarantees [Col E] 31.4%
Total [Col A+Col B+Col C+Col D+Col E] 81.0%
Upfront Gov. Financing [Col A+Col B+Col C] 7.5%
The Dallas Fed report took the Total Column, which includes the non upfront costs of Columns D+E that "could eventually entail fiscal costs", and multiplied by the GDP which equaled 12.6 Trillion according to the Dallas Fed Report.
Direct government support for the U.S. financial sector took the form of capital injections, Treasury lending, asset purchases, government guarantees, and unusual central bank support and liquidity provision. The International Monetary Fund (IMF 2009) estimated direct support above and beyond the previously existing public safety net at 82 percent of 2007 U.S. GDP, or $12.6 trillion.
Note: I have no explanation why the Fed claims the number in the IMF report is 82% or why the IMF round the number up to 81%, instead of the 80.9% that the numbers add up to.
Bottom line the 12.6 trillion includes around 11.5 trillion potential fiscal costs. Again these are 4 year old numbers and we know now that most of the potential costs have yet to be incurred and as time passes they are less likely to be needed.
To get the actually costs, based on the IMF report data, you would calculate 7.5% of the GDP which would be around 1.2 Trillion. That number sounds about correct to me for a 2009 number.
The Dallas Fed report took the Total Column, which includes the non upfront costs of Columns D+E that "could eventually entail fiscal costs"
That's your mistaken reading of the report. Those specific eventual fiscal costs aren't included in the totals. They can't be because they are as of yet unknown.
From your own post:
Quote:
Originally Posted by WilliamSmyth
From the report:
Liquidity provisions that do not require upfront treasury financing have also been made, and could eventually entail fiscal costs (Table 2.1, column D).
"Have also been made."
The provisions that did require upfront treasury financing are the ones that have been reported. The report notes, as you've brought to our attention, that other provisions that did not require upfront treasury financing have also been made.
Yeah, because saving the American auto industry wasn't important. That was millions of jobs plus the supply chain. And even today, the govt's ahead.
The entire meltdown was the result of bad banking policies that allowed for gambling trillions of dollars, while they knew they'd be backstopped by the government exploiting the very people they were robbing.
This is simply more proof that the playing field is slanted. Bankers created bad loans, bundled the toxic assets, and sold F rated bonds as AAA. They made money creating them, and money offloading them.
Still, nobody has gone to jail in the land of free markets without conscience.
That's your mistaken reading of the report. Those specific eventual fiscal costs aren't included in the totals. They can't be because they are as of yet unknown.
From your own post:"Have also been made."
The provisions that did require upfront treasury financing are the ones that have been reported. The report notes, as you've brought to our attention, that other provisions that did not require upfront treasury financing have also been made.
Did the Dallas report use the 81/82% figure or not? They did. The 81/82% figure includes support that did not require upfront funding. The table clearly states that. The IMF report breaks out the upfront costs into a separate column. The upfront costs, according to the IMF, represent 7.5% of the GDP. 7.5% of the GDP is not 12.6 trillion. However, an 80% plus figure would be 12.6 trillion.
The IMF report went beyond just upfront costs. They included types of support that did not require any upfront funding. There is no way to get to the 80% plus figure without including the non upfront figures, which also means there is no way to get to the 12.6 trillion figure without including non upfront figures.
The entire meltdown was the result of bad banking policies that allowed for gambling trillions of dollars, while they knew they'd be backstopped by the government exploiting the very people they were robbing.
This is simply more proof that the playing field is slanted. Bankers created bad loans, bundled the toxic assets, and sold F rated bonds as AAA. They made money creating them, and money offloading them.
Still, nobody has gone to jail in the land of free markets without conscience.
It wasn't the free market though. The free market never made those loans in the past. The free market allows failures to fail. Crony capitalism is what did us in.
Back in 2008, all sorts of investments took a hit to include my house. What followed was a fire sale on stocks, real estate, etc. Those who were in a position to buy (thanks to TARP), picked-up assets for dimes on the dollar while ordinary people watched their retirement accounts crash and their home values plummet. Whatever the intentions of the bailouts, the end result is the people who caused this crisis were the same people who most benefited. So when I hear of record bank profits and what were once penny stocks now soaring, I know ordinary people got screwed on the way down and, with government's help, got screwed on the way back up too.
Exactly, while the left wingers all celebrated government invervention and then whine that the richest got richer at everyone elses expense..
Did the Dallas report use the 81/82% figure or not? They did. The 81/82% figure includes support that did not require upfront funding.
Were toxic assets purchased or not?
From 2010:
Quote:
Key members of the five-man Board are quietly mulling a fresh burst of asset purchases, if necessary by pushing the Fed's balance sheet from $2.4 trillion (£1.6 trillion) to uncharted levels of $5 trillion.
According to this WSJ article the Fed Balance sheet is now more than 3.6 Trillion The assets the Fed holds have jumped by over $800 billion, or about 30%, to more than $3.6 trillion ... The balance sheet is up from less than $1 trillion prior to the recession. During the downturn the Fed expanded its balance sheet through several programs aimed at keeping markets functioning. As markets stabilized the Fed shifted out of emergency programs and into purchases of U.S. Treasurys, MBS and agency debt securities to drive down interest rates and encourage more borrowing and growth in three separate rounds of what is known as quantitative easing. Earlier in the recovery, MBS and agency debt holdings, which were part of the first round of quantitative easing, had steadily declined as loans were paid off or matured. But with the latest round of bond purchases, the Fed ramped up its securities purchases. The Fed holds more than $1.2 trillion in MBS and agency debt, but owns more Treasurys — over $2 trillion.
So the Fed has purchased roughly 2.6 trillion in assets since the start of the recession. I don't believe all of these assets would be classified as toxic, but the intent is to support the financial markets.
A current fed report has the security assets at 3.4 Trillion
So for a rough calculation add the Fed Balance sheet of 3.6 Trillion to the 1.2 Trillion that the IMF had in 2009 and you get 4.8 Trillion. I believe there probably is some overlap between the 1.2 and 3.6 number.
Bottom line 4.8 Trillion is a far cry from 12.6 Trillion.
It's actually the other way round. The corporations, and the elite, own the politicians. Sure, many politicians are investors in the corporations, but they don't control them, the corporations control the politicians.
No. And to think in this linear fashion is limiting. They are intertwined. That is why I said govt elite et al.
The govt is largest shareholder of publicly traded corps through its investment funds. They use proxy votes to direct publicly traded corps. This isn't about politicians owning some shares.
It is important to understand the pieces, however. Govt aka municipal corps are a fictional construct just like a transnational corp. Ultimately there are real individuals behind the fiction. However, it is the transnationals that are shareholder controlled through the municipal corps.
Politicians are just theater. They are corporate employees. This is business.
Last edited by CDusr; 09-18-2013 at 03:05 PM..
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