Re: northern crock dies....clown dithers for six months....bear stearn taken over in 2 days....

On Mon, 17 Mar 2008 09:58:53 +0000, Maria
<theoldwomanwholivedinashoe@xxxxxxxx> wrote:

On Mon, 17 Mar 2008 02:56:51 -0700 (PDT), Mel Rowing
<mel.rowing@xxxxxxxxxxxxxx> wrote:

On Mar 17, 9:40 am, Maria <theoldwomanwholivedinas...@xxxxxxxx> wrote:
On Mon, 17 Mar 2008 04:09:32 +0100, abelard <abela...@xxxxxxxxxxx>
wrote:

after screwing the economy by interminable meddling....
      the clown believes he can run a bank....

america just guarantees some mortgages

Would it have gone to the better performer had the US not acted as
guarantor (for $30bn)? What does JP Morgan have to lose?

On the face of it this is indeed a good deal for JP Morgan. The
present situation is not the end of or even the beginning of the end
of corporate capitalism.

Similar terms were on offer with regard to NR They do involve public
risk but with risk goes potential reward. Note also that there is no
EU looking over the shoulder with a view to seeing "unfair subsidy"
The US government spends US money as it sees fit.

Note further that there has been and will be no public outcry overthe
arrangement. The US public has not suffered decades of polluted
thinking brought about through socialism. For them the idea that banks
should form part of the corporate sector is as natural as breathing.
They would have regarded nationalisation with great suspicion. They
have never experienced it.

Ok...but what's the material difference between offering credit to NR
(to £42bn, over what was needed at the time) ) and offering guarantees
to BS?

jpm own bear stearns....
the effect is the fed is taking paper as collateral from bear stearns
(now part of jpm)
this is a normal function of a national bank...the paper is just not
regard as being as solid as the usual paper the fed would have
taken for the loans....
the fed is taking the paper as if it were a normal backed loan from
jpm and guaranteeing the bank against losses on the paper....

the fed is treating the paper as money equivalent in cash....
that is a risk of some manner...but so are all banking transactions

the money 'lent' by the fed is also subject to inflationary risks....
but in this case jpm has money instead of mortgages....as its risk
item whereas the fed has mortgages as its risk centre....

if you want to go further....
you would need to understand what banks do normally with money
(which they habitually first 'borrow')
whereas the fed just prints it and takes a steady highly reliable
profit/tax....the fed also takes 'interest'.....

in this narrow case the have taken mortgages....
you may then follow that further down the chain.....
the mortgages are a *real* risk in that the fed can lose on
them.....eg if the (that bundle of ) housing market results in
foreclosures....
otherwise they have an income stream that would otherwise have
gone to the banks....
therefore that part of the parcel is 'nationalised'

now read this carefully from keynes....
http://www.abelard.org/news/politics0803.php#keynes_socialism_inflation_160308
And in more detail, and good advice to this day for leaders facing the
present credit problems:

"Thus inflation is unjust and deflation is inexpedient. Of the two
perhaps deflation is, if we rule out exaggerated inflations such as
that of Germany, the worse; because it is worse, in an impoverished
world, to provoke unemployment than to disappoint the rentier. But it
is necessary that we should weigh one evil against the other. It is
easier to agree that both are evils to be shunned. The individualistic
capitalism of today, precisely because it entrusts saving to the
individual investor and production to the individual employer,
presumes a stable measuring-rod of value, and cannot be
efficient-perhaps cannot survive-without one."
Social consequences of the changes in the value of money, 1923

it could not possibly be put more clearly...if you understand the
words....

that is the situation presently facing markets and governments...

it is a matter of fine judgements and balances...

government's sane job is to protect 'the little fellow'....not to
protect bear stearns of the management of northern crock....
that is precisely what the fed are doing.....

and what the clown is fumbling at every turn.....

further
as america runs a free market...all these things are well understood
in american government (despite the whining dishonesty of the
democrat politicians)
in britain and europe the first instinct is to look to government....

in america government is merely an enabler... and an umpire...
in britain it is an infernal meddler


see mel for pretty well the same information put in from a different
angle in a different way...and in 'better' inglish :-)

For these reasons I doubt whether a similar arrangement for NR would
have been politically possible.

Further BS is a far bigger outfit than NR.

Seems to have cost a lot more for NR!

cost to who?

regards

--
web site at www.abelard.org - news comment service, logic, economics
energy, education, politics, etc 1,552,396 document calls in year past
--------------------------------------------------------------------------------
all that is necessary for [] walk quietly and carry
the triumph of evil is that [] a big stick.
good people do nothing [] trust actions not words
only when it's funny -- roger rabbit
--------------------------------------------------------------------------------
.

Loading