The Bailout of the housing Bubble

youngdan wrote:

You are getting robbed and you don't care. You are an unusual man.

There is robbery going on allright youngdan. Some people work all their lives and get nothing, and other people get vast, unspendable amounts without ever raising a sweat.

cactus flower wrote:

youngdan wrote:

You are getting robbed and you don't care. You are an unusual man.

There is robbery going on allright youngdan. Some people work all their lives and get nothing, and other people get vast, unspendable amounts without ever raising a sweat.

So what would be your suggestions to 'unclump' it ?

cactus flower wrote:

youngdan wrote:

You are getting robbed and you don't care. You are an unusual man.

There is robbery going on allright youngdan. Some people work all their lives and get nothing, and other people get vast, unspendable amounts without ever raising a sweat.

And others gain vast unspendable amounts by working all their lives.

cookiemonster wrote:

cactus flower wrote:

youngdan wrote:

You are getting robbed and you don't care. You are an unusual man.

There is robbery going on allright youngdan. Some people work all their lives and get nothing, and other people get vast, unspendable amounts without ever raising a sweat.

And others gain vast unspendable amounts by working all their lives.

I didn't say that they don't work, cookiemonster. Just that plenty of people work as hard or harder, and that their "earnings" are totally disproportionate to their personal efforts.

A very small percentage follow the markets and it takes a long time to get a feel for them. What is happening since say Northern Rock is that many are spending a lot of time looking into them because they know that gogantic skullduggery is afoot but RTE is not going to explain it, that is for sure. Tomorrow will be fun.

youngdan wrote:

You are getting robbed and you don't care. You are an unusual man.

I certainly don't get hung up about who is robbing me. The only real question is whether the amount of theft is (a) small, and (b) predictable. Who doesn't matter at all.

**cactus posted above

youngdan wrote:

A very small percentage follow the markets and it takes a long time to get a feel for them. What is happening since say Northern Rock is that many are spending a lot of time looking into them because they know that gogantic skullduggery is afoot but RTE is not going to explain it, that is for sure. Tomorrow will be fun.

Alan Greenspan was just on BBC saying this was a once in a century and a half event and that it was the worst he had seen and he was asked if there would be more. "I suspect there will" he said.

Lehman's is shagged so - taxpayer won't bail this one out and Barclay's and BoA won't touch it with a pole - they weren't getting the promises the report said.

Auditor #9 wrote:

**cactus posted above

youngdan wrote:

A very small percentage follow the markets and it takes a long time to get a feel for them. What is happening since say Northern Rock is that many are spending a lot of time looking into them because they know that gogantic skullduggery is afoot but RTE is not going to explain it, that is for sure. Tomorrow will be fun.

Alan Greenspan was just on BBC saying this was a once in a century and a half event and that it was the worst he had seen and he was asked if there would be more. "I suspect there will" he said.

Lehman's is shagged so - taxpayer won't bail this one out and Barclay's and BoA won't touch it with a pole - they weren't getting the promises the report said.

There's no bail out here. The story of the Korean deal was only strung out to postpone the evil day - I'd say that time was used well by some. Both AIB and BoI are under question. AIB claim they are asset rich. If there assets are those unsold flats in Smithfield/houses in Manorhamilton I would wonder about it.

Ibis. Nobody can say the amount is small. That one injection last year was 300 billion euro. 3 grand a family

youngdan wrote:

Ibis. Nobody can say the amount is small. That one injection last year was 300 billion euro. 3 grand a family

It's certainly a lot - 2.4% of the EU GDP. Say it raises inflation by the same amount (from 5% to 7.4%), then if you had €10,000 in savings, it would be worth at the end of the year €9310 rather than €9523 - so you've lost €213, assuming you've got your €10K in cash under the mattress. If you've got your money in a bank, the loss will be rather less, since deposit rates track inflation. To get up to your notional figure of €3K, the family would need savings of about €140K. That's not common.

Even if a person has no savings it will cost him. 300 billion was created. At that moment the total value of everything within the borders of the EU did not change so therefore the real value of the existing money must be reduced by 300 billion so that the real value of the old money plus the new money is the same as it was before the injection. At the time I read that measure of the Euro money supply was 3 trillion so the decrease in value of each Euro was 10%. A hobo with 10 Euros was after being robbed of 1 Euro but of course he was not aware of it.

We must keep in mind though that there is more actions than this causing inflation as we have a fractional reserve banking, debt based, system. If this reverses then we could see a deflationary collapse but lets just concentrate on the day of the injection.

The 300 billion immediately went onto the balance sheets of the winners. It did not mysteriousely float out randomly into the money supply.

I have read tonight that some bonds of these financial monsters are trading at 45 cents on the dollar. Had the government gauranteed these bonds the value would jump to 100 cents. Anyone holding a billion dollars worth of these in the morning would have 2.2 billion dollars in his account by the evening.

So 300 billion euros were added to the balance sheets of the winners by the evening and 300 billion value had been subtracted from the losers on that day last year

It is a perfect crime as it is legal and the victim is unaware.

The 3 grand figure is an average gotten by dividing the amount between 500 million people for 600 each. People with money are likely to be financially astute and they will invest to try to beat inflation. If deflation comes these lads will get a horrendous shafting

youngdan wrote:

Even if a person has no savings it will cost him. 300 billion was created. At that moment the total value of everything within the borders of the EU did not change so therefore the real value of the existing money must be reduced by 300 billion so that the real value of the old money plus the new money is the same as it was before the injection. At the time I read that measure of the Euro money supply was 3 trillion so the decrease in value of each Euro was 10%. A hobo with 10 Euros was after being robbed of 1 Euro but of course he was not aware of it.

We must keep in mind though that there is more actions than this causing inflation as we have a fractional reserve banking, debt based, system. If this reverses then we could see a deflationary collapse but lets just concentrate on the day of the injection.

The 300 billion immediately went onto the balance sheets of the winners. It did not mysteriousely float out randomly into the money supply.

I have read tonight that some bonds of these financial monsters are trading at 45 cents on the dollar. Had the government gauranteed these bonds the value would jump to 100 cents. Anyone holding a billion dollars worth of these in the morning would have 2.2 billion dollars in his account by the evening.

So 300 billion euros were added to the balance sheets of the winners by the evening and 300 billion value had been subtracted from the losers on that day last year

It is a perfect crime as it is legal and the victim is unaware.

The 3 grand figure is an average gotten by dividing the amount between 500 million people for 600 each. People with money are likely to be financially astute and they will invest to try to beat inflation. If deflation comes these lads will get a horrendous shafting

Now, the first part of that I have no problem with, that the injection of such a sum of credit into the system causes inflation. Where you and I part company is on this notion that the €300 billion has to go into someone's pockets, that somewhere there are some fat cat "winners", which doesn't follow at all.

The winners are those who hold the assets whose value jump in price due to the bailout.

While listening to the radio today they were talking about Soras after getting caught by buying 91 million shares of Lehman. I was remembering back in the early 90s when Britain spent a lot of money defending it's currency but eventually they had to admit defeat. One of the winners was Soras and he made 1 billion in one day. It is rare for the winners to be named but the scoop was so large that he is now known as The Man who Broke the Pound. The English people were the losers and a small group including Soras were the winners.

On the day of the injection there was a group of people whose accounts were fatter by 300 billion. The money is real. It does not mysteriously become part of the total.

youngdan wrote:

The winners are those who hold the assets whose value jump in price due to the bailout.

I agree that there will be such winners....but...

youngdan wrote:

While listening to the radio today they were talking about Soras after getting caught by buying 91 million shares of Lehman. I was remembering back in the early 90s when Britain spent a lot of money defending it's currency but eventually they had to admit defeat. One of the winners was Soras and he made 1 billion in one day. It is rare for the winners to be named but the scoop was so large that he is now known as The Man who Broke the Pound. The English people were the losers and a small group including Soras were the winners.

On the day of the injection there was a group of people whose accounts were fatter by 300 billion. The money is real. It does not mysteriously become part of the total.

...there's no reason whatsoever that there will be winners to the tune of €300 billion. That seems to me to be based on the idea that €300 billion in notes has been handed out, and has to be somewhere. It doesn't, at least not in that sense, and definitely not in the sense you're suggesting. No group of people has to be €300 billion richer simply because that's the amount injected into the system. Instead, a little bit of that money will wind up being used to cover my credit card bill, another little bit to cover the cash late night revellers draw from the ATM. That's what it's there for - to provide liquidity. If it simply went into pockets, then it would not provide any liquidity.

Currency speculation, by the by, is an entirely different game, with clear and distinct winners and losers.

Currency speculation is a different game indeed. But the fact is Soros made a billion and the people lost billions. Soros and most other speculators were betting on one side. The British Treasury was betting on the other side

How exactly will the 300 billion get into ATM machines. If that was done then that bank would be 300 billion richer. You have a mental block that is preventing you from admitting to yourself that the 300 billion goes to someone. Instead you say that a little bit will go to covering your credit card bill. Unfortunately there is no reality at all in that. I pointed out to you that when the bonds double in value the happy owners double their money but this simple fact is not sinking in.

youngdan wrote:

Currency speculation is a different game indeed. But the fact is Soros made a billion and the people lost billions. Soros and most other speculators were betting on one side. The British Treasury was betting on the other side

How exactly will the 300 billion get into ATM machines. If that was done then that bank would be 300 billion richer. You have a mental block that is preventing you from admitting to yourself that the 300 billion goes to someone. Instead you say that a little bit will go to covering your credit card bill. Unfortunately there is no reality at all in that. I pointed out to you that when the bonds double in value the happy owners double their money but this simple fact is not sinking in.

No, because that simple fact is not directly related to the €300 billion that went in. The movement in the markets that accompanies the bail-out is a separate mechanism. Indeed, the chance of profit involved is more directly related to the previous difficulties than the bailout - if it had been known all along that the government would unquestionably bail out bank X, then bank X's shares won't have dipped, and there will be no profit to be made, proving that the profit involved is unrelated to the bailout itself. Shares in companies are not valued simply by the expres​sion(money in company/number of shares). I'm not saying nobody profits off this - I'm saying nobody profits directly, and that it isn't simply a case of rich people soaking up the €300 billion until it's all in their pockets.

Banks lend amongst themselves all the time (hence the interbank lending rate etc) - those banks that do not have sufficient liquid assets to cover their immediate obligations borrow from those that have excess assets. When the banks fear that each others' balance sheets are full of bad debt, they are more cautious about lending to other banks. In extremis, the whole interbank credit market starts to dry up - which means that banks can no longer borrow to meet, say, the cash withdrawals made by customers. If word gets out that this is the case, everyone panics and attempts to get what they can, collapsing the banks.

To prevent this, the central banks (or any other body of financial institutions) can club together to "inject liquidity" - which is to say, put good credit into the pool, backed by themselves. The banks can lend this to each other without so much caution, because it is backed by the central bank. Ideally, this covers the riskier interbank loans, allowing the banks to loan their own money on the less risky deals - restoring the operation of the interbank credit market. And, yes, that means that where the €300 billion goes is to cover your ATM withdrawal.

Ibis. Snap out of it. You are still talking about shares which is peanutslike I said. The bonds are 1000 times greater in value. That activity that you are writing about is called The Fed Funds rate and has nothing whatsoever to do with a companies bonds outstanding.

youngdan wrote:

Ibis. Snap out of it. You are still talking about shares which is peanutslike I said. The bonds are 1000 times greater in value. That activity that you are writing about is called The Fed Funds rate and has nothing whatsoever to do with a companies bonds outstanding.

I really don't know, sometimes. You know all of what's in the previous post, but you still think the €300 billion has to wind up in the pockets of particular people. It prevents people losing money, yes, but it's not 300 bucks out of the cookie jar that just has to be in somebody's wallet.

There is nothing wrong with what you wrote in the prievious post and hopefully you have a good understanding of it because not many do, but it is a completely different subject altogether.

The 300 billion does has to be on the account of somebody. It is real money

youngdan wrote:

There is nothing wrong with what you wrote in the prievious post and hopefully you have a good understanding of it because not many do, but it is a completely different subject altogether.

The 300 billion does has to be on the account of somebody. It is real money

It's not, though - it's the monetisation of illiquid assets. In other words, the central bank lends credit on the basis of assets held by the banks that would not normally be considered liquid enough to lend on. In a sense, it's acting as the pawnshop after you've exhausted the credit at the bank - and for the same reason: to sort out cash flow.

You must have a book on the financial system and are jumping from page to page. What you describe above is how The Discount Window works. Again great to understand but nothing to do with what we are talking about. Closer though as the Discount Window will lend face value on the junk but it is still junk and the money is still owed to the Fed.

What we are talking about is junk that is one day junk and the next day is made whole and sold(not borrowed against). One day they are worth 1billion and the next day they are worth 2 billion