Economics

Treasury Lied, The Economy Died ( a Little Bit More)

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The Treasury Department "lost credibility" when it said its first capital injections from the $700 billion financial rescue were for healthy banks, the inspector general for the Troubled Asset Relief Program said.

In a report issued today, the inspector, Neil Barofsky, said then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke had concerns about the finances of several of the nine banks in which the government invested $125 billion last October. Two of those lenders, Bank of America Corp. and Citigroup Inc., were later given more aid….

"Treasury may have created unrealistic expectations about the institutions' condition and their ability to increase lending," he wrote. "Treasury and the TARP program lost credibility when lending at those institutions did not in fact increase and when subsequent events—the further assistance needed by Citigroup and Bank of America being the most significant examples— demonstrated that at least some of those institutions were not in fact healthy."

More here.

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  1. As long as Paulson got the paperwork right when imported those orchids he is okay. The fact that he lied and stole a trillion dollars is no big deal really.

  2. Why I don’t believe a word Bernanke says:
    http://robvstate.com/2009/09/2…..epression/

  3. So, it was more like a promise to pay, not a real contract or anything?

  4. If you want to add to the insanity, check out this paragraph from a report about how the US Debt is financed:

    http://www.treasurydirect.gov/…..nn2008.pdf

    “As of September 30, 2008, $5,210 billion, or 90 percent, of the securities that constitute debt held by the public were
    marketable, meaning that once the Federal Government issues them, they can be resold by whoever owns them.

    Marketable
    debt is made up of Treasury bills, Treasury notes, Treasury bonds, and Treasury Inflation-Protected Securities (TIPS) with
    maturity dates ranging from less than 1 year out to 30 years.

    Of the marketable securities currently held by the public as of
    September 30, 2008, $3,429 billion, or 66 percent, will mature within the next 4 years (see Figure 3).

    As of September 30,
    2008 and 2007, notes and TIPS held by the public maturing within the next 10 years totaled $3,004 billion and $2,767 billion,
    respectively, an increase of $237 billion”

    Meaning that the bonds they’re issuing for the debt have a very short-life span.

    This means they have to keep borrowing more and more money .. more and more frequently.

    Keep this in mind when you hear the Democrats talk about yet another stimulus.

    No one can convince me that all of this crap isn’t a deliberate agenda to destroy the finances of the US Fed Government and have it collapse.. just like the Radical Far Left plan called “Cloward-Piven” calls for.

  5. VinceP,

    I don’t see anything there about holding long term debt off the market. IIRC, short term debt is typically more popular because of the lower uncertainty about what is going to be going on when it matures.

  6. Back when Paulsen was nominated for SoT… I ran across this article on a Democrat Leftist site about how Paulsen may as well be a liberal Democrat when you look at his record.. and how Bush was selling out his party and base and that Democrats should support him

    http://www.mydd.com/story/2006/5/31/17549/2373

    Henry Paulson: A Betrayal of Bush’s Conservative Base?

    by Matt Stoller, Wed May 31, 2006 at 05:54:09 PM EST

    Is Henry Paulson going to get the Harriet Miers treatment? Maybe. I’ve already mentioned snarkily that Chuck Schumer loves the guy. The right is sliming Paulson pretty aggressively, with Steven Milloy of the Competitive Enterprise Institute going after him:

    [see link for CEI quote]

    It’s not just ethics and his background as a funder of Democrats and liberal groups. They also hate his ideology and his support of environmentalism.

    [see link for CEI quote]

    Paulson is a good choice for this position. A savvy Democratic Party would vote for Paulson’s confirmation but give him a rough go in terms of the Fannie Mae accounting fiasco. Goldman has been in and around many of the larger accounting scandals over the past few years, and a little sunlight wouldn’t hurt. They should also get him on the record about global warming, the financial fallout of Iraq, peak oil, and the financial effects of an invasion of Iran.

    There’s no better sign that Bush is weak than the nomination of a liberal Republican like Paulson. This is a big and deep betrayal of his base. Bush is nominating someone who acknowledges the perils of global warming and is a strong environmentalist. Paulson is a good choice for Treasury Secretary, probably the best we’re going to get. The question is will the right allow someone from the reality-based community to take the position?

  7. “John Tagliaferro|10.5.09 @ 9:19AM|#

    VinceP,

    I don’t see anything there about holding long term debt off the market. IIRC, short term debt is typically more popular because of the lower uncertainty about what is going to be going on when it matures. ”

    The problem is, they’re financing trillions of dollars of debt with fast-expiring Debt. That means they’re going to hit a wall of cash flow problem at this rate.

    (Note: I’m just a regular person… I dont work in banking.. if i use a wrong term here or there.. please try to read between the lines)

    1. The problem is, they’re financing trillions of dollars of debt with fast-expiring Debt. That means they’re going to hit a wall of cash flow problem at this rate.

      (Note: I’m just a regular person… I dont work in banking.. if i use a wrong term here or there.. please try to read between the lines)

      Like with anything else, they can only sell what people are willing to buy. In their case, they can and have strong-armed a bit with financial institutions lately, on other loans. Have not heard it yet on bonds.

      If they are financing short term “stuff” then the proper instruments to hawk would be short term debt. IIRC, it is called “matching”, i.e., you match the length of financing to the length of the project, at least on the commercial side.

      I am in no way endorsing the federal government engaging in massive deficit spending.

      1. The Treasury is not having any trouble selling either short- or long-term debt. The 10-year Treasury note is still well below 4 percent, and the market for government debt strengthens as the economy continues to suck. This week the government will borrow another $60 billion, all of it with maturities of 10 years or longer.

        I don’t know what the normal ratio of short- to long-term debt is, though I’d assume there’s always a lot more short-term debt in circulation. In any event, people are still eager to buy long-term Treasury debt.

  8. Well, considering that lying is what they do best, I am not surprised!

    RT
    http://www.complete-privacy.net.tc

  9. Anonymity Guy is making a lot of sense today. Maybe he’s gotten clean?

  10. Nah, he just got a hobby. Like diagnosing illness over the Internet.

    1. Or fixing people’s bad credit?

  11. Nah, he just got a hobby.

    I thought shooting up was a hobby.

  12. John T. (and anyone else), would you like to join those of us who are boycotting these retarded threaded comments? If everybody joins in, Hit’n’Run will become readable again.

    1. Count me in.

      1. Me too!

        1. Aarrg! What the fuck happened? I turn off my computer for a week or two and H&R goes all freaky. And where’s preview now?

    2. People are still engaging Lonewacko, Chad, Tony, Edward, etc after all these years, so I think it’s hopeless.

    3. Was that John T. for me or for John T? I guess I will vote as an anyone else.

    4. Actually, I like threaded comments if only because when Episiarch and SugarFree and the other usual suspects decide to turn the thread into their own personal chat room, I can just scroll past their stuff and start reading topical comments again. In the old format that kind of behavior could essentially kill an interesting thread because you’d have to dig for the 10% of posts that actually were on-topic in the midst of the chat room shit.

      1. Good point. It is easier for Warty to find my RSVP’s for our secret rendevouss with this format.

    5. All I want is a preview.

  13. Good idea, Xeones. We shall fight the oppressors for your right to post sequentially, brother.

    1. Can I vote more than once, Chicago style?

  14. And do I still use HTML or what?
    Is this bold?

  15. Yes, Pro Lib! I think the boycott was Epi’s idea, actually, but i will gladly take credit for it.

    You’d think with the website upgrade they could have finally added a preview feature, but nooooo…

    1. Actually, the worst situation would be half of the commenters posting sequentially and half using the nested replies. That would really make it unreadable, and I fear that’s where your “boycott” is headed.

      1. See the Zombie thread from the weekend for a mild example.

  16. I’m freakin’ out here. I think I need to go back to the woods for another week…

  17. I wrote a song for the revolution, too. Well, “wrote” is a strong word. I ripped off Tom Petty.

  18. I wrote a song for the revolution, too.

    I like it.

  19. That would really make it unreadable, and I fear that’s where your “boycott” is headed.

    Gridlock! Excellent.

    The threaded comments make it too difficult to catch up in longer threads. With sequential comments, all you have to do is scroll from the end until you see one you recognize, instead of picking through every reply in the entire thread. I’m agin that.

    1. I like the threads because it makes it easier, thoretically, to follow 2 debates between 4 people. What we need is a whole thread on this subject.

  20. Yes, Pro Lib! I think the boycott was Epi’s idea, actually, but i will gladly take credit for it.

    Yeah, we know.

    Where the fuck are my blink tags, anyway?

  21. Can I vote more than once, Chicago style?

    Only if you vote… correctly.

  22. when Episiarch and SugarFree and the other usual suspects decide to turn the thread into their own personal chat room, I can just scroll past their stuff

    Somebody sat alone at lunch.

  23. So, Tulpa, how about that awesome Battlestar Galactica ending?

  24. Tulpa,

    But you only had to read everything once. In this format, you’re scrolling through the whole mess to find comments. Meh.

  25. Perhaps the government should have hedged their bets, the way Goldman did with CIT.

    http://www.ft.com/cms/s/0/a5dc…..abdc0.html

    According to this info, GS will profit if CIT goes bankrupt.

    Amazing.

  26. Yeah, Tulpa’s problem would only really be solved with collapsible comments. If people started being funny or interesting, he could just click it down to the original comment and skip the good stuff.

    1. If we had a rating system that would solve everything.

  27. Yeah, Tulpa’s problem would only really be solved with collapsible comments.

    Well… that particular one of Tulpa’s problems.

  28. And here’s another problem with no preview: Preview let’s you refresh the page so you can avoid same comment double posts and revise comments on the fly to take in stuff posted while you were replying.

  29. Preview let’s you refresh the page

    It also lets you remove any unnecessary apostrophes that may be lurking.

  30. And the comment box is tiny. Is this twitter now? WFT? OMG? LOL!

  31. Exactly, X. Did we really need more bad grammar and spelling around here?

  32. Whattamatta, Tulpa? Everyone’s interested in the self-esteem of SugarFree’s junk. And by everyone, I mean not unresponsive Puerto Ricans.

  33. Can I vote more than once, Chicago style?

    Only if you’re dead.

    1. ACK! Flashback to the Zombie thread!

  34. You sort of need to have credibility before you can lose it, Treasury Department douchebags.

  35. Tom Petty is RACIST!

  36. Autodidact,

    Why of course he is! He’s from Gainesville, Florida, a Southern city.

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