# Where to now for the 'bailout'?



## Bushman (30 September 2008)

So the good senators have shown some back bone and ignored Paulson, Helicopter and Dubya's prominent jawbones. 

So where to now for the 'bailout'? 

Looks like efforts are likely to turn to the severely eroded equity bases of the banks that are left standing on a case-by-basket-case basis. So in effect we will have a nationalisation of the US banking system. Japan and the 1980's comes to mind? 

Anyway it should prove cheaper than pouring 'good' money after bad as more and more tranches of leveraged securities debt start to whiff. 

And I am sure it will be good for a few more dead cat bounces. Happy days


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## Bushman (30 September 2008)

Actually I spoke too soon - Kevin07 will rescue the bailout. Hang on to your stinky CDO's ;-) 


HONG KONG (MarketWatch) -- Australian Prime Minister Kevin Rudd Tuesday called for global pressure on U.S. lawmakers to pass the $700 billion financial bailout package after the House of Representatives voted it down Monday, according to reports. "The call that we need to make is for them to put aside party politics and to pass this package because it is necessary for the stabilization of U.S. financial markets and global financial markets," said Rudd at a news conference in Canberra, according to a Reuters report. "All our interests are at stake here," he reportedly added.


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## RustyK (30 September 2008)

I am sure all the democrats and republicans that voted against the bail out package will have now changed their minds on the back of this incredibly influential statement by Prime Minister Rudd!


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## auric (30 September 2008)

what a turkey this rudd is; has no idea, one breathe we can ride out the storm now he calling on the world to pressure the usa govt to pass the bail out, hints of panic i think or weak,should have said nothing and backed our banks ,or is there doubt????


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## gav (30 September 2008)

Hmmm, didnt they all fall asleep when Rudd was speaking over there?  What makes him think they are listening now?


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## mayk (30 September 2008)

He is using McCain's tactic of exhibiting leadership. Everyone knows the bill will be passed and later on he can add this as an achievement... Long term thinking folks...


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## RustyK (30 September 2008)

I agree with 'Mayk' that the bill will be passed in some format fairly quickly rightly or wrongly.  But K Rudd will have very little influence on that and surely only idiot would believe he has assisted despite claims he will make in the future???


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## Temjin (30 September 2008)

The bill will be passed one way or the other, with different terms of course. Warren made a few cool $ billion bet on it. 

And they will be resubmitting the bill again tomorrow, I think.


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## Bushman (30 September 2008)

RustyK said:


> I agree with 'Mayk' that the bill will be passed in some format fairly quickly rightly or wrongly.  But K Rudd will have very little influence on that and surely only idiot would believe he has assisted despite claims he will make in the future???




I would say it is a breathless example of political grandstanding by Kev07. Maybe he can become a full-time lobbyist in Washington given that he is our 'jet-setting' PM. 

Off course it will have no effect.


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## chops_a_must (30 September 2008)

Lol.

You gotta love the muppets that swallow hook, line and sinker the one liners the conservative media dish out.

Did wonders for one of WA's best premiers in the history of the state.


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## snapperhunter (30 September 2008)

Did Rud speak in English or Mandarin during the conference??? 

I think he may as well have spoken in Mandarin, that way the Yanks might have taken more notice of him, rather than taking catnaps!


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## chops_a_must (30 September 2008)

Yes. Ok. We get it.


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## Kauri (30 September 2008)

The US House of Representatives will reconvene at noon U.S EST on Thursday, following yesterday"s 228-205 vote against the Bush administration"s TARP. *132 Republicans* and 94 Democrats *voted against the plan*, with 65 Republicans and 140 Democrats voting in favour ... 
    party politics Kev??? isn't Bush a Republican???.. might be more to do with individual senators being concerned about thier seats metinks...

Cheers
...........Kauri


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## chops_a_must (30 September 2008)

Kauri said:


> The US House of Representatives will reconvene at noon U.S EST on Thursday, following yesterday"s 228-205 vote against the Bush administration"s TARP.



Admiral Ackbar knows:







Or:


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## Bushman (1 October 2008)

chops_a_must said:


> Lol.
> 
> You gotta love the muppets that swallow hook, line and sinker the one liners the conservative media dish out.
> 
> Did wonders for one of WA's best premiers in the history of the state.




PS: I voted Green/Labour so I must be Kermit?  

[INSERT VIGILANTE AGGRESSIVE RETORT HERE]  I'll title it 'The Banality of the Troll'.


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## deadset (1 October 2008)

I'm wondering when the significant timelines are : 



> Both Obama and McCain said they would return to Washington for the vote, due to take place sometime after a series of votes starting at 7:30 p.m. EDT (2330 GMT).




is that 9:30am Thursday ?

Any other dates on the radar ?

So according to Murphy's law they will either vote yes and it'll go down or they'll vote no and it'll go up.


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## dhukka (2 October 2008)

Contrary to popular belief there are some sensible people on Capitol Hill in Washington. It's almost uncanny how accurate this senator was with his predictions back in 1999:

Senator Dorgan on the 1999 Financial Modernization Act


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## Kauri (2 October 2008)

are insurance co's covered???   

Cheers
...........Kauri


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## gfresh (2 October 2008)

My thoughts. 

The package will be passed, and there will be much celebration and hand slapping... for about 5 minutes. Then the real attention will turn to the other important issues of slowing the housing falls, and the intense problems in the real economy. People will realise that maybe, just maybe it's not just "Wall Street" that needs to be saved but all their precious jobs and staving off a depression, which will have catastrophic effects for everybody. They'll soon forget about a few execs getting their golden parachutes, or whatever they were worried about in terms of "bailing out" those that caused the problem. 

Further major problems will pop up, of which this bill will be shown not to be effective against anyhow. Mainly the sudden shrinking up of credit, the fuel for their economy. Seeing as this has been the real forcing driving the driving the GDP engine in recent years, not true efficiency improvements, the engine will start stalling severely. How can you have less banks, and severely injured ones at that, providing more, and more credit? I still don't quite get that. 

As a result corporations will scale back massively, lay off jobs, collapse, bring down other corporations they owe money to (suppliers/creditors, etc). Rates policy is totally ineffective once over this edge, they only had to look to Japanese history to see this. 

As far as I can tell, all the magic "$700bn" figure does is allow some paper shuffling in and out of the banks balance sheets, which most knows that is ludicrous anyhow. Eventually they'll drop the cards once again, probably next quarter when the whole balancing of the books has to be done again, and mortgage resets will *still* be going strong. Eventually large numbers of AAA mortgages will be defaulting as unemployment races towards 10%. Then there will complete, absolute fear, that nothing may be able to be done. 

Then we will see some very crazy ideas put forward to help fix the problem, as per the 1930's. Some may even work somewhat, but it will be many years until the system can repair itself.


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## gfresh (2 October 2008)

Case in point.. if this is an issue of restoring confidence in lending, shouldn't have the bill getting through at least the Senate somewhat increased that confidence? doesn't seem like it... 



> The London interbank offered rate, or Libor, that banks charge each other for such loans climbed 6 basis points to 4.21 percent today, the highest since Jan. 11, the British Bankers' Association said. The corresponding rate for euros advanced 3 basis points to a record 5.32 percent. The Libor-OIS spread, a gauge of cash scarcity among banks, widened to a record.


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## white_goodman (3 October 2008)

when the lower house pass/approve sydney time?


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## Kauri (3 October 2008)

white_goodman said:


> when the lower house pass/approve sydney time?





   The House of Representatives is expected to vote on the revised TARP between 16:30GMT and 18:00GMT today. The House voted 228-205 against the original TARP on Monday (the Dow closed down 7% on Monday). Cheers
...........Kauri


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## white_goodman (3 October 2008)

Kauri said:


> The House of Representatives is expected to vote on the revised TARP between 16:30GMT and 18:00GMT today. The House voted 228-205 against the original TARP on Monday (the Dow closed down 7% on Monday). Cheers
> ...........Kauri




so whats that roughly in sydney time?


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## Kauri (3 October 2008)

white_goodman said:


> so whats that roughly in sydney time?





now.... 8.22 perth.... shows GMT etc.... 

 Cheers
.................Kauri


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## Bushman (8 October 2008)

*** Newsflash** Moral hazard has now been extended to the US home owner themselves!! *

McCain has promised to bail out the American homeowners themselves in the Great Debate.  It is to be called McCain Resurgence Plan. They just love a good surge those Republicans. 

That decides it. I am going out there, finding the most overvalued house I can find, mortgage it up to the hilt (because I know that what is good policy in the US will become good policy in Oz) and know that good 'ol 'BIG GOVERNMENT' will bail me out if the house price falls. 

Oh fruit.... 


From The Age:

The Republican hopeful said the *US government would promptly snap up bad home loans if he became president*.

``People are no longer able to afford their mortgage payments,'' said McCain as he laid out what he billed as an original proposal for addressing the grassroots impact of the Wall Street credit crisis.

``As president of the United States, I would *order the secretary of the treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes, at the diminished value of those homes*,'' he said.
*
Doing so would enable struggling homeowners to meet their mortgage payments and stay in their homes, he said.*

``Is it expensive? Yes,'' he said. ``But we all know, my friends, that until we stabilise home values in America, we're never going to start turning around and creating jobs and fixing our economy.

``We've got to give some trust and confidence back to America. I know how to do that, my friends, and it's my proposal. It's not Senator Obama's proposal. It's not President Bush's proposal. I know how to get America working again.''

In a statement issued minutes after McCain spoke, his campaign said the McCain Resurgence Plan - as it branded the proposal - would purchase mortgages directly from homeowners and mortgage lenders and replace them with fixed-rate mortgages.

Such mortgages would enable families to stay in their homes, it said.
``By purchasing the existing, failing mortgages, the McCain Resurgence Plan will eliminate uncertainty over defaults, support the value of mortgage-backed derivatives and alleviate risks that are freezing financial markets,'' it said.

``The direct cost of this plan would be roughly $US300 billion ($A423.13 billion) because the purchase of mortgages would relieve homeowners of 'negative equity' in some homes,'' it said.


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## rub92me (8 October 2008)

Bushman said:


> *** Newsflash** Moral hazard has now been extended to the US home owner themselves!! *
> From The Age:
> 
> The Republican hopeful said the *US government would promptly snap up bad home loans if he became president*.
> ...



But, but, but. That was my idea!!


rub92me said:


> Great questions and contributions so far. My question is: why are they spending so much money to try and sponge up the toxic derivative mess; wouldn't that money be far better utilised in buying up the underlying assets, which would drive up their price?
> Say the total derivative value at risk is 500 trillion dollars. This value may be 1,000 times more than the underlying assets on which this pyramid was built.
> Wouldn't it be far more effective to try and drive up the price of the underlying assets by 10% for starters?



The world is in real trouble now if they start listening to my ideas :


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## Bushman (9 October 2008)

rub92me said:


> But, but, but. That was my idea!!
> 
> The world is in real trouble now if they start listening to my ideas :




lol. I know what you mean. I also really, really hope old man river does not get his hands on the lever of treasury. what a ridiculous idea.  

PS:  rumours of the Fed taking an equity stake in the banks keep circulating. This is according to unnamed sources at the bank. Scuttlebutt -  or is this step three in the 'shock and awe' campaign? 

They will give it their best the Fed. I feel this will create a false bottom now for the market until the US reporting season once more scares the crud out of the punters in late Jan/early Feb. That might be when the poop infects the US-dollar itself. Then it might finally be time to start that 'The calf has been born; it will be a bull in two years' thread.


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## moXJO (9 October 2008)

Whats the go with the Arab and Asian backing for the US.Anyone got a rundown yet?


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## Bushman (14 October 2008)

Kevin07 is adding to his 'bailout' credentials by the day - $10.4b to be given to the old, poor and young to be spent on houses, rent and the like. 

For the good 'ol middle class tax lackeys like myself, there will be nix as per usual. Guess I am expected to 'muddle my way through' this one. 

From The Age: 
'The Federal Government will pump $10.4 billion into the economy in a bid to prevent the economy sliding into a recession.

Prime Minister Kevin Rudd and Treasurer Wayne Swan unveiled the emergency spending plan, which includes $4.8 billion for pensions,  $3.9 billion for low-income families, $1.5 billion for first-home buyers.'

PS: as predicted, the Yanks are taking $250b equity stake in the banks.


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## Bushman (14 October 2008)

Who gets the Fed's equity 'injections'? Apparently it is:
Citi $25b
JP Morgan $25b
Bank of America $12.5b
Merril Lynch $12.5b
Goldman Sach $10b
Morgan Stanley $10b
State Street Bank $3b
Bank of NY $3b

http://www.marketwatch.com/news/sto...x?guid={9C59F5E0-73C7-4AC8-93CD-88E01998974E}

Poor old Dicky Fuld, of Lehman Bros, must be crying in his $500m USD (or is that $250mUS). If only they had kept the wolves at the door for one more month hey.


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## kransky (14 October 2008)

Bushman said:


> Kevin07 is adding to his 'bailout' credentials by the day - $10.4b to be given to the old, poor and young to be spent on houses, rent and the like.
> 
> For the good 'ol middle class tax lackeys like myself, there will be nix as per usual. Guess I am expected to 'muddle my way through' this one.
> 
> ...




Its pathetic imo.. throw money at consumers. that's a great policy. It sh!ts me to think how much infrastructure you could build with 10Bn. The money should be saved and used on capital projects WHEN the recession is in full swing..


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## Bushman (20 October 2008)

Finally, at glacial pace, the LIBOR is coming down! Printing presses might be able to start slowing down. So the bailout is starting to work but at what long-term cost to the USD? The economy first, the currency second hey.

'Three-month dollar Libor fell to 4.41875% from a 4.5025% rate on Thursday. That's down 40 basis points, or 0.4 of a percentage point, from last Friday and the lowest level since Oct. 8. *It's also the first weekly decline for three-month Libor since early July. *'


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## Glen48 (20 October 2008)

Can any explain the expected results of the $500 Trillion CDS's and who is likely to pay?


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## noirua (20 October 2008)

IMG have accepted a â‚¬10 billion loan from the Dutch Government.


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## Bushman (20 October 2008)

Glen48 said:


> Can any explain the expected results of the $500 Trillion CDS's and who is likely to pay?




1. Your number is 10 times too high. 
2. Derivatives is a zero sum game so no need for tax payer money. 
3. From what I have read, the Lehman Bros unwinding is going reasonably well. 

However it might claim a few extra individual scalps - hedgies and the like. Maybe to commodity free fall we are seeing is the result of the CDS positions?

Some claim it already claimed AIG. If Ford and GM go under then it could be a real party.  

Hey that is the beauty of a completely unregulated CDS derivative market that has sprung up in the last decade or so - no-one know how it will unwind.


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## noirua (20 October 2008)

South Korea has offered US$100 billion to bail out its Banks.  US$30 billion has been injected into its Banks.


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## deadset (24 October 2008)

Who actually paid for the bailout ?
Was it solely the US government ?  I would presume so, but I'm not sure.


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## derty (24 October 2008)

In the US, strictly speaking it will be the future US taxpayers who will be paying for this. 

But in reality the question is will it ever be paid for? Or will it just be added onto the mountain of debt constantly accumulating?


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## Bushman (8 January 2009)

Why not i guess? However I am assuming this one is frimly a 'tongue-in-cheek' request. 

From The Age: 

*
US p*rn moguls' plea for government reliefJanuary 8, 2009 - 11:36AM *

Two p*rn moguls including Hustler magazine founder Larry Flynt are seeking a five-billion-dollar bailout from Washington, arguing that the limp US economy has thrown cold water on the adult entertainment industry. 

Flynt and "Girls Gone Wild" video series creator Joe Francis asked the newly convened 111th Congress "to rejuvenate the sexual appetite of America" in a bailout move similar to the one set aside for US auto manufacturers.

"Congress seems willing to help shore up our nation's most important businesses, (and) we feel we deserve the same consideration," Francis said in a statement.

Flynt said people were "too depressed to be sexually active."

"This is very unhealthy as a nation. Americans can do without cars and such, but they cannot do without sex."

AFP


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## Aussiejeff (19 March 2009)

> [size=+1]Biotech sector calls for rescue package[/size]
> 
> *Australia's biotech sector is pushing for a $600 million rescue package needed, it says, to ensure its 1,200 companies survive the global economic slow-down.*
> 
> ...



http://www.thebull.com.au/articles_detail.php?id=1174

NOT a bailout? Smells like one to me.

Well, I think the gummint should bailout small "investors" to prop up their share trading.

Say, $50 Billion guys 'n gals?  Why not? Everyone else is starting to put their hands out....


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