I have always loved the video clips of the Rachel Maddox Show, as she is very witty, and yet, provides valuable information. You can view from MSNBC.Com, although I have not highlighted a single one of the videos, as it tended towards politics than financial markets news.
However, this video clip published today, 23rd December 2008, is a key exception. It highlights the ridiculous nature of how TARP (Troubled Assets Rescue Plan) is being managed. Form your own opinion after you have viewed the video. Some people might even get very upset after watching it.
However, this video clip published today, 23rd December 2008, is a key exception. It highlights the ridiculous nature of how TARP (Troubled Assets Rescue Plan) is being managed. Form your own opinion after you have viewed the video. Some people might even get very upset after watching it.
Visit msnbc.com for Breaking News, World News, and News about the Economy
My personal understanding of the situation is that the money is replacing money already lost by the financial institutions, and thus, how do you spend money that has already been spent?
How was the money spent? It was spent investing in toxic assets like CDOs (Collateralized Debt Obligations, which is related to Sub-Prime Mortgages) or CDS (Credit Default Swaps), or already loaned out to borrowers. Now, due to the losses, the banks have become undercapitalized.
This is one way of saying that should there be some major deposit withdrawals, the banks will not be able to repay the depositors back their money. Thus, the money received from TARP is merely a replacement of the liquid cash position that the banks should have, which they had lost due to bad loans or investments in toxic assets. This is why, the banks will never use the bailout money to give out more loans.
Did Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke know this when they gave out billions of dollars to the financial institutions? What do you think?
If a small guy like me, writing a blog can understand the situation so well, without even reading the confidential documents submitted by the financial institutions to the government, do you think the two most powerful men in the US financial world doesn't know what they are doing?
How was the money spent? It was spent investing in toxic assets like CDOs (Collateralized Debt Obligations, which is related to Sub-Prime Mortgages) or CDS (Credit Default Swaps), or already loaned out to borrowers. Now, due to the losses, the banks have become undercapitalized.
This is one way of saying that should there be some major deposit withdrawals, the banks will not be able to repay the depositors back their money. Thus, the money received from TARP is merely a replacement of the liquid cash position that the banks should have, which they had lost due to bad loans or investments in toxic assets. This is why, the banks will never use the bailout money to give out more loans.
Did Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke know this when they gave out billions of dollars to the financial institutions? What do you think?
If a small guy like me, writing a blog can understand the situation so well, without even reading the confidential documents submitted by the financial institutions to the government, do you think the two most powerful men in the US financial world doesn't know what they are doing?
My personal opinion is that the bailout money is just that .... bailout money, which was never meant to encourage lending, however it may have been put across to the American taxpayers in the past few months.
The other issue is how the bailout money is spent, in terms of remunerating some of the key employees, including the CEOs of the Financial Institutions. Check out this Interview of CNBC's Erin Burnett on "How Wall Street Uses Tax Dollars" from MSNBC.Com.
Best wishes,
Ooi
Visit msnbc.com for Breaking News, World News, and News about the Economy
Posts
No comments:
Post a Comment