| User Info
| Geithner, Kohn, (barf) Kneale, Banking and More in forum [Market-Ticker]
|
Wawawa
Posts: 249
Incept: 2009-03-18
San Diego, CA
|
----------
RAT RACE IS OVER, RATS WON :)
|
Wawawa
Posts: 249
Incept: 2009-03-18
San Diego, CA
|
----------
RAT RACE IS OVER, RATS WON :)
|
Margincalltime
Posts: 1025
Incept: 2008-04-01
NJ
|
hmmmm, did someone or someone(s) take a twisted wrong turn and create a web that is spinning out of their control?? Is someone going to lose THEIR charter, the one that says they aren't allow to lend against these so called "assets"???
|
Murf
Posts: 4486
Incept: 2007-08-28
MurfCon Warning Level: Arrogance II
|
Excellent presentation, Gen. re: Kohn, Reuters wrote..However, he did caution that the increase in the balance sheet was not without risks, and warned that if this led to credit losses at the Fed, it could force the Fed to go hat in hand to the U.S. government, compromising its policy independence. This is something Robert Prechter warned about in a recent interview linked on TF. Essentially the Fed could end up calling on the Fannie/Freddie implied guarantee for a Fed bailout of MBS. That call could cause some sparks, me thinks.
----------
The money has already been lost. Someone has to book it.
|
Wawawa
Posts: 249
Incept: 2009-03-18
San Diego, CA
|
<i>and warned that if this led to credit losses at the Fed, it could force the Fed to go hat in hand to the U.S. government, compromising its policy independence.</i>
what would be consequences of the FED going BK ?
WOW, who would have thought of that.
----------
RAT RACE IS OVER, RATS WON :)
|
Stanowen
Posts: 160
Incept: 2008-10-02
|
I've been asking for years:
Does American Express, Capital One, etc create wealth? Or is it a tax on economic transactions?
Same for Bank of America and Citigroup. These companies don't create wealth, they redistribute it, for a fee.
Walt Disney and Microsoft create wealth.
Reason: spell check is marvelous
|
Genesis
Posts: 130703
Incept: 2007-06-26
|
----------
I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
|
Brushyourteeth
Posts: 1403
Incept: 2009-09-02
State College, PA
Online
|
Good stuff, KD. Especially on the bankers. I'm going to send this video around. By the way, I love CNBC's headline tonight. Geithner Tells Town Hall: 'We Have to Change Things' http://www.cnbc.com/id/32783897:rofl:
----------
"The only stance they've (our world leaders) ever known is to bend over in the shower!"
|
Genesis
Posts: 130703
Incept: 2007-06-26
|
Oh its better. I've got the Elizabeth Warren video - just don't have time to do a video ticker on it.
This weekend, my friends, this weekend.
----------
I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
|
Andrew123
Posts: 175
Incept: 2009-07-05
California
|
Fannie and Freddie are in receivership. Is there anything preventing the Treasury from using its revolving tarp credit card to pay off agency debt? I assumed that if the Fed is buying a trillion plus in agency debt that this implied guarantee will be enforced. Also, Bernanke has testified that the Fed is able to buy anything that in its judegement is money good. Whether this is a bastardization of the law is beside the point. They are doing it, and I think it is non agency paper that Kohn is concerned about.
|
Murf
Posts: 4486
Incept: 2007-08-28
MurfCon Warning Level: Arrogance II
|
Gee, I wonder what the Fed would get for it's portfolio of MBS - one hundred cents on the dollar?
----------
The money has already been lost. Someone has to book it.
|
Kylafoon
Posts: 2457
Incept: 2009-02-05
Zombie Portal Lookout
|
CNBC Tim Geithner Exclusive was just that "exclusive" of critical thought.
It was the biggest room full of useful idiots I've observed this year.
Fluff and lies. Feel good verbage.
Transparent as in see through the bull****.
I have to say that he was convincing enough to convey this.
He absolutely believes himself. Or his lying was Acadeny Award level acting.
----------
"...But whenever we see things done wildly, but taken tamely, then the State is growing insane..." - Gilbert Keith Chesterton 1910
"I found a flaw in the model that I perceived is the critical functioning structure that defines how the world works." - Alan Greenspan, October 2008
|
Mikeit83
Posts: 964
Incept: 2009-06-19
East Coast
|
Being the youngster here (and having recently gone through a series of economics classes) banks and money was explained similar to how Karl explained it. Except there was a bank A, B, C,,,,,,Z
The original 40 would be deposited into bank A from depositor.
-Bank A loans out 320 dollars. (assuming 9:1 ratio. (9*40)-40=320
-Borrower just so happens to need 320 bucks for a Sony Playstation 3. Goes to bank A and takes out a loan for 320 bucks.
-Best Buy takes his 320 bucks and deposits it into bank B.
-Bank B now uses 320 bucks (@ 9:1 ratio) to loan out more money. They loan out $2560 dollars to someone looking to buy a new high end gaming PC from NewEGG.
-Borrower gets loan from Bank B and buys new PC from NewEgg.
-NewEGG deposits $2560 dollars into their bank (Bank C).....
You get the point. At least that was how it was explained to me. The 9:1 ratios were kept to reserve the necessary capital for other withdrawels and meet legal requirements. What is frightening is that a lot of banks were sitting north of 20:1 and even 30:1.
Of course, the originating banks made back the deposit+interest until the depositER withdrew or spent the deposit again.
Is my explanation sound?
|
Genesis
Posts: 130703
Incept: 2007-06-26
|
No Mike.
The bank gets $10,000 in a deposit.
It lends out $9,000 (with a 10% reserve ratio; the actual varies and Greenspan bastardized it) which is then spent.
The $9,000 that is spent is redeposited, and the bank lends out $8,100 of that.
And so on.
Banks do not "create" money. The exception is the original "high power" money deposit at The Fed when the bank is set up; The Fed will in fact "create" a loan against that high-power money at the inverse of the reserve ratio, but in commerce, money is not created.
----------
I don't care if it makes sense -- only if it makes money. -- Me
Bank (n): See scam, fraud and theft. Eat a bankster -- they're low-carb.
What part of "shall not be infringed" was unclear?
|
Etz
Posts: 13889
Incept: 2007-06-26
LA
|
I had to turn off the Geithner/CNBC sham after about 5 minutes for fear of throwing up all over my PC. 
----------
Legal chicanery and beneficent darkness are the banker's stoutest allies - F.Pecora.
|
Knobcreek
Posts: 980
Incept: 2009-02-06
|
Etz3I: me, too. I give folks a lot of credit for their ability to watch that ****. Same goes for Obama on Monday. I haven't allowed myself to watch government propaganda bologna for a decade. The bull****, coupled with MSM softball questioning drove me out.
|
Mikeit83
Posts: 964
Incept: 2009-06-19
East Coast
|
Gen- yeah you were right- its getting late and Im knee deep in studying for programming and accounting right now.
My goof.
Using your example
-Guy deposits 10k.
-Bank A loans out 9k. Keeps 1k.
-New borrower takes out 9k loan.
-Bank B receives 9k when its spent.
-Bank B loans out 8k. Keeps 1k as reserve
While not technically creating money- its still doing the work of 27k dollars if we stop where I did in the example. It just has to be paid back- or defaulted. I remember my econ teacher describing it just as you did- I just went the wrong way with it.
The cycle keeps repeating itself every time the borrower makes a payment or pay off on the debt borrowed.
I guess the debt creation multiplier just creates a house of cards. The higher the ratio- the more unstable the system gets when something goes wrong.
|
Icanhasbailout
Posts: 9939
Incept: 2009-03-10
Imaginationland
|
I too noticed that Turbo Tim has been working hard to get his nickname changed to Filibuster Tim. He seems to think his job is to bore people to death with tangential, butt-covering, long-winded commentary; either that, or he is engaged in a purposeful strategy to minimize the number of questions that can be asked of him in any forum by chewing up all the time himself.
----------
|
Mikek31
Posts: 4350
Incept: 2009-05-04
Chicago
|
Hey Karl, great vid and thanks for the heads-up on Kohn's little slip of the tongue. Can't get that kind of news anywhere else but here.
I know you're busy, but just wondering what you think about evidence showing that commercial banks actually lend first, and look for reserves later? In other words, the "high-powered money" at the Fed has to be created after the fact through expansion of the money supply (i.e., open market ops) to keep up with the pace of commercial lending?
----------
Everyone keeps looking at the system and saying "it's not working, it needs to be redesigned somehow." It's working exactly the way the people who own it intend it to work.-Sutluc
|
Throxxofvron
Posts: 10323
Incept: 2009-02-17
Hyper-Speculative Psycho-Facsistic Parabolic Blow-Off
|
Quote:However, he did caution that the increase in the balance sheet was not without risks, and warned that if this led to credit losses at the Fed, it could force the Fed to go hat in hand to the U.S. government, compromising its policy independence. **** THAT. THIS IS A THREAT. THIS IS A DEMAND TO SURRENDER THE SOVEREIGN GOVERNMENT OF THE UNITED STATES TO THE FED. The Banks have Rigged The FED and Will DESTROY the Reserve Currency of Western ****ing Civilization if THEY Don't Get THEIR Money? http://www.tickerforum.org/cgi-ticker/ak....Quote:The bankers were focused on saving themselves
----------
DIONYSUS: " Thou hast no knowledge of the life thou art leading; thy very existence is now a mystery to thee. " -from 'The Bacchantes' By Euripides “During times of universal deceit, telling the truth becomes a revolutionary act.” -George Orwell
|
Trader_kid
Posts: 6820
Incept: 2007-09-27
USA Prime Credit
|
Quote:Kohn added this outcome "seems extremely remote," and he argued that the Fed would continue to earn substantial net profits on its balance sheet for the next few years in all but the most distant scenarios. and a sustained, nationwide decline in real estate prices also seemed "highly unlikely" to bernanke in 2005.
----------
"(The Fed) is in the business of imposing false values." - Jim Grant
"When the fear of losing money overcomes the fear of being thought stupid, that's when you get capitulation." - Art Cashin
|
Donethat
Posts: 771
Incept: 2009-04-22
|
Isn't the fed pricing those GSE MBS to maturity ??? Lots of ways the Fed could have credit losses, ... ( and other losses ) 1. GSE MBS through either default or market price change. 2. Citibank and BAC guarantees ( here is where some non GSE MBS might be easily found. ) http://www.federalreserve.gov/newsevents.... 3. Maiden Lane's I, II, III ... AIG etc. 4. TAF should a recipient bank go under ... 5. Selling Treasuries for less than they paid for them, if interest rates should rise. 6. Declining rapidly "AAA" commercial paper guarantees. 7. Lending at the discount window should a bank go under. 8. Swaps with Central Bank of Iceland or Ireland ... or 9. At least the Asset backed and commercial paper funding facilities are down ... 10. ??? |
Mlshawaii
Posts: 1785
Incept: 2009-05-13
|
Karl,
Great video ticker. I am getting so tired of this. Geithner tried to come off as if the government didn't see this coming. Please. I saw this coming in 2004. I started to figure it out in 2003, and then I really "got it" in 2005-2006 that we would have a major recession and a possible depression.
It has been so frustrating watching our beloved nation self-destruct.
Thanks for your work.
|
Passchendaele
Posts: 352
Incept: 2008-12-17
Pacific Northwest
|
Watching that human gumboil tonight, I believe that Geitner and his cronies have devoted themselves to a course of action and will not waver. Even if Morgenthau came down from the heavens with a plan, Geitner would not alter policy. Like Napoleon in his last campaign, that ****er's hubris will destroy us all.
Guessing when is much like contemplating Schrodinger's cat.
|
