The Bailout

[Lemur]

Warning: Image under the tag contains PG language.

[drone]

Zing!

[Seamus Fermanagh]

Just to add to the cheerfulness (nice one, my proto-simian friend!), 4-week t-notes are trading at a negative yield on the secondary market -- for the first time in more than 60 years.

[CountArach]

Just to add to the cheerfulness (nice one, my proto-simian friend!), 4-week t-notes are trading at a negative yield on the secondary market -- for the first time in more than 60 years.

Can you initiate those of us who don't speak economics into what this means?

[Seamus Fermanagh]

One Month Treasury Notes (You pay X now, we'll give you Y back in one month)

are now trading at a negative yield (-0.01% interest)

on the secondary market (private investors among themselves AFTER the feds have sold to an investor)

So, for the first time in a LONG while, investors are paying $10,001 for something they expect to collect $10,000 upon in 30 days.

They only do this if they think the true loss will be more OR if the entire investment climate is so poor that this is a way not to lose too much but keep the money safe.

The "G" has absolutely FLOODED the market lately, pumping more than $3T over the last 75 days in order to have enough liquidity where no bank can fail because of a bank-run.

Unfortunately, the glut of T-notes makes it even more likely that inflation will bite us a bit, or (much worse) a period of actual deflation will occur.

[CountArach]

Thanks Seamus

Sounds like an aweful situation to be in - people actually investing in the hope they will lose less money this way than they will in another way.

[Hosakawa Tito]

Actually it's not really individual people, but large investors, banks, companies, mutual funds, that are afraid to invest in anything right now. They would rather lend to the government knowing that in 3 months they would not make back all their money. Their strategy; lose as little as possible for that year end balance sheet. If the return on the t-bill is less than inflation you are losing money in real purchasing terms anyway. It's just the psychological effect of this market climate.

[Seamus Fermanagh]

Actually it's not really individual people, but large investors, banks, companies, mutual funds, that are afraid to invest in anything right now. They would rather lend to the government knowing that in 3 months they would not make back all their money. Their strategy; lose as little as possible for that year end balance sheet. If the return on the t-bill is less than inflation you are losing money in real purchasing terms anyway. It's just the psychological effect of this market climate.

True, but those mutuals represent an awful lot of individual investors indirectly.

[Tribesman]

Could anyone explain why the financial bailout bill for the auto industry gives judges a pay-rise ?

[Seamus Fermanagh]

Could anyone explain why the financial bailout bill for the auto industry gives judges a pay-rise ?

It's a favorite tactic over here. Add a pet project or something completely different to a bill that "has" to pass so that it gets done without delay (or sometimes without review).

Doesn't the Dial use this charming approach? Or do they practice their political iniquities some other way.

[Hosakawa Tito]

Could anyone explain why the financial bailout bill for the auto industry gives judges a pay-rise ?

True, but those mutuals represent an awful lot of individual investors indirectly.

@ Seamus - Don't I know it. I'm one of those individuals with a lifetime of savings riding on my 457 deferred compensation plan through work, along with millions of others. Jumping into something safer now would lock in my loses and I would miss out on any recovery. Gotta keep the faith or resign to working till I'm 75.

@ Tribesman - It's the "Masters of Pork" way to piggyback unpalatable items to "sure to pass" bills that would probably not pass on their own merits. Senators and Congressmen voted themselves a bill awhile back to automatically receive COLA *cost of living adjustments* yearly. Federal judges receive them too, except when the legislators vote not to accept theirs for the year which they do on occasion. Considering there is a recession on, giving these judges *who make about $170 grand/year plus unimaginable perks* wouldn't exactly be popular or seemly even for a politician. Better to slip it through the backdoor in their eyes. The excuse for COLA's for these Feds being that Senators & Congressmen are working cheap compared to the lobbyists positions they could get, and the judges could make more as corporate lawyers or private legal jurists/counsel. It's a bunch of hooey...let them leave and apply for those great jobs says I. If they want raises bring it up for a vote every election year...yeah right, what was I thinking?

[Spino]

Man, it just gets better and better.

Remember that $500 billion 'stimulus package' I mentioned earlier in this thread? Well it done got a whole lot bigger.

How much bigger? Upwards of $500 billion bigger...

http://www.reuters.com/article/busin...rpc=23&sp=true

Spoiler Alert, click show to read: 

Obama stimulus could reach $1 trillion: report
Sun Dec 14, 2008 6:04pm EST

NEW YORK (Reuters) - President-elect Barack Obama's team is considering a plan to boost the recession-hit U.S. economy that could be far larger than previous estimates and might reach $1 trillion over two years, the Wall Street Journal reported on Saturday.

Obama aides, who were considering a half-trillion dollar package two weeks ago, now consider $600 billion over two years "a very low-end estimate," the newspaper said, citing an unidentified person familiar with the matter.

The final size of the stimulus was expected to be significantly higher, possibly between $700 billion and $1 trillion over that period, it said, given the deteriorating state of the U.S. economy.

Officials with Obama's camp have declined to comment on media reports about the size of the boost his administration might seek to give the economy through increased public spending and tax cuts.

Obama is due to take office on January 20.

Battered stock market investors around the world have taken heart from previous indications of how Obama's administration may seek to kickstart growth in the world's largest economy.

Obama has promised he will launch a massive public works program to help lift the U.S. economy out of recession.

The president-elect is likely to be briefed by his aides on the outline of the stimulus plan next week with a view to getting it passed by Congress by the time he is sworn in next month, the Journal said.

Economists have previously said they expect Obama to quickly sign a multi-year spending package that could be worth up to $750 billion, or almost 5 percent of U.S. gross domestic product.

The administration of President George W. Bush has been given authority by Congress to spend up to $700 billion in taxpayer money to rescue the nation's banking system.

The money was originally set aside to buy up toxic mortgage-backed securities but is now being used to recapitalize banks and induce them to lend more freely.

Can I hear $1.5 trillion? $1.5 trillion for this lovely & timeless stimulus package? $1.5 going once, $1.5 trillion going twice... $2 trillion from the Congressman from Massachussetts!

[Lemur]

As usual, the world's finest news source nails it:

GEORGE TOWN, CAYMAN ISLANDS—Amid the bleak backdrop of imminent economic collapse, worried observers got some good news last October when executives from the nation's top 10 failing companies celebrated the historic $700 billion government bailout with an ultra- extravagant $800 billion party aimed at restoring confidence and bolstering their resolve.

"It's never ideal for private corporations to rely on public funding, but we would not have been able to survive another week without letting loose and throwing this massive bash," Merrill Lynch CEO John Thain said aboard his newly purchased $22 million yacht, the Excelsior. "We can only hope it's not a case of too little too late."

Three thousand guests were reportedly flown on 750 separate private jets to the Caribbean, where they commemorated the last-minute financial aid package—which saved their companies from the subprime mortgage crisis that has left thousands of Americans without homes—with 4-tons of Beluga caviar, $250,000 bottles of vintage Dom Pérignon served over precious gems, a 36-hour fireworks display, an additional loan of $200 billion to cover the costs of the gala, and a private concert for each attendee with rock legend Rod Stewart.

Held October 4–7 on all three of the Cayman Islands, the historic economic-stimulus celebration, spokespeople said, sent an important signal to the world that Wall Street was weathering the crisis in style.

[Spino]

As usual, the world's finest news source nails it:

GEORGE TOWN, CAYMAN ISLANDS—Amid the bleak backdrop of imminent economic collapse, worried observers got some good news last October when executives from the nation's top 10 failing companies celebrated the historic $700 billion government bailout with an ultra- extravagant $800 billion party aimed at restoring confidence and bolstering their resolve.

"It's never ideal for private corporations to rely on public funding, but we would not have been able to survive another week without letting loose and throwing this massive bash," Merrill Lynch CEO John Thain said aboard his newly purchased $22 million yacht, the Excelsior. "We can only hope it's not a case of too little too late."

Three thousand guests were reportedly flown on 750 separate private jets to the Caribbean, where they commemorated the last-minute financial aid package—which saved their companies from the subprime mortgage crisis that has left thousands of Americans without homes—with 4-tons of Beluga caviar, $250,000 bottles of vintage Dom Pérignon served over precious gems, a 36-hour fireworks display, an additional loan of $200 billion to cover the costs of the gala, and a private concert for each attendee with rock legend Rod Stewart.

Held October 4–7 on all three of the Cayman Islands, the historic economic-stimulus celebration, spokespeople said, sent an important signal to the world that Wall Street was weathering the crisis in style.

Hey, we all have to make sacrifices. Just think, in happier times that would have been 8 tons of Beluga caviar, $500,000 dollar bottles of Dom Pérignon and 48 straight hours of fireworks...

That article must be confusing millions with billions. I seriously doubt they dropped $800 billion on a bash. I mean, for that money they could build personalized pyramids & triumphal arches made of gold for each of the top officers...

[Husar]

Are you trying to keep something up or are you not aware that this is an Onion article?

[Lemur]

I needed a crowbar to pry Spino's tongue out of his cheek. I think he was fully aware that I was quoting The Onion.

But isn't it funny how often The Onion nails difficult subjects? Sometimes the parodists speak more truth than the MSM. Example.

-edit-

Speaking of which ...