Thursday, May 06, 2010
Printy printy
The Washington Post: Freddie Mac asks U.S. for $10 billion as losses pile up
Freddie Mac, the bailed-out mortgage-finance giant, reported Wednesday that it continues to lose money and needs an additional $10.6 billion in assistance from U.S. taxpayers.
Posted by devo @ 06:48 AM (948 views) Add Comment
12 Comments
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1. alan said...
Its "bail out" time again, folks.
Too big to fail, where does it all stop ? (this is a serious question).
...meanwhile, the people who got bonuses from selling the mortgages are on a yacht somewhere, sipping a cold beer.....
2. Crunchy said...
Where does it all stop? When the takeover is complete.
How is the illegal President of America 'Barry Soetoro' (X CIA) these days? D'oh! Conspiraloon? Damn right I am.
Go Rev Manning!! Keep up lads.
"...meanwhile, the people who got bonuses from selling the mortgages are on a yacht somewhere, sipping a cold beer...." Yeah alan and the rest.
3. dbc reed said...
If only it was a matter of" printy printy".This money comes from US taxpayers by the looks of it.How is it that the banks can create credit and governments can't?
4. 51ck-6-51x said...
alan said, "Too big to fail, where does it all stop?"
I agree that is certainly a serious question. It's easy to say but difficult to define; I believe we should not try to. If A is not too big to fail the combination of A and B (or A, B, and C) may well be, so splitting up X to avoid the issue just hides the risk and may even make it harder to deal with the fallout when [not if!] something does go wrong. Much of the reason institutions have become so big is that the rules have been set to favour their size, rather than what should determine scale (efficiency and productivity). So I think the answer to your question is, unfortunately, that it all stops at the state.
devo said, "printy printy",
Err, really? I think they are suckling from the taxpayer's teet, not from the central bank's - or are you saying that this will inevitably cause more need to create money? I don't think that is necessarily true.
5. debtfree said...
any ideas how it works ?
my understanding is the FED create the money for the government, which is then paid back by the taxpayer to government, who then pays back the fed.
where does the fed get the money ? printy printy
6. debtfree said...
Found this statement about taxpayers money and deficits:
The media frequently claim federal deficits spend taxpayers’ money. This is, as Star Trek’s Mr. Spock said, “illogical.”
If deficits spent tax money, they wouldn’t be deficits. “Deficit” means spending beyond tax receipts.
Which is surely the whole point about a sovereign debt crisis, especially with shrinking 'tax receipts' and rising budget 'deficits' ?
7. 51ck-6-51x said...
Deficit: the result of spending more than one has (here a govt.) - whether they then borrow from the central bank or the markets or increase future revenue (latter not so likely here!). If they borrow from the central bank and the central bank has not borrowed or raised this from/in the markets or acquired it by charging for services rendered then it was printed into existence.
i.e:
1) it does not necessarily imply borrowing
2) If it does cause borrowing then it could be borrowed directly or indirectly from the capital markets
3) If it was not borrowed from the markets then it may have been raised (e.g. central bank rights issue etc...) or produced rather than created.
So it was not necessarily printed, if it wasn't, however, it could still be created in the future - e.g. to pay back the debtors OR defaults could occur.
As you can see it's not so cut and dry that this bail out will cause the creation of new money - it depends upon the market response and govt. and central bank decisions both now and in the future.
8. 51ck-6-51x said...
debtfree said, "The media frequently claim federal deficits spend taxpayers’ money"
Well, they are spending their future tax receipts, regardless of how much is money is created - inflation of the money supply would lead (eventually) to higher nominal tax receipts, so long as the markets do not decide that the sovereign is trying to print it's way out of external debt, in which case there could then be a crisis and the deficit was actually spending those taxpayers' future earning power (which is effectively the same - right?!).
9. rumble said...
"Too big to fail, where does it all stop ?"
-- Many empires will say it doesn't have to stop.
10. debtfree said...
@ 7. 51ck-6-51x
cheers, you're right, it's not as cut and dry as it seems !
11. Crunchy said...
9. debtfree YES IT IS!
12. debtfree said...
11. Crunchy - ha ha, that's what I thought first of all, basic maths really hey.