Comments on: Why Bailout Wall Street? http://www.canadiancapitalist.com/why-bailout-wall-street/ Helping you invest and prosper Sat, 11 Feb 2012 19:27:54 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Last Month of the Corporate World Edition of Sunday Links | Personal Finance Blog by Money Ning http://www.canadiancapitalist.com/why-bailout-wall-street/#comment-175829 Last Month of the Corporate World Edition of Sunday Links | Personal Finance Blog by Money Ning Fri, 26 Dec 2008 05:25:25 +0000 http://www.canadiancapitalist.com/?p=1338#comment-175829 [...] Even the Canadians are talking about the bailout package!  See what Canadian Capitalist has to say about it! [...] [...] Even the Canadians are talking about the bailout package!  See what Canadian Capitalist has to say about it! [...]

]]> By: Thursday Linkstuff http://www.canadiancapitalist.com/why-bailout-wall-street/#comment-159774 Thursday Linkstuff Thu, 09 Oct 2008 08:57:01 +0000 http://www.canadiancapitalist.com/?p=1338#comment-159774 [...] Capitalist wrote an excellent explanation as why the big US bailout is necessary.  I tend to [...] [...] Capitalist wrote an excellent explanation as why the big US bailout is necessary.  I tend to [...]

]]> By: Comment on Why Bailout Wall Street? by Weekly Roundup: Syncroblog b…/b http://www.canadiancapitalist.com/why-bailout-wall-street/#comment-159353 Comment on Why Bailout Wall Street? by Weekly Roundup: Syncroblog b…/b Mon, 06 Oct 2008 14:09:21 +0000 http://www.canadiancapitalist.com/?p=1338#comment-159353 [...] Weekly Roundup: Syncroblog Edition at Clever Dude Personal Finance Money wrote an interesting post today onComment on Why Bailout Wall Street? by Weekly Roundup: Syncroblog b…/bHere’s a quick excerpt[...] - Canadian Capitalist gives his opinion of the bailout. [...] [...] [...] Weekly Roundup: Syncroblog Edition at Clever Dude Personal Finance Money wrote an interesting post today onComment on Why Bailout Wall Street? by Weekly Roundup: Syncroblog b…/bHere’s a quick excerpt[...] – Canadian Capitalist gives his opinion of the bailout. [...] [...]

]]> By: Weekly Roundup: Syncroblog Edition at Clever Dude Personal Finance & Money http://www.canadiancapitalist.com/why-bailout-wall-street/#comment-159347 Weekly Roundup: Syncroblog Edition at Clever Dude Personal Finance & Money Mon, 06 Oct 2008 11:43:19 +0000 http://www.canadiancapitalist.com/?p=1338#comment-159347 [...] - Canadian Capitalist gives his opinion of the bailout. [...] [...] – Canadian Capitalist gives his opinion of the bailout. [...]

]]> By: squawkfox » Apples, Bailouts, and Carnivals Oh My! http://www.canadiancapitalist.com/why-bailout-wall-street/#comment-159099 squawkfox » Apples, Bailouts, and Carnivals Oh My! Sun, 05 Oct 2008 04:46:15 +0000 http://www.canadiancapitalist.com/?p=1338#comment-159099 [...] Why Bailout Wallstreet? | Canadian Capitalist [...] [...] Why Bailout Wallstreet? | Canadian Capitalist [...]

]]> By: The Financial Blogger | Financial Ramblings http://www.canadiancapitalist.com/why-bailout-wall-street/#comment-158985 The Financial Blogger | Financial Ramblings Sat, 04 Oct 2008 12:07:28 +0000 http://www.canadiancapitalist.com/?p=1338#comment-158985 [...] Canadian Capitalist is asking why bailout Wall Street? I think they should bailout the main street instead! Help the poor people instead of the fat cats! [...] [...] Canadian Capitalist is asking why bailout Wall Street? I think they should bailout the main street instead! Help the poor people instead of the fat cats! [...]

]]> By: Canadian Capitalist http://www.canadiancapitalist.com/why-bailout-wall-street/#comment-158861 Canadian Capitalist Fri, 03 Oct 2008 20:05:37 +0000 http://www.canadiancapitalist.com/?p=1338#comment-158861 Fair enough. I do agree with you that this can't go on forever, especially at the rate at which fiscal deficit has been increasing in the past few years. I think the bill proposes hiring bankers to value all this toxic debt (that's one of the criticisms of the bill). I also agree with you that profits on this package isn't a sure thing and there may be losses when all is said and done. Fair enough. I do agree with you that this can’t go on forever, especially at the rate at which fiscal deficit has been increasing in the past few years. I think the bill proposes hiring bankers to value all this toxic debt (that’s one of the criticisms of the bill). I also agree with you that profits on this package isn’t a sure thing and there may be losses when all is said and done.

]]> By: Al http://www.canadiancapitalist.com/why-bailout-wall-street/#comment-158859 Al Fri, 03 Oct 2008 19:33:28 +0000 http://www.canadiancapitalist.com/?p=1338#comment-158859 CC, It will be interesting to see, and I have to admit that a lack of buyers for treasuries is a long shot in the short to medium term. I'm skeptical, however, that the world will continue to allow the US to borrow more and more and more as the prospects of getting paid back get worse and worse. There must be a point of no return when the US will have to either default on its debt or drastically cut back spending. I'm not actually assuming that the entire $700B is a write off, however in the short term they will have a $700B debt (if they use it all) and an asset they can't sell. There is no indication on how they will value the assets they are buying. If they go for a current market value, it's likely that the sellers would become insolvent. If they pay the value on the banks books, the US govt will eat major losses. Any value that is determined in the middle will be harder to judge, but my belief is the US will lose money and worsen their financial position for a long time. To put things in perspective, the US government collected $2.4T in 2007 and interest payments were $243B. So they paid 10% of their income as interst payments. If the US has to pay 4% on their $11T debt, that would be $440B. If receipts stay the same for 2008(ignoring layoffs etc), the interest payments represents 18% of income. And that's on an IO loan. If the world gets nervous and demands a 6% return, then the US is paying around %28 of their income as interest payments. At 11% interest, the US govt would be paying half of their income as interest payments. I see the bill has passed. CC,

It will be interesting to see, and I have to admit that a lack of buyers for treasuries is a long shot in the short to medium term. I’m skeptical, however, that the world will continue to allow the US to borrow more and more and more as the prospects of getting paid back get worse and worse. There must be a point of no return when the US will have to either default on its debt or drastically cut back spending.

I’m not actually assuming that the entire $700B is a write off, however in the short term they will have a $700B debt (if they use it all) and an asset they can’t sell. There is no indication on how they will value the assets they are buying. If they go for a current market value, it’s likely that the sellers would become insolvent. If they pay the value on the banks books, the US govt will eat major losses. Any value that is determined in the middle will be harder to judge, but my belief is the US will lose money and worsen their financial position for a long time.

To put things in perspective, the US government collected $2.4T in 2007 and interest payments were $243B. So they paid 10% of their income as interst payments. If the US has to pay 4% on their $11T debt, that would be $440B. If receipts stay the same for 2008(ignoring layoffs etc), the interest payments represents 18% of income. And that’s on an IO loan.

If the world gets nervous and demands a 6% return, then the US is paying around %28 of their income as interest payments. At 11% interest, the US govt would be paying half of their income as interest payments.

I see the bill has passed.

]]> By: Canadian Capitalist http://www.canadiancapitalist.com/why-bailout-wall-street/#comment-158854 Canadian Capitalist Fri, 03 Oct 2008 17:46:08 +0000 http://www.canadiancapitalist.com/?p=1338#comment-158854 Al: Perhaps. It is hard to say what China or other nations will or won't do. But the proof is in what's actually happening in the markets. 30-year Treasury Bonds are yielding about 4% and seems to be only fixed income investors are willing to buy now. You're assuming that the entire $700B is a write off. i.e. the Uncle Sam borrowed the money and it went poof. But that's not the case. They are using the borrowed money to buy distressed securities and may even end up making money. The key is that a market for these assets does not exist, not that they will always be worthless. For instance, they are almost certainly going to make a nice profit on the AIG bailout. Al: Perhaps. It is hard to say what China or other nations will or won’t do. But the proof is in what’s actually happening in the markets. 30-year Treasury Bonds are yielding about 4% and seems to be only fixed income investors are willing to buy now.

You’re assuming that the entire $700B is a write off. i.e. the Uncle Sam borrowed the money and it went poof. But that’s not the case. They are using the borrowed money to buy distressed securities and may even end up making money. The key is that a market for these assets does not exist, not that they will always be worthless. For instance, they are almost certainly going to make a nice profit on the AIG bailout.

]]> By: Sam Luu http://www.canadiancapitalist.com/why-bailout-wall-street/#comment-158853 Sam Luu Fri, 03 Oct 2008 17:44:29 +0000 http://www.canadiancapitalist.com/?p=1338#comment-158853 I understand that this US bailout may be necessary, but why should Canadian pitch in. Doesn't this affect the Canadian dollar and personal taxes. This is my primary worry - I know Canadian jobs are at risk, but the protectionist Americans will guarantee that anyway. I don't believe the bailout plan will have any long term benefits. I believe by not buying market prices for the securities, the US government puts their tax payer at risk. The US deficit may balloon further if this doesn't pan out. They may end up like the Japanese for 10 years. I understand that this US bailout may be necessary, but why should Canadian pitch in. Doesn’t this affect the Canadian dollar and personal taxes. This is my primary worry – I know Canadian jobs are at risk, but the protectionist Americans will guarantee that anyway.

I don’t believe the bailout plan will have any long term benefits. I believe by not buying market prices for the securities, the US government puts their tax payer at risk. The US deficit may balloon further if this doesn’t pan out. They may end up like the Japanese for 10 years.

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