Bernanke Urges Against U.S. Buying Assets at `Fire-Sale' Prices

[D-Mack]

As long as they aren't paying more than 100%, people should be happy I guess.

By Craig Torres and Scott Lanman

Sept. 23 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the Treasury Department should buy illiquid assets at ``hold-to-maturity'' values under its $700 billion rescue plan instead of at discounted ``fire-sale'' prices.


...

Analysts said Bernanke is essentially advocating that government use a pricing model that assumes that the debt will be paid in full over a long period of time. That is different from the mark-to-market model used by investment banks that prices assets at what they are worth on a given day.

...

``They are basically saying, `Let's take a best-case scenario, let's assume we don't have losses,''' said Julian Mann, vice president at First Pacific Advisors LLC in Los Angeles. ``Home prices continue to deteriorate. There are real losses here.''

http://www.bloomberg.com/apps/news?p...mjE&refer=home

[ASH]

Re: Bernanke Urges Against U.S. Buying Assets at `Fire-Sale' Prices

As long as they aren't paying more than 100%, people should be happy I guess.

Fuck that noise. (Bernanke's noise -- not yours.)

[*T*]

Re: Bernanke Urges Against U.S. Buying Assets at `Fire-Sale' Prices

Sounds to me like:

Buy at par (100c) assets that have already been marked down by the market to 5-10c...

FREE MONEY!!!

YIPPEEE!


Can I issue some ABS please? They qualify, they are:
- illiquid
- hard to value in a market
- concentrated ownership
- totally fraudulent
- worth f* all

[Jim Nickerson]

Re: Bernanke Urges Against U.S. Buying Assets at `Fire-Sale' Prices

As long as they aren't paying more than 100%, people should be happy I guess.

Based on the article you posted, doesn't it strike you that Bernanke is brain-dead?

[we_are_toast]

Re: Bernanke Urges Against U.S. Buying Assets at `Fire-Sale' Prices

A nice analysis of the $700B.

Well, to me it helps to highlight the challenge the Treasury faces. If it pays a high price for various dud assets, it won’t move nearly as much off the banks’ balance sheet — which may leave residual questions about the health of key institutions. On the other hand, if the Treasury pays a low price, it may leave a lot of banks in trouble and in desperate need of new equity.

ballpark math

[The Outback Oracle]

Re: Bernanke Urges Against U.S. Buying Assets at `Fire-Sale' Prices

My take was that as the questioning came they (Paulson and Bernanke) tried to back away from this. So what is really scary is that they have cobbled together a 3 page proposal that they have hardly given any thought to, and then asked for $700 Billion for their mates.
Also despite that he asked for no oversight, no appeals, no changes allowed by courts.....oh yes Hank....of COURSE he wants transparency and oversights!!! Yeah right! But 'how is it going to work?' the congress askes
"Oh well we'd rather not say" or alternately "Well we don't have an effing clue...just give us the money!"

The worst of it is 'The housing meltdown is the root cause of the problem'. They ALL believe that...Paulson, Bernanke, the Senate/Congress...all this turmoil and dislocation, and they have not learned a single thing about anything!

[phirang]

Re: Bernanke Urges Against U.S. Buying Assets at `Fire-Sale' Prices

My take was that as the questioning came they (Paulson and Bernanke) tried to back away from this. So what is really scary is that they have cobbled together a 3 page proposal that they have hardly given any thought to, and then asked for $700 Billion for their mates.
Also despite that he asked for no oversight, no appeals, no changes allowed by courts.....oh yes Hank....of COURSE he wants transparency and oversights!!! Yeah right! But 'how is it going to work?' the congress askes
"Oh well we'd rather not say" or alternately "Well we don't have an effing clue...just give us the money!"

The worst of it is 'The housing meltdown is the root cause of the problem'. They ALL believe that...Paulson, Bernanke, the Senate/Congress...all this turmoil and dislocation, and they have not learned a single thing about anything!

Paulson can't articulate the details of the program without humiliating china, gcc, and russia etc. that's the problem.

[The Outback Oracle]

Re: Bernanke Urges Against U.S. Buying Assets at `Fire-Sale' Prices

Paulson can't articulate the details of the program without humiliating china, gcc, and russia etc. that's the problem.

Phirang...your post was a bit long. Just 'Paulson can't articulate' would have been sufficient.

Actually i understand good reasons for not laying out detailed plans etc. It was just that the more i listened the more i felt they really didn't have a clue what they were doing. They have just dreamed up some myopic response to try to get through the next week! maybe that is just me and despite his stupid statements and ramblings of the past two years, paulson really is a bright fellow.

One other thing is bothering me...they intend bringing in 'advisers' from private industry to advise on these values and auctions etc.....now..who would happen to know the most about these things...they are so complicated....ah i know...the blokes who set them up in the first place?

[phirang]

Re: Bernanke Urges Against U.S. Buying Assets at `Fire-Sale' Prices

Phirang...your post was a bit long. Just 'Paulson can't articulate' would have been sufficient.

Actually i understand good reasons for not laying out detailed plans etc. It was just that the more i listened the more i felt they really didn't have a clue what they were doing. They have just dreamed up some myopic response to try to get through the next week! maybe that is just me and despite his stupid statements and ramblings of the past two years, paulson really is a bright fellow.

One other thing is bothering me...they intend bringing in 'advisers' from private industry to advise on these values and auctions etc.....now..who would happen to know the most about these things...they are so complicated....ah i know...the blokes who set them up in the first place?

After defrauding our own citizens, now the brokers and bankers can redeem themselves and defraud SWF's...

[icm63]

Re: Bernanke Urges Against U.S. Buying Assets at `Fire-Sale' Prices

Why isnt the dollar crashing on this stupidity !

US Govt/Taxpayer may loose huge if buys assets at 100% - case example Japan !

NO losses allowed
NO short sellers allowed
NO risk exists
NO free market exists
A real f*ck up exists tho !

[Supercilious]

Re: Bernanke Urges Against U.S. Buying Assets at `Fire-Sale' Prices

Based on the article you posted, doesn't it strike you that Bernanke is brain-dead?

Bernanke is not brain-dead, but he thinks we all are brain-dead and believe that he wants to rescue us by inconspicuously slipping slave chains around our necks.

[*T*]

Re: Bernanke Urges Against U.S. Buying Assets at `Fire-Sale' Prices

Agreed - you cannot get that far in academia without being pretty smart. As for Paulson, as has been said before, you do not get to be head of Government Sachs without being pretty damn smart.

Which indicates to me that they knew exactly what was happening some years ago, given the level of information they have available.

Which makes the timing of the proposal, at the point of maximum confusion, entirely deliberate.

[Tulpen]

Re: Bernanke Urges Against U.S. Buying Assets at `Fire-Sale' Prices

Based on the article you posted, doesn't it strike you that Bernanke is brain-dead?

Clearly Bernanke's position is that the first priority now is that financial institutions must be made healthy, the time for half-baked solutions is over as it has proven to threaten the financial stability of the US and world financial system. By buying the toxic debts at severely depressed prices the capitalization of (other) banks will be even worse as they have to mark the bad debts even further down so that is obviously not a good idea.

[Jim Nickerson]

Re: Bernanke Urges Against U.S. Buying Assets at `Fire-Sale' Prices

Clearly Bernanke's position is that the first priority now is that financial institutions must be made healthy, the time for half-baked solutions is over as it has proven to threaten the financial stability of the US and world financial system. By buying the toxic debts at severely depressed prices the capitalization of (other) banks will be even worse as they have to mark the bad debts even further down so that is obviously not a good idea.

I was in a market last week and all the guy had for sale was fruit and vegetables that were rotten. I asked him if thought anyone was stupid enough to buy these things, he replied that if someone didn't he was going out of business. So being brainless and charitable, I was shopping with my mother's money, I bought all I could carry so he wouldn't go out of business.

[c1ue]

Re: Bernanke Urges Against U.S. Buying Assets at `Fire-Sale' Prices

I was in a market last week and all the guy had for sale was fruit and vegetables that were rotten. I asked him if thought anyone was stupid enough to buy these things, he replied that if someone didn't he was going out of business. So being brainless and charitable, I was shopping with my mother's money, I bought all I could carry so he wouldn't go out of business.

Jim,

Is this an allegory or an actual happening?

If real, did you really give your mom rotten fruit and vegetables?

And does this mean you approve of the Paulson plan...because you "feel his pain"? :eek: