iShares Lehman 7-10 Year Treasury (IEF)
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- All Comments on IEF
- General Discussion on IEF
- Wednesday Outlook: Staying on the Sidelines [view article]
- An All-Weather Portfolio Using Multiple Asset Classes [view article]
- Tuesday Outlook: Everything But the Kitchen Sink [view article]
- Pimco's Bill Gross: Bailout Plan Benefits Main Street [view article]
- Treasury Bonds: The Short of the Century [view article]
- Key Asset Class Returns of the Week [view article]
- Global Long Term Interest Rates [view article]
- Global Market Roundup: Will the Bailout Work? [view article]
- Tuesday Overview: Confusion and Caution [view article]
- Short Cut to Profits? A Closer Look at Inverse Funds [view article]
- Bailout Cost, per Taxpayer, by Income [view article]
- High Yield Spreads Near Record Highs [view article]
loading ...Recent IEF Articles
- Wednesday Outlook: Staying on the Sidelines
- Tuesday Outlook: Everything But the Kitchen Sink
- Key Asset Class Returns of the Week
- Friday Outlook: Who Let the Dogs Out?
- iShares ETFs Tied to Lehman Indexes Face Potential Regulatory Headache
- Global Long Term Interest Rates
- Wednesday Outlook: Approaching Capitulation?
- Tuesday Outlook: Capitulation? Not Yet
- Currency ETFs Shine Through Bleak Market
- Global Market Roundup: Will the Bailout Work?
- Full List of Articles »
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Bailout Cost, per Taxpayer, by Income [view article]
No, we will grow 6-7% per year long term average after all the noise.The market dropped 777 points on Monday. But the same index was *worth* 777 points at the 1982 low, 26 years ago. In 26 years, a day's hard fluctuation is the size the whole market was then.
The permabears will be screaming "doom, doom" when the market drops 10,000 points in one day, 26 years from now. All the way down to 175,000.
Perhaps it won't be quite that good, and perhaps it will meander around for 5 years before taking off again. Or perhaps it will take off within 6 months after a bailout bill passes. Nobody knows, and I for one don't much care. As long as we don't deliberately nuke the golden goose that is our financial system, a generation from now every doom mongering short today, will look as dumb as the doom mongering shorts of 1982. Who all said that recession was Hoover all over again and Reagan was a dunce, etc, etc. Reply
Bailout Cost, per Taxpayer, by Income [view article]
iThinkBig:Too bad the world is going to end on December 21, 2012, per the Mayan Calendar. We'll never see the start of the next bull market. :-)
Seriously though, you're right. Things will get worse before they get better. ARM resets will continue until at least 2010 and foreclosures will follow the resets. Housing prices will continue down until the excess inventory clears. New building will slow to a crawl and economic activity with it. Hunkerdown and look for bargain basement prices on things of value to build your net worth on. Until then, protect your savings and add to them every chance you get. Reply
Bailout Cost, per Taxpayer, by Income [view article]
What was the economy like in 1980? Did we use the Efficient Market Hyposis then? No? Then perhaps as an economist I take into consideration what an entire economic model the USA has run with the last 25 years. Then I will consider if the USA will remain the global currency peg in the foreseeable future Jason C.Yes, we'll move on and grow the economy yet again. But are we still a $14 T economy? I don't think you or I could answer that at this time.
Will we grow 6-7% a at some point, sure. But your information is providing false hope for investors and citizens alike.
Here is my advice since 2007 which has remained consistent and has been accurate as all can click on my screen name and see since then: We are going into a depression. Our 25 year economic model has failed. Inside greed from Washington and Banking accelerated this process.
Prepare for a Depression. Plenty of ways to make money and buy up great assets cheap during one. People will become fabulously wealthy or fabulously poor in short spans.
The start of the next sustained stock market and Bull will be 2013. I can click on your comments Jason C and see many, many incorrect forecasts. But on financial knowledge you are very bright in general, just over-optimistic about the short and mid-term.
Hey, I want it to be wonderful too, but I am a realist not a cheerleader and as such I have a responsibility to advise those I care for about the realities I mentioned. Much of it is simple common sense and fundamentals. Reply
cannot
compete!
Bailout Cost, per Taxpayer, by Income [view article]
"P.S. We don’t know all the history behind mark-to-market accounting rules, but wouldn’t temporarily creating more asset valuation flexibility in this locked-up credit market improve capital ratios and reduce the capital infusion requirements, reducing the size of the needed bailout, and grease the wheels of credit a bit?"Absolutely correct!! We leveraged this stuff up with more flexible models of valuing it...we cannot deleverage it with a strict mark-to-market model, without taking a huge hit. The hit will be hardest upon the buyer who gets in while the market is least functional and therefore paying worst-possible-case prices...and that stands to be the U.S. government! (i.e. taxpayers)
Just Say No to the "bailout."
Reply
Bailout Cost, per Taxpayer, by Income [view article]
Good comment, JasonC! Nice to see someone who understands real life economics.On Oct 01 03:16 PM JasonC wrote:
> The UST collects 20% of national income regardless of policies, tax,
> spending, funding, investment, any of it. That is the econometric
> reality.
>
> Therefore, the only question and I mean the only question on the
> cost of this policy is whether it will raise or lower future GDP.
> If it will raise it, it will pay for itself many times over. If
> not, it will cost something.
>
> But a very modest something. Our actual collective wealth is not
> the money lying around, or the inventories, or even all assets at
> their current prices, let alone the prices they would fetch in a
> general deflationary smash. Instead, it is our entire future income
> stream, also known as the economy. Which is $14.3 trillion a year
> and rising 6-7% a year forever.
>
> Nobody debating the subject is remotely sane or thinking like an
> economist, and it show. One entry accounting and tendentious spin
> is all you see. Reply
Bailout Cost, per Taxpayer, by Income [view article]
The UST collects 20% of national income regardless of policies, tax, spending, funding, investment, any of it. That is the econometric reality.Therefore, the only question and I mean the only question on the cost of this policy is whether it will raise or lower future GDP. If it will raise it, it will pay for itself many times over. If not, it will cost something.
But a very modest something. Our actual collective wealth is not the money lying around, or the inventories, or even all assets at their current prices, let alone the prices they would fetch in a general deflationary smash. Instead, it is our entire future income stream, also known as the economy. Which is $14.3 trillion a year and rising 6-7% a year forever.
Nobody debating the subject is remotely sane or thinking like an economist, and it show. One entry accounting and tendentious spin is all you see. Reply
Tuesday Overview: Confusion and Caution [view article]
Hey inthemoney..why do you care what the top 1-2% make?
Are you here to get out of this mess, or simply make sure everyone else matches your 35k in the private sector?
I don't care how much you make if you fix my problem! Reply
Tuesday Overview: Confusion and Caution [view article]
RCA,I should have been more clear... I agree that we want the 'best and brightest' on the job.
the angle I am aiming for is similar to a commission structure for top earning salesmen. I just want results... Give incentive to right the ship along with reward.
And nor do I think that I have perfect solutions. Gotta start somewhere. Reply
Bailout Cost, per Taxpayer, by Income [view article]
New short form tax return for the post-bailout world:1040-TARP
1) Write down your income: $____________
2) Send it in.
Make checks payable to the US Treasury.
Reply
Bailout Cost, per Taxpayer, by Income [view article]
As Ron Paul pointed out, we're not accounting for lost opportunities--that is, where we could employ this money elsewhere. Moreover, no one can issue more and more money/debt and control inflation.Price inflation will grow to a painful extent as money/debt inflates and this definitely will inflict great harm on the bottom income group. Reply
Everything
Tuesday Overview: Confusion and Caution [view article]
Hey, inthemoney is on to something. ELIMINATE INCOME TAXES. By eliminating income tax and moving to consumption tax you automatically create an incentive to save. If people actually saved money instead of using credit in the first place, we wouldn't be in such a dire position now. ReplyBailout Cost, per Taxpayer, by Income [view article]
If you carefully read the proposed legislation you will note three things:1) The institutions eligible for aid are anyone other than a foreign central or entity owned by a foreign government. (check how the term "financial institution" is defined)
2) Troubled assets eligible for purchase can be anything and anywhere. There is no restriction to domestic mortage backed securities. (check how the term "troubled assets" is defined.
3) The $700 Billion limit is a line of credit limit, not a cap on the amount of assets that can be purchased. The treasury can sell assets for 90 cents on the dollar and still consume the full $700 Billion, as long as it does not own more than $700 Billion of assets at one time. (check the
authorized increase in national debt to get an idea of the real exposure.)
I cannot stress strongly enough that it is important to read the actual 106 page document, and not rely on second hand interpretations. Pay particular attention to the definitions section. Reply
Bailout Cost, per Taxpayer, by Income [view article]
I think that in general the post raises the issue of wealth effects, and distributional effects. I think there will be a net reduction in wealth based on wealth held and the lower income will be more affected. The distributional effects are more evenly applied as all will benefit from some sort of a recovery. But what has not been accounted for is the lack of justice in this mess which will hurt all lower income people. This is a time of real danger since the drive will be to compensate and prevent - more safety netting to imperil progress in restoring the economy. It comes back more slowly and unevenly each time. ReplyBailout Cost, per Taxpayer, by Income [view article]
The whole discussion of coupon rate and Treasury cashflow is moot. The Treasury can opt to issue additional debt to cover payments and grow the deficit to any level Congress allows it. It can also, through the Reserve, control the inflation rate and change the real cost of payments to any value it is comfortable with.The question of total cost is relevant and important, but the issue of coupon rates and dates is pointless.
Reply
ing
Bailout Cost, per Taxpayer, by Income [view article]
more reasonable would be a IMF rescue funded by Japan and neighbors, I guess it will happen even with bailout... Reply