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Jim Myrtle

Jim Myrtle
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  • The Fed Should Stimulate Lending [View article]
    Yeah, survival beats the alternative.
    Aug 17, 2012. 09:49 AM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    The first that you know.
    Still waiting for some proof the capital position matters one bit.
    Aug 17, 2012. 09:48 AM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "These were toxic assets when they bought them"

    Government guaranteed mortgages were toxic?

    "How do you figure that they did not overpay for these assets?"

    Do you have proof they did? Beyond your feelings?
    Aug 17, 2012. 09:47 AM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "That's a net cushion of 4.44%"

    It seems like it was only hours ago that you were claiming they only earned 2% on assets, things have improved.

    Great, so in a few years, the rate goes to 4.75% and then the Fed doesn't give the Treasury any money for a while. So what?
    The Treasury survived before they rec'd $80 billion a year, if they go 5 or 10 years getting zero, the republic will survive.
    Aug 16, 2012. 09:20 PM | 1 Like Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "And they won't resign, they'll sterilize."

    They've got a lot of room to sterilize at higher rates before they blow thru their $80 billion annual profit. Not a problem.
    Aug 16, 2012. 07:41 PM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "In chess terms, you seem to be saying that the Fed's rook is pinned"

    I may have a better chess term.

    A player whose turn it is to move who has no move that does not worsen his position is said to be in zugzwang.

    Sell bonds, immediate losses, negative capital.
    Pay 6% to sterilize reserves, long term losses, negative capital.

    Do nothing, hyperinflation.

    I guess the Fed should just resign.
    Aug 16, 2012. 05:05 PM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "They have already paid too much for the MBS"

    How do you figure that?

    "They don't want to take more losses here"

    They have gains on their MBS.
    Aug 16, 2012. 04:38 PM | 1 Like Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "On the Fed's financial position: we are not talking about paying back deposits: just about paying 6% interest with assets yielding 2%"

    They hold $853 billion in MBS and $91 billion in agency debt, at face value. I'm pretty sure they earn a lot more than 2% on those.
    They earned about $80 billion last year. If they need to pay 6% to "sterilize reserves", $80 billion/0.06 = about $1.3 trillion in reserves.

    What's the problem?
    Aug 16, 2012. 03:01 PM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "All that TARP did was allow one class that was most culpable to escape financial ruin"

    Yup, those Main Street defaulters and their Congressmen escaped with an intact banking system.

    "and the costs were passed on to everyone else"

    Bank TARP made money.
    If you want to talk about the Fannie, Freddie and auto portions, let me know.

    "If we had just let these guys go bust we would now be beyond this"

    That's funny.
    Aug 15, 2012. 05:11 PM | 1 Like Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    Excellent! Your post made me thirsty.
    Aug 15, 2012. 04:36 PM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "The treasury did not make money on TARP"

    The Treasury made money on the bank portion of TARP.
    The auto portion, Fannie & Freddie portion and mortgage forgiveness portions all lost money.

    "And you have zero evidence for the rest of your claims. It was fearmongering by the banks, no more no less"

    Was the 30% drop in money supply during the GD a good thing?
    Should we have tried for the same drop, or a larger one, in 2008?

    "And we could certainly just print money out of thin air to make FDIC whole if it came to it"

    How is that better than preventing the collapse in the first place?

    "And the price of gold was well under $1000 in 2008 so even if we have been paid back which we have not"

    The bank portion was.

    "we have been paid back in seriously devalued dollars"

    Why does gold matter? Oil was over $140.
    Oil is more important than gold.
    Aug 15, 2012. 03:10 PM | 1 Like Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "Crushing the money supply and banks hopefully isn't in anyone's playbook"

    It is on the wish list of the "Let the banks crash and burn because that is somehow cleansing" crowd.

    "Suffice to say 100's of billions is better than multi trillions - if that's a worthwhile or comparable metric"

    You're right, the losses would probably have been in the trillions.
    I prefer the TARP gains to trillions in losses.
    Aug 15, 2012. 03:05 PM | 2 Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "The government merely was sending wealth from one class to another. Without TARP, Goldman Sachs would probably have went bankrupt and good riddance"

    The Treasury made money on TARP and it didn't cost you a cent.
    Without it, bank failures would have emptied the FDIC fund and taxpayers would have been on the hook, either as depositors or guarantors, and the Treasury would have lost $100s of billions, instead of making money.
    Crushing the money supply and the banking system doesn't help the common man.
    Aug 15, 2012. 12:49 PM | 1 Like Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "What I am saying is that when yields move up, as they will some day, a $1.5Tn bond portfolio funded with overnight money will generate losses that will wipe out the central bank capital position"

    Yes, that would be awful. We can't expect the Fed to give the Treasury $80 billion every year. But so what? So what if the Fed doesn't give the Treasury a dime for the next 5 or 10 years while they "rebuild their capital position"?

    Will they declare bankruptcy? Why does it matter?
    Their cost of capital is tiny. As rates rise, new bonds they buy will have larger coupons. So why does it matter?
    Aug 15, 2012. 10:18 AM | Likes Like |Link to Comment
  • The Fed Should Stimulate Lending [View article]
    "Heaven forbid that your rosy picture may in the end sound very much like that of Dick Fuld/Jimmy Cayne in September 2007"

    Bear and Lehman tried to fund their bond portfolio with overnight money. Are you somehow comparing the Fed's portfolio to their's?
    Are you afraid the Fed's funding will suddenly dry up?
    Aug 15, 2012. 09:49 AM | 1 Like Like |Link to Comment
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