Grand unified books thread

[The Minsky Moment]

Just read a review (the second) about Timothy Geitner's book.

How much would youse guys figure the Wall Street bailout cost the US?

I think it is running negative (Feds got back more than they put in) if you don't adjust for risk or opportunity cost.

[Queequeg]

In Spanish?

no. Translated in italian.

L.

I forgot your national background.     Pedrito sounded Spanish-y to me. 

[Pedrito]

In Spanish?

no. Translated in italian.

L.

I forgot your national background.     Pedrito sounded Spanish-y to me.

Pedrito IS spanish, but it's simply the name of my first Diablo character 

L.

[Admiral Yi]

I think it is running negative (Feds got back more than they put in) if you don't adjust for risk or opportunity cost.

Unca Sam made 166 billion on the deal.

How would your risk and opportunity cost adjustments affect that number?  You seem to be suggesting it would be negative after doing so.

[The Minsky Moment]

Risk - It's not easily measurable but clearly the Feds took a good deal of risk buying AIG without really knowing exactly what positions it held.  Similar for Fannie and Freddie.  The credit extended to tottering banks was a little less risky but still far from rock solid.

If we assume gross bailout funds committed of somewhere around $3 trillion (I've seen numbers claimed over 10), then the net return is about 5 percent over 4 years.  That is a very poor return given the risk taken.

Of course, this is kind of irrelevant because the commitments of funds weren't done for investment purposes but to forestall catastrophe.  The wisdom of the bailouts IMO rises or falls based on their strength as a policy response to a financial crisis, not a whether the final tally was in the red or the black.  By comparison I think the old S&L resolution ended up with a small net loss (tens of billions) but still was good policy.

[Admiral Yi]

Risk - It's not easily measurable but clearly the Feds took a good deal of risk buying AIG without really knowing exactly what positions it held.  Similar for Fannie and Freddie.  The credit extended to tottering banks was a little less risky but still far from rock solid.

Which doesn't really address my question of how risk (and opportunity cost) should be factored in.

If we assume gross bailout funds committed of somewhere around $3 trillion (I've seen numbers claimed over 10), then the net return is about 5 percent over 4 years.  That is a very poor return given the risk taken.

Eh?  TARP funding was on the order of $600 billion.  Are you including Fed lending?

Of course, this is kind of irrelevant because the commitments of funds weren't done for investment purposes but to forestall catastrophe.  The wisdom of the bailouts IMO rises or falls based on their strength as a policy response to a financial crisis, not a whether the final tally was in the red or the black.  By comparison I think the old S&L resolution ended up with a small net loss (tens of billions) but still was good policy.

Agreed, but Geitner's purpose in raising the point is to disabuse the public of the common misconception that the US bailed out the banks by handing over a big wad of money.

What percentage of the American public do you figure knows that money got paid back, with interest?

[crazy canuck]

What percentage of the American public do you figure knows that money got paid back, with interest?

If you want to stress the "with interest" part then you should agree with the rest of Joan's analysis 

[Admiral Yi]

If you want to stress the "with interest" part then you should agree with the rest of Joan's analysis 

Why is that?

[crazy canuck]

If you want to stress the "with interest" part then you should agree with the rest of Joan's analysis 

Why is that?

because, as Joan pointed out, it wasnt a particularly good ROI when considering the risk.  So best not to try to make it sound like it was. 

[jimmy olsen]

Medieval style Lord of the Rings art!

http://io9.com/these-medieval-style-tolkien-illustrations-are-like-not-1585380478

[Admiral Yi]

because, as Joan pointed out, it wasnt a particularly good ROI when considering the risk.  So best not to try to make it sound like it was.

You use the word "analysis" differently than I do, but that's not a big deal.

I haven't tried to make it sound like a great ROI, and AFAIK neither did Geitner.  I don't know what purpose would be served by doing so.  Lending $600 billion to banks during a financial crisis is not a typical opportunity for private investors, and I certainly don't think Geitner is advocating engineering another meltdown so the US Treasury can profit handsomely from the bailout.

The point of mentioning the $166 billion is to correct the thinking of people who still believe the bailout consisted of handing over--gifting--US taxpayer funds to financial institutions.

[crazy canuck]

because, as Joan pointed out, it wasnt a particularly good ROI when considering the risk.  So best not to try to make it sound like it was.

You use the word "analysis" differently than I do, but that's not a big deal.

I haven't tried to make it sound like a great ROI, and AFAIK neither did Geitner.  I don't know what purpose would be served by doing so.  Lending $600 billion to banks during a financial crisis is not a typical opportunity for private investors, and I certainly don't think Geitner is advocating engineering another meltdown so the US Treasury can profit handsomely from the bailout.

The point of mentioning the $166 billion is to correct the thinking of people who still believe the bailout consisted of handing over--gifting--US taxpayer funds to financial institutions.

Meh, you use words differently much of the time.  I agree.  Not a big deal.

I agree there is not need to dwell on whether the "with interest" part is meaningful because in the context of the risk it wasnt.

[Admiral Yi]

Then you're not agreeing with me.

[Queequeg]

Anyone else read 2666?

I slugged up to two thirds but never managed to finish it, although it seemed to be a good book. The killings part becomes almost unbearable. I'll try again in the future, but right now I need something lighter.

L.

I got about half way through. I liked the part with the professors of German literature, but afterwards it lost me.

Honestly, I think you could skip that.  The part about Archimboldi is fascinating, and I think you get the point about the murders about halfway through the section. 

Finished 2666.  Starting A Place of Greater Safety. 

[garbon]

I'm reading a biography of Henry VII and turned to look at the author bio on the jacket cover. Apparently this first-time author has a PhD in Early Tudor History. I never knew that was possible.