A pox on the baby boomers! DJ sub 7000.

[Donuthole]

I just took what he posted at face value. I apologize if you are being humorous and it went over my head.

At face value, he was concerned about the market dip. I think we all were. I guess I just don't see where he said he was pulling (or did pull) his money out of the market.

[byu71]

At face value, he was concerned about the market dip. I think we all were. I guess I just don't see where he said he was pulling (or did pull) his money out of the market.

Somewhere in the assinine rant he said, "I watched the DJ drop ruining the savings and 401K's of many of us". Doesn't sound like a fellow concerned and taking advantage of the opportunity to buy low.

I will admit he didn't specifically say he was getting out. I also didn't say anywhere in my post he did get out.

[cowboy]

I have not seen the Jon Stewart interview with Geithner but that being said, Treasury was given wide latitude to do as it pleased with TARP funds. In fact, TARP was pitched and signed under the idea that they would purchase troubled assets from banks, but what they ended up doing with those funds was purchasing billions of dollars worth of preferred stock from banks. Once the bill was passed, they did not seek or need support from Congress to use the money in this way and could have just as well used the TARP authority to buy mortgages from banks and then refinanced and reduced principal. It is very undersandable why Stewart would have pressed Geithner on this.

The problem with the financial crisis is that it was so complex. Mortgages were owned in pieces, by a lot of different entities, and some of the pieces had zero value if the mortgage went away, regardless of whether by default or refinance. Banks were in trouble because those parts of the mortgages had devalued so much due to the delinquency rate doubling, and the foreclosure rate increasing tenfold. Refinancing or writing principle down wasn't going to bail them out because their asset value, and thus capital base that determined how much they could lend, had decreased considerably.

Mortgages and their derivatives are priced based on their rate of return and their risk. When the risk of losing money on an asset rises, the value drops. Writing down or refinancing loans would have only taken risk out of traditional mortgages. The riskier mortgage derivatives would have still been wiped out because the systemic risk in the economy at that point was so great. TARP would have been a great fix for the S&L crisis, but this one was much more complicated.

By the time TARP passed, the crisis was to the point that it wasn't just the risky portions of mortgages that had devalued - the nation's entire mortgage portfolio had lost value, and banks who held mortgages as capital had their lending capacity severely constrained. The Fed and Treasury really had no good options, but they thought the least bad option at the time was to recapitalize the banks so they could resume lending because money velocity (the rate money turns over in the economy, which is largely determined by borrowing and lending) had screeched to a halt.

Obviously, there is much more to this than a quick three paragraphs can describe. Nobody understands it completely, not even the people who were trying to fix it. People like Stewart, who propose simple solutions, resonate with the public but don't seem to grasp (or they choose to ignore) the complexity of the situation. Unfortunately, Geithner and Bernanke couldn't explain the in's and out's in a 15 minute interview, or even a 2 hour congressional testimony, partly because half of the country wouldn't understand it no matter how clearly it was explained.

[Mormon Red Death]

https://twitter.com/UberFacts/status/1161229663815065600?s=19

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[SCcoug]

https://twitter.com/UberFacts/status...815065600?s=19

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[Walter Sobchak]

Actually... that's it. PAC and/or MBN for RF would be *chef's kiss*. 💋