Since 2009, 88 Percent Of Income Growth Went To Corporate Profits, 1% Went to Wages

[boedicca]

Why should I read the article? If you think a portion of it proves your claim, post it.

The debt guarantees weren't forever. They have expired. The government never guaranteed all bad debt, as you originally claimed. And do not now.

Still waiting for your proof that Bush deregulated and allowed banks, for the first time, to sell mortgages instead of hold them forever. You haven't admitted your error so that makes you a liar.

As far as the assets of BOA, that's not "my number", that's the real number.

The fact that they have $2.2 trillion in assets and a market cap of only $64 billion doesn't tell you how much bad debt they have or how much bad debt the market thinks they have.

I could explain how a balance sheet works, but based on your weak understanding, it seems like it would be a waste of time.

Government loans, spending or guarantees to rescue the U.S. financial system total more than $12.8 trillion since the international credit crisis began in August 2007, according to data compiled by Bloomberg as of March 31. The total includes about $2 trillion on the Fed’s balance sheet.

Fed Shrouding $2 Trillion in Bank Loans in

The government still guarantees all that money. If the euro blows up in the next few weeks and US banks get into trouble the government will guarantee anything they haven'y guaranteed already. That's to reassure the markets and prevent panic, bank runs, market panic etc. You may remember the Fed and the other big central banks recently provided unlimited dollar loans to any banks that might need them :

LONDON -- Five of the world's top central banks acted jointly Thursday to provide unlimited dollar loans to banks, a move aimed at easing the growing tensions in the eurozone's financial sector and shielding the global economy from its jitters.

The European Central Bank said it will coordinate with the U.S. Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank to offer three-month dollar loans to banks through the end of this year.

World's central banks flood market with dollars - Forbes.com

This was to calm markets and try and prevent the current euro crisis spiralling. So yes, they're guaranteeing everything they guaranteed back in 2008 and will continue to guarantee basically the entire financial system until the crisis is over, maybe a decade or two down the line. And when the next crisis happens, they'll do exactly the same thing again.

Looking at BOA's balance sheet is a waste of time because they're marking their assets to make-believe instead of to market. Looking at how the market values the bank is a better way to approximate BOA's situation. Markets are never wrong, right?

"Fed Shrouding $2 Trillion in Bank Loans"

Yeah, Fed loans have been repaid. Now what are you whining about?

"The government still guarantees all that money"

No they don't. Check this out.

The Debt Guarantee Program, part of the FDIC’s Temporary Liquidity Guarantee Program, backed almost $350 billion of debt at its peak. At the end of December, $267 billion was still guaranteed

FDIC warns on end of giant debt guarantees - MarketWatch

"Looking at BOA's balance sheet is a waste of time"

It's a waste of time for you, because you don't know the difference between asset and capital.

He clearly doesn't know how to read a balance sheet.

BAC has over $2T in assets.

BAC Balance Sheet | Bank of America Corporation Com Stock - Yahoo! Finance

 

[Raoul_Duke]

Guaranteed? LOL!

The government spent trillions? Is that money gone?
Or are you whining about loans that were repaid?

Still no proof the taxpayer is on the hook for anything but Fannie and Freddie?

Like the Bloomberg article says, the government guaranteed about eight trillion dollars of debt. We don't know how much they'll eventually have to pay out on that as it depends on economic growth, the recovery of the banking system and most of all on housing prices. But the best estimate at the moment of the costs of the bailout are currently about one and a half trillion dollars :

US government still owed $1.5 trillion in financial bailout money

But who knows how much the banks will eventually have in bad debt. They were all campaigning to have mark-to-market scrapped and as an example, Bank of America's balance sheet shows them to have $220 billion in assets but the market values the entire company at about $70 billion, at least the last time I looked. So the market clearly thinks that there's a lot of bad debt on these banks' balance sheets that they haven't admitted to yet.

Let's have a gander at the link with the detail. Gee, most of the outstanding money is due to GSEs, Fannie Mae & Freddie Mac and the FHA:

Yes, that's right. Here's a graph of the Fed's balance sheet to confirm it:

So the Fed have bought about a trillion dollars of Fannie and Freddie assets. Why did they do this?

 

[boedicca]

Like the Bloomberg article says, the government guaranteed about eight trillion dollars of debt. We don't know how much they'll eventually have to pay out on that as it depends on economic growth, the recovery of the banking system and most of all on housing prices. But the best estimate at the moment of the costs of the bailout are currently about one and a half trillion dollars :

US government still owed $1.5 trillion in financial bailout money

But who knows how much the banks will eventually have in bad debt. They were all campaigning to have mark-to-market scrapped and as an example, Bank of America's balance sheet shows them to have $220 billion in assets but the market values the entire company at about $70 billion, at least the last time I looked. So the market clearly thinks that there's a lot of bad debt on these banks' balance sheets that they haven't admitted to yet.

Let's have a gander at the link with the detail. Gee, most of the outstanding money is due to GSEs, Fannie Mae & Freddie Mac and the FHA:

Yes, that's right. Here's a graph of the Fed's balance sheet to confirm it:

So the Fed have bought about a trillion dollars of Fannie and Freddie assets. Why did they do this?

Good question. How do you think The Bernank and Barney Frank would respond?

And why do you think they did?

 

[Raoul_Duke]

Let's have a gander at the link with the detail. Gee, most of the outstanding money is due to GSEs, Fannie Mae & Freddie Mac and the FHA:

Yes, that's right. Here's a graph of the Fed's balance sheet to confirm it:

So the Fed have bought about a trillion dollars of Fannie and Freddie assets. Why did they do this?

Good question. How do you think The Bernank and Barney Frank would respond?

And why do you think they did?

I asked you first.

 

[boedicca]

Short answer: The government is engaged in a futile attempt to prevent the inevitable consequences of its distortion the housing market which grossly inflated prices and debt levels. The Devil's bargain they made put the risk on taxpayers.

Fannie Mae and Freddie Mac never should have existed.

Try reading "Reckless Endangerment" for the full story.

Now, your turn.

 

[Raoul_Duke]

Short answer: The government is engaged in a futile attempt to prevent the inevitable consequences of its distortion the housing market which grossly inflated prices and debt levels. The Devil's bargain they made put the risk on taxpayers.

Fannie Mae and Freddie Mac never should have existed.

Try reading "Reckless Endangerment" for the full story.

Now, your turn.

There were huge housing bubbles in Europe too. There were absolutely vast bubbles in Ireland and Spain which were so big that the governments went insolvent bailing them out and required bailing out themselves. There was no Fannie O'Mae or Freddie O'Mac in Ireland but their housing markets became even more bubbleicious than America's did. So how did european countries get so distorted too?

 

[boedicca]

We're discussing what happened in the U.S. Try to focus.

 

[Toddsterpatriot]

Like the Bloomberg article says, the government guaranteed about eight trillion dollars of debt. We don't know how much they'll eventually have to pay out on that as it depends on economic growth, the recovery of the banking system and most of all on housing prices. But the best estimate at the moment of the costs of the bailout are currently about one and a half trillion dollars :

US government still owed $1.5 trillion in financial bailout money

But who knows how much the banks will eventually have in bad debt. They were all campaigning to have mark-to-market scrapped and as an example, Bank of America's balance sheet shows them to have $220 billion in assets but the market values the entire company at about $70 billion, at least the last time I looked. So the market clearly thinks that there's a lot of bad debt on these banks' balance sheets that they haven't admitted to yet.

Let's have a gander at the link with the detail. Gee, most of the outstanding money is due to GSEs, Fannie Mae & Freddie Mac and the FHA:

Yes, that's right. Here's a graph of the Fed's balance sheet to confirm it:

So the Fed have bought about a trillion dollars of Fannie and Freddie assets. Why did they do this?

Because of the deregulation you claimed but still haven't proven?

Are you ever going to show that banks couldn't sell mortgages until Bush changed the rules?
Or are you going to keep running away? LOL!

 

[Toddsterpatriot]

Short answer: The government is engaged in a futile attempt to prevent the inevitable consequences of its distortion the housing market which grossly inflated prices and debt levels. The Devil's bargain they made put the risk on taxpayers.

Fannie Mae and Freddie Mac never should have existed.

Try reading "Reckless Endangerment" for the full story.

Now, your turn.

There were huge housing bubbles in Europe too. There were absolutely vast bubbles in Ireland and Spain which were so big that the governments went insolvent bailing them out and required bailing out themselves. There was no Fannie O'Mae or Freddie O'Mac in Ireland but their housing markets became even more bubbleicious than America's did. So how did european countries get so distorted too?

Bush do some imaginary deregulation in Europe too?

 

[Raoul_Duke]

Short answer: The government is engaged in a futile attempt to prevent the inevitable consequences of its distortion the housing market which grossly inflated prices and debt levels. The Devil's bargain they made put the risk on taxpayers.

Fannie Mae and Freddie Mac never should have existed.

Try reading "Reckless Endangerment" for the full story.

Now, your turn.

There were huge housing bubbles in Europe too. There were absolutely vast bubbles in Ireland and Spain which were so big that the governments went insolvent bailing them out and required bailing out themselves. There was no Fannie O'Mae or Freddie O'Mac in Ireland but their housing markets became even more bubbleicious than America's did. So how did european countries get so distorted too?

Bush do some imaginary deregulation in Europe too?

Nothing to do with Bush.

 

[Raoul_Duke]

We're discussing what happened in the U.S. Try to focus.

I am discussing what happened in America. I'm saying you can't blame the housing bubble on Fannie and Freddie. Other countries had even bigger bubbles and the government played no part in them.

 

[Toddsterpatriot]

There were huge housing bubbles in Europe too. There were absolutely vast bubbles in Ireland and Spain which were so big that the governments went insolvent bailing them out and required bailing out themselves. There was no Fannie O'Mae or Freddie O'Mac in Ireland but their housing markets became even more bubbleicious than America's did. So how did european countries get so distorted too?

Bush do some imaginary deregulation in Europe too?

Nothing to do with Bush.

Wow! For once, you're right.

 

[Ame®icano]

Here is the article in NYT about GE and their taxes. - G.E.’s Strategies Let It Avoid Taxes Altogether

General Electric, the nation’s largest corporation, had a very good year in 2010.

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.

I am tired of lefties keep blaming Bush for everything. His tax cuts didn't cause economic crisis, housing crisis did. I would rather blame Bush for not forcing oversight on Fannie and Freddie, we know why he couldn't, and for bailing out big banks instead of letting them fail and got restructured.

It surprises me, and it bothers me that not many people see who invested so much into those "to big to fail" institutions and who got to profit most from their bailouts. At the end, it's not them who will pay more taxes, but small businesses who are not in position to lobby in Washington as GE is. Btw, isn't GE one of the Buffett's largest holdings and until recently owner of NBC/MSNBC? Connect the dots.

If you pay attention on Bush's tax cuts, they cost us approximately $70 billion a year for total of $560 billion since they were in force. That's over $400 billion less then cost of stimulus that was spend in less then two years with almost no results. So which one screwed us more?

 

[Dragon]

I am tired of lefties keep blaming Bush for everything.

I agree, that's irrational. The rot in our system goes all the way back to 1980 at least. Bush played a part in it but certainly wasn't responsible for everything.

His tax cuts didn't cause economic crisis, housing crisis did.

True about the tax cuts, false about the housing crisis. Bush's tax cuts were a primary cause of the ballooning of the federal deficit, but that's the deficit, not the economy.

What caused the meltdown? Step back a moment and recognize what the meltdown was, how it proceeded. Let's be clear what we're talking about.

1) Banks and insurance companies developed an investment vehicle called "mortgage backed securities" and a practice called "credit default swaps." Credit default swap - Wikipedia, the free encyclopedia This allowed certain mortgages (mostly for business properties) to be at the bottom of a whole chain of financial instruments whose total value far exceeded the amount of the original mortgage.

2) A bubble in the housing market (again, primarily involving business properties) burst, property values dropped, and a large number of mortgages went into default. This triggered payoff of credit default swaps (often in huge amounts whose total far exceeded the value of the defaulted mortgages), and the failure of mortgage-backed securities, which resulted in the impending failure of a number of large banks and insurance companies.

3) This in turn triggered a tightening of credit, as these large banks were not lending the way they had in the past. Since consumption in our underpaid economy was dependent on consumer credit, this caused sales to slump and many businesses to fail or to lay off workers. The economy went into recession.

4) Between banks and consumers, the recession created a new, more frugal mindset that does not allow the same degree of borrowing as in the past, so that the economy, although in recovery, remains depressed.

So -- what caused the meltdown? Bad mortgages? But without the mushrooming of credit-default swaps and mortgage-backed securities, the damage from the bad mortgages would have been minimal. Those ill-advised financial instruments, or the lack of regulation that permitted them? A much bigger factor than the mortgages, but without the reliance on credit in the consumer economy, the financial meltdown would have been much less destructive.

How about this. The collapse of our economy was caused by low wages and stagnating incomes that made the economy dependent on consumer spending financed by credit, so that the first serious hiccup in the financial industry could send the whole economy into a tailspin; coupled with deregulation of the financial industry that encouraged and enabled irresponsible financial investments making such hiccups more likely.

And of course, very little of that was George W. Bush's fault. (And none of it was Barack Obama's.)

I would rather blame Bush for not forcing oversight on Fannie and Freddie, we know why he couldn't

Hardly any of the mortgages that failed were made by Fannie or Freddie. You can blame Bush for this if you want, but it had very little if anything to do with the economic crash.

and for bailing out big banks instead of letting them fail and got restructured.

While moral outrage on this point is understandable, the damage would have been far worse if the banks had been allowed to fail.

If you pay attention on Bush's tax cuts, they cost us approximately $70 billion a year for total of $560 billion since they were in force. That's over $400 billion less then cost of stimulus that was spend in less then two years with almost no results. So which one screwed us more?

The tax cuts, because your statement that the stimulus had "almost no results" is inaccurate. However, the tax cuts were not responsible for the economic crash.

 

[Ame®icano]

I agree, that's irrational. The rot in our system goes all the way back to 1980 at least. Bush played a part in it but certainly wasn't responsible for everything.

...

...

1977, precisely.

I discussed about it and about housing bubble and what caused it in this thread, maybe you should join too...

U.S. Is Set to Sue a Dozen Big Banks Over Mortgages

Since you mentioned CDS, I have to ask for you opinion... if everyone was paying their mortgages, would meltdown happen?

 

[Sallow]

Where the hell do you think the money to pay wages comes from, you fucking dunce?

So we wage earners get to pay up to 35% of our wages to fund big corporate America and get a 1% return? And that's in addition to the labor we put in?

Not very equitable..

 

[Dragon]

Since you mentioned CDS, I have to ask for you opinion... if everyone was paying their mortgages, would meltdown happen?

No, but there is never a time when everyone is paying their mortgages, and housing bubbles happen. If you're asking the question in terms of "what do we fix?" then the place to focus is on the deregulation of the financial industry and, even more, on the maldistribution of wealth in our society. If you have a house in a brush-fire zone, you don't keep the area cleared of trees and brush and follow other safety precautions, a fire is started by a careless smoker, and your house burns down, what do you blame? Your own foolishness in buying property in a high-risk area? Your compounded foolishness in not taking proper precautions thereafter? Or smoking?

 

[Toddsterpatriot]

I am tired of lefties keep blaming Bush for everything.

I agree, that's irrational. The rot in our system goes all the way back to 1980 at least. Bush played a part in it but certainly wasn't responsible for everything.

His tax cuts didn't cause economic crisis, housing crisis did.

True about the tax cuts, false about the housing crisis. Bush's tax cuts were a primary cause of the ballooning of the federal deficit, but that's the deficit, not the economy.

What caused the meltdown? Step back a moment and recognize what the meltdown was, how it proceeded. Let's be clear what we're talking about.

1) Banks and insurance companies developed an investment vehicle called "mortgage backed securities" and a practice called "credit default swaps." Credit default swap - Wikipedia, the free encyclopedia This allowed certain mortgages (mostly for business properties) to be at the bottom of a whole chain of financial instruments whose total value far exceeded the amount of the original mortgage.

2) A bubble in the housing market (again, primarily involving business properties) burst, property values dropped, and a large number of mortgages went into default. This triggered payoff of credit default swaps (often in huge amounts whose total far exceeded the value of the defaulted mortgages), and the failure of mortgage-backed securities, which resulted in the impending failure of a number of large banks and insurance companies.

3) This in turn triggered a tightening of credit, as these large banks were not lending the way they had in the past. Since consumption in our underpaid economy was dependent on consumer credit, this caused sales to slump and many businesses to fail or to lay off workers. The economy went into recession.

4) Between banks and consumers, the recession created a new, more frugal mindset that does not allow the same degree of borrowing as in the past, so that the economy, although in recovery, remains depressed.

So -- what caused the meltdown? Bad mortgages? But without the mushrooming of credit-default swaps and mortgage-backed securities, the damage from the bad mortgages would have been minimal. Those ill-advised financial instruments, or the lack of regulation that permitted them? A much bigger factor than the mortgages, but without the reliance on credit in the consumer economy, the financial meltdown would have been much less destructive.

How about this. The collapse of our economy was caused by low wages and stagnating incomes that made the economy dependent on consumer spending financed by credit, so that the first serious hiccup in the financial industry could send the whole economy into a tailspin; coupled with deregulation of the financial industry that encouraged and enabled irresponsible financial investments making such hiccups more likely.

And of course, very little of that was George W. Bush's fault. (And none of it was Barack Obama's.)



Hardly any of the mortgages that failed were made by Fannie or Freddie. You can blame Bush for this if you want, but it had very little if anything to do with the economic crash.

and for bailing out big banks instead of letting them fail and got restructured.

While moral outrage on this point is understandable, the damage would have been far worse if the banks had been allowed to fail.

If you pay attention on Bush's tax cuts, they cost us approximately $70 billion a year for total of $560 billion since they were in force. That's over $400 billion less then cost of stimulus that was spend in less then two years with almost no results. So which one screwed us more?

The tax cuts, because your statement that the stimulus had "almost no results" is inaccurate. However, the tax cuts were not responsible for the economic crash.

"This allowed certain mortgages (mostly for business properties) to be at the bottom of a whole chain of financial instruments whose total value far exceeded the amount of the original mortgage"

So what? Each mortgage is owned precisely once.

"Hardly any of the mortgages that failed were made by Fannie or Freddie. You can blame Bush for this if you want, but it had very little if anything to do with the economic crash"

The mortgages owned by Fannie and Freddie are the ones where the taxpayer is currently on the hook. Not the ones owned by Citi or BOA or JPM.

 

[Toddsterpatriot]

Where the hell do you think the money to pay wages comes from, you fucking dunce?

So we wage earners get to pay up to 35% of our wages to fund big corporate America and get a 1% return? And that's in addition to the labor we put in?

Not very equitable..

The 35% you're paying is funding big government.
Are you getting your moneys worth yet?

 

[Ame®icano]

Since you mentioned CDS, I have to ask for you opinion... if everyone was paying their mortgages, would meltdown happen?

No, but there is never a time when everyone is paying their mortgages, and housing bubbles happen. If you're asking the question in terms of "what do we fix?" then the place to focus is on the deregulation of the financial industry and, even more, on the maldistribution of wealth in our society. If you have a house in a brush-fire zone, you don't keep the area cleared of trees and brush and follow other safety precautions, a fire is started by a careless smoker, and your house burns down, what do you blame? Your own foolishness in buying property in a high-risk area? Your compounded foolishness in not taking proper precautions thereafter? Or smoking?

There are always people who are not paying, even when there is no bubble. That's the risk banks are taking by loaning money and they have to keep enough cash in reserve to cover eventual loses. Then you have a housing bubble, in my opinion caused by government laws and backed by Fannie and Freddie, once that bubble burst you have shitload of people stop paying for mortgages they shouldn't take at the first place.