This obscene shell game will bring the American, and thereby the world's, economy down.

Baucus (D-MT)
Bennet (D-CO)
Bingaman (D-NM)
Carper (D-DE)
Conrad (D-ND)
Durbin (D-IL)
Franken (D-MN)
Hagan (D-NC)
Harkin (D-IA)
Inouye (D-HI)
Johnson (D-SD)
Klobuchar (D-MN)
Kohl (D-WI)
Landrieu (D-LA)
Manchin (D-WV)
McCaskill (D-MO)
Nelson (D-FL)
Nelson (D-NE)
Pryor (D-AR)
Stabenow (D-MI)
Tester (D-MT)
Udall (D-CO)
Warner (D-VA)
Webb (D-VA

Until WE do something about this chronic betrayal from within OUR ranks,
we will not be able to do anything about The Republicans.

http://www.salon.com/2010/02/23/democrats_34/

Party Leadership CAN do something about Party Discipline,
it it wanted to.
Party Funds can certainly be dispensed to Progressive Primary Challengers,
IF Party Leadership wanted to do something.

SEE: White House support FOR Blue Dog Blanche Lincoln, Democratic Primary, 2010

...IF they wanted to.


You will know them by their WORKS,
not by their excuses.
[font size=5 color=green]Solidarity99![/font][font size=2 color=green]
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Might as well delete this subthread. They voted correctly, IMHO.

...because of the "Farm Subsidy"?

Do you know what Minnesota, Iowa, and Wisconsin have in common?
Don't you think it is past time to let Big Corn Corporations make it on their own?
If not, how much longer do you think we should continue to subsidize the Billion Dollar Big Corn Corporations at the expense of the Hungry & the Poor?

YOU might think my comments are "overblown",
but I'm Sick & Tired of being continually Sold Out by "Democrats" protecting their BIG DOLLAR Single Source Donors on a rotating basis.

Why are "Democrats" soooo BAD at playing this game in Washington?
WHY is it ALWAYS the Working Class & the Poor picking up the tab for the conspicuous consumption of the RICH?

out of the mouths of millions whose jobs they gambled away - starving not just them, but their children, too. They want 2 billion a year less in food stamps. How many babies will that (not) feed?

There are no words for the disgust.

Wat

stunning.

Thanks for posting this.

there..fixed it.

Wish the news would report it that way.

I hate these fuckers.

unless you kind of look at it sideways and squint your eyes.

The article describes confidence in the banking sector that government backing allows as a "subsidy", letting them borrow at lower rates than they would otherwise. Then the money saved on interest payments on borrowed money is taken as income they wouldn't have earned otherwise.

Of course that not how it would work...a primary way banks make money is by borrowing money at one rate and lending it at a higher rate. The difference between the two is a fundamental ratio - if one side increases, so does the other - and the bank's income would be the same regardless of the "subsidy". The effect of removing government backing, assuming it raised interest rates for bank borrowing as the article says, would be a growth-stifling and inflationary increase in the cost of all borrowing, passed through to the economy as a whole.

the banks acting as the middleman

...though I think our political apparatus would have to be a little more evolved and responsible before it could be trusted to run things well.

"The people" are already indemnified by the FDIC.

It's large creditors that are essentially insured or expect to be insured. They're the people that we'd want to take a haircut.

The creditors also probably wouldn't want their money back. It would still be earning interest. They just want to know that if they want their money back, they can get it back.

It is very much a subsidy.

sub·si·dy: a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive

Read the paper in full to understand just how massive this subsidy is.

...so the banks can borrow at a lower rate than they would otherwise.

But you must see my point - a given bank might have (as an example) a fixed .005 markup between their borrowing and their lending costs, which would allow them to cover the risk of lending and overhead while still maintaining an operating profit. If the bank borrows at 3.5%, it lends at 4%. If the bank borrows at 4%, it lends at 4.5%, and so on. The rate itself has no effect on income - income is determined by the markup, which is worked out with great certainty and care to provide whatever is needed to keep operations profitable.

Again, the rate doesn't determine income, the markup on that rate does, and that has nothing to do with what Bloomberg is talking about.

Using your example of a fixed 0.5% markup, you write: "If the bank borrows at 3.5%, it lends at 4%. If the bank borrows at 4%, it lends at 4.5%, and so on."

But if market conditions would allow the bank to lend out the full amount available at 4.5%, then if instead it's lending at only 4% (because the government has lowered the bank's borrowing costs), then the demand for loans would exceed the supply. In other words, some would-be borrowers who refused to pay 4.5% will be willing to pay 4%. In that instance, the bank won't woodenly keep lending at 4% until the money runs out, and then tell other loan applicants that the window is closed. No, the bank will instead calculate what rate (4.1%? 4.375%?) it can charge and still lend out all the money it wants to lend. It will happily up its markup from 0.5% to 0.6% or whatever, thereby increasing its profits.

I'll concede that there's probably some truth to your analysis to this extent: Because the government implicitly subsidizes more than one giganto-bank, it does affect the market conditions. When Citibank assesses the credit market, it's assessing a credit market in which Chase, Bank of America, etc. are also beneficiaries of this too-big-to-fail policy, which affects their lending decisions, thus in turn affecting what Citibank can charge. As a result, it's probably not a dollar-for-dollar effect. I don't know whether the authors of the quoted study considered this complication. If they didn't, their numbers may be on the high side. Nevertheless, that would only dampen the subsidization effect, not eliminate it.

In addition, the prospect of a bailout amounts to government aid to big banks as opposed to their smaller (mostly regional) competitors, which are less likely to be deemed too big to fail.

It's an implicit subsidy.

"sub·si·dy: a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive."

In this case, it's a non-sum of money. No money changes hands annually from the Feds to JPM to ensure that the interest rates stay low. It's not granted to JPM because it's simply not in existence. There is no subsidy.

There is the implicit guarantee of a loan if JPM needs it. But a loan isn't a grant, and a loan from several years ago doesn't equal a grant this year.

The best you could do is argue that it's the forfeiting of a federal insurance premium, but it's a weak and incomplete argument. FDIC charges a fee for insurance, i.e., in exchange for guaranteeing depositor accounts. In this case, the Fed guarantees creditors' accounts. The difference is that in the event of a default, the FDIC actually pays out money that it knows it won't get back, charging to cover payouts as well as overhead on administration; the Feds loaned money, at interest, that they expected back, and the interest wasn't for overhead. The administrators are on the payroll anyway. The interest starts to look like insurance payments.

Governments have stepped in on multiple occasions and many implicit guarantees were made explicit. Real money has changed hands and toxic debts have been transferred from private banks onto the public balance sheet. Try to keep current, this isn't news.

http://www.sourcewatch.org/index.php?title=Total_Wall_Street_Bailout_Cost

I wonder how soon the republicans will start yelling about this?? ...........

Well this particular 16 billions of dollars fits into it. See Post 16 above yours.

noun pl. sub·si·dies.
1. a direct pecuniary aid furnished by a government to a private industrial undertaking

In this case there is NO direct pecuniary aid. For those who know what that means ... The government isn't paying JPM 16 billion a year. No money is changing hands here.

Because OTHER PRIVATE COUNTERPARTIES BELIEVE that in the event of a meltdown the government would bail out JPM, these OTHER PRIVATE COUNTERPARTIES are willing to lend to JPM for less than they otherwise would.

The calculated difference between what they otherwise might charge JMP is the 16 billion a year.

Moreover Dodd Frank purports to end TBTF via the new special regulator and new resolution authority. So there is legislation that explicitly addresses the TBTF assumption made by counterparties. So there should not be an "implicit" guarantee assumed any more.

Unless you want to argue that Dodd Frank isn't in reality what it was marketed to be.

Just a little added perk we give them so they can save some extra pennies.