Skip to main content

Bogus bailout profits?

Market Talk blogger Steven Russolillo points out that a few noted finance bloggers are incensed over claims that the government is profiting from the legion of bank bailouts.

More details from, "TARP Profits?! Pfft!":

"A few bloggers were rather incensed today after
The New York Times and Financial Times each published stories detailing how the government is supposedly profiting off of the hundreds of billions of dollars spent on bank bailouts.

Even if the Treasury is making money off the eight biggest banks that have repaid their TARP obligations, losses from AIG, Fannie Mae (FNM), Freddie Mac (FRE), GM and Chrysler can’t be ignored, bloggers say.

And other costs associated with TARP, such as lost tax revenues and stimulus plans, must be accounted for before discussing TARP profitability.

Nevertheless, NYT presents the case that taxpayers will benefit from the bailouts because Treasury is making money off the TARP, with Goldman Sachs (GS) and Morgan Stanley (MS) providing highest return on investment."

Steven goes on to quote the New York Times article's on the government's supposed bailout profits, while countering those claims with some swift responses from Yves at Naked Capitalism and Barry Ritholtz at Big Picture.

I suggest you read all three blog posts to get a full understanding of why counting up these early TARP repayments as profits ignores the much bigger picture of the full bailout costs. Good reading!

Popular posts from this blog

Nasdaq credit rating junked.

S&P cut Nasdaq's credit rating to junk status citing debt burdens and its questionable strategy to buy a controlling interest in the London Stock Exchange. Financial Times reported that the exchange's counterparty credit & bank loan rating were lowered fromm BBB- (lowest investment grade rating) to BB+. The change will increase Nasdaq's borrowing costs should it wish to pursue aquisition targets. For an earlier look at the exchange consolidation trend that brought about Nasdaq's push for a stake in the LSE, please see "Exchange fever" .

Jesse Livermore: How to Trade in Stocks (1940 Ed. E-book)

If you've been around markets for any length of time, you've probably heard of 20th century supertrader, Jesse Livermore . Today we're highlighting his rare 1940 work, How to Trade in Stocks (ebook, pdf). But first, a brief overview of Livermore's life and trading career (bio from Jesse Livermore's Wikipedia entry). "During his lifetime, Livermore gained and lost several multi-million dollar fortunes. Most notably, he was worth $3 million and $100 million after the 1907 and 1929 market crashes, respectively. He subsequently lost both fortunes. Apart from his success as a securities speculator, Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one's position as it goes in the right direction and cutting losses quickly. Ironically, Livermore sometimes did not follow his rules strictly. He claimed that lack of adherence to his own rules was the main reason for his losses after making his 1907 and...

Finance Trends 2019 Mid-Year Markets Review

Email subscribers of the Finance Trends Newsletter receive the first look at new articles and market updates, such as the following piece, sent out to our email list on Sunday (6/14).   Hello and welcome, everyone! If you received our last email notice over the July 4th holiday, you'll know that this weekend's newsletter will serve as a mid-year market update and a follow-up to issue #29, " How to Reinvest in a Rising Market ".   Ladies and gentlemen, without further ado, let's start the show...  Finance Trends Newsletter: Our Mid-Year Market Review When we last spoke, back in February, the U.S. stock market was rallying off its December-January lows. As the S&P 500 and Nasdaq reclaimed their 200 day moving averages in February and March, it became increasingly apparent that a lot of retail investors (and perhaps some institutional investors) were left under-invested while watching this recovery move from the sidelines.  The U.S. stock ...