You know those hundreds of billions thrown at the Wall Street banks?

Made a profit.

CBO estimates that the net cost to the federal government of the TARP’s transactions, including the cost of grants for mortgage programs that have not been made yet, will amount to $34 billion. CBO’s analysis reflects transactions completed, outstanding, and anticipated as of November 15, 2011.

That cost stems largely from assistance to American International Group (AIG), aid to the automotive industry, and grant programs aimed at avoiding home foreclosures: CBO estimates a cost of $59 billion for providing those three types of assistance.

But not all of the TARP’s transactions will end up costing the government money. The program’s other transactions with financial institutions will, taken together, yield a net gain to the federal government of about $25 billion, in CBO’s estimation.

AIG, GM and Chrylser, that\’s where the losses are.

The banksters aid, turned a profit.

Remind me what those idiots are doing in Zucotti Park again?

12 comments on “You know those hundreds of billions thrown at the Wall Street banks?

  1. OT (sorry) but when you talk about governments printing money to increase liquidity, does it literally involve putting ink on paper and sending it to the bank? Or is it a case of giving themselves permission to pretend that more money exists than did previously? What I think I mean is, does the physical act of printing banknotes increase the money supply?

    Yes, I really am that ignorant.

    Tim adds: Printing more bank notes does increase the money supply, yes, as does minting more coins. But that’s not the only way you can do it now. Just tell the computers in the Bank of England that there is more money and Lo! there is more money.

  2. From the 1980s, I recall a Ford boss saying that the company did not make money making cars but from selling finance agreements.

    Given that GM and Chrysler are not making many cars at the moment, we have to assume that they aren’t selling many finance agreements either. OK, they are making loads of cars, but they are working well below capacity.

  3. As an American, I don’t care if they did make a profit. The government still rewarded bad behavior, albeit behavior the government encouraged, and reinforced the concept of “too big to fail”. Neither of these things can be considered positive outcomes for the future.

  4. @Donavon Pfeiffer Jr: As an American, I don’t care if they did make a profit.”

    “The government still rewarded bad behavior…”

    As an Englishman, I expect an argument, which is absent.

  5. “transactions completed, outstanding, and anticipated”: I take it that by “anticipated” they mean “expected”?

  6. Two things. Firstly, it’s an “estimate”. You know what that means? It’s an estimate, that’s what it means.

    Secondly, you haven’t taken into account the overall cost to the economy of government maintaining an insolvent industry. In the 70s, Thatcher rightly decided that Britian couldn’t afford to keep nationalised coal and motor car industries going because of the general economic ruin that caused.

    But when it came to recognising the same about banking, for some strange reason nobody dared to close the mines.

    And yet, the cost alone of a continually expanding money supply is catastrophic for the productive economy. We all know this. Far worse than the coal mines ever were. When the Great Crash happened, that was the point when the remnant free market tried to creatively destroy banking-as-we-know-it. The bailouts stopped that happening. Whether or not a pretended profit can be screwed out of the rest of us on the balance sheets is largely irrelevant. The cost we all have to bear is the continued existence of the nationalised banking system, and that’s where the real ruin lies. They’re the only industry in the economy that gets to create its product- money- ex nihilo. Hardly surprising if they can thus create an accounting illusion of turning a profit, under that circumstance, is it?

  7. I think it’d be risky to read too much into this (i looked at the report and it doesn’t add much detail).

    Just as one example, if AIG had not been rescued, would the banks have lost more money? Surely yes, so I don’t know how you can separate the two.

    Also clearly other measures have been put in place to support the banks through monetary policy, this has costs, which will be paid by taxpayers eventually.

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  10. It’s too soon to say AIG’s loan was a losing venture. They’re still paying it off, albeit very slowly. It will take many more years before the final tally is counted.

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