failure of TARP :: Spero Consulting

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Government Whining and Bailout Fees

Andy Spero | January 12, 2010 | 0 Comment(s) |

Given the past two days’ front page headlines in the The Wall Street Journal, it seems that banks are doing a lot of bracing. Monday’s headline announced that Banks Brace for Bonus Fury, and today’s headline announces that Banks Brace for Bailout Fee.

The first article notes of complaints by the public and government officials about bonuses paid for 2009 ‘results.’ The second article describes a likely attempt by federal officials to, in some sense, monetize those complaints by levying new fees onto banks. (Soon, we’ll soon publish a… Read the rest

And You Thought We Were Depressing

Andy Spero | April 2, 2009 | 0 Comment(s) |

Responding to our request for comments in yesterday’s post, Happy Anniversary to…Us!, a reader from Australia pointed us to an excellent and quite comprehensive article in May’s edition of The Atlantic Monthly. (Thanks Steven.)

The article is entitled “The Quiet Coup,” and was written by Simon Johnson, an econ prof at MIT and the former Chief Economist at the International Monetary Fund (IMF). Fortunately, as you can tell by the link, the article is freely available from The Atlantic‘s web site.¹

Mr.… Read the rest

More Silliness on Valuation and Government Purchases

Andy Spero | February 3, 2009 | 0 Comment(s) |

For the umpteenth time since September, The Wall Street Journal has published an opinion column that recommends the government purchase of “toxic” banks assets. Today’s (February 3′s) version is by Robert C. Pozen: How to Value Toxic Bank Assets. (We really do hate the use of that adjective “toxic” because depending upon the application, many toxins have redeeming value. We’re not sure about these mortgage thingies.)

Of course, the title of the essay is completely misleading as there is nothing in the text that discusses valuation–only the… Read the rest

The Problem of Induction

Andy Spero | January 28, 2009 | 0 Comment(s) |

If you missed it on Monday (January 26), L. Gordon Crovitz had an interesting article in The Wall Street Journal entitled Bad News Is Better Than No News. In our zeal to complete a project, we missed it when it was published, but now mention to the reader that it is worth their time.

We like it because it is consistent with much that we’ve written on these pages since the blog’s inception, and especially since last September. For example: no one knows what the mortgage thingies are worth, the banks… Read the rest

Our Middle-class Morality

Andy Spero | January 14, 2009 | 0 Comment(s) |

We chuckled when we saw this headline in The Wall Street Journal today, January 15: Fed Officials Say Ailing Banks Require More U.S. Funds.

That’s not really news, and–by the way–it’s tautological or true by definition. (Uh, otherwise, they wouldn’t be ailing now would they, precious.)

Anyway, our point is always the sa: just because they need the money, doesn’t mean that they deserve the money nor does it mean that they’ll spend it wisely.

In that way, they’re not much different the the homeless alcoholics who beg… Read the rest

So Far, So Good, Mr. Obama

Andy Spero | December 4, 2008 | 0 Comment(s) |

The Wall Street Journal reports today that Obama Keeps His Distance From Treasury on TARP. It seems the Mr. Obama and his representatives are not providing the Bush administration officials with specifics about their mortgage and liquidity crises-related plans.

We say: what’s wrong with that?

Whether Mr. Obama and his staff are seriously deliberating and contemplating specific plans or actions or whether they are just pretending to do so, either is fine with us. Both are a vast improvement over the panic-speech of Mr. Paulson and Mr. Bernanke in the last half… Read the rest

Volatility and Losses: No End in Sight

Andy Spero | December 1, 2008 | 0 Comment(s) |

If you haven’t read it, For the Vix, 40 Looks Like It’s the New 20 in today’s The Wall Street Journal please know that is a decent column.

We particularly like the paragraph:

“Volatility may not return to its highs, but it isn’t clear when it will get back to normal, either. Volatility breeds fear, which breeds more volatility. There is still too much uncertainty about the losses lurking on bank balance sheets and about the depth and breadth of the current recession to inspire much calm.”

Now,… Read the rest

More Evidence of the Lack of Forethought that is TARP

Andy Spero | November 28, 2008 | 0 Comment(s) |

The Wall Street Journal today, November 28, reports Rescue Plan Strained by Lack of Staff.

We’ve criticized the government’s response to both the domestic mortgage crisis and the larger global confidence crisis since it–that which became TARP–was first proposed. (We use the singular “it” because we’ve not heard any government official decouple the problems either in their initial panic or in the intervening months.)

Since mid-September, other than times when we were too busy to write, our criticism as been consistent, harsh, and steady: (1) initially the government officials, led… Read the rest

The Mortgage Crisis: Why Not Incentivize the Private Sector?

Andy Spero | November 26, 2008 | 0 Comment(s) |

In today’s (November 26) edition of The Wall Street Journal, there is a Deal Journal article entitled, “Paulson Plan: ‘Truly Idiotic.’”

Although we’ve not gone that far in describing TARP et al, we’ve been harshly critical of Mr. Paulson. In fact, we’ve mentioned that his series of actions don’t seem to constitute an actual plan, because the word “plan” implies a certain degree of, well, planning or foresight and forethought, and those prerequisites seemed absent in his Panic of ’08.

The quoted accuser in the Deal Journal article is Charles Calomiris, a… Read the rest

Should Citi Be Nationalized as a Warning to Others?

Andy Spero | November 21, 2008 | 0 Comment(s) |

Note: We’ll likely expand and edit this post in the morning, but wanted to circulate the idea before bedtime.

We’re rather diligent–but not obsessed– about keeping up with financial new.¹ We’ve heard many financial firms announce lay-offs and have read how at a few, like Goldman, senior managers have decided to forgo bonuses.

As we recall, most banks have announced withdrawals from subprime mortgage origination and loans, which seems like a wise move, but given the magnitude of their errors and mistakes, we’re very surprised that we haven’t read… Read the rest

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