The article says that without subsidies the big banks would about break even. Does that presuppose that toxic assets are recorded accurately in their books? I recall that there was controversy about this, and then the issue seemed to vanish. If toxic assets have not been accounted for accurately, how big is the discrepancy?
They're not talking about a one time thing, but a perpetual artificially low cost of capital afforded only to the largest banks, basically at the cost of everyone else.
That statement is disingenuous. Collateral based bad mortgages were a small fraction of the toxic assets. Banks only ended up forgiving around $20 billion in mortgage debt, which is nothing compare to the size of other issues. The bad mortgage issue has been a red herring from the beginning to distract attention from criminal fraud by bankers and absurdly focus on homeowners instead.
Almost all of the toxic assets, or more properly, speculative loss that will never be paid, was on the derivatives market which could be as much as $1.2 quadrillion dollars, 20 times the size of the entire world economy, of which even the $16 trillion in bailouts was a small amount.
The toxic assets have been moving around and ending up off of bank sheets and on federal government sheets as part of loan paybacks, which is more of the massive scam and stealth bailouts going on.
Every one of these mega banks should be dismantled. The same scams continue.
>Almost all of the toxic assets, or more properly, speculative loss that will never be paid, was on the derivatives market which could be as much as $1.2 quadrillion dollars, 20 times the size of the entire world economy, of which even the $16 trillion in bailouts was a small amount.
This is quite literally unbelievable. Do you have anything to back it up?
In theory these unwind cleanly, and the actual risk is low. As the article says, if there is even a small discrepancy in how they unwind, the real numbers are insane. A big part of the freak out when Lehman failed is that everyone knew that in theory the deals would unwind, but it had never been tested in practice on anything like that scale.
I've never read anything I thought was credible from washingtonsblog, and this is no exception. The number is based largely on speculation, and if you follow the chain of blogs and investor articles the whole thing just stinks of the sort of hype you see when an investment site is trying to scare you.
