No, Treasury Bailout Profits Are Not 10 Billion Dollars . . .
Why doesn’t anyone understand what a profit is? It is the total revenue minus the total costs. Which is why this FT headline is our second dumb headline of the day:
US Treasury’s bail-out profits top $10bn
“The US government has made more than $10bn so far on banks’ repayments of bail-out funds, according to a new analysis that suggests taxpayers might turn a profit on the unprecedented help extended to the financial sector during the crisis . . .”
No, they have not made $10 billion dollars. As the article later states, “Treasury still expects to lose $117bn on the entire Tarp Programme, which includes investments in the car industry and AIG, the insurer.”
To determine profits, we have to look at the total costs — TARP, bailouts, all rescues, etc.
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Source:
US Treasury’s bail-out profits top $10bn
Francesco Guerrera
FT, April 5 2010
http://www.ft.com/cms/s/0/7dbc8cac-40d4-11df-94c2-00144feabdc0.html
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April 6th, 2010 at 11:31 am
More misinformation and propaganda to mislead the Sheeple. The purveyors of this phony crap KNOW this is crap but they are paid to disseminate crap to keep their corporate masters (read: advertisers) happy.
April 6th, 2010 at 11:45 am
Barry (insert sarcasm here),
Of couse they cant name the article “Treasury still expects to lose $117bn”. God forbid mainstream Media go against “group think”. The universe would blow up.
April 6th, 2010 at 11:49 am
Well, look at the way it is written.
“according to a new analysis” – by whom? and what was the old analysis saying?
“that suggests taxpayers might turn a profit” – and it doesn’t even say TARP will turn out a profit, they’re “suggesting” that it “might”.
“the unprecedented help extended to the financial sector” – extended, you’re fucking kidding me, as if the financial sector got a little help after everybody else, pure crap.
Manny, this IS advertising, nothing else.
April 6th, 2010 at 12:16 pm
Barry,
As you may know, journalists write the articles but copy editors write the headlines. When I was a reporter, a headline sometimes would appear on one of my stories that would leave me scratching my head in puzzlement. In this case, the sentence in the story is quite specific and limiting: “. . .on banks’ repayments of bail-out funds.” The headline-writer got carried away. Urgent deadlines contribute to this sloppiness.
Off-topic a bit, I think we were much better served when journalism was seen as a trade rather than as a profession, and when more reporters were educated in the school of hard knocks instead of in journalism school. The skeptical, hard-bitten editors who’d cuss you out in front of everybody in the middle of the newsroom if you dared even just misspell something are long-gone. In their place we now have exquisitely sensitive people who are proud of their open-mindedness and who’ve been taught there isn’t such a thing as objective truth. Therefore, in their minds, since truth depends on one’s point of view, it’s a lesser value than others like advocacy or — for TV journalists — getting your hair just right. But I think in the FT story here it’s probably just sloppiness in the face of a pressing deadline.
April 6th, 2010 at 12:19 pm
If your daughter were raped and kissed by the rapist upon departing, would you headline the rape or the kiss? U.S. has been kissed, and we should rejoice because the daughter was not killed. God bless the rapist, but even if the kiss results in a wedding, there is more to the story than the ceremony.
Where would the profits be had the taxpayers not paid off the financial industries’ gambling debts and permitted banks to mark their assets to make-believe?
April 6th, 2010 at 12:27 pm
‘Pressing deadline’ is a poor excuse for MSM who are ignoring real stories of substance and appear to become dumb and dumber to please their ‘masters’ who are benefiting from ‘status quo’ for decades!
Either way it is a sad commentary on Financial publications in MSM whose credibility is going down!
April 6th, 2010 at 12:49 pm
Why’s there a deadline to get a story like this out, anyway? It’ll still be there tomorrow, if it’s true.
But what reporters/journalists now (perhaps, always have) engage in is bias confirmation. They know what people would like to read, and tailor their stories to conform to their reader’s perceptions. No one likes to hear negative things about markets or money, hence the perpetual sunniness of most market commentators. Not only that–no one WILL hear truth that subverts their biases. It’s the nature of the soft matter. People will believe any fantasy whatsoever if they think it is in their best interests and disregard/ignore anything that they believe is irrelevant or not in their best interest to believe. Objective truth, if there ever were such a thing, long ago…”took the last train for the coast, the day the music, died”.
April 6th, 2010 at 12:51 pm
Another Doh ! moment for journalism!
April 6th, 2010 at 1:14 pm
I wish my wife thought like this writer – then I could claim “honey- I won $500 playing blackjack” and leave it at that.
But NOooo, she insists that I was only “up” $500 at one point, and in fact I lost money when I left the table after the $200 I a started with was all gone…
Details.
April 6th, 2010 at 1:52 pm
I sure do hope that some far-sighted soul in the Treachery Dept is buying CDS’s, betting against the solvency of the Bananamerican Republic. We’re gettin’ pretty desperate for some trading profits.
April 6th, 2010 at 1:56 pm
Journalism, education, government pronouncements and a great deal of everything else prepared for pubic consumption is now unofficially classified as, PROPAGANDA and INDOCTRINATION for SEDENTARY SITIZENS or, PISS, for anyone with an IQ at least in double digits.
April 6th, 2010 at 1:57 pm
@cn
Props on “Treachery” nomenclature.
April 6th, 2010 at 2:33 pm
Off the subject of journalism and on the subject of TARP: I am a poor reader of things financial and wonder if anyone can provide a brief outline of the extent to which the recovery of investment banks (and the repayment of TARP loans) came as a result of, 1) Treasury’s making good on AIG’s credit default swaps , and 2) the FED’s purchase of collateralized debt obligation “securities” (real and synthetic) from the same investment banks.
Extra credit for estimates of the quality of the FED’s CDO portfolio.
Thanks.
April 6th, 2010 at 2:57 pm
There is a serious problem with the meaning of numbers in our society. It pervades all economic data.
I have never even read freakonomics but from what I hear they are the only ones who have made any serious kind of an attempt to talk about that issue.
April 6th, 2010 at 3:07 pm
@flipspiceland — wish I could claim to have originated that, but it’s something I picked up here … I forget from whom. My own contribution is the “Feral Reserve”.
April 6th, 2010 at 3:30 pm
@advsys — Freakonomics is OK, but they have their own blinders on, and tend to look at problems with an extremely narrow view. But they do inspire actual thinking, so I guess I can endorse them — just don’t take their view as the only view.
April 6th, 2010 at 4:26 pm
I always felt the FT was more or less willing to be critical of the US.. Is this rare for the FT to put such a misleading title? are they now trying to be bullish on the US? I know they love B. Obam
April 6th, 2010 at 4:42 pm
Don’t forget about the “special” tax breaks given for repayment.
April 6th, 2010 at 6:38 pm
Yes, let’s pretend that this a ‘simply’ poor Journo-alism..
the, actual, *Reality, of the Scene, is inconsequential.
Haven’t We learned, by now, that our illustrious ‘leaders’ know that which is best for us//?
Who are We, mere rabble, to Question that which is served for our understanding?
yes, under/stand..
April 6th, 2010 at 7:34 pm
It’s a bailout… I don’t really expect the govt to make any money. What really bothers me is that the govt is the only one absorbing losses (you should add the losses on the $1.5T MBS purchases at subsidized rates). no single shareholder, bondholder or employee of Goldman Sachs and others has lost a penny in the worst financial crisis since the Great Depression. Amazing…
April 6th, 2010 at 8:52 pm
What’s truly sad is that not one of the above irate respondents seems to realize that a Treasury “profit” would be a loss for the economy, and a Treasury “loss” is a gain for the economy. Further, taxpayers do not gain from Treasury “profits,” nor do they pay for Treasury losses. On the contrary, taxpayers profit when the Treasury takes a loss.
Rodger Malcolm Mitchell
April 6th, 2010 at 11:57 pm
Uh, FANNIE and FREDDIE are NOTHING like the private sector bailouts.
Those companies were created by and RUN BY the govt.
Outside FNM and FRE the entire bailout will be profitable. The govt is up $10B on Citi alone.
Even FNM/FRE may end up profitable (all depends on how they finance). Fed sent treasury something like $100B last year. Expects more this year.
April 7th, 2010 at 12:05 am
The comments here don’t seem to understand the first thing about the financial numbers in TARP, Treasury, Fed or GSEs.
What was the taxpayer profit on TaRP to – JPM, GS, BAC, WFC, etc, etc. All is paid back with interest and warrants profit. $Bs in profit on each.
What is the currnt Mtm profit on Citi?
How much has the Fed sent Treasury in “profit” last 2 yrs? (answer – $150b)
Will the GSEs lose money? (Maybe, maybe not. They carry pretty well, about 6%)
Will the Fed lose money on bulk mortgage purchases? (NO! This is impossible. Basic understanding of MBS market)
April 7th, 2010 at 9:58 am
Me to a friend at the casino: “how you doing?”
Friend: “Great! I’m up $300 at Blackjack!”
I found out later he had also lost $2500 at Craps, but neglected to mention that part.
May 3rd, 2010 at 6:11 pm
@Ninsyboy – well put! Thank you.
May 3rd, 2010 at 6:21 pm
@cognos and RodgerMitchell – can you both elaborate just a hair? Somehow your conclusions do not jive with basic deductive reasoning.