Fed claims $13B profit on lending facilities

[CA renter]

[quote=davelj][quote=CA renter]Yes, we definitely disagree on this.

While *some* private sector employees (investors?) take risks, public sector employees take even greater risks, especially those in public safety.[/quote]

This has been thoroughly debunked. Even the more purportedly dangerous jobs like police and firefighters have on-the-job mortality rates that are pretty far down the scale relative to plenty of other occupations. And, job contentment among this group is also pretty high.

http://www.livescience.com/1431-survey-reveals-satisfying-jobs.html

[/quote]

No way anyone can convince me that trading securities is more risky that police work or firefighting. And, per your link, salespeople in the financial and securities industry are higher on the “contentment” scale than cops are (firefighters are higher).

Here:

Badge-wielding types took a serious hit. Of all occupations, protective-service occupations suffered the greatest relative increase in workplace fatalities in 2007, jumping 20% to 314. Nearly one-half of those were police officers; indeed, enough men in blue perished in the line of fire to earn a spot on the list of America’s 10 most dangerous jobs.

In 2007, 143 sheriffs and patrol officers died on the job–a rate of 21.4 per 100,000 workers–making police work the 10th most dangerous job in America. “Things have gotten more violent,” admits Rich Roberts, public information officer from the International Union of Police Association, a Sarasota, Fla.-based union, “but fortunately we’re better protected to a degree.”

http://www.forbes.com/2008/08/25/dangerous-jobs-fishing-lead-careers-cx_mk_0825danger.html
————

As for firefighting, the reduction in injuries and fatalities over the years is due to better training and firefighting/rescue techniques. But the fatality rate only tells part of the story. Firefighters now perform many different services — paramedic, search and rescue, hazmat, etc. All of which have different types of risks (think of the liability when treating an acute patient). Also, not included in those numbers are the deaths that result from exposure to toxic materials, where the deaths result many years later.

(PDF warning)

http://www.iaff747.com/docs/Cancer%20Risk%202x%20as%20High0001.pdf
————-

I suppose, at the end of the day, we have to ask ourselves if the risks taken by traders and speculators is worth more than the risks taken by public safety personnel. The answer to that is subjective, and depends on where you stand, logically and philosophically.

[davelj]

[quote=CA renter]
No way anyone can convince me that trading securities is more risky that police work or firefighting. And, per your link, salespeople in the financial and securities industry are higher on the “contentment” scale than cops are (firefighters are higher).[/quote]

Not at all what I was implying (and you know this). My point was merely that (a) jobs aren’t priced according to physical risk, and (b) some people simply like doing these purportedly (although perhaps not overly in a relative context) risky jobs – they actually enjoy them. Different strokes for different folks.

[quote=CA renter]
I suppose, at the end of the day, we have to ask ourselves if the risks taken by traders and speculators is worth more than the risks taken by public safety personnel. The answer to that is subjective, and depends on where you stand, logically and philosophically.[/quote]

Exactly – it’s all subjective. (And because it’s subjective, “logic” has little to do with it – it’s mostly philosophical.) I assume that you’re not in favor of a Randian Council of Vocations that chooses work for people, so while the market may not do a perfect job of allocating professions, it appears to do a much better job than the alternatives. Such are the imperfections of quasi-liberty.

[davelj]

[quote=CA renter]
No way anyone can convince me that trading securities is more risky that police work or firefighting. And, per your link, salespeople in the financial and securities industry are higher on the “contentment” scale than cops are (firefighters are higher).[/quote]

Not at all what I was implying (and you know this). My point was merely that (a) jobs aren’t priced according to physical risk, and (b) some people simply like doing these purportedly (although perhaps not overly in a relative context) risky jobs – they actually enjoy them. Different strokes for different folks.

[quote=CA renter]
I suppose, at the end of the day, we have to ask ourselves if the risks taken by traders and speculators is worth more than the risks taken by public safety personnel. The answer to that is subjective, and depends on where you stand, logically and philosophically.[/quote]

Exactly – it’s all subjective. (And because it’s subjective, “logic” has little to do with it – it’s mostly philosophical.) I assume that you’re not in favor of a Randian Council of Vocations that chooses work for people, so while the market may not do a perfect job of allocating professions, it appears to do a much better job than the alternatives. Such are the imperfections of quasi-liberty.

[davelj]

[quote=CA renter]
No way anyone can convince me that trading securities is more risky that police work or firefighting. And, per your link, salespeople in the financial and securities industry are higher on the “contentment” scale than cops are (firefighters are higher).[/quote]

Not at all what I was implying (and you know this). My point was merely that (a) jobs aren’t priced according to physical risk, and (b) some people simply like doing these purportedly (although perhaps not overly in a relative context) risky jobs – they actually enjoy them. Different strokes for different folks.

[quote=CA renter]
I suppose, at the end of the day, we have to ask ourselves if the risks taken by traders and speculators is worth more than the risks taken by public safety personnel. The answer to that is subjective, and depends on where you stand, logically and philosophically.[/quote]

Exactly – it’s all subjective. (And because it’s subjective, “logic” has little to do with it – it’s mostly philosophical.) I assume that you’re not in favor of a Randian Council of Vocations that chooses work for people, so while the market may not do a perfect job of allocating professions, it appears to do a much better job than the alternatives. Such are the imperfections of quasi-liberty.

[davelj]

[quote=CA renter]
No way anyone can convince me that trading securities is more risky that police work or firefighting. And, per your link, salespeople in the financial and securities industry are higher on the “contentment” scale than cops are (firefighters are higher).[/quote]

Not at all what I was implying (and you know this). My point was merely that (a) jobs aren’t priced according to physical risk, and (b) some people simply like doing these purportedly (although perhaps not overly in a relative context) risky jobs – they actually enjoy them. Different strokes for different folks.

[quote=CA renter]
I suppose, at the end of the day, we have to ask ourselves if the risks taken by traders and speculators is worth more than the risks taken by public safety personnel. The answer to that is subjective, and depends on where you stand, logically and philosophically.[/quote]

Exactly – it’s all subjective. (And because it’s subjective, “logic” has little to do with it – it’s mostly philosophical.) I assume that you’re not in favor of a Randian Council of Vocations that chooses work for people, so while the market may not do a perfect job of allocating professions, it appears to do a much better job than the alternatives. Such are the imperfections of quasi-liberty.

[davelj]

[quote=CA renter]
No way anyone can convince me that trading securities is more risky that police work or firefighting. And, per your link, salespeople in the financial and securities industry are higher on the “contentment” scale than cops are (firefighters are higher).[/quote]

Not at all what I was implying (and you know this). My point was merely that (a) jobs aren’t priced according to physical risk, and (b) some people simply like doing these purportedly (although perhaps not overly in a relative context) risky jobs – they actually enjoy them. Different strokes for different folks.

[quote=CA renter]
I suppose, at the end of the day, we have to ask ourselves if the risks taken by traders and speculators is worth more than the risks taken by public safety personnel. The answer to that is subjective, and depends on where you stand, logically and philosophically.[/quote]

Exactly – it’s all subjective. (And because it’s subjective, “logic” has little to do with it – it’s mostly philosophical.) I assume that you’re not in favor of a Randian Council of Vocations that chooses work for people, so while the market may not do a perfect job of allocating professions, it appears to do a much better job than the alternatives. Such are the imperfections of quasi-liberty.

[sdrealtor]

Thank you for a simple but brilliant post.

[sdrealtor]

Thank you for a simple but brilliant post.

[sdrealtor]

Thank you for a simple but brilliant post.

[sdrealtor]

Thank you for a simple but brilliant post.

[sdrealtor]

Thank you for a simple but brilliant post.

[davelj]

[quote=davelj][quote=briansd1][quote=Diego Mamani]Yeah dude, cut back!

Anyways, the $13B pales in comparison to the money that we (taxpayers) will lose with Fannie and Freddie. We’ve already lost close to $150 BILLION, and we stand to lose another $160 billion to $1 trillion, according to conservative estimates:

http://www.bloomberg.com/news/2010-06-13/fannie-freddie-fix-expands-to-160-billion-with-worst-case-at-1-trillion.html%5B/quote%5D

True enough.

FHA will also likely cost taxpayers $100 billion.

Funny thing is that Fan/Fred and FHA sprang into action after the financial crisis to save the market.

But certain uninformed people who just don’t understand the chain of events accuse the GSEs of CAUSING the crisis.[/quote]

How many times I have to explain this I just don’t know (this is may be the fifth time). As I wrote back in December 2009:

[quote=davelj]
I think the Fannie/Freddie (F&F) TARP [in addition to accumulated losses] will also get paid back, but over a much longer time horizon. Spread lenders, almost no matter how bad off they are, can always fill a hole, the only issue being how long it takes. And it’s going to take F&F a long time. To use an example, lets say that F&F charge off 10% of their portfolio (which would be a big number). Further, let’s say the average yield on the remaining 90% of their book is 5.5% and their funding costs (now borrowing at govt rates) are 2.5%. Add in 100 bps of operating expenses and you have a 200 bp spread. Here, it takes F&F 5.5 years to fill its hole (from losses) with spread income from the performing portfolio. If you assume that F&F’s losses are going to be 20% of its book, it takes them 11 years to fill the hole, and so on. So, while we’re hearing about the big “losses” coming out of F&F – which are real losses – we will get that money back… eventually… but it could be many years. We will lose in real (that is, inflation-adjusted) terms for sure.[/quote]

The point here is that F&F’s “losses” are an income statement item and are meaningless absent a discussion of the balance sheet. We, the US Taxpayers, now own a huge pile of mortgage assets (along with corresponding debt that funds them). The losses will stop eventually – likely in a few years – and the spread income will fill the hole (think of it as accumulated negative retained earnings in accounting terms) and eventually yield a net profit. But… this is in nominal dollars and down the road many years. So, again, there will be a loss in real dollars, but that loss will be a small fraction of the “current losses” that are reported in the MSM. To be clear, I don’t give a rat’s ass about F&F – I just want folks to understand the difference between (1) temporary losses and permanent losses of capital, and (2) income statements and balance sheets.[/quote]

We’re starting to see signs of what I’ve been talking about for quite some time at the GSEs (although earlier than I would’ve expected):

http://housingdoom.com/2011/03/01/maloni-fannie-freddie-healing-faster-thought/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+HousingDoom+%28Housing+Doom+Housing+Bubble+Blog%29

Pay attention to the following headings: “Fascinating GSE Market Developments” and “No Lost Money on the GSEs?”. McFarland is making the same point I’ve been making for quite some time, albeit without providing the math behind it and on shorter time horizon.

[davelj]

[quote=davelj][quote=briansd1][quote=Diego Mamani]Yeah dude, cut back!

Anyways, the $13B pales in comparison to the money that we (taxpayers) will lose with Fannie and Freddie. We’ve already lost close to $150 BILLION, and we stand to lose another $160 billion to $1 trillion, according to conservative estimates:

http://www.bloomberg.com/news/2010-06-13/fannie-freddie-fix-expands-to-160-billion-with-worst-case-at-1-trillion.html%5B/quote%5D

True enough.

FHA will also likely cost taxpayers $100 billion.

Funny thing is that Fan/Fred and FHA sprang into action after the financial crisis to save the market.

But certain uninformed people who just don’t understand the chain of events accuse the GSEs of CAUSING the crisis.[/quote]

How many times I have to explain this I just don’t know (this is may be the fifth time). As I wrote back in December 2009:

[quote=davelj]
I think the Fannie/Freddie (F&F) TARP [in addition to accumulated losses] will also get paid back, but over a much longer time horizon. Spread lenders, almost no matter how bad off they are, can always fill a hole, the only issue being how long it takes. And it’s going to take F&F a long time. To use an example, lets say that F&F charge off 10% of their portfolio (which would be a big number). Further, let’s say the average yield on the remaining 90% of their book is 5.5% and their funding costs (now borrowing at govt rates) are 2.5%. Add in 100 bps of operating expenses and you have a 200 bp spread. Here, it takes F&F 5.5 years to fill its hole (from losses) with spread income from the performing portfolio. If you assume that F&F’s losses are going to be 20% of its book, it takes them 11 years to fill the hole, and so on. So, while we’re hearing about the big “losses” coming out of F&F – which are real losses – we will get that money back… eventually… but it could be many years. We will lose in real (that is, inflation-adjusted) terms for sure.[/quote]

The point here is that F&F’s “losses” are an income statement item and are meaningless absent a discussion of the balance sheet. We, the US Taxpayers, now own a huge pile of mortgage assets (along with corresponding debt that funds them). The losses will stop eventually – likely in a few years – and the spread income will fill the hole (think of it as accumulated negative retained earnings in accounting terms) and eventually yield a net profit. But… this is in nominal dollars and down the road many years. So, again, there will be a loss in real dollars, but that loss will be a small fraction of the “current losses” that are reported in the MSM. To be clear, I don’t give a rat’s ass about F&F – I just want folks to understand the difference between (1) temporary losses and permanent losses of capital, and (2) income statements and balance sheets.[/quote]

We’re starting to see signs of what I’ve been talking about for quite some time at the GSEs (although earlier than I would’ve expected):

http://housingdoom.com/2011/03/01/maloni-fannie-freddie-healing-faster-thought/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+HousingDoom+%28Housing+Doom+Housing+Bubble+Blog%29

Pay attention to the following headings: “Fascinating GSE Market Developments” and “No Lost Money on the GSEs?”. McFarland is making the same point I’ve been making for quite some time, albeit without providing the math behind it and on shorter time horizon.

[davelj]

[quote=davelj][quote=briansd1][quote=Diego Mamani]Yeah dude, cut back!

Anyways, the $13B pales in comparison to the money that we (taxpayers) will lose with Fannie and Freddie. We’ve already lost close to $150 BILLION, and we stand to lose another $160 billion to $1 trillion, according to conservative estimates:

http://www.bloomberg.com/news/2010-06-13/fannie-freddie-fix-expands-to-160-billion-with-worst-case-at-1-trillion.html%5B/quote%5D

True enough.

FHA will also likely cost taxpayers $100 billion.

Funny thing is that Fan/Fred and FHA sprang into action after the financial crisis to save the market.

But certain uninformed people who just don’t understand the chain of events accuse the GSEs of CAUSING the crisis.[/quote]

How many times I have to explain this I just don’t know (this is may be the fifth time). As I wrote back in December 2009:

[quote=davelj]
I think the Fannie/Freddie (F&F) TARP [in addition to accumulated losses] will also get paid back, but over a much longer time horizon. Spread lenders, almost no matter how bad off they are, can always fill a hole, the only issue being how long it takes. And it’s going to take F&F a long time. To use an example, lets say that F&F charge off 10% of their portfolio (which would be a big number). Further, let’s say the average yield on the remaining 90% of their book is 5.5% and their funding costs (now borrowing at govt rates) are 2.5%. Add in 100 bps of operating expenses and you have a 200 bp spread. Here, it takes F&F 5.5 years to fill its hole (from losses) with spread income from the performing portfolio. If you assume that F&F’s losses are going to be 20% of its book, it takes them 11 years to fill the hole, and so on. So, while we’re hearing about the big “losses” coming out of F&F – which are real losses – we will get that money back… eventually… but it could be many years. We will lose in real (that is, inflation-adjusted) terms for sure.[/quote]

The point here is that F&F’s “losses” are an income statement item and are meaningless absent a discussion of the balance sheet. We, the US Taxpayers, now own a huge pile of mortgage assets (along with corresponding debt that funds them). The losses will stop eventually – likely in a few years – and the spread income will fill the hole (think of it as accumulated negative retained earnings in accounting terms) and eventually yield a net profit. But… this is in nominal dollars and down the road many years. So, again, there will be a loss in real dollars, but that loss will be a small fraction of the “current losses” that are reported in the MSM. To be clear, I don’t give a rat’s ass about F&F – I just want folks to understand the difference between (1) temporary losses and permanent losses of capital, and (2) income statements and balance sheets.[/quote]

We’re starting to see signs of what I’ve been talking about for quite some time at the GSEs (although earlier than I would’ve expected):

http://housingdoom.com/2011/03/01/maloni-fannie-freddie-healing-faster-thought/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+HousingDoom+%28Housing+Doom+Housing+Bubble+Blog%29

Pay attention to the following headings: “Fascinating GSE Market Developments” and “No Lost Money on the GSEs?”. McFarland is making the same point I’ve been making for quite some time, albeit without providing the math behind it and on shorter time horizon.

[davelj]

[quote=davelj][quote=briansd1][quote=Diego Mamani]Yeah dude, cut back!

Anyways, the $13B pales in comparison to the money that we (taxpayers) will lose with Fannie and Freddie. We’ve already lost close to $150 BILLION, and we stand to lose another $160 billion to $1 trillion, according to conservative estimates:

http://www.bloomberg.com/news/2010-06-13/fannie-freddie-fix-expands-to-160-billion-with-worst-case-at-1-trillion.html%5B/quote%5D

True enough.

FHA will also likely cost taxpayers $100 billion.

Funny thing is that Fan/Fred and FHA sprang into action after the financial crisis to save the market.

But certain uninformed people who just don’t understand the chain of events accuse the GSEs of CAUSING the crisis.[/quote]

How many times I have to explain this I just don’t know (this is may be the fifth time). As I wrote back in December 2009:

[quote=davelj]
I think the Fannie/Freddie (F&F) TARP [in addition to accumulated losses] will also get paid back, but over a much longer time horizon. Spread lenders, almost no matter how bad off they are, can always fill a hole, the only issue being how long it takes. And it’s going to take F&F a long time. To use an example, lets say that F&F charge off 10% of their portfolio (which would be a big number). Further, let’s say the average yield on the remaining 90% of their book is 5.5% and their funding costs (now borrowing at govt rates) are 2.5%. Add in 100 bps of operating expenses and you have a 200 bp spread. Here, it takes F&F 5.5 years to fill its hole (from losses) with spread income from the performing portfolio. If you assume that F&F’s losses are going to be 20% of its book, it takes them 11 years to fill the hole, and so on. So, while we’re hearing about the big “losses” coming out of F&F – which are real losses – we will get that money back… eventually… but it could be many years. We will lose in real (that is, inflation-adjusted) terms for sure.[/quote]

The point here is that F&F’s “losses” are an income statement item and are meaningless absent a discussion of the balance sheet. We, the US Taxpayers, now own a huge pile of mortgage assets (along with corresponding debt that funds them). The losses will stop eventually – likely in a few years – and the spread income will fill the hole (think of it as accumulated negative retained earnings in accounting terms) and eventually yield a net profit. But… this is in nominal dollars and down the road many years. So, again, there will be a loss in real dollars, but that loss will be a small fraction of the “current losses” that are reported in the MSM. To be clear, I don’t give a rat’s ass about F&F – I just want folks to understand the difference between (1) temporary losses and permanent losses of capital, and (2) income statements and balance sheets.[/quote]

We’re starting to see signs of what I’ve been talking about for quite some time at the GSEs (although earlier than I would’ve expected):

http://housingdoom.com/2011/03/01/maloni-fannie-freddie-healing-faster-thought/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+HousingDoom+%28Housing+Doom+Housing+Bubble+Blog%29

Pay attention to the following headings: “Fascinating GSE Market Developments” and “No Lost Money on the GSEs?”. McFarland is making the same point I’ve been making for quite some time, albeit without providing the math behind it and on shorter time horizon.

[Author]

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