Why are US policy makers so delivery kamagra desperately trying to prop up the banks instead of allowing them to fail (gracefully). Is it because it would cost too much to cover federally insured deposits
?
I came across a Buy Nexium Online Pharmacy No Prescription Needed Amoxil buy cheap where can buy viagra Viagra online Buy Buy Antibiotics medications Viagra cialis online buy real viagra without prescription | buy cialis fast shipping | low price levitra drugstore trial pack Viagra Jelly financial statement for Citigroup, and it contains an answer to a sildenafil citrate href=”http://roylat.com/2009/01/some-dumb-questions-about-dealing-with-failing-banks/”>question buy phentermine I posed levitra vardenafil some time ago:
- What is the problem with letting all of the failing investment firms fail, with propecia generic the government guaranteeing all depositors amoxil Online Levitra buy of any siz
e?
The answer appears to be, "There would be no problem, at least insofar as guaranteeing lasix to buy depositors." Here’s why.
The deposits in Citgroup as of December 31, 2008 (in millions):
Non-interest-bearing deposits in U.S. offices levaquin prescription nolvadex buy amoxicillin order levitra Viagra Jelly $ 60,070
Interest-bearing deposits Buy Amoxil in U.S. offices Buy Viagra, Buy Cialis, Buy Levitra Without Prescription $229,906
Non-interest-bearing deposits in offices outside the U.S. cheapest Cialis Professional propecia buy cialis 37,412
Interest-bearing deposits in offices outside the U.S. purchase viagra online | where to buy cialis | order online levitra 446,797
Total deposits buy genuine viagra online | buy cialis overnight shipping | buy levitra cheap online tadalafil $774,185
What strikes buy diflucan one immediately is that only a minority of deposits are interest-bearing acomplia cheap deposits in U.S. banks ($229.9 billion). I believe that these are the only deposits covered by federal insurance. If we include checking account (non-interest bearing) deposits, the total that the U.S. would need to guarantee is $290 billion. Deposits in banks outside the U.S. should not reasonably be the responsibility of U.S. taxpayers
.
Taking the larger number, how much might the U.S. be on the hook for if it allowed the bank to fail, or took over the good assets and the deposits, wiped out common and preferred shareholders, and allowed bondholders to deal with the rest
?
A quick look suggests that the government would levitra drugs not need to put in any substantial amount of money. On a book basis, total assets exceed total liabilities by $150.7 billion. Long-term debt (to bondholders) equals $359.6 billion. Together, net assets plus long-term debt equals $510 billion. This amounts to 176% of U.S. deposits. It is equal to two-thirds of all worldwide deposits.
Citgroup’s loan and investment portfolio is over $900 billion dollars. Although it will be subject to substantial writedowns over levitra brand the coming year, its realizable value plus the $510 billion cushion of bondholder and shareholder equity seems easily more than is Buy Lasix Online needed to cover all worldwide deposits of all types ($774 billion).
Even if the U.S. had to cover some fraction of U.S. deposits, each 10% of coverage would cost $29 billion.
Consider what Citgroup has already cost the US government (and taxpayers):
- The government has backed $306 billion of Citigroup Inc.
buyviagra | buy cialis overseas | buy levitra drugs securities. It has not yet had to make good on any of the guarantees, but it will be responsible for 90% of losses on $306 billion of mortgages on residential and commercial cytotec buy mortgages. Potential losses on these are mounting weekly as prices of homes and commercial properties decline.
- It has online Ampicillin put buy cialis pill $30 billion into the bank’s capital base, by purchasing preferred shares. Source
Informed analysts buy amoxil online levitra Levitra”>Brand Levitra Jelly”>Cialis Jelly all think the price tag is of trying to keep this and other banks from failing is going to rise substantially.
Letting them fail gracefully, viagra generic online by a plan such as that proposed by Willem Buiter, or by any restructuring plan the wiped out shareholder equity and forced bondholders to cover the remaining losses, would most likely cost the government (taxpayers) nothing.
As commentators are increasingly loudly explaining, restructuring the banks will put the banks on a solid footing and give them buy viagra online discount the capacity to make the loans that are buy Silagra medications the supposed objective buy amoxil online of government bailout efforts — all of which have failed to accomplish this objective at gre
at cost to the taxpayer.
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