[Peter Suderman]
A colleague notices that the New York Fed has released some details on the Bear Stearns bailout, which is probably a little bit important considering the public could end up footing the bill if things go south. The whole situation is a bigger mess than Ishtar and Waterworld combined (a movie which, okay, I'd actually like to see), but I tend to think skepticism, of whatever sort, is a far more appropriate a reaction than the "Bernanke is my kind of guy" Fed-love we're seeing in some quarters.
Copyright © 2009 by The Atlantic Monthly Group. All rights reserved.
The $29 billion credit extension is supported by assets that were valued at $30 billion by Bear Stearns, which valued the assets at market value on March 14.
That's better than it thought it would be.
How do you value something that is illiquid and hence, do not have a market price or is so thinly traded that the market price can be wildly above or below book value?
Actually, the Bear Stearns deal seems to have been more the work of the NY Fed president Tim Geithner than Bernanke. And overall, it looks like it was the right decision, all things considered.
I spent 30 minutes writing and revising a response to the economic substance of your post and then figured...aahh, forget it. So, three thoughts spurred by your movie references....
(1) Ishtar - I saw Ishtar on cable and thought it was a worthwhile movie. The reason that it's slammed as a paradigmatic failure is the net return. I blame that on hiring two (then) huge stars and shooting on location. The thing could have been shot in Nevada with nobodies and would have been a Cannes darling.
(2) Waterworld - I've seen this movie; it's unredeemable.
(3) The Postman - Another Kevin Costner flick. You didn't mention this, but it's another high budget flick that tanked in terms of return and, coming on the heels of Waterworld, many folks mention as being a horrible movie. I liked this movie quite a bit. I would recommend it.
Take care and best regards.
When Oh When Is Megan Returning From Her Wrongful Suspension ?
There's not enough information here. Based on this description, that stuff could be money good or largely worth nothing. My guess is they have a bunch of non-AAA tranches of mortgage-backed securities, some good chunk of which will be worth nothing due to deterioration in the underlying pool and the thinness of the tranche.
The agency stuff should be ok, wonder why it is in there?(perhaps due to interest rate structure - PACs/TACs/IOs?)
The Fed is required by law to take only high quality collateral. I don't see any reason they would flout that law and accept low-grade collateral instead. And why wouldn't Bear put up the good stuff? It's not like they had any reason to try to cheat the Fed. Indeed, the consequences of doing so would be ruinous.
"THE HISTORY OF THE UNITED STATES
SILVER DOLLAR
By Richard Giedroyc
The silver dollar was a natural denomination to be adopted by the fledgling United States.
The tradition of the so-called “crown” size coin dates from the late 15th century when significant silver finds in Germany and central Europe were struck into talers. The word taler has been translated into many languages where the crown size silver coin has been used. Among these translations are daler, daalder and dollar. The word dollar is not unique to the United States, nor was it first used here. James VI of Scotland struck a 30-shilling coin between 1567 and 1571 generally called the Sword Dollar due to his depiction on the obverse holding a sword. The Double Merk of 1578 is called the Thistle Dollar. Charles II of England (1660-1685) struck a dollar denomination coin for Scotland. Fractional denominations were in half, quarter, eighth and sixteenth dollar denominations. Spain issued crown size silver coins in the denomination of 8 reales. Spanish colonial American Mints struck silver mined in Central and South America into 8 reales and smaller denominations, most of the coins shipped back to Spain. The 8-reales coins not exported to Spain were used in local commerce in the New World, some of them eventually arriving in the English colonies along the Atlantic coast.
In the 13 original colonies the 8-reales coin was popularly referred to as a milled dollar. Considering the Royal Mint did not provide the necessary coins needed for local commerce the American colonies used any foreign specie available. The Spanish milled dollar was typically what was available. It was so popular that the coin was
finally formally demonetized through an act of Congress in 1857. The tradition of the fractions of the dollar which was initiated during the reign of Charles II became popular. Although smaller or fractional denomination Spanish colonial American coins were sometimes available, many of the 8-reales coins were cut into pie
shaped halves, quarters, eighths and sixteenths to make change. These are the famous “pieces of eight” of romantic literature.
The United States settled on a decimal currency system rather than the cumbersome pound sterling system of Great Britain or the awkward denomination system based on the silver 8 reales and gold 8 escudos of Spain. Within the American colonies Maryland was the first to issue paper money in dollar denominations in 1766. In 1775 the Continental Congress printed paper money again in the dollar denomination.
The tradition of the U.S. dollar denomination coin was born with the pewter, brass and silver composition 1776 Continental dollar coin varieties. These coins are generally accepted to have been patterns rather than circulation coins, but they paved the way for the tradition of a dollar denomination coin.
Thomas Jefferson was among the proponents for a silver dollar coin as early as 1785. These were difficult economic times for the young country. The Spanish 8-reales coin filled the need in the absence of a U.S. Mint and federally issued currency.
When Secretary of the Treasury Alexander Hamilton presented Congress with a report on a Mint and a monetary system, a dollar coin with the approximate weight and purity of the Spanish milled dollar was taken into serious consideration. The very first
statute of the Mint Act of April 2, 1792, authorized striking of silver dollar denomination coins. Our federal coinage actually begins in 1792 with what could be argued to be patterns, regular production of some denominations commencing during 1793.
The first U.S. Silver Dollars were struck in 1794
The silver dollar denomination was delayed until 1794, in part due to a problem in requisitioning the necessary silver. Secretary of State Jefferson rather than Secretary of the Treasury
Alexander Hamilton had initially been placed in charge of the Mint. Since this caused a personal problem between the two men, Hamilton did not cooperate in the necessary requisitions for bullion for striking these coins.
It isn’t known for certain, but it appears the dies for the Flowing Hair silver dollar of 1794 to 1795 may have been made as late as September 1794. Mint Engraver Robert Scot designed the initial U.S. silver coins, including the Flowing Hair silver dollar. No one knows for certain, but Scot may have used Engraver Joseph Wright’s eagle design from the 1792 pattern quarter dollar coin for the eagle on the reverse of the first silver dollar coin. The initial silver dollar coins are struck of 26.96 grams of .8924 fine silver alloyed with copper. The diameter is about 39 to 40 millimeters with a lettered edge reading HUNDRED CENTS ONE DOLLAR OR UNIT. The Spanish colonial American 8-reales coin beginning in 1772 has a weight of 27.07 grams of .903 fine silver. With this in mind and the fact Congress ruled the 8 reales was to circulate on par with the new dollar coin, the silver dollar coin would in reality circulate at a discount to the so-called Spanish milled dollar or would fail to be accepted in commerce at all..."
http://www.coinfacts.com/historical_notes/history_of_the_silver_dollar.htm
McArdle was fired at the same time Andy Sullivan went "on hiatus."
You don't suppose....
I expect that if the Fed held these to term they would make a tidy profit.