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That's because TALF significantly sweetens the returns that can be earned from buying the AAA-rated bonds. Take a typical auto-loan bond. A top-rated auto ABS bond pays a dividend these days of about 3.5%, or a return of $3.5 million on an investment of $100 million, as long as the bond doesn't go into default. That's actually not a terrible yield right now. Just ask anyone with a savings account. (See 5 reasons for economic optimism...
Under TALF, though, an investor has to make a down payment of just $8 million to get a loan from the government to buy $100 million in auto bonds. The loan costs 1.5% a year, or $1.5 million on $100 million, which lowers the investor's take-home return to $2 million. But remember, the investor had to put up just $8 million. That means the annual return on the much smaller up-front investment zooms to a fat 25%. Lower-rated auto loans can pay as much as 30%, but they have a much higher rate of default...
...These objections, while well intentioned, are undermined by the simple fact that Get Out of Cambridge provides a much-needed service that has heretofore not existed on campus and therefore deserves support from the larger undergraduate community. Additionally, since the UC was given a stake in the business in return for its support, it may actually recoup its original investment, allowing it to give more grants to other student groups...
...first victim to speak, George Nierenberg, was so angry and agitated that he could barely stay at the lectern; he got scarcely 45 seconds into his feelings before the judge told him to return to his seat, reminding the others of his instructions. Only two more witnesses chose to speak afterward, even though many more were present in the courtroom. Madoff sat still as a statue, his eyes downcast. (Read "One Victim Asks: Was It Worth It, Mr. Madoff...
...then sending it overseas for oil and gas is counterproductive. Yet the Obama budget includes a 13% excise tax on offshore oil and gas production in the Gulf of Mexico, threatening the domestic oil and gas industry at a time when we should be encouraging it to return resources home to America. The various tax increases in the Obama budget combine to form as great a threat to economic growth as the Smoot-Hawley Tariff - in effect a huge tax increase on consumers - did in the 1930s. Obama needs to slow down, recognize how much the world has changed...