http://www.ritholtz.com/blog/2010/04/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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