Obama is Bush part 3

Paulson/Bernanke: $700 Billion at 'Hold to Maturity' Pricing

There is no such thing as "hold to maturity price".

If Bernanke knows exactly which home owners are going to default and which will not, he should definitely tell us -- and more importantly tell us where he bought his crystal ball that foresees defaults but somehow fails to warn him about the credit crisis.

Unless you know who will/will not default -- you have no way of knowing if a mortgage is worth par or zero.

If he really did earn his PhD, than Bernanke knows this very well and he is deliberately lying to us. Shame on him

Fed Is Likely to Make Money from Its Bank Buyouts

Mr Delong:

If this is such a money making opportunity for the government, please explain why deep pocketed, smart, long term investors such as Warren Buffet, Texas Partners, Blackstone LP, Carlyle Group, etc don't leap in and buy these assets?

What do you **think** you know that all these other people don't?

Given the government's history of paying $100 billion to bail out Katrina victims without actually doing so, including warehouses that were still filled with ice for New Orleans a year after the storm was over... Given the government's long standing history of paying over a billion dollars for a single airplane, and $10,000 for a coffee maker... given that the government has had a **spending** deficit every single year for 40 years...

How do you figure the government is going to turn a profit on assets when smart money like Berkshire Hathaway and private equity funds can not?

There is a reason these people are billionaires and the government is in debt trillions of dollars...

It is really unhelpful when supposedly learned professors write ridiculous articles such as this one.

On Recent Financial Stories

Regarding Citi (and most banks) -- its standard MO for lame CEOs and their management consultants to suggest trimming costs by slashing the IT and back office budgets. What is really surprising is that anyone outside the company would give a shred of credence to the idea.
1) It was the CEO and the "profit" centers who got over-levered on mortgage debt they didnt understand
2) It was the CEO's earlier decisions to ignore risk management and not develop proper risk management software... its far from obvious how cutting these areas further will do anything but hurt
3) Exactly how many traders does it take to go out and buy assets they clearly don't understand and on absurd leverage? Any janitor who dropped out of high school could lose billions just as fast -- and a lot cheaper
4) Does Citi need thousands of securitization lawyers and deal makers considering the market is all but shut down? Do any of the banks need this?
5) Why is management overly concerned with approving first class business airline tickets? If there was actual business activity occurring, a multi-billion dollar corporation really shouldn't care between $300 and $3000... the real question is "Why are you flying at all?" Since there is no business going on, don't fly at all. Get rid of the managers who want to fly first class -- and while you are at it, get rid of the manager who does the approving.
6) This one is a no brainer: save millions by getting rid of all the McKinsey people or else all the Citi managers. If the Citi managers don't know what they are doing, why are they there? If they do know what they are doing, why is McKinsey there? Two completely redundant management structures

But even with two redundant management structures, the best plan they can come up with is to make cuts in risk management and IT? How many McKinsey people did it take to conclude that firing people who had nothing to do with the mistakes that caused the bank's collapse won't result in lower staff morale?