CM in MA

U.S. Government's Plan for Banks - Ready, Fire, Aim

Timmy G knows precisely what he's doing and is being quite transparent about it. Obfuscation is the desired result. Reality becomes what the government says it is. Pretty simple, really. Success (or victory) can be declared based on yet to be defined outcomes. Enough loopholes will exist for anything to be explained away. This surprises anyone? Here's some free advice regarding portfolio construction and bank stocks: buy something else!

I'll side with Warren Buffett on this one, if I can't understand it I won't buy it. And I can't understand banks, that's for sure. Throw in a Dirty Harry approach (that one must know their limitations), and bank stocks become radioactive for me. I guess I won't be able to brag about how I scored on C, BAC, WFC, etc. But at least I might be able to buy myself a six-pack to enjoy.

Good luck, and good hunting!

TARP Accountability: Bankers Say 'What, Me Sorry?'

TARP means you never have to say you're sorry. Ought to be set to music.

Citi: A Sell at $3.00?

What cracks me up is that anyone pays any attention to what any analyst has to say. I'll give Meredith Whitney credit in that she called Citi to some extent--the stock had already fallen from highs in the mid-50s when she went to "underperform." She certainly did better than most analysts following financial firms. But, was it luck? This question goes to the point of the article about changing the rating. What information is she using to form her opinion. The analysts rely, to no small degree, on information provided by the companies being analyzed. It's pretty clear that the folks at Citi, and at other financial companies, don't know what's happening on their own books. How should Meredith Whitney, or any other analyst, be expected to figure it out? The real laughs start when analysts at Citi, GS, JPM, et al, put a recommendation on each other. Again, these same analysts would be hard put to explain their own company's books.

Henry Paulson Could Have Done Better

Gene-

About my last post. I misread your reply, putting incorrect emphasis on some of your words--sorry about that. Sure, we agree that the world would be better without the bailout. Where we disagree is that the philosophy behind the bailout, and any government action that stems from it, are so fundamentally flawed that what actually gets done is irrelevant. The bailout(s) are poison to our system. The distortions introduced by the TARP, etc. are worse than the disease. The patient would recover if just left alone.


On Nov 24 04:20 PM Gene Chan wrote:

> I guess I wasn't clear... I totally agree with you that the world
> would be a better place if a bail-out wasn't needed in the first
> place. But there is nothing we can do about that now - the bail-out
> package is there, it was already voted through Congress and everything,
> we have no power to change that. The only thing we can hope for now
> is that they don't squander that money.

Henry Paulson Could Have Done Better

Gene-

We are total disagreement--the bailout wasn't needed and isn't necessary. The capitalist system has self-correcting and healing mechanisms. These have been short-circuited by the the same people who were the architects of the abuses the system. They proclaim that they couldn't foresee the folly of their policies and practices, but now are the only ones with wisdom, foresight, and ability to save us from them. Paulson, Bernanke, et al, are only making things worse. This chapter in U.S. and world financial history will go down as one marked by hubris and failure. These people, including those about to take office, are the problem not the solution.


On Nov 24 04:20 PM Gene Chan wrote:

> I guess I wasn't clear... I totally agree with you that the world
> would be a better place if a bail-out wasn't needed in the first
> place. But there is nothing we can do about that now - the bail-out
> package is there, it was already voted through Congress and everything,
> we have no power to change that. The only thing we can hope for now
> is that they don't squander that money.

Henry Paulson Could Have Done Better

"Predicament we're in" We? Do you have a mouse in your pocket? This predicament, touted by the same people who created the mess, belongs to those who took on credit when they couldn't afford to (addicts), those who sold them that credit (street dealers), those who encouraged sub-prime borrowing (ring leaders), and those who failed to set and enforce regulations and standards (feds). Now they pass along the bill for their collective malfeasance to others while simultaneously destroying any remaining confidence in the markets. And all this for the very worst of reasons--because they can.

I am not in any predicament, except for the one being foisted on me by Wall St and Washington. Like many others, I pay my mortgage on time (in fact, I prepay on the principal). I pay my credit card bill in full every month. I save and invest (ha!) for retirement. Who are the fools in this game? All the folks like me, and our kids and grandkids, who will have to foot the bill for those who took on too much risk while pretending they didn't know.

So what's the answer. Quit claiming that those who made the mess can clean it up. The need to just stop and leave the scene of the crime. Let the market sort out the winners and losers. And let the losers take their losses. Capitalism, plain and simple is what will purge the system. All we're doing now is prolonging the pain.


On Nov 24 02:23 PM Gene Chan wrote:

> "Are there any capitalists left?"
>
> Well, I wish we didn't have to go down this path of the bail-out.
> But given the predicament we're in, and that they've already decided
> to do it, might as well do it right and make it count.

Henry Paulson Could Have Done Better

We've gone through the looking glass..."A policy that keeps his options open would have been a force multiplier that puts a floor on the prices of assets all across the system instead of the distortion we have now."

How is putting an artificial floor under asset prices not a distortion? Are there any capitalists left?

The Current Market Atmosphere: Easy Money Hard to Come by

Interesting article, but forming any opinion, thesis or course of action on "facts" such as "the median wage-earner is unable to afford the median priced home" is fraught with danger. I glanced at the study and am fairly certain it is using national medians. Well, we don't live in a median world. Wealth and earning power tends to cluster. Those earning at or below the national median wage in a high-wage area will likely find themselves consistently priced out of the local real estate market where most homes will tend to run above the median house price. Conversely, a person earning at or above the median wage in a low-wage area will be able to afford a home at the upper end of what is likely to be a below median priced housing market.

Facts and data only have meaning when put in context. And also remember that all studies have biases (yes, even at Harvard) and perhaps even hidden agendas.