De Graaf

The Benefits of Too Big to Fail

Sean Ryan is spot on.

Explicit or implicit, either way the costs of implicit backing of risk by governments are obvious now.

If TBTF banks are allowed to exist in the future, which I expect they will, then improved regulation and higher risk insurance should be implemented on a global basis to offset the systemic failure. I believe Strauss Kahn of the IMF talked about that latter issue recently, to form one global pool of insurance covering all major markets.

You can allow greedy bankers to continue, or you socialize some of their profits in insurance pools on a pro rato basis. The bigger the bank, the more it contributes.

Hard work should always be rewarded without limits. But not on the back of society by means of Keynesian leverage.

Time for Austrian economics. The common individual centralized. Not MBA bonuses.

Why Bank Nationalization Will Never Happen

Good article, thank you.

I wonder if the US government has learnt anything from Japan. They studied the deflation cycle, but they aren't responding properly! I tell you, its way to slow.
Recently there was an article about Asian analysts calling to the US for more money into its system. They see the exact same thing happening that Japan did wrong in the '90s. The eventual breakthrough and its rise of the three pillars were based on the nationalization of Jap banks. After that things went into recovery mode.

The US of A is way to slow with the injections. My personal opinion is to let the system fail and stop the phoney money policy, but you know politics. For a politician to face the gallows is simply doing nothing. Obama needs to respond for his constituents, but we all know (at least the sane ones do) that this stimulus is merely a jobsaver. It won't get us out of this mess.
Just like Japan did, America is going to use a few trillions of dollar more to get out of this crisis....and fast.

Just look for the reports on how much Japan is pushing through for stimulus as we speak....

Why Bailouts Are Not the Answer

Hi Peter,

Again, I totally agree with your perspective. But tell me, why don't the so called 'puppets with strings' don't see this and act accordingly?

Is it because they are not willing to encounter the political face loss. Or do they just love the remedy of debasing the currency patriotically and let the foreign lenders pay the (inflationary taxed) dollar bill.

My point is, that with this insane spending packages they come up with every week nowadays, there comes a moment in 2009 when the foreign willingness to back up Treasury is halted.
With inflationary practices the US Treasury tries to debase their currency with the smart tool of expanding the money supply. And you and I know that the inflation of our (world) currency is not measurable with tools. You can only see the effect of it.

The large indebtedness of the US consumer, and the state, its actually coming to the point of no return from what they are doing. Because this type of inflation the Treasury pursuits, faces another integrity problem and correspondingly; National security.

All this debt that fueled the American economy, is now being filled with an inflationary torrent, like you pointed out nicely. But add the fact that the same dollar is being funded by mostly foreign lenders, who are not yet feeling the effect of inflation in their hands. This is like a cigar from their own box!!

Only because the effect of inflation (higher prices with the same or smaller amount of goods) is not yet visible, and will not be visible for years! That is because of the debt position America is in. They now use 'their own' money (printing press money) to fill the debt bases gaps in the economy. Thereby NOT showing inflation. And in the meantime the lenders keep on propping up cash in Treasury bonds, now starting to show lower rates due to the Helicopter Bernanke.

Its insane! In 2009 or 2010 and far beyond their comes a Tsunami (T of Trillions) of inflated dollars on the markets, that instantly crashes the dollar currency. Thereby fueling havoc among the US foreign lenders.
I suspect it follows with great turmoil and political instability as governments fell into the trap of propping up a failed dollar. Just as the failed US economy right now.

There comes a time, this behaviour will be punished. And I don't like this development at all Peter.

Good article,

brgds

Citigroup: Another Bad Deal

These guys from Zachs, definitately don't have anything in common with the nuts function this company delivers on a global basis.
The deal looks bad indeed for the taxpayer. Their credit status won't improve by this, nor does their real estate values go up. All true.

But consider this; people took risks, banks took risks, and the only one that had to regulate this is government together with independant (SEC)bank auditors. The latter ones failed big time.

Now, about your rant about the government not making any money on the CitiGroup deal. You haven't looked into the deal. Because they receive $7 billion in preferred stock @ ~8 percent interest annually. Next to that, they receive warrants for acquiring 4.9 percent of common stock when its hit $10.50. That is very attractive for the taxpayer. Especially when you consider, that this banking giant is the motor of global finance and restructuring its cost base to be ready for the next century in finance.

So basically what Zach's is saying, is based on a rant against CitiGroup.
Please analyse your market some better next time. This downgrades your company on my list instantly. I hope also with the others in the community.

In regard to the auto-industry, please; what is wrong with you people. The automakers except for Ford, where already on the brink of collapse, after 20 years of mismanagement. Their union contracts and social security obligations are insane for this type of market. How about competitiveness? We are the big tree, and you just save our ass Congress...right. That is taxpayer dillusion.
I say, let the strong and competent survive over the weak and incompetent corporations. Social interventionalism must be used to reform the health care system on a government level. Not corporate wise.

brgds.

FDIC Troubled Bank List Grows By 46% - Is Your Bank Safe?

Guys, dammit didn't you learn any math at school.

46 percent increase of 117 banks on the list (last quarter) is 171 banks on the FDIC list.

I know your possibly cannot be investors, b'cause you''ll be losing money like water...

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