krbo3

Big Banks: Pulling Off the Ultimate Bait and Switch

1. The banks C, BAC, WFC, and GE (yes, GE is a financial), and possibly JPM are insolvent. If you don’t believe that, then I’ve go some mortgage backed securities to sell you!

2. How does our competent Treasury Secretary expect there to be ‘private sector participation’ when the country’s major money centers have no money?

3. From Bloomberg: “The plan is aimed at financing as much as $1 trillion in purchases of illiquid real-estate assets, using $75 billion to $100 billion of the Treasury’s remaining bank-rescue funds. The Public-Private Investment Program will also rely on Federal Reserve financing and Federal Deposit Insurance Corp. debt guarantees, the Treasury said in a statement in Washington.”

4. The astute student will see the pure genius and eloquence of this article. It basically is describing how the private sector is going to participate in this process with OUR (the taxpayers money)! Number 5 below is a post from JT77 from another article:

5. From JT77 post: “The Geithner plan is at grave risk of being gamed by the financial industry. The money center banks can be bidders in this process, and are greatly incentivized to collaborate to bid up each other’s offered asset pools. This allows them to:
1. Transfer 93% of the downside risk they now own to the FDIC and Treasury.
2. Control the bidding process; ensuring bids are well above MTM.
3. Mark up remaining assets they will keep on their books.
In the near term, this will lead to a surge in the XLF and bank share prices, ensuring passage of the Tangible Common Equity “stress” test. In the longer term, the continued decline in employment and home prices, rising savings rates, and rising credit card, auto loan, student loan, and CMBS defaults, may lead to historic losses for the FDIC. Unfortunately, the FDIC’s Deposit Insurance Fund is already near zero. Should the FDIC become impaired in its new role as guarantor of bank assets, it risks failure in its original role as guarantor of bank liabilities, i.e. deposits. We will then be at risk of what we have so far managed to avoid – a good, old-fashioned Depression era bank run.”

How Treasury's Bank Bailout Could Make Things Worse

JT77 has said it BEAUTIFULY above! Read the post above before you read my comments.

I just have a few more points to add.

1. The banks C, BAC, WFC, and GE (yes, GE is a financial), and possibly JPM are insolvent. If you don’t believe that, then I’ve go some mortgage backed securities to sell you!

2. How does our competent Treasury Secretary expect there to be ‘private sector participation’ when the country’s major money centers have no money?

3. From Bloomberg: “The plan is aimed at financing as much as $1 trillion in purchases of illiquid real-estate assets, using $75 billion to $100 billion of the Treasury’s remaining bank-rescue funds. The Public-Private Investment Program will also rely on Federal Reserve financing and Federal Deposit Insurance Corp. debt guarantees, the Treasury said in a statement in Washington.”

4. Let’s decode item 3 above into plain English. “The plan is aimed at financing as much as $1 trillion in purchases of illiquid real-estate assets”. 1Trillion dollars. Hey, what’s another trillion! No big deal! Continued…“using $75 billion to $100 billion of the Treasury’s remaining bank-rescue funds”. Let’s assume that there actually is 100Billion left from the original TARP. Where’s the other 900Billion going to come from? Oh…” The Public-Private Investment Program will also rely on Federal Reserve financing”. Translated…THE FED IS GOING TO PRINT 900b OUT OF THIN AIR. The Chinese have basically said that they are not buying any more of our bonds in diplomatic terms! Who out there is going to buy 900B of treasury bonds? And last…” and Federal Deposit Insurance Corp. debt guarantees”. The FDIC is almost broke as it is! How are they going to guarantee another 1 Trillion?

5. Now…go back and read JT77’s post again. The astute student will see the pure genius and eloquence of the post. It basically is describing how the private sector is going to participate in this process with OUR (the taxpayers money)! If you don’t believe it…just look at the market action today (23 March 2009). The S&P 500 up around 7%, with the financials leading the way with 10.2% gains on the day. Surprisingly…the NASDAQ (no financials) was just along for the ride, lagging the rest of the market (but still impressive gains).

6. One more thing. I have to give credit to the radio show host for saying this. This is very ENRON-esque. Didn’t ENRON move bad assets off of their balance sheet into other areas to hide losses? Wasn’t Ken Lay going to go to jail for this? Didn’t Bernie Ebbers go to Jail for this with world-com? But now it’s ok for the Banks (the most guilty mentioned above) to do this in the name of getting credit flowing again. What’s most sickening is that the Banks will get to do the same thing…the same thing that others are sitting in jail for…except they are moving their toxic assets to us, the taxpayer, with the help of the entity that is suppose to bring ‘…And Justice For All’.

Illegal Short Sellers May Face RICO Indictments

Fact: The SEC is going to do NOTHING!

Facts to back up the above fact:

1. Even through the SEC is 'supposedly' and independent agency,
they are a member of the President's Working Group on financial
Markets (I know this sounds like consparicy stuff, but please
bear with me). The Working Group is chaired by the Secretary of
the Treasury (Hank Paulson, aka uncle Hank) and includes the
Chairman of the SEC, the Chairman of the Federal Reserve
and the Chairman of the Commodity Futures Trading Commission.

a. Basically Uncle Hank here is the boss.

2. We all know Uncle Hank's relationship with Goldman Sachs.

3. Goldman Sachs seems to be weathering this current little
financial crisis a bit better than its compeditors. According to
the media consensus, they have hedged against this real
estate / mortgage meltdown. This brings up some interesting
questions:

a. Back last October when both Uncle Hank and Uncle Ben
were out saying that housing is bottoming, and that sub-
prime was 'contained', why was Goldman hedging?

b. When the hotties on CNBC and Fox Business News figured
out and were saying last October that giving homelss people
200K mortagaes was probably not a good idea...why was
the SEC or some regulating authority not looking into this?
At this point they could have easily done this!

c. When the ship found itself in the eye of this $#1T storm,
why was Bear Stearns allowd to fail BEFORE the rule on
naked short selling was instuited. Just before Bear Stearns
failed...why was Chris Cox (the SEC) defending thier
liquidity? The agency that is suppose to be regulating them?

d. I don't need to elaborate on the firms/banks getting this
special protection, and those that are not! Why is this not
being looked into?

The astute student now realizes that we're beyond the point of the SEC being able to do anything! We are now in the situation where these 4 frat boys listed in bullet item 1 above who created this mess, are now the wise intellectuals that are tasked with cleaning it up. If you believe any meaningful investigation or charges will come from the SEC, then I've got some mortage backed securities to sell you!

Why Today Is Different From the Inflationary 1970s

If you are purchaser of electronics, or a washer & dryer, well then I probably agree...there's no inflation

I.E. the Core CPI.

However...if you're like me: If you regularly buy fuel, use transportation, need hospital services, eat food at home, pay tuition, require medical care, eat out, drink booze, and pay rent...

DONT TELL ME THAT THERE IS NO INFLATION!