take a guess

Treasury's Standardized Terms

Felix, you are taking a piece out of the broader context. The real trick behind this is that banks can be guaranteed on new senior loans. Combined with the T1 capital injection, banks will be able to get 5 - 7x new loans at dirt cheap price and lend them out while maintaining a safe T1 ratio. This gave them some good incentive to make some easy money. At the end of day, not making profit is as dangerous as not having a good balance sheet.

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

Here is a simple alternative that would satisfy most senators and Bernanke:

The treasury buys up the loan with cash for a discounted mark-to-market value of the property determined by an auditor authorized by the congress and inject a capital through preferred shares into the company up to the difference between the cash value and the hold-to-mature value. The preferred shares have a punitive interest rate, such as 11%, redeemable in 5 (or given number of) years, and with exclusive voting rights on executive pays and dividends. The government keeps these rights until all preferred shares are redeemed.

The government can use some portion of the interest income from the preferred shares and the loans to fund programs for rewriting the loans. The rest of the interest income can be used for compensating future potential losses on delinquencies and foreclosures of these loans. The government can hold the loans to maturity, default or until someone willing to purchase it with the mark-to-market price after the loans have been adjusted to prime status.

Given that the financial institutions will have increased capital to fund regular operations, further restrictions on capital ratio can be phased in overtime and then phased out after all money have returned to the treasury.

A Glut of Petroleum Products

The comparison in absolute quantity v.s. 20+ year average is misleading. It doesn't take into account the increase in consumption rate over the average.

The Citi Plunge Continues

Haven't you heard on the news or watched on TV about how people saved two whales trapped in the bay near San Francisco? Instead of trying to help them swim, guide them through the river and out to the sea. It takes time and could be painful, but nature eventually did its work with a little bit of help.

EMC Corporation: Undervalued and Ripe for Buyout

For those who really think VMW is overvalued, they can short VMW and long $(1/0.86) EMC for each dollar shorted to get the 13.1B valuation on the rest of EMC. I don't know how many are already doing this right now, thus VMW may actually be still discounted because of this.

Anyway, the number published here is indeed valid. Does the rest of EMC worth 13.1B? I don't know. At least it has tons of cash and its revenue and profit has been kept growing consistently after the .com bust. (Disclosure: owns both VMW and EMC stocks)

Help for the Guarantors - From an Unexpected Source

In step 6, to make up for the sinking value of CDS on FG, IB can sell the CDS to FG as part of the deal. The FG will get the $0.5B in cash or maybe even more for the sale of CDS. The IB can sell the CDS acquired from IB if the rating doesn't go up. Whoever causes the manipulated price of the CDS on IB will lose for sure.