car_guy

A Look at Citi's Trust Preferreds

Citi and BofA are both walking corpses. Now that the new administration is actually applying a 'stress' test to banks, instead of just pouring our money down a bottomless pit, these 2 companies will die quickly.

Big Three Endure Public Flogging - Government Finally Gets it Right

This brings up another good point. How can the ratings agencies constantly downgrade the US 3 manufacturers driving up their costs & making them uncompetitive (you notice only Toyota is offering 0% financing, with GM's credit rating how could they afford it) while rating derivatives they don't even understand AAA. Isn't a lack of understanding the very definition of risk.

This sounds like market manipulation 101. Put high ratings on the products your customers, the investment banks, want to sell and downgrade everything else. After being so incredibly wrong, why does anybody care what Moodys/S&P/etc rate anything at?


On Dec 07 02:47 PM James Wilson wrote:

> I can see what Buffet means now. Each Derivative split into hundreds
> of small pieces with the total profit broken into even more Derivatives
> then sold in a package at full value as AAA paper.
>
> The same thing Enron was doing by dividing the risk then packaging
> the longterm profits as a short term gain.

Big Three Endure Public Flogging - Government Finally Gets it Right

Mr. Newman's article raises very good points. The Wall Street firms never even had to testify for their gifts. Their money is not even a loan. The $300B for C is to cover the losses on bad debt. That is all taxpayer $ down the drain. Their remaining $50B is in "equity" which I put in quotes since this already exceeds their market cap. I also have not heard Congress demanding that Pandit cut his pay to $1 and sell all of their perks. I did not even hear any uproar when AIG spend $500M of taxpayer money for trip to Europe to "reward" their top executives for their performance this year.

TenQ - the gifts to the financial community are not a 1 time deal. We have been here before with the savings & loan crisis, the huge infusion of capital after the '88 crash, the huge infusions of capital at the begininng of this year, and AIG has already gone back to the well 2 months after their original loan for another $70B and a huge cut in their interest rate. This was after wasting almost 1% of the original amount on the executive vacation. GM/F/C were not interested in government loans until the banks tightened credit so much that ALL US auto sales, foreign & domestic, dropped over 30% the last 2 months to levels that no car company can run at for long. If the financial institutions that caused this mess took some of the $7 TRILLION in government money they received and actually used it to provide consumer credit, the US 3 would not be in Washington.

The UAW, of which I am neither a member nor a fan, finally took their lumps last year and conceded to a contract with lower wage benefit levels for new workers and moving the health care & retirement liabilities off the companies books & into a VEBA. That is why they keep saying they will be at parity with Toyota/Honda/etc in 2010.