"First, Treasury is announcing a voluntary capital purchase program. A broad array of financial institutions is eligible to participate in this program by selling preferred shares to the U.S. government on attractive terms that protect the taxpayer."
I think the term "Bankruptcy Lite" is appropriate.
We appreciate that these healthy institutions are taking these steps to strengthen their own positions and to enhance the overall performance of the U.S. economy
Am I supposed to feel reassured by this staggeringly blatant lie? Not only is it "voluntary", but they're somehow all "healthy" institutions now. How patriotic they must be to help the taxpayers out with such a sweetheart deal on their "totally-not-worthless" stock!
Did I understand correctly that the FDIC has guaranteed the senior debt of all FDIC insured banks? Woo hoo. I feel right at home here on Bizarro world, buy equities, going to the moon!!!
Gold could hit $1,500, say Merrill analysts
By Moming Zhou
Last update: 8:26 a.m. EDT Oct. 14, 2008Comments: 16
NEW YORK (MarketWatch) -- Gold prices could hit $1,500 as global plans to rescue the financial industry are set to increase inflation pressures, according to analysts led by Francisco Blanch at Merrill Lynch. "The unintended consequence of the ongoing financial bailout will be a return of inflationary pressures to the commodity markets," wrote the analysts in a note released Monday. The analysts didn't say when gold would hit the price target. They also predicted oil prices will rise to $150 a barrel.
"The unintended consequence of the ongoing financial bailout will be a return of inflationary pressures to the commodity markets," wrote the analysts in a note released Monday. The analysts didn't say when gold would hit the price target.
And I predict everyone - everyone! - reading this thread will die.
I am pissed. Maybe it is because of my investment decisions. I just do not see how throwing money at the banks is going to create anything sustainable. They talk of lack of confidence. WTF are we going to produce that is significantly change people's lives. Most of our profits over the last ten years were due to a ponzi scheme instead of real products. What is going to replace the ponzi scheme? I guess we just blame the unregulated free market for the next 15 years.
Whan price controls were first introduced under the Nixon administration, eCONomists hailed the action stating that it would halt inflation and restore faith and econommic growth. Inflation soared and the Dow collapsed 40% shortly after.
I just do not see how throwing money at the banks is going to create anything sustainable.
I don't think it's about productivity anymore. I think it's about momentum. Put every ounce of effort into keeping things MOVING. Momentum. That's the new word for our new age.
Instead of being assured in the banking system, I am more frighten by the government's bailout. This bailout screams "Danger look out below, we are insolvent!"
Once the street figures this out, just how far will the market fall?
Guess what, if any one of these banks files bankruptcy, the shares purchased by the Gov will be wiped out.
I am more concerned then ever.
By the way why is any loan in this country pegged to LIBOR and not the US prime?
Only in America can you totally screw over the financial system and still walk away with a handout.
All this proved today is when you mess up it better be so big it messes up the system, that way you can't go down. Bear Stearns, not big enough, Lehman, not big enough, WAMU, not big enough, Wachovia, not big enough. Citi, JP Morgan, Goldman, AIG, Bank O America, etc... just right!
Mook writes:
"The unintended consequence of the ongoing financial bailout will be a return of inflationary pressures to the commodity markets," wrote the analysts in a note released Monday. The analysts didn't say when gold would hit the price target.
And I predict everyone - everyone! - reading this thread will die.
It appears that financial institutions earn money on transactions (say fees on your mother-in-law's checking account) and lose everything taking risks they don't understand. I want this to stop, and stop nowthe current patching by the banking establishment worldwide is akin to using the same doctor to cure the patient when the doctor has a track record of systematically killing them. And this is not limited to bankingI generalize to an entire class of random variables that do not have the structure we think they have, in which we can be suckers.
Can anyone here recommend a "compare and contrast" article about what the eurozone and the US are doing? Also, 2 days ago someone here made it sound as if we're supplying the money for the eurozone bailout--is that true? Thanks in advance.
PLEASE do the math. If the warrants are truly worth what they are represented to be (15% of principal) then the amount invested as preferred is 90% of nominal.
If $25B of preferred goes into B then really $21.25B is allocable to the preferred.
That means the 5% accreting to 9% should be measured relative to the 85% notional principal allocated.
For the first years when its below 9%, we can ROUGHLY assume the deficit interest below 9% compensates for the net present value of the warrant (close enough).
So for arithmetic purposes, this is a perpetuity at 9%.
It is worth more or less than its face value depending whether the applicable discount rate for very long term investments of equivalent risk profile is less or more than 9%.
Right now, arguably, said discount rate is about 15%? Anybody? I assume we'd have to use something around B or CCC.
Thus we wuz robbed. We're putting in $X and getting back paper worth maybe 1/2 $X.
BUT, if you believe that TOO BIG TO FAIL was always and will always be baked in the cake, you might use a different discount rate.
For me, given what Buffett got and given the realities, this is a free contribution amounting to almost 1/2 of 85% of $250B.
Incidentally, we were taught this math in 6th grade public schools when schools were schools:
Value of a perpetuity:
Present Value = Annual Pmt / Discount
Therefore, 9% perpetual paper is worth aobut 9/15 of its present value, said present value being whatever the warrants arent worth (I believe 85%?).
So we just gave away 6/15 or more of 85% of $250B.
As in GAVE IT AWAY.
VERY SERIOUSLY, I am a quantitative tax lawyer I specialize in this stuff including valuations of private placement securities and I guarantee you this is how the govt would value these investments at least for federal income tax purposes: if its preferred and not debt and its a near-bk business then you better believe you'd be required to presume a 15% comparable return.
VERY SERIOUSLY, I am a quantitative tax lawyer I specialize in this stuff including valuations of private placement securities and I guarantee you this is how the govt would value these investments at least for federal income tax purposes: if its preferred and not debt and its a near-bk business then you better believe you'd be required to presume a 15% comparable return.
But you missed the best part: He is foregoing voting rights, so that his successor has no ability to rectify this stupid deal.
God help the dollar. And I've always thought that the dollar bears wear overblown; now I just think they haven't been expressing themselves well.
JP - Moral hazard is alive and doing well. The casino mentality will not change on WS, GS and the others will begin to look for profits in commodities and any other bubble they can create, nothing has changed except they now know that no matter what they do, they will not be allowed to fail and they will be rewarded for taking us to the brink again.
"Temporary"; when used by gov., historians, deranged economists, it tends to mean the interval of time between 2 major events.(wars, revolutions, etc)
"Partial involvment"; you do whatever we tell you to, and we won't give a shit if you call yourself independent.
P.S. Remember miracles don't last long.
C&C: No doubt, but the law of unintended consequences is going to loom large very soon.
Replacing loss-of-confidence with a taxpayer giveaway? How does that make me want to expand my business?
I now need to go think about which folks are about to be let go, because clearly that money is not going to filter to anyplace near real, cash-financed businesses. And I refuse to out and lever up.
I'm told that the new T Sec will have the ability to alter the deals.
Congress has already told Paulson that they are not pleased with some aspects of the deal, exempting some of the compensation restrictions and they will have hearings after the election.
With their oversight powders they can also void aspects of this deal.
Hmmm interesting. Doesn't this cause massive inflation in equities and commodities, but does nothing for housing? What happens when people realize that housing is still dropping in value? Does this still have an effect on anything?
Deutsche Bank said US will need to issue 3.3 TRILLION new bonds in 2009... EDIT: The Budget Deficit and Macro Policies Going Forward Posted in October 13th, 2008 by admin in Uncategorized Submitted by 403 Forbidden....
Lets assume the Treasury, the Fed and the rest of the community of international financial policymakers are able to stabilize the financial system. What are the fiscal options available, given the borrowing and spending policies of the Bush Administration?
From Chowdhury and Huie, Skyrocketing Issuance,
US Economics/Strategy Weekly
(Deutsche Bank, 10 Oct.) (not online):
Treasury issuance is likely to increase to extraordinary levels over the past year. There are 3 components to the issuance picture. The first is the traditional federal budget, which in fiscal year 2009 is likely to increase substantially from the 2008 deficit of around $440 bn. The second are the various Treasury rescue initiatives that involve buying assets or equities; only the expected net cost will be formally recorded on the budget, but the entire gross spending amount will be added to the issuance requirement. Finally, the Federal Reserves liquidity facilities will also add to issuance, as the Fed no longer has capacity to sell or lend the Treasuries in its portfolio; instead, going forward it will rely on the Supplementary Financing Program, where the Treasury issues bills and deposits the proceeds at the Fed, to finance its lending facilities. In total, we expect net issuance to rise to $3.3 tn over the fiscal year.
While equity injections may be necessary for the special few in the interim to restore stability in the sector, long term we should never let one company and it's underlying asset base/exposure get so big it could place the country's or world's financial economy at risk. So once things are stabilized there should be a concerted effort to break up big banks, promote competition and force greater transparency. This and other structural reform of our global financial system is key to making the global rescue succesful in the long term.
" However, the consumer and taxpayer that is the backbone of the economy will continue to be raped, then ignored. Our models show that they arent relevant"
"Is It Secret?!?! Is It Safe?!???!"
GANDALF is appropriately concerned that Frodo Baggins not disclose the whereabouts of "THE RING". If "THE 9" get their hands on the ring, and it is returned to SAURON, than Middle Earth is history.
Back on regular old Earth, the role of GANDALF is played by Henry Paulson, Ben Bernanke, George Bush, and a host of uber-wealthy autocrats and despots; THE RING is played by 56 Trillion Dollars in worthless "assets": pieces of paper not worth the ink they're written in; THE 9 are played by people 'in the know', whose cries for truth and justice are being muted by those playing GANDALF; SAURON is played by the people of the world.
I know, I know. In LORD OF THE RINGS, Gandalf is a good guy and Sauron is a bad guy. But just for the sake of the metaphor, pretend the opposite.
So you see....well, I know it's pretty obvious....but, anyway...
As long as Spanky Paulson and his cronies (et al) can keep their 50 Trillion Dollar lie a secret from the people, quelling dissent and using deceit and spin and lies to keep the people in line, than they can continue to live the life of luxury and leisure...with the commonfolk as their unwitting slaves. But should the truth become known, than the people will rise up and take over the planet.
Nice fantasy. As far as I can see---even when the truth DOES come out in the form of massive financial collapse due to 50 Trillion Dollars "worth" of dogshit, the people may not win out after all. You see, in this adaptation of THE LORD OF THE RINGS, Gandalf enlists the support of all of the wizards at his disposal (Saruman, et al) and destroys the people....save for a few billion to keep on in indenture
Taking aggressive steps to manage potential conflicts of interest is essential because firms with the relevant financial expertise may also hold assets that become eligible for sale into the TARP. We have asked firms that wish to compete for contracts to disclose their potential conflicts of interest and recommend specific steps to manage those conflicts.
The terms of this cash injection plan are a complete joke.
The senior preferred shares will pay a dividend of 5 percent for the first five years and 9 percent after that, the Treasury said. The purchase price of the stock will be the market price of the banks' common shares at the time of the transaction. Companies will be able to buy back the equity at par after three years.
These banks did the financial equivalent of running over a crowd of people while driving drunk and they are rewarded by with our tax dollars for a new fancier SUV and financing terms that you and I would drool over.
With this single stroke, I loose all respect for Hank Paulson.
560.40 Commercial paper and corporate debt securities.
2) Corporate debt securities must be:
(i) Securities that may be sold with reasonable promptness at a price that corresponds reasonably to their fair value
(ii) At the time of purchase, the cost of such securities must be written down to an amount that represents the investment value of the securities considered independently of the conversion feature; and
(iii) Federal savings associations are prohibited from exercising the conversion featur
In the next debate, I would request that each candidate offer three names whom they consider potential candidates for Secretary of the Treasury in their new administration. That will be a crucial post in January and the person in that seat must understand the nuances of the markets.
To put some numbers on this: So far, US financial institutions have taken about $650 billion in asset writedowns. Nouriel Roubini and others have put the total expected writedowns at $1-$2 trillion. This suggests that banks still have $350 billion-$1.350 trillion in losses to take. Losses in this range could wipe out common shareholders, the government, and the financial institutions....unless the banks can easily raise additional equity to offset the losses. But What About The Next $750 Billion Of Writedowns?
Tuesday, October 14, 2008
A Credit Stimulus Package
As I understand TARP, it is essentially a credit stimulus package. The first part was forcing 9 large banks to jointly participate because:
"Bringing together all nine executives and directing them to participate was a way to avoid stigmatizing any one bank that chose to accept the government investment."
I'm not so sure that this wasn't done to move the plan forward quickly and avoid negotiating with each bank, but I get the point, sort of.
Then, because each bank could use the money for something other than loans, the plan forces them to loan the money.
The needs of our economy require that our financial institutions not take this new capital to hoard it, but to deploy it, Mr. Paulson said, who offered some details of the plan along with the Federal Reserve chairman, Ben S. Bernanke, and the chairman of the Federal Deposit Insurance Corporation, Sheila C. Bair.
The problem here would seem to the quickness, intelligence, and risk of these loans.
"In a letter to Mr. Paulson on Monday, Mr. Schumer, chairman of the Joint Economic Committee, urged the Treasury to demand that banks receiving capital eliminate their dividends, restrict executive pay and stick to safe and sustainable, rather than exotic, financial activities.
Where's Nemo?
Paulson speaking now ...
Iceland now 77% down despite enormous depreciation of currency. Oh my god.
"First, Treasury is announcing a voluntary capital purchase program. A broad array of financial institutions is eligible to participate in this program by selling preferred shares to the U.S. government on attractive terms that protect the taxpayer."
I think the term "Bankruptcy Lite" is appropriate.
Stumbled over "decisive".
bwaahhhhhhhaaaaaa
"Get confidence back in the confidence game"
Paulson "regrets" having to do this and bankers were "forced" to take the $250B. What great Americans
No reason for the Fed now. Make it part of the US Treasury. At least then we can say we own our own money.
Fourth, this is socialism for the well connected and Wall Street.
Fifth, the bad news is the American middle class are still on the hook for trillions and your standard of living is likely to go down.
Yours truly....Hank
We appreciate that these healthy institutions are taking these steps to strengthen their own positions and to enhance the overall performance of the U.S. economy
Am I supposed to feel reassured by this staggeringly blatant lie? Not only is it "voluntary", but they're somehow all "healthy" institutions now. How patriotic they must be to help the taxpayers out with such a sweetheart deal on their "totally-not-worthless" stock!
Did I hear the word: Clawback?
I'm hoping we have another bubble.
"Either we're lying now or we lied a few weeks ago to Congressional leaders"
"I'm hoping we have another bubble."
So is Hank; so is Ben. Scary.
Maybe now, because the banks belong to the people, just saying fuck it and walking away when you are under water will be shunned.
Yes, he's going to clawback, in true Dr. Evil style, ONE MILLION DOLLARS.
Wow, S&P futures up 50. Did they finally get it right?
wally writes:
"I'm hoping we have another bubble."
So is Hank; so is Ben. Scary.
They, we got nothing else, nothing
Did I understand correctly that the FDIC has guaranteed the senior debt of all FDIC insured banks? Woo hoo. I feel right at home here on Bizarro world, buy equities, going to the moon!!!
What garbage.
Where can I find a copy of the text?
They have also committed to continued aggressive actions to prevent unnecessary foreclosures and preserve homeownership.
This is the part that cracks me up.
They have also committed to continued aggressive actions to prevent unnecessary foreclosures and preserve homeownership.
All necessary foreclosures will continue though, which I guess is all of them.
"We were dragged kicking and screaming into this by them damn Europeans"
Words words words.
Have a good day Calculated Riskonians.
I'm hoping we have another bubble.
The growing number of people that are wards of the state is looking bubblicious.
Short US Treasuries anyone?
Gold could hit $1,500, say Merrill analysts
By Moming Zhou
Last update: 8:26 a.m. EDT Oct. 14, 2008Comments: 16
NEW YORK (MarketWatch) -- Gold prices could hit $1,500 as global plans to rescue the financial industry are set to increase inflation pressures, according to analysts led by Francisco Blanch at Merrill Lynch. "The unintended consequence of the ongoing financial bailout will be a return of inflationary pressures to the commodity markets," wrote the analysts in a note released Monday. The analysts didn't say when gold would hit the price target. They also predicted oil prices will rise to $150 a barrel.
"Banks will be covered without assessments for 30 days"
Thank God they're saving all the little banks, too. Maybe they can claw Leh back to life, poor suckers.
Can bankruptcy be considered the new bubble?
Maybe now, because the banks belong to the people, just saying fuck it and walking away when you are under water will be shunned.
Ha! Right, just like the banks will suddenly feel really bad for charging exorbitant overdraft fees to their new shareholders.
"The unintended consequence of the ongoing financial bailout will be a return of inflationary pressures to the commodity markets," wrote the analysts in a note released Monday. The analysts didn't say when gold would hit the price target.
And I predict everyone - everyone! - reading this thread will die.
I won't say when, however.
I am pissed. Maybe it is because of my investment decisions. I just do not see how throwing money at the banks is going to create anything sustainable. They talk of lack of confidence. WTF are we going to produce that is significantly change people's lives. Most of our profits over the last ten years were due to a ponzi scheme instead of real products. What is going to replace the ponzi scheme? I guess we just blame the unregulated free market for the next 15 years.
I feel like I just bought a lottery ticket...
"The unintended consequence of the ongoing financial bailout will be a return of inflationary pressures to the commodity markets,"
That statement is simply incorrect. It is an intended consequence.
The new bubble is more fraud. All loans are guaranteed. Lend away, subprime is back.
Whan price controls were first introduced under the Nixon administration, eCONomists hailed the action stating that it would halt inflation and restore faith and econommic growth. Inflation soared and the Dow collapsed 40% shortly after.
CNBC just reported that as long as the gov's preferred bank shares are outstanding, ALL COMMON STOCK DIVIDENDS ARE SUSPENDED. Can anyone here confirm?
I just do not see how throwing money at the banks is going to create anything sustainable.
I don't think it's about productivity anymore. I think it's about momentum. Put every ounce of effort into keeping things MOVING. Momentum. That's the new word for our new age.
Who will buy my apples?:
But how dcould that be? We've been told that regular shareholder 'would not be diluted".
Hmmm....
Instead of being assured in the banking system, I am more frighten by the government's bailout. This bailout screams "Danger look out below, we are insolvent!"
Once the street figures this out, just how far will the market fall?
Guess what, if any one of these banks files bankruptcy, the shares purchased by the Gov will be wiped out.
I am more concerned then ever.
By the way why is any loan in this country pegged to LIBOR and not the US prime?
Who will follow Iceland down? Any ideas?
Only in America can you totally screw over the financial system and still walk away with a handout.
All this proved today is when you mess up it better be so big it messes up the system, that way you can't go down. Bear Stearns, not big enough, Lehman, not big enough, WAMU, not big enough, Wachovia, not big enough. Citi, JP Morgan, Goldman, AIG, Bank O America, etc... just right!
wally writes:
"The unintended consequence of the ongoing financial bailout will be a return of inflationary pressures to the commodity markets,"
That statement is simply incorrect. It is an intended consequence.
wally
My untrained mind agrees. Dividends paid on this $250B don't adjust for inflation and rate increase, the loans made from this "rescue" will
This is truly sickening. Not one word about saving a little, consuming a little less, living within our means, just endless credit.
Will Ireland be next to go belly-up? UK? Ukraine?
"Banks are healthy"
I suspect I wasn't the only one who immediately thought "if they're so friggin' healthy, why the need for a bailout".
Professional liars.
Avoidance is not a solution.
@I'm hoping we have another bubble.
Privatizing infrastructure? Keep hearing this, but know little about it... Got a bridge I'd like to sell you.
so, we have mark to market now?
or just endless money available to supplant dealing with the derivative poison for now?
the derivative ratio to world GDP remains the same.
Mook writes:
"The unintended consequence of the ongoing financial bailout will be a return of inflationary pressures to the commodity markets," wrote the analysts in a note released Monday. The analysts didn't say when gold would hit the price target.
And I predict everyone - everyone! - reading this thread will die.
I won't say when, however.
Is Market Watch the CNBC of the internet?
Mish has analysed the current situation with Elliot waves. This is the final bear market rally, there will be another crash and then bottom, period.
Sounds too good to be true.
MW writes:
Short US Treasuries anyone?
Yeah baby...TBT and soon PST
Bloomberg moron just said dominos will fall. (He meant everything will be rosy)
How am I supposed to save money when these monkeys will stop at nothing to destroy those savings?
Wouldnt this be just a band aid until the cds market is unwound?
An interesting article by Nassim Nicholas Taleb.
It appears that financial institutions earn money on transactions (say fees on your mother-in-law's checking account) and lose everything taking risks they don't understand. I want this to stop, and stop nowthe current patching by the banking establishment worldwide is akin to using the same doctor to cure the patient when the doctor has a track record of systematically killing them. And this is not limited to bankingI generalize to an entire class of random variables that do not have the structure we think they have, in which we can be suckers.
Edge: THE FOURTH QUADRANT: A MAP OF THE LIMITS OF STATISTICS By Nassim Nicholas Taleb
StateStreet, BNY, MS, GS, C, BOA, WFC - I only count 7, Who are the other 2?
Can anyone here recommend a "compare and contrast" article about what the eurozone and the US are doing? Also, 2 days ago someone here made it sound as if we're supplying the money for the eurozone bailout--is that true? Thanks in advance.
"Deploy that capital! Lend to one another! Anyone who breaks this chain will have very bad things happen..."
Let the bubble in commodities begin...poor and middle class get to pay for this bail out.
Any confirmations on this dividend??
The gold spot price is cliff diving this morning.
Mr. Paulson said banks must use the money for lending to each other and customers.
Ya right, the Caymans are going to need bigger vaults to store all this loot.
Let the bubble in commodities begin...poor and middle class get to pay for this bail out.
But why will commodities go up if the poor and middle class are spending all of their money on taxes?
PLEASE do the math. If the warrants are truly worth what they are represented to be (15% of principal) then the amount invested as preferred is 90% of nominal.
If $25B of preferred goes into B then really $21.25B is allocable to the preferred.
That means the 5% accreting to 9% should be measured relative to the 85% notional principal allocated.
For the first years when its below 9%, we can ROUGHLY assume the deficit interest below 9% compensates for the net present value of the warrant (close enough).
So for arithmetic purposes, this is a perpetuity at 9%.
It is worth more or less than its face value depending whether the applicable discount rate for very long term investments of equivalent risk profile is less or more than 9%.
Right now, arguably, said discount rate is about 15%? Anybody? I assume we'd have to use something around B or CCC.
Thus we wuz robbed. We're putting in $X and getting back paper worth maybe 1/2 $X.
BUT, if you believe that TOO BIG TO FAIL was always and will always be baked in the cake, you might use a different discount rate.
For me, given what Buffett got and given the realities, this is a free contribution amounting to almost 1/2 of 85% of $250B.
Incidentally, we were taught this math in 6th grade public schools when schools were schools:
Value of a perpetuity:
Present Value = Annual Pmt / Discount
Therefore, 9% perpetual paper is worth aobut 9/15 of its present value, said present value being whatever the warrants arent worth (I believe 85%?).
So we just gave away 6/15 or more of 85% of $250B.
As in GAVE IT AWAY.
VERY SERIOUSLY, I am a quantitative tax lawyer I specialize in this stuff including valuations of private placement securities and I guarantee you this is how the govt would value these investments at least for federal income tax purposes: if its preferred and not debt and its a near-bk business then you better believe you'd be required to presume a 15% comparable return.
"I'm hoping we have another bubble."
So is Hank; so is Ben. Scary.
We might have to. The simple fact may be that we have an economy that requires a morphine drip to survive.
The gold spot price is cliff diving this morning.
The world just got flooded with trillion$. Gold will go way down before it goes way up
VERY SERIOUSLY, I am a quantitative tax lawyer I specialize in this stuff including valuations of private placement securities and I guarantee you this is how the govt would value these investments at least for federal income tax purposes: if its preferred and not debt and its a near-bk business then you better believe you'd be required to presume a 15% comparable return.
But you missed the best part: He is foregoing voting rights, so that his successor has no ability to rectify this stupid deal.
God help the dollar. And I've always thought that the dollar bears wear overblown; now I just think they haven't been expressing themselves well.
Well, the Baltic states could go next; Estonia, Lithuania, Latvia... and then the smaller Eastern countries with speculative bubbles; Croatia, etc.
JP - Moral hazard is alive and doing well. The casino mentality will not change on WS, GS and the others will begin to look for profits in commodities and any other bubble they can create, nothing has changed except they now know that no matter what they do, they will not be allowed to fail and they will be rewarded for taking us to the brink again.
"Temporary"; when used by gov., historians, deranged economists, it tends to mean the interval of time between 2 major events.(wars, revolutions, etc)
"Partial involvment"; you do whatever we tell you to, and we won't give a shit if you call yourself independent.
P.S. Remember miracles don't last long.
Now all you little debt slaves get out there and get to borrowing money damn it.
So, how to profit from this in the short term (this week)?
Did this bailout reduce the prospects for unemployment over the next 12 months? NO!
How to profit? Find bullion. Physical. Now.
Does EESA discuss mid-level management compensation?
C&C: No doubt, but the law of unintended consequences is going to loom large very soon.
Replacing loss-of-confidence with a taxpayer giveaway? How does that make me want to expand my business?
I now need to go think about which folks are about to be let go, because clearly that money is not going to filter to anyplace near real, cash-financed businesses. And I refuse to out and lever up.
Profit? Short US debt
Is it possible that the next bubble will be the fiat dollar?
crispy&cole writes:
Profit? Short US debt
How is that done?
I'm told that the new T Sec will have the ability to alter the deals.
Congress has already told Paulson that they are not pleased with some aspects of the deal, exempting some of the compensation restrictions and they will have hearings after the election.
With their oversight powders they can also void aspects of this deal.
A very odd thing about this is that these people expect to be believed,at least to some extent.
Anonymous | 10.14.08 - 9:35 am
Short treasuries
With their oversight powders
Organic George | 10.14.08 - 9:36 am | #
Freudian slip? LOL
(red faced)
A very odd thing about this is that these people expect to be believed,at least to some extent.
Tom Stone | 10.14.08 - 9:36 am | #
It's the modern version of parting the Red Sea.
10k here we come.
It's the modern version of parting the Red Sea.
Anonymous | 10.14.08 - 9:38 am | #
The quick get through, the rest get swamped.
Big Picture Blog provided the following map of all 300+ point rallies:
http://bigpicture.typepad.com/comments/images/2008/08/07/300_pointthen.png
Of course, this says nothing about what will actually happen over the rest of the week.
Hmmm interesting. Doesn't this cause massive inflation in equities and commodities, but does nothing for housing? What happens when people realize that housing is still dropping in value? Does this still have an effect on anything?
Good morning. I thought you folks might enjoy this video in context of our leaders' desperate panic: Not One Cent: Financial Bailout, Hyper-Debt, Preemptive War, Bankruptcy
The Black Autumn: In Search of the Visible Hand - SPIEGEL ONLINE - News - International
The view from Germany.
Dow up over 300 this morning already. Is it a full moon today? (yes)
Deutsche Bank said US will need to issue 3.3 TRILLION new bonds in 2009... EDIT: The Budget Deficit and Macro Policies Going Forward Posted in October 13th, 2008 by admin in Uncategorized Submitted by 403 Forbidden....
Lets assume the Treasury, the Fed and the rest of the community of international financial policymakers are able to stabilize the financial system. What are the fiscal options available, given the borrowing and spending policies of the Bush Administration?
From Chowdhury and Huie, Skyrocketing Issuance,
US Economics/Strategy Weekly
(Deutsche Bank, 10 Oct.) (not online):
Treasury issuance is likely to increase to extraordinary levels over the past year. There are 3 components to the issuance picture. The first is the traditional federal budget, which in fiscal year 2009 is likely to increase substantially from the 2008 deficit of around $440 bn. The second are the various Treasury rescue initiatives that involve buying assets or equities; only the expected net cost will be formally recorded on the budget, but the entire gross spending amount will be added to the issuance requirement. Finally, the Federal Reserves liquidity facilities will also add to issuance, as the Fed no longer has capacity to sell or lend the Treasuries in its portfolio; instead, going forward it will rely on the Supplementary Financing Program, where the Treasury issues bills and deposits the proceeds at the Fed, to finance its lending facilities. In total, we expect net issuance to rise to $3.3 tn over the fiscal year.
Anonymous writes:
Is it possible that the next bubble will be the fiat dollar?
Interesting.
How would that work exactly?
ew thread
Dollar will show strength until the election?
Дурак и его деньги скоро разделены
That is Russian for
"a fool and his money are soon parted"
Better learn the language because we are not capitalists anymore.
While equity injections may be necessary for the special few in the interim to restore stability in the sector, long term we should never let one company and it's underlying asset base/exposure get so big it could place the country's or world's financial economy at risk. So once things are stabilized there should be a concerted effort to break up big banks, promote competition and force greater transparency. This and other structural reform of our global financial system is key to making the global rescue succesful in the long term.
" However, the consumer and taxpayer that is the backbone of the economy will continue to be raped, then ignored. Our models show that they arent relevant"
I'll say it again. They've taken all the short-side risk out of this market.
They're all in.
Ella wrote:
"By the way why is any loan in this country pegged to LIBOR and not the US prime?
"
Crooks use Libor because it is more beneficial for them. Rate was usually higher than Prime and moved up quicker. Easier for them to manipulate too.
The Humpty Dumpty Bankers sat on the golden wall.
The Humpty Dumpty Bankers had a great fall.
All the governments men and the Congress bailout legislation
Could not put Humpty Dumpty back together again.
Michael LittleBig
10-14-08
"Is It Secret?!?! Is It Safe?!???!"
GANDALF is appropriately concerned that Frodo Baggins not disclose the whereabouts of "THE RING". If "THE 9" get their hands on the ring, and it is returned to SAURON, than Middle Earth is history.
Back on regular old Earth, the role of GANDALF is played by Henry Paulson, Ben Bernanke, George Bush, and a host of uber-wealthy autocrats and despots; THE RING is played by 56 Trillion Dollars in worthless "assets": pieces of paper not worth the ink they're written in; THE 9 are played by people 'in the know', whose cries for truth and justice are being muted by those playing GANDALF; SAURON is played by the people of the world.
I know, I know. In LORD OF THE RINGS, Gandalf is a good guy and Sauron is a bad guy. But just for the sake of the metaphor, pretend the opposite.
So you see....well, I know it's pretty obvious....but, anyway...
As long as Spanky Paulson and his cronies (et al) can keep their 50 Trillion Dollar lie a secret from the people, quelling dissent and using deceit and spin and lies to keep the people in line, than they can continue to live the life of luxury and leisure...with the commonfolk as their unwitting slaves. But should the truth become known, than the people will rise up and take over the planet.
Nice fantasy. As far as I can see---even when the truth DOES come out in the form of massive financial collapse due to 50 Trillion Dollars "worth" of dogshit, the people may not win out after all. You see, in this adaptation of THE LORD OF THE RINGS, Gandalf enlists the support of all of the wizards at his disposal (Saruman, et al) and destroys the people....save for a few billion to keep on in indenture
Taking aggressive steps to manage potential conflicts of interest is essential because firms with the relevant financial expertise may also hold assets that become eligible for sale into the TARP. We have asked firms that wish to compete for contracts to disclose their potential conflicts of interest and recommend specific steps to manage those conflicts.
Presidents Working Group on Financial Markets
See Warsh and other young idiots that have contributed to market instability through nepotism.
See: Brown @ FEMA
The terms of this cash injection plan are a complete joke.
The senior preferred shares will pay a dividend of 5 percent for the first five years and 9 percent after that, the Treasury said. The purchase price of the stock will be the market price of the banks' common shares at the time of the transaction. Companies will be able to buy back the equity at par after three years.
These banks did the financial equivalent of running over a crowd of people while driving drunk and they are rewarded by with our tax dollars for a new fancier SUV and financing terms that you and I would drool over.
With this single stroke, I loose all respect for Hank Paulson.
Re: We appreciate that these healthy institutions are taking these steps to strengthen their own positions
ROTFLMAO!
Re: he Federal Reserve has announced further details of its Commercial Paper Funding Facility (CPFF) program.
See Also: tle 12: Banks and Banking
PART 560LENDING AND INVESTMENT
Subpart ALending and Investment Powers for Federal Savings Associations
Justia :: Code of Federal Regulations tit....30.1.42.9.html
560.40 Commercial paper and corporate debt securities.
2) Corporate debt securities must be:
(i) Securities that may be sold with reasonable promptness at a price that corresponds reasonably to their fair value
(ii) At the time of purchase, the cost of such securities must be written down to an amount that represents the investment value of the securities considered independently of the conversion feature; and
(iii) Federal savings associations are prohibited from exercising the conversion featur
America's Reign of Terror
America's Reign of Terror -- Seeking Alpha
In the next debate, I would request that each candidate offer three names whom they consider potential candidates for Secretary of the Treasury in their new administration. That will be a crucial post in January and the person in that seat must understand the nuances of the markets.
To put some numbers on this: So far, US financial institutions have taken about $650 billion in asset writedowns. Nouriel Roubini and others have put the total expected writedowns at $1-$2 trillion. This suggests that banks still have $350 billion-$1.350 trillion in losses to take. Losses in this range could wipe out common shareholders, the government, and the financial institutions....unless the banks can easily raise additional equity to offset the losses.
But What About The Next $750 Billion Of Writedowns?
Tuesday, October 14, 2008
A Credit Stimulus Package
As I understand TARP, it is essentially a credit stimulus package. The first part was forcing 9 large banks to jointly participate because:
"Bringing together all nine executives and directing them to participate was a way to avoid stigmatizing any one bank that chose to accept the government investment."
I'm not so sure that this wasn't done to move the plan forward quickly and avoid negotiating with each bank, but I get the point, sort of.
Then, because each bank could use the money for something other than loans, the plan forces them to loan the money.
The needs of our economy require that our financial institutions not take this new capital to hoard it, but to deploy it, Mr. Paulson said, who offered some details of the plan along with the Federal Reserve chairman, Ben S. Bernanke, and the chairman of the Federal Deposit Insurance Corporation, Sheila C. Bair.
The problem here would seem to the quickness, intelligence, and risk of these loans.
"In a letter to Mr. Paulson on Monday, Mr. Schumer, chairman of the Joint Economic Committee, urged the Treasury to demand that banks receiving capital eliminate their dividends, restrict executive pay and stick to safe and sustainable, rather than exotic, financial activities.
I'm still not reassured.
"Safe and Sustainable" means no credit for speculators. Seems like a good idea for 1999.
Not exactly what the boys want banks to do.