ROFLOL. The day the PPIP was announced, bloggers around the world came up with ways to game the program. Many of them involved being both buyer and seller. So it is no surprise that the banks are lobbying for a free lunch.
I think they should be embarrassed for even suggesting this!
At least one bank lobbyist realized this:
"A bank bidding on its own assets really has the potential to look awful in the public's mind," said Mark J. Tenhundfeld, an American Bankers Association lobbyist.
And here I thought the banks would just take the taxpayers money and buy tbonds and sit there fat dumb and happy.... Man they are way more creative than that.... No wonder they make the big bucks.... And the fact that they would even try this without keeping it secret speaks volumes about how rotten things are in NYC...
"A bank bidding on its own assets really has the potential to look awful in the public's mind," said Mark J. Tenhundfeld, an American Bankers Association lobbyist.
If I were a banker, I would loudly cancel all cash bonuses (replacing them with stock options), provide a photo op where we sell the entire fleet of corporate jets (we can always lease new ones for a little bit more), and then calmly go about my business bidding up my own assets to the point where I reap a freakin' fortune.
It's stupid but it was stupid from the get-go. Actually, you may as well let the banks bid on their own assets, since increased bids would raise prices and presumably lower the eventual government subsidies.
All we're doing by forbidding the banks from bidding on their own stuff is keeping in place this veil where underneath we assume this isn't yet another massive giveaway, more to convince ourselves than anything.
Want to try modelling how this works out?
1. Go to: Demo for POLE ZERO PLOT
2. Click Start
3. This will open a java applet with a number of windows. Find the Window that is titled "PZ Placement Block"
4. Click Add Pole
5. Click the cursor on the real axis to the left of the unit circle. This should leave a red x
6. Look at the Plot window
"A bank bidding on its own assets really has the potential to look awful in the public's mind," said Mark J. Tenhundfeld, an American Bankers Association lobbyist.
Don't be ridiculous. Nobody's going to buy their own assets--GS will bid on BAC assets, BAC will bid on C assets, C will bid on JPM assets....
I suppose I'm a bit relieved that it was necessary to lobby for permission. If it were possible to simply have hedge fund intermediaries take care of this for them they would have done so without a public stink.
I thank the Good Lord that in real life we have President Obama to damp out the oscillatory forces of evil. Otherwise, this could lead to real problems.
I called the FDIC during the comment period and got through to some Media guy after pestering the receptionist. I was actually inquiring about a statement attached to their online conference advising the "media" not to quote from it. I wondered if anonymously posting to a public forum made me part of the "media". He asked me, "How do you feel about it?".
Then I asked him how selling something you own to yourself could ever be anything other than fraud. (A JPM analyst had asked about it during the call) He tried some 5th grade explanation. I told him I was a lawyer. The whole conversation was bizarre.
At least it will free up even more money for commodities speculation, and should drive more people away from the USD and UST market. All of which will benefit my positions.
Sometimes expecting the worst of human behavior is very, very profitable.
"I thank the Good Lord that in real life we have President Obama to damp out the oscillatory forces of evil. Otherwise, this could lead to real problems."
He is nothing more than a puppet, no more than Reagan,Bush,Clinton or Dubs. If the PPIP fails, as I suspect and banks are still insolvent and need trillions more in money, public will revolt and say no more. Obama will glance over/smirk and the bankers then bail the fook out as wholesale changes are made to the power structure finally allowing the country to get to the bottom of this mess. I am not sure when the "failure" moment comes, but it will come.
We already had in happen before in 1979. The following years were not good economically if I remember.
What possible reason could a bank have for wanting to buy assets from itself?
Even someone who knows nothing about finance would realize something fishy was going on... wouldn't they?
You're holding a piece of used tissue paper and somebody offers you $4 if you'll buy the paper from yourself for $5. Do you accept the $4, or do you worry about how stupid you'll look buying a used tissue from yourself?
Update from BNO: NORTH KOREA ABANDONS KOREAN WAR ARMISTICE.
Update 2: NK Statement: "Any hostile act against our vessels, including search and seizure, [..] we will immediate respond with a powerful military strike"
Update 3: NK Statement: "THE PENINSULA WILL SOON BE RETURNED TO "THE STATE OF WAR."
Sometimes expecting the worst of human behavior is very, very profitable.
On the other hand, you could end up sitting there fondling all your coinz when the hyena-faced zombies start gathering at nightfall to break into your bunker. (full disclosure - I've been piling up coinz in my bunker too. Just not feeling comfortable about the longer term).
"Bankers see it as a win-win," said Tanya Wheeless, chief executive of the Arizona Bankers Association, which has urged the FDIC to let banks buy their own assets through PPIP.
Does she have any idea how this sounds? How can a lobbyist be so ham-handed at public relations?
"The killing in 1967 of an unarmed demonstrator by a police officer in West Berlin set off a left-wing protest movement and put conservative West Germany on course to evolve into the progressive country it has become today.
Now a discovery in the archives of the East German secret police, known as the Stasi, has upended Germany’s perception of its postwar history. The killer, Karl-Heinz Kurras, though working for the West Berlin police, was at the time also acting as a Stasi spy for East Germany.
It is as if the shooting deaths of four students at Kent State University by the Ohio National Guard had been committed by an undercover K.G.B. officer, though the reverberations in Germany seemed to have run deeper.
“It makes a hell of a difference whether John F. Kennedy was killed by just a loose cannon running around or a Secret Service agent working for the East,” said Stefan Aust, the former editor in chief of the weekly newsmagazine Der Spiegel. “I would never, never, ever have thought that this could be true.” "
CR, with all due respect, I submit to you that these sons of bitches have no pride, no honor, and no ethics.
Agreed...but wouldn't you think they'd have some sense of the political consequences of the public reaction? Couldn't the 19 bankers just meet in Summers's office and have him make a threatening phone call to the FDIC? Why is this happening in public?
"Don't you understand all these guarantees encourage fraud?
If you let a bank retain an equity interest in something it "sells", and handing [sic] it a non-recourse
loan from the Treasury and a guarantee, that is a sham transaction"
Bloomberg anchor asked Geithner last week if Sheila Bair was a "team player". He held up the facade. We'll see...
"You don't need to be tactful when you get whatever you want"
They'll get whatever they want until the political costs of giving it to them become too great, and they are unnecessarily hastening that moment.
I thought Obama made that clear a while back--don't make it hard for us to give you what we want to give you. This is a political operation and we have appearances to maintain.
The weird thing about capitulation is you might not SEE it anywhere until after it has passed and you look back. Bulls seem to think they ring a bell at the top, bears at the bottom - there are no bells.
"On the other hand, you could end up sitting there fondling all your coinz when the hyena-faced zombies start gathering at nightfall to break into your bunker"
Don't worry, I have guns as well. In fact, when this started hitting the fan, my first investments were guns and shooting lessons. Not that I think I will need them. But I don't think I will ever need fire insurance either...
How long does the FDIC guarantee extend? I thought there was a 3 year expiry on the corporate issues they've guaranteed
"Additional terms of the guarantee have not been announced."
It wouldn't make sense to have the guarantee period be shorter than the expected timeframe for materialization of the losses. I'd expect at least a 10-year guarantee on the grounds that anything shorter might discourage private participation in the program.
ghostfacedinvestah - Charlton Heston and Will Smith had lots of guns. What they really needed was a good escape route (and maybe a turbo-charged dune buggy with nitrous tanks).
"Chrysler LLC’s swift bankruptcy process will give consumers confidence that General Motors Corp. would also emerge quickly if it needs to seek court protection, a person familiar with the matter said. "
This person either A) works for GM or B) works for the government. just a guess.
Denninger warned weeks ago about this very gaming of PPIP by the banks. I guess the only thing shocking about it is they are asking permission to do it.
At the bottom you will hear a thud. It will be the collective jaw drops of investors around the world.
I remember a thud like that the day Congress voted down Paulson's first proposal. It was the end of the world...huge headlines reading "MARKETS PLUNGE", "LARGEST LOSS ON RECORD", etc.
We closed that day at 10365 on the Dow. That was supposed to be the bottom, and where are we now after a 39% rally?
So this just speeds up the process of moving the collective bad debt from the corporate balance sheets onto the govt balance sheet. It was going to happen anyway, sooner or later. IMHO they might as well speed up the process and get it over with.
Given that it IS going to happen, whether we like it or not, how do you position yourself?
In other words, envision a time, 6 months from now, when, instead of banks holding all their bad debt, the govt/Fed holds it. All of it, private label RMBS, CMBS, credit card debt, whole loans, HELOCS, everything.
CR: The purpose of PPIP is to remove the toxic legacy assets from the bank's balance sheet, not to allow the banks to game the program at taxpayer expense.
Come on CR, it is exactly that. But a bit more subtle than has been suggested. Banks won't buy their own assets (directly), nor will they buy the assets of other banks (directly), instead, they will collectively buy toxic assets by funding their purchase by PIMCO and other asset managers.
Generally, the stronger banks will participate more (but all will participate to some degree). That's why we needed the stress test first. Banks can now raise equity that can be used for PPIP investments. It makes little sense for Private Equity to participate in PPIPs (though some may) but it makes a great deal of sense for banks.
Once banks have overbid...um...I mean established a market price, then the PPIPs will be sold off to pension funds and other "long term" investors.
"In other words, envision a time, 6 months from now, when, instead of banks holding all their bad debt, the govt/Fed holds it. All of it, private label RMBS, CMBS, credit card debt, whole loans, HELOCS, everything."
Better not be holding anything denominated in USD at that point.
The diagnosis bias happening here isn't a bunch of bears growling at each other though it does resemble the Yellowstone dump circa 1970 some threads. The problem I perceive is the thought that the entire system is corrupt and the boy scouts have all built their doomsteads and given up. There are many bankers, accountants, bureaucrats, journalists, average joes and yes politicians who realize what has happened and are fighting back. The evidence abounds all around and the push back is gathering steam. A revolution isn't brewing and Madmax bought a ocean front condo and is a little pissed he overpaid but will keep on keeping on.
Many happy people living in what we would consider squalor and with oppressive regimes but they still live, laugh and love. Attitude and perspective is everything. Lighten up and be kinder to each other. The eating our own is getting bad around here.
"CR: The purpose of PPIP is to remove the toxic legacy assets from the bank's balance sheet, not to allow the banks to game the program at taxpayer expense."
Technically, this would achieve the same purpose - they would own the assets, but not the risk of the assets. So basically they transform the assets into govt-guaranteed paper.
Or a better analogy - before they owned equity, after they own equity with a put option to the govt.
The toxic asset is no longer toxic to them.
The govt has already done this for Citi and BofA, so arguably the other banks should be able to participate since those two have a competitive advantage.
this is how a great country collapses.... A bank will buy its own assets from itself using a government match and leverage insured by an entity that is backed by the government. oh... and the government is running a 2T budget deficit. It is so absurd it makes me want to cry and then buy something/anything not backed by the full faith and credit of the usg.
Congress reduces FDIC borrowing capacity, deposit insurance guarantee. FDIC increases assessments to cover, pro rata by which back dumped how much bad paper. Banks can't pass on fees because depositors organize efficient mass surges to chase interest rates.
"The diagnosis bias happening here isn't a bunch of bears growling at each other though it does resemble the Yellowstone dump circa 1970 some threads..."
I agree with your entire post. the issue with most people posting here is they are honest, were probably brought up with a good work ethic, and raised with a certain sense of fairness. None of which is valued in America today. I can understand why people are mad.
re: bearish sentiment around CR
Since the market turned sour, there has not been a single rally that has not been predicted, called, and stood by from someone here. Emotion was certainly elevated in early November and March; I don't know on what basis the comparison between now and then can be made. Please stop trying to provoke arguments where you have positioned yourself to be a martyr. No one likes whiners
edit: I have no idea who has been bringing this up, just that there are enough people who have had no problem sticking around to be proven right on a market surprise. I would listen to them based on reputation, or someone making a detailed well reasoned argument, but rarely will I pay attention to someone with neither
You all worry too much. All is well. Soon a framed Google stock certificate will go for 200k mighty American dollars and gold will come out of safes and used as doorstops. CR will start performing with his charts at bar mitzvahs in the LA metro area where all homes will be worth 1 million dollars.
Hey everyone, the govt was gonna own the toxic crap under any scenario (principally, nationalization)
The problem isn't that the gov't owns it, its that the bankers have been given a "get out of jail" card free pass -- and the government (us!!) have no real upside: private gains, socialized losses. The Obama administration seems to understand this and has recently talked about 1) new reguations, and 2) bank CEO's being shown the door (at some unspecified future time). But I really wonder if #2 will ever happen.
However, I for one like posters who are farting through silk. Or posters who appeal to the Wright Model B. Or those who blame the CMBS collapse on zit-faced hedgies.
Obama demanded "new reforms on his desk by the end of the year". Of course, no deadline can't be extended. His attitude, shared by many in Washington, is still 'get through this crisis and then make sure it never happens again.' He has the timing reversed. The crisis will not end until reforms have been instituted and those responsible held accountable, and not just a few CEO's.
Tim waiting for 2012
Web searching is well on its course to becoming 'commodtized' for the lack of a better word. That is why google is investing so much in side projects. They don't want to become the next yellow pages income fund. Intel is a great piece of history. They do a lot of good work and execute extremely well, but to actually grow their business they need to find new contexts in which their core competencies are of value. In some cases, create the contexts in which their core competencies bring value.
Not to mention much of their growth has come at the expense of print advertising. When print is dead will there be growth? Revenues are already down YoY. This stock is rich to say the least.
"Write something that makes government function better with less spending."
On the third grant, they commissioned an ROI study for our nationwide deployment.
We had roughly a $60 million / year return on $5 million / year.
All my corporation work was much less and shrinking.
I never imagined that large corporations could run suckier than the Federal gov't but that's what I've seen.
"Any of you out there still holding deposits at the too big 19 are part of the problem. "
Agree with that, moved all my money out of WFC and into Schwab, who, although did accept the money market guarantee, did not take TARP. I can forgive a small transgression.
What have the political consequences of public reaction so far? None as far as I can tell, perhaps a few cosmetic changes. Quite a few people called/e-mailed their elected reps, re: the first bailout round and, let's see, there was a nice gesture by some Congresspeople of voting it down, a gesture only, and since then it's been pretty much clear sailing for the banksters, AIG, et al, hasn't it? (maybe not GM & Chrysler, but that's partly due to the desire to continue to destroy unions, imo). Some MSM covered outrage re: bloated compensation/huge bonuses, so a few bonuses were returned. But have any real caps been established? Any long lasting change in standards re: bonus amounts & when awarded? More stringent requirements on who can be a corporate board member? On board member compensation & stock options? Any other useful/positive changes required as part of the various forms of federal welfare offered? Nope. The moment it seemed as though there might be, the banks started muttering about returning those TARP funds & I haven't heard/read anything lately about compensation restrictions as a condition of receiving TARP funds, etc.
As far as I've been able to see, there haven't been any negative political consequences. Not when I continue to read incredibly inane, biased & stupid articles such as the one by Michele Singletary New credit card restrictions put an end to subsidies funded by the less fortunate - The Boston Globe, that continue to justify the greedy, gouging & shortsighted behavior of the credit card issuers or accept it w/out question as being ok, while appearing to imply its the people who have paid off their balances in full every month who were the only beneficiaries (as in look what you guys got away with) of the easy credit policies of the issuers. The propaganda's still being churned out.
Some of the people I know aren't happy about what's going on, but like me, they're tired of e-mailing & calling their elected reps, writing letters to the editor, trying to participate in local decision-making , etc., without apparently achieving much, if anything, in the way of desired changes. Obama's made a few useful changes, but for the most part, he's backtracked on almost every promise of substance he made prior to his nomination & during his campaign. It's been pretty much same old, same old. Otherwise, you'd think that the Obama admin/FED would be too embarrassed to go through with a program (PPIP) that it took some bloggers approximately 2 minutes to figure out how banks could game the process.
So how do banksters get held accountable when those with the power to hold them accountable seem to be sycophants? Accomplices? I like what I've heard/read of Elizabeth Warren, but she doesn't seem to have much real power. Wonder what she thinks of the PPIP?
"More stringent requirements on who can be a corporate board member?"
The problem of interlocking directorates, as a 90 year-old recalled the phrase to me recently.
The banks lobby (paying with bailout dollars) unashamedly for fraud. Now is not the time for outrage fatigue. Plenty of time to unseat a Representative.
At least among the people I talk with on Capitol Hill, there is a very real sense that business is returning to usual; certainly, the lobbyists are out in force, they want what they always want, and it’s hard to see many of them as seriously weakened.
Kinda speaks for itself, doesn't it? This is sooooo far from over.
Are you kidding me? This article is actually in the newspaper? Being covered in plain site? And people aren't pissed that they are even going forward with the PPIP program? Haven't the markets recovered like 25+% from when the PPIP was introduced as "we need this program to save the world for the 5th time!"?
Seems like most people are happy that "stocks are going up" again, I guess. W-T-F!
We have to eliminate: 1) too-big-to-fail; and 2) evasion of responsibility via "convenient doubt".
1 is obvious. #2 is the arguments used by bank and tobacco ceo's: while some speculated about bad outcomes, no one could know for sure what the future held...
...... Roubini is in Seoul now for digital forum , and he said this morning that "recession is going to be over end of this year" @ Sheraton Hotel , naturally changed his words again like Krug.......
"their nukes can only go 80 miles...true story. i'm like 300 away from them. maybe it wasn't a test? maybe they were experimenting with nuclear energy? or....anti matter? they are pretty retarded and backward there, according to most sources but who knows, maybe they are on to something. they know no1 will fuck with them b/c they have nothing to offer the rest of the world. as long as nobody gets hurt too bad, they have free reign to blow themselves up however they like.
At least that appears to be the attitude over here...
south Korea and the US give them lots of shit. as in more than 30% of the food they eat. south Korea offered them free energy in exchange for shutting down their nuke program but no luck. Kim Jeong Il is crazier than a shithouse rat. His son will succeed his,"throne," and they are already telling people that he is ten years older than he actually is. More to come there...
Not worried,"
Nice to see comments from someone who lives close-by. This person sounds like a lot of fun. Thanks for posting these.
Contrary to his comments, the North is not required (or even provably able) to use missile delivery methods, so this alone is not a reason for calmness. Not to harsh anyone's buzz.
What might be a reason for calmness is that North Korea has a consistent history of beginning negotiations with spectacular attention gathering shenanigans.
Evidently they are quite enthusiastic to get together. We should take them up on the matter.
My wife was telling me... South Korea starting to be a little tense, as well as Japan. Ties between those countries may be strengthening. Additionally the recent tests come on the heals of the suicide of their former President. I had some poor information previously.
I'm not sure how accurate this has been reported in American media sources (possibly he was embroiled in scandal?). It is true that their former president was involved in scandal and getting equivalent of $6M in bribes or kickbacks or something. However, the 2 Presidents before that also were involved in similar schemes. The difference was Roh had no political power to protect him from the special investigator (or something like that). This may have blown up in their current President's face, however they get to deal with their crazy brother to the North instead.
I find South Korea a strange country... maybe here in America we have a strange country, but they don't seem to have the same free-speech and free-protest rights that we do. My wife was speaking to another of her ex-patriots here and she was very shaken up by the scandal and what was going on in that country. I think there were a number of mourners of the former president and the police were stopping them from marching or whatever they were going to do. All of the blame could end up on their current President who has made numerous mistakes (in my view) regarding policy. Roh was loved because he was the first person in Korea to become President without a college degree, he had graduated with their equivalent of the GED. Of course he was wrong to take the bribes; however it might be argued that the investigation went too far... as his party had zero power to protect themselves.
YLSP thanks for the scandal info. I get dizzy when I try to understand South Korean politics.
Arguably once started the North had to conduct another test, and repeat until successful. They couldn't leave the old, apparently misfried, test to stand.
Had they never tested originally they would not have had to make that public clarification.
Externalized Costs (profile) wrote on Wed, 5/27/2009 - 1:22 am
The diagnosis bias happening here isn't a bunch of bears growling at each other though it does resemble the Yellowstone dump circa 1970 some threads. The problem I perceive is the thought that the entire system is corrupt and the boy scouts have all built their doomsteads and given up.
Confucian disengagement. A Dynasty this deteriorated will see no voluntary reform. All you can do is prolong the agony.
There are many bankers, accountants, bureaucrats, journalists, average joes and yes politicians who realize what has happened and are fighting back. The evidence abounds all around and the push back is gathering steam.
LOL! "Green shoots"! Show me some actual "pushback". Futile jawboning from Congress? Sure, until the next opportunity to spend billions is presented. Gawp all you want at the show they are throwing to distract you from the robbery of the state, the proof is in the pudding.
A revolution isn't brewing and Madmax bought a ocean front condo and is a little pissed he overpaid but will keep on keeping on.
"Mad max" is a great catch all for when you don't have a specific criticism but want to tar people as "doomers" without actually grappling with the mechanisms at work. Instead, people who hold the view are dismised as having a definitely sensational but factually nonspecific romantic / irrational view. I like "boyscouts" as well, so that people who disagree with you are painted as child-like and overly idealistic.
Romantic and irrational, sort of like, "It'll come back, despite the fact that it's broke and has no rational basis and doesn't have a policy cohort that could stop making mistakes in a million years, it'll come back, you just have to BELIEVE."
Talk all you want about pushback and the green shoots of reform. The state hasn't stopped indebting itself for the gain of a narrow segment of the population.
"for the gain of a narrow segment of the population."
how many americans played the home-ATM or house flip game?
maybe what isn't remarkable is the fact that BT, GE, etc, are just hedge funds attached to incidental businesses, but that a few individuals and businesses that aren't leveraged-asset schemes are still out there. maybe the moneycenter banks are just slightly more politically connected than the rest of us.
stick with it, a dispassionate, laconic even explanation
no wonder the market was up big Tuesday, all those rat faced, weasel eyed rodents skittering about the trading posts, muttering "I don't give a flip who does what to whom, tonight I'm going home with steak for dinner."
HollywoodHack (homepage, profile) wrote (in reply to...) on Wed, 5/27/2009 - 4:34 am
how many americans played the home-ATM or house flip game?
While being urged to by Alan Greenspan. Remember, spending is patriotic, we have to deny Osama his victory. I was sure there for "math is hard, let's go shopping" as state policy. The population were made into ignorant "consumers" instead of citizens and then instructed to jump off a cliff for profit. People who didn't go along were at a distinct economic disadvantage. Given that crap = status contest, it had real consequences.
The reason the bets were made by the bankers is because they knew there was no loss, that they would be bailed out to the extent that they had engineered there own systemic criticality for just that purpose.
I'm not saying the population was admirable, I'm saying they were pushed.
"The reason the bets were made by the bankers is because they knew there was no loss, that they would be bailed out to the extent that they had engineered there own systemic criticality for just that purpose."
To a extent I agree, but even the bankers didn't expect this big of mess hence the size of the problem and offshoots of problems it has caused. They are stretching it far more thinner than they want.
Eras End (profile) wrote on Wed, 5/27/2009 - 5:40 am
To a extent I agree, but even the bankers didn't expect this big of mess hence the size of the problem and offshoots of problems it has caused.
Oh agreed. Like the Chinese, they found it's easier to ride the tiger than to get off. Or in the immortal words of Chuck Prince:
“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing".
Supply is enormous and demand, despite rock-bottom interest rates, is weak: the plain facts for the housing sector where building disappointments are making it harder to remember the occasional good news from the sector. MBA's purchase applications index has been one of the biggest disappointments, indicating no improvement at all in demand. The purchase index edged higher to a still very weak 256.6 in the May 22 week. The refinance index, which has been a bright spot, remains strong but did fall back 19 percent to 3,890.4. Rates remain low but they did jump up the latest week, up 12 basis points to 4.81 percent for 30-year fixed mortgages. Existing home sales data for April, a key indicator for the housing sector, will be posted at 10:00 a.m. ET.
Fed checkbook open. Erm, think we'll have some 5-years, uh, mebbe some 10s, riiiight, 100pt spread? Fine, whatever. No, no, account's fine, check'll clear, sure. Why you lookin at me like that? I'm good for it. You know I am. Hey, we're partners, huh? C'mon, we go back, like, $9T man!
Ghesh. Some people. Ok, man, see you tomorrow. Pick up some 10s, yeah? A bundle. Uh huh, you too, don ever change, man.
"Actually, you may as well let the banks bid on their own assets, since increased bids would raise prices and presumably lower the eventual government subsidies."
No, by allowing the banks to bid up the assets, the Fed and Treasury end up paying MORE to the bank for the same asset, INCREASING the government subsidy.
"The purpose of PPIP is to remove the toxic legacy assets from the bank's balance sheet, not to allow the banks to game the program at taxpayer expense."
Oh, do tell! The purpose is to make certain the kleptocrats suffer no losses. It is most definately to allow these criminals to profit at taxpayer expense. It's design explicitly makes this so. All this noise is that even given the HUGE benefit, the greedy bastards want more.
Next thing you'll try to argue CR, is that the gov't actually gives a shit about the citizens, and that it is here to help us.
....PPIP HAS to be gamed to be effective. There will be a lobbied loophole somewhere that will enable a wide "gray-area" for interpretation as to banks buying and selling their own excrement.
I disagree, it is just a smoke screen to allow more looting under the guise of "getting credit moving again". As if credit flow was the problem. Like taking Metamucil to get the bowels moving again after suffering a shot gun blast to the abdomen....
"There will be a lobbied loophole somewhere..."
That's not a bug, it's a feature...of ALL legislation. How else to our rulers legalize the bribes?
“The offer probably cost them more to print out than the offer is worth,” [said] Gary Thomas, a retired auto mechanic and GM bondholder........Thomas, 56, said he has “hundreds of thousands of dollars” of his savings in the automaker’s bonds and has joined a group of individual creditors called GM Bondholders Unite."
Good old Gary wants what is owed him. He's the type of investor Obama warned us about. "Big-money speculative investors".
A VAT tax is a great idea. Since the banksters are confident of their value added taxing those transactions will obviously serve to highlight the importance of their actions.
Exactly my thoughts. They might promise to lower income taxes, or FICA, or Medicare, but in the end they won't. The original income tax was only supposed to affect the top 1% of wage earners, the rich. We see how that ended up. We will need to tell D.C. what CA voters told Sacramento. Hell, no.
I remember organized Bartering clubs in Denver got in trouble with the Government for for issuing some kind of credit script. They don't like competition.
The fact the banks are even asking....... if anyone had any doubt as to the true color of a banker... now you know. Pure criminal sociopathic corruption. To any banker reading this. PHUCK YOU!!!
Dead Thread but my answer is: I don't have a WSJ subscription so I haven't read the story.
I described how the PPIP is supposed to work. If the banks want to use govt $, we should
be very suspicious as it is likely to be for their own selfish benefit.
I'd guess that they: 1) use govt $ for the equity portion (no skin in the game whatsoever!), and/or
2) have their in-house asset managers "manage" the toxic assets so the banks can collect fees.
Wow, such a blatant attempt to scam public money. If that's not a conflict of interest, I don't know what is. It's like your right hand selling to your left hand.
Unfortunately, it seems like the regulators still trust banks to regulate themselves. "Oh no, they won't be bidding up their own assets. It'll be a fair, transparent process!"
I don't get it. If there's no subsidy involved in the PPIP, then why would the banks...
...
Oh.
I am shocked! Shocked I tell you...
Gambling? Here?
another bit of clever obfuscation
set up seemingly complex acronym filled subsidy game, then allow the banks to recapitalize themselves on the backs of taxpayers
I'll give Geithner his due - at least he's better at hiding the greatest theft in American history
PPIP is the bankers last shot. If it doesn't work wholesale changes are coming to the power structure and another Friday night massacre ala 1979.
ROFLOL. The day the PPIP was announced, bloggers around the world came up with ways to game the program. Many of them involved being both buyer and seller. So it is no surprise that the banks are lobbying for a free lunch.
I think they should be embarrassed for even suggesting this!
At least one bank lobbyist realized this:
"A bank bidding on its own assets really has the potential to look awful in the public's mind," said Mark J. Tenhundfeld, an American Bankers Association lobbyist.
It looks awful because it is awful.
best to all
sure, why not?
If you don't let the banks bid on it directly, they'll just use a Lone Star type of intermediary. Heads, I win; tails, you lose.
I thought the banks would be a little bit less obvious about this but I guess not since nobody will stand up to them.
but confidence is up today... thats what they told me....
And here I thought the banks would just take the taxpayers money and buy tbonds and sit there fat dumb and happy.... Man they are way more creative than that.... No wonder they make the big bucks.... And the fact that they would even try this without keeping it secret speaks volumes about how rotten things are in NYC...
This really is insane.
What possible reason could a bank have for wanting to buy assets from itself?
Even someone who knows nothing about finance would realize something fishy was going on... wouldn't they?
its just one big circle jerk and we have to clean up the mess....
"A bank bidding on its own assets really has the potential to look awful in the public's mind," said Mark J. Tenhundfeld, an American Bankers Association lobbyist.
It looks awful because it is awful.
Soon Mark will join the ranks of the unemployed
And here I thought the banks would just take the taxpayers money and buy tbonds and sit there fat dumb and happy
Community banks are loan makers. Money center banks are deal makers.
If I were a banker, I would loudly cancel all cash bonuses (replacing them with stock options), provide a photo op where we sell the entire fleet of corporate jets (we can always lease new ones for a little bit more), and then calmly go about my business bidding up my own assets to the point where I reap a freakin' fortune.
It's stupid but it was stupid from the get-go. Actually, you may as well let the banks bid on their own assets, since increased bids would raise prices and presumably lower the eventual government subsidies.
All we're doing by forbidding the banks from bidding on their own stuff is keeping in place this veil where underneath we assume this isn't yet another massive giveaway, more to convince ourselves than anything.
Want to try modelling how this works out?
1. Go to: Demo for POLE ZERO PLOT
2. Click Start
3. This will open a java applet with a number of windows. Find the Window that is titled "PZ Placement Block"
4. Click Add Pole
5. Click the cursor on the real axis to the left of the unit circle. This should leave a red x
6. Look at the Plot window
The corps will have to be stinking to high heaven before the parasites realize that they have killed the host.
since increased bids would raise prices and presumably lower the eventual government subsidies.
You got that backwards.
"A bank bidding on its own assets really has the potential to look awful in the public's mind," said Mark J. Tenhundfeld, an American Bankers Association lobbyist.
Don't be ridiculous. Nobody's going to buy their own assets--GS will bid on BAC assets, BAC will bid on C assets, C will bid on JPM assets....
I suppose I'm a bit relieved that it was necessary to lobby for permission. If it were possible to simply have hedge fund intermediaries take care of this for them they would have done so without a public stink.
6. Look at the Plot window
I thank the Good Lord that in real life we have President Obama to damp out the oscillatory forces of evil. Otherwise, this could lead to real problems.
I called the FDIC during the comment period and got through to some Media guy after pestering the receptionist. I was actually inquiring about a statement attached to their online conference advising the "media" not to quote from it. I wondered if anonymously posting to a public forum made me part of the "media". He asked me, "How do you feel about it?".
Then I asked him how selling something you own to yourself could ever be anything other than fraud. (A JPM analyst had asked about it during the call) He tried some 5th grade explanation. I told him I was a lawyer. The whole conversation was bizarre.
Surprised? Not at all.
At least it will free up even more money for commodities speculation, and should drive more people away from the USD and UST market. All of which will benefit my positions.
Sometimes expecting the worst of human behavior is very, very profitable.
"I thank the Good Lord that in real life we have President Obama to damp out the oscillatory forces of evil. Otherwise, this could lead to real problems."
He is nothing more than a puppet, no more than Reagan,Bush,Clinton or Dubs. If the PPIP fails, as I suspect and banks are still insolvent and need trillions more in money, public will revolt and say no more. Obama will glance over/smirk and the bankers then bail the fook out as wholesale changes are made to the power structure finally allowing the country to get to the bottom of this mess. I am not sure when the "failure" moment comes, but it will come.
We already had in happen before in 1979. The following years were not good economically if I remember.
What possible reason could a bank have for wanting to buy assets from itself?
Even someone who knows nothing about finance would realize something fishy was going on... wouldn't they?
You're holding a piece of used tissue paper and somebody offers you $4 if you'll buy the paper from yourself for $5. Do you accept the $4, or do you worry about how stupid you'll look buying a used tissue from yourself?
black swan or more hot air with North Korea?
Update from BNO: NORTH KOREA ABANDONS KOREAN WAR ARMISTICE.
Update 2: NK Statement: "Any hostile act against our vessels, including search and seizure, [..] we will immediate respond with a powerful military strike"
Update 3: NK Statement: "THE PENINSULA WILL SOON BE RETURNED TO "THE STATE OF WAR."
Update 4: Yonhap Statement here
Zero Hedge
Does anyone know if there has there been a bigger taxpayer rip-off? Or will this one top the list?
Sometimes expecting the worst of human behavior is very, very profitable.
On the other hand, you could end up sitting there fondling all your coinz when the hyena-faced zombies start gathering at nightfall to break into your bunker. (full disclosure - I've been piling up coinz in my bunker too. Just not feeling comfortable about the longer term).
CR- "I think they should be embarrassed for even suggesting this! "
CR, with all due respect, I submit to you that these sons of bitches have no pride, no honor, and no ethics.
I submit that they are incapable of being "embarrassed" in the way you describe.
Why? Look what they did to this country.
Good night and good luck.
YouTube - Good Night, And Good Luck
"unremitted negativity"
Hahaha
That's why we look for inflection points.
They are often the point of maximum hysteria/delusion.
RE market hasn't inflected yet.
"Bankers see it as a win-win," said Tanya Wheeless, chief executive of the Arizona Bankers Association, which has urged the FDIC to let banks buy their own assets through PPIP.
Does she have any idea how this sounds? How can a lobbyist be so ham-handed at public relations?
And the prudent(TM) wonder why I have a jackhammer on hand for when the bank wants to take possession of their shinny REO.
can i buy back my own mortgage then flip it for a profit? wheres my pitchfork....
Interesting revelation from the IHT:
"The killing in 1967 of an unarmed demonstrator by a police officer in West Berlin set off a left-wing protest movement and put conservative West Germany on course to evolve into the progressive country it has become today.
Now a discovery in the archives of the East German secret police, known as the Stasi, has upended Germany’s perception of its postwar history. The killer, Karl-Heinz Kurras, though working for the West Berlin police, was at the time also acting as a Stasi spy for East Germany.
It is as if the shooting deaths of four students at Kent State University by the Ohio National Guard had been committed by an undercover K.G.B. officer, though the reverberations in Germany seemed to have run deeper.
“It makes a hell of a difference whether John F. Kennedy was killed by just a loose cannon running around or a Secret Service agent working for the East,” said Stefan Aust, the former editor in chief of the weekly newsmagazine Der Spiegel. “I would never, never, ever have thought that this could be true.” "
Talk about a Wile E. Coyote moment...
RE market hasn't inflected yet.
Heck, we haven't yet seen capitulation anywhere.
CR, with all due respect, I submit to you that these sons of bitches have no pride, no honor, and no ethics.
Agreed...but wouldn't you think they'd have some sense of the political consequences of the public reaction? Couldn't the 19 bankers just meet in Summers's office and have him make a threatening phone call to the FDIC? Why is this happening in public?
Damn it must feel good to be a banksta!
Does she have any idea how this sounds? How can a lobbyist be so ham-handed at public relations?
"You don't need to be tactful when you get whatever you want"
Heck, we haven't yet seen capitulation anywhere.
True enough. Even Gavshire still seems to be hanging in there.
Germany. The only country where the desire to preserve bookkeeping exceeds the one for survival
From my comment to the FDIC website in April:
"Don't you understand all these guarantees encourage fraud?
If you let a bank retain an equity interest in something it "sells", and handing [sic] it a non-recourse
loan from the Treasury and a guarantee, that is a sham transaction"
Bloomberg anchor asked Geithner last week if Sheila Bair was a "team player". He held up the facade. We'll see...
"You don't need to be tactful when you get whatever you want"
They'll get whatever they want until the political costs of giving it to them become too great, and they are unnecessarily hastening that moment.
I thought Obama made that clear a while back--don't make it hard for us to give you what we want to give you. This is a political operation and we have appearances to maintain.
Anyone remember what the leverage for the PPIP was?
Of a $10 bid, that would be 50¢ private, 50¢ treasury, $9 FDIC guaranteed bond?
How long does the FDIC guarantee extend? I thought there was a 3 year expiry on the corporate issues they've guaranteed
Isn't this referred to as "shill bidding"?
The weird thing about capitulation is you might not SEE it anywhere until after it has passed and you look back. Bulls seem to think they ring a bell at the top, bears at the bottom - there are no bells.
"On the other hand, you could end up sitting there fondling all your coinz when the hyena-faced zombies start gathering at nightfall to break into your bunker"
Don't worry, I have guns as well. In fact, when this started hitting the fan, my first investments were guns and shooting lessons. Not that I think I will need them. But I don't think I will ever need fire insurance either...
How long does the FDIC guarantee extend? I thought there was a 3 year expiry on the corporate issues they've guaranteed
"Additional terms of the guarantee have not been announced."
It wouldn't make sense to have the guarantee period be shorter than the expected timeframe for materialization of the losses. I'd expect at least a 10-year guarantee on the grounds that anything shorter might discourage private participation in the program.
At the bottom you will hear a thud. It will be the collective jaw drops of investors around the world.
I had the same thought .... how could anyone lobby for this with a straight face? I can hardly wait to hear the rationalizations.
Anyone remember what the leverage for the PPIP was?
6:1, wasn't it? At least on the whole loans side...I'm not so sure about the legacy securities.
ghostfacedinvestah - Charlton Heston and Will Smith had lots of guns. What they really needed was a good escape route (and maybe a turbo-charged dune buggy with nitrous tanks).
Ok, a little positivity. If this goes through it will end Geithner's career in "public service".
I volunteer to help build a legal challenge. Find me an underdog bank plaintiff, or maybe 80 million taxpayers in a class action.
"Chrysler LLC’s swift bankruptcy process will give consumers confidence that General Motors Corp. would also emerge quickly if it needs to seek court protection, a person familiar with the matter said. "
This person either A) works for GM or B) works for the government. just a guess.
Denninger warned weeks ago about this very gaming of PPIP by the banks. I guess the only thing shocking about it is they are asking permission to do it.
At the bottom you will hear a thud. It will be the collective jaw drops of investors around the world.
I remember a thud like that the day Congress voted down Paulson's first proposal. It was the end of the world...huge headlines reading "MARKETS PLUNGE", "LARGEST LOSS ON RECORD", etc.
We closed that day at 10365 on the Dow. That was supposed to be the bottom, and where are we now after a 39% rally?
So this just speeds up the process of moving the collective bad debt from the corporate balance sheets onto the govt balance sheet. It was going to happen anyway, sooner or later. IMHO they might as well speed up the process and get it over with.
Given that it IS going to happen, whether we like it or not, how do you position yourself?
In other words, envision a time, 6 months from now, when, instead of banks holding all their bad debt, the govt/Fed holds it. All of it, private label RMBS, CMBS, credit card debt, whole loans, HELOCS, everything.
CR: The purpose of PPIP is to remove the toxic legacy assets from the bank's balance sheet, not to allow the banks to game the program at taxpayer expense.
Come on CR, it is exactly that. But a bit more subtle than has been suggested. Banks won't buy their own assets (directly), nor will they buy the assets of other banks (directly), instead, they will collectively buy toxic assets by funding their purchase by PIMCO and other asset managers.
Generally, the stronger banks will participate more (but all will participate to some degree). That's why we needed the stress test first. Banks can now raise equity that can be used for PPIP investments. It makes little sense for Private Equity to participate in PPIPs (though some may) but it makes a great deal of sense for banks.
Once banks have overbid...um...I mean established a market price, then the PPIPs will be sold off to pension funds and other "long term" investors.
opps, didn't get the formating right, sorry guys
Anyone remember what the leverage for the PPIP was?
I'll be looking that up, as soon as I get through researching the number of strings on Nero's fiddle.
"congress is insignificant compared to the power of the market. "
"In other words, envision a time, 6 months from now, when, instead of banks holding all their bad debt, the govt/Fed holds it. All of it, private label RMBS, CMBS, credit card debt, whole loans, HELOCS, everything."
Better not be holding anything denominated in USD at that point.
The diagnosis bias happening here isn't a bunch of bears growling at each other though it does resemble the Yellowstone dump circa 1970 some threads. The problem I perceive is the thought that the entire system is corrupt and the boy scouts have all built their doomsteads and given up. There are many bankers, accountants, bureaucrats, journalists, average joes and yes politicians who realize what has happened and are fighting back. The evidence abounds all around and the push back is gathering steam. A revolution isn't brewing and Madmax bought a ocean front condo and is a little pissed he overpaid but will keep on keeping on.
Many happy people living in what we would consider squalor and with oppressive regimes but they still live, laugh and love. Attitude and perspective is everything. Lighten up and be kinder to each other. The eating our own is getting bad around here.
"CR: The purpose of PPIP is to remove the toxic legacy assets from the bank's balance sheet, not to allow the banks to game the program at taxpayer expense."
Technically, this would achieve the same purpose - they would own the assets, but not the risk of the assets. So basically they transform the assets into govt-guaranteed paper.
Or a better analogy - before they owned equity, after they own equity with a put option to the govt.
The toxic asset is no longer toxic to them.
The govt has already done this for Citi and BofA, so arguably the other banks should be able to participate since those two have a competitive advantage.
While it may involve some slight of hand, the PPIP will be a success...
Stocks will rise...
Timmy will look like a hero....
at least for a while.
IMO the big question now is how the Fed/Tsy unwinds without causing big inflation/stagflation.
(I'd guess we get no real Fed/Tsy pull bank until Obama's second term)
this is how a great country collapses.... A bank will buy its own assets from itself using a government match and leverage insured by an entity that is backed by the government. oh... and the government is running a 2T budget deficit. It is so absurd it makes me want to cry and then buy something/anything not backed by the full faith and credit of the usg.
"...the govt/Fed holds it. All of it,..."
Congress reduces FDIC borrowing capacity, deposit insurance guarantee. FDIC increases assessments to cover, pro rata by which back dumped how much bad paper. Banks can't pass on fees because depositors organize efficient mass surges to chase interest rates.
One can dream...
The eating our own is getting bad around here.
Let's check back in on this theory after the next trillion or so in Treasury issuance.
hmm. 10 year t is yielding 3.53. ben is going to need to start buying more treasuries soon.
Any of you out there still holding deposits at the too big 19 are part of the problem.
IMO the big question now is how the Fed/Tsy unwinds
Never happen... the paper that's going in will die there.
"The diagnosis bias happening here isn't a bunch of bears growling at each other though it does resemble the Yellowstone dump circa 1970 some threads..."
I agree with your entire post. the issue with most people posting here is they are honest, were probably brought up with a good work ethic, and raised with a certain sense of fairness. None of which is valued in America today. I can understand why people are mad.
re: bearish sentiment around CR
Since the market turned sour, there has not been a single rally that has not been predicted, called, and stood by from someone here. Emotion was certainly elevated in early November and March; I don't know on what basis the comparison between now and then can be made. Please stop trying to provoke arguments where you have positioned yourself to be a martyr. No one likes whiners
edit: I have no idea who has been bringing this up, just that there are enough people who have had no problem sticking around to be proven right on a market surprise. I would listen to them based on reputation, or someone making a detailed well reasoned argument, but rarely will I pay attention to someone with neither
You all worry too much. All is well. Soon a framed Google stock certificate will go for 200k mighty American dollars and gold will come out of safes and used as doorstops. CR will start performing with his charts at bar mitzvahs in the LA metro area where all homes will be worth 1 million dollars.
Hey everyone, the govt was gonna own the toxic crap under any scenario (principally, nationalization)
The problem isn't that the gov't owns it, its that the bankers have been given a "get out of jail" card free pass -- and the government (us!!) have no real upside: private gains, socialized losses. The Obama administration seems to understand this and has recently talked about 1) new reguations, and 2) bank CEO's being shown the door (at some unspecified future time). But I really wonder if #2 will ever happen.
Hell, I even called the bottom in March
. The top call, on the other hand....
No one likes whiners
However, I for one like posters who are farting through silk. Or posters who appeal to the Wright Model B. Or those who blame the CMBS collapse on zit-faced hedgies.
Top call: 6 months after the Fed stops supplying liquidity.
Obama demanded "new reforms on his desk by the end of the year". Of course, no deadline can't be extended. His attitude, shared by many in Washington, is still 'get through this crisis and then make sure it never happens again.' He has the timing reversed. The crisis will not end until reforms have been instituted and those responsible held accountable, and not just a few CEO's.
Tim waiting for 2012
Web searching is well on its course to becoming 'commodtized' for the lack of a better word. That is why google is investing so much in side projects. They don't want to become the next yellow pages income fund. Intel is a great piece of history. They do a lot of good work and execute extremely well, but to actually grow their business they need to find new contexts in which their core competencies are of value. In some cases, create the contexts in which their core competencies bring value.
Not to mention much of their growth has come at the expense of print advertising. When print is dead will there be growth? Revenues are already down YoY. This stock is rich to say the least.
"Heck, we haven't yet seen capitulation anywhere."
Not exactly true.
I started applying for education-based jobs last week.
The best project I did was a series of 4 grants from the Federal gov't.
broward,
You haven't capitulated until you give up the leather pants.
OT-Even the Rhodesians don't want US dollars.
Rand Disappearing from Circulation in Harare
Megabe may be a dictator but there's one law he can't change--Say's:
The South African rand is disappearing from circulation especially in Harare, as it continues to gain value over the American dollar.
The rand however, remains the reference currency and is widely used in Midlands and Matabeleland.
Traders in the market now prefer to sell their good in rand as compared to the US dollar.
The parallel market is trading at a cross rate of US$1 at an equivalent of R9 with some trading as low as R8, 50 for a dollar.
http://www.thezimbabweobserver.com/buss_rand_238.8965r42.htm
Any of you out there still holding deposits at the too big 19 are part of the problem.
Yeah, and even the Zimbabweans think you're making a mistake.
I trust my tax dollars in your hands, Broward. Write something that makes government function better with less spending.
"...in the LA metro area where all homes will be worth 1 million dollars."
Where have you been? They already are!
"Write something that makes government function better with less spending."
On the third grant, they commissioned an ROI study for our nationwide deployment.
We had roughly a $60 million / year return on $5 million / year.
All my corporation work was much less and shrinking.
I never imagined that large corporations could run suckier than the Federal gov't but that's what I've seen.
"Any of you out there still holding deposits at the too big 19 are part of the problem. "
Agree with that, moved all my money out of WFC and into Schwab, who, although did accept the money market guarantee, did not take TARP. I can forgive a small transgression.
suicide car bomb attack in Lahore, Pakistan. ~30 casualties
Details, or is it confidential ?
Yalt @ 9:56pm.
What have the political consequences of public reaction so far? None as far as I can tell, perhaps a few cosmetic changes. Quite a few people called/e-mailed their elected reps, re: the first bailout round and, let's see, there was a nice gesture by some Congresspeople of voting it down, a gesture only, and since then it's been pretty much clear sailing for the banksters, AIG, et al, hasn't it? (maybe not GM & Chrysler, but that's partly due to the desire to continue to destroy unions, imo). Some MSM covered outrage re: bloated compensation/huge bonuses, so a few bonuses were returned. But have any real caps been established? Any long lasting change in standards re: bonus amounts & when awarded? More stringent requirements on who can be a corporate board member? On board member compensation & stock options? Any other useful/positive changes required as part of the various forms of federal welfare offered? Nope. The moment it seemed as though there might be, the banks started muttering about returning those TARP funds & I haven't heard/read anything lately about compensation restrictions as a condition of receiving TARP funds, etc.
As far as I've been able to see, there haven't been any negative political consequences. Not when I continue to read incredibly inane, biased & stupid articles such as the one by Michele Singletary New credit card restrictions put an end to subsidies funded by the less fortunate - The Boston Globe, that continue to justify the greedy, gouging & shortsighted behavior of the credit card issuers or accept it w/out question as being ok, while appearing to imply its the people who have paid off their balances in full every month who were the only beneficiaries (as in look what you guys got away with) of the easy credit policies of the issuers. The propaganda's still being churned out.
Some of the people I know aren't happy about what's going on, but like me, they're tired of e-mailing & calling their elected reps, writing letters to the editor, trying to participate in local decision-making , etc., without apparently achieving much, if anything, in the way of desired changes. Obama's made a few useful changes, but for the most part, he's backtracked on almost every promise of substance he made prior to his nomination & during his campaign. It's been pretty much same old, same old. Otherwise, you'd think that the Obama admin/FED would be too embarrassed to go through with a program (PPIP) that it took some bloggers approximately 2 minutes to figure out how banks could game the process.
So how do banksters get held accountable when those with the power to hold them accountable seem to be sycophants? Accomplices? I like what I've heard/read of Elizabeth Warren, but she doesn't seem to have much real power. Wonder what she thinks of the PPIP?
azurite,
That's why I'm so cynically inclined to expect the worst, because TPTB have no incentive to do otherwise until it's way too late.
Print media and TV news wonder why they are struggling?
"More stringent requirements on who can be a corporate board member?"
The problem of interlocking directorates, as a 90 year-old recalled the phrase to me recently.
The banks lobby (paying with bailout dollars) unashamedly for fraud. Now is not the time for outrage fatigue. Plenty of time to unseat a Representative.
From "The Baseline Scenario"
At least among the people I talk with on Capitol Hill, there is a very real sense that business is returning to usual; certainly, the lobbyists are out in force, they want what they always want, and it’s hard to see many of them as seriously weakened.
Kinda speaks for itself, doesn't it? This is sooooo far from over.
Are you kidding me? This article is actually in the newspaper? Being covered in plain site? And people aren't pissed that they are even going forward with the PPIP program? Haven't the markets recovered like 25+% from when the PPIP was introduced as "we need this program to save the world for the 5th time!"?
Seems like most people are happy that "stocks are going up" again, I guess. W-T-F!
We have to eliminate: 1) too-big-to-fail; and 2) evasion of responsibility via "convenient doubt".
1 is obvious. #2 is the arguments used by bank and tobacco ceo's: while some speculated about bad outcomes, no one could know for sure what the future held...
FED "Can't Find" $9 Trillion!
Is Anyone Minding the Store at the Federal Reserve?
Here is the video Rick Santelli metioned
the nyfed will keep on shoveling taxpayer trillion$ out the door until the short term ust market breaks, and not a moment sooner
$1.2 Trillion Slush Fund: Congressman Alan Grayson Grills Fed Vice Chair Donald Kohn
YouTube - $1.2 Trillion Slush Fund: Congressman Alan Grayson Grills Fed Vice Chair Donald Kohn
and #3 on the list would be the know-nothing, naval-gazing, "hoocoodanode?" excuse resulting from willful ignorance and diffusion of responsibility
as a bank ceo, I'm paid to run my bank, not speculate about systemic risk! (use gravelly banker monotone with a hint of indignation)
...... Roubini is in Seoul now for digital forum , and he said this morning that "recession is going to be over end of this year" @ Sheraton Hotel , naturally changed his words again like Krug.......
...... Roubini says bottom of U.S. recession not here yet
| Reuters .......
...... http://media.daum.net/breakingnews/view.html?cateid=100000&newsid=20090527103112076&p=yonhap .......
...... Hangsheng closed up more than +4.7% ..... highest index figures in 8 months , fully recovered from last years crash......
Pretty sure whatever Ultrashorts I'm in will be stopped out with this latest surge.
from my friend in S korea:
"their nukes can only go 80 miles...true story. i'm like 300 away from them. maybe it wasn't a test? maybe they were experimenting with nuclear energy? or....anti matter? they are pretty retarded and backward there, according to most sources but who knows, maybe they are on to something. they know no1 will fuck with them b/c they have nothing to offer the rest of the world. as long as nobody gets hurt too bad, they have free reign to blow themselves up however they like.
At least that appears to be the attitude over here...
south Korea and the US give them lots of shit. as in more than 30% of the food they eat. south Korea offered them free energy in exchange for shutting down their nuke program but no luck. Kim Jeong Il is crazier than a shithouse rat. His son will succeed his,"throne," and they are already telling people that he is ten years older than he actually is. More to come there...
Not worried,"
I just thank God for the global cooling and lower than normal Sun activity since 1913.
SpaceWeather.com: Spotless Days: The Sun Plunges into the Deepest Solar Minimum in a Century
Code Otis,
Nice to see comments from someone who lives close-by. This person sounds like a lot of fun. Thanks for posting these.
Contrary to his comments, the North is not required (or even provably able) to use missile delivery methods, so this alone is not a reason for calmness. Not to harsh anyone's buzz.
What might be a reason for calmness is that North Korea has a consistent history of beginning negotiations with spectacular attention gathering shenanigans.
Evidently they are quite enthusiastic to get together. We should take them up on the matter.
rex,
what do you mean by "not required to use missile delivery methods?"
maybe you mean they could use a hyundai?
Not to put too fine a point on it, but I hate those slimy sons of bitches. May they burn in hell.
CodeOtis: rex,
what do you mean by "not required to use missile delivery methods?"
maybe you mean they could use a hyundai?
Or, a Trabant! in a Trebuchet! Touche!
My wife was telling me... South Korea starting to be a little tense, as well as Japan. Ties between those countries may be strengthening. Additionally the recent tests come on the heals of the suicide of their former President. I had some poor information previously.
I'm not sure how accurate this has been reported in American media sources (possibly he was embroiled in scandal?). It is true that their former president was involved in scandal and getting equivalent of $6M in bribes or kickbacks or something. However, the 2 Presidents before that also were involved in similar schemes. The difference was Roh had no political power to protect him from the special investigator (or something like that). This may have blown up in their current President's face, however they get to deal with their crazy brother to the North instead.
I find South Korea a strange country... maybe here in America we have a strange country, but they don't seem to have the same free-speech and free-protest rights that we do. My wife was speaking to another of her ex-patriots here and she was very shaken up by the scandal and what was going on in that country. I think there were a number of mourners of the former president and the police were stopping them from marching or whatever they were going to do. All of the blame could end up on their current President who has made numerous mistakes (in my view) regarding policy. Roh was loved because he was the first person in Korea to become President without a college degree, he had graduated with their equivalent of the GED. Of course he was wrong to take the bribes; however it might be argued that the investigation went too far... as his party had zero power to protect themselves.
What impresses me is the number of people who think we're living inside our financial Swarzschild radius who are also insomniacs. Who read CR.
YLSP thanks for the scandal info. I get dizzy when I try to understand South Korean politics.
Arguably once started the North had to conduct another test, and repeat until successful. They couldn't leave the old, apparently misfried, test to stand.
Had they never tested originally they would not have had to make that public clarification.
Externalized Costs (profile) wrote on Wed, 5/27/2009 - 1:22 am
The diagnosis bias happening here isn't a bunch of bears growling at each other though it does resemble the Yellowstone dump circa 1970 some threads. The problem I perceive is the thought that the entire system is corrupt and the boy scouts have all built their doomsteads and given up.
Confucian disengagement. A Dynasty this deteriorated will see no voluntary reform. All you can do is prolong the agony.
There are many bankers, accountants, bureaucrats, journalists, average joes and yes politicians who realize what has happened and are fighting back. The evidence abounds all around and the push back is gathering steam.
LOL! "Green shoots"! Show me some actual "pushback". Futile jawboning from Congress? Sure, until the next opportunity to spend billions is presented. Gawp all you want at the show they are throwing to distract you from the robbery of the state, the proof is in the pudding.
A revolution isn't brewing and Madmax bought a ocean front condo and is a little pissed he overpaid but will keep on keeping on.
"Mad max" is a great catch all for when you don't have a specific criticism but want to tar people as "doomers" without actually grappling with the mechanisms at work. Instead, people who hold the view are dismised as having a definitely sensational but factually nonspecific romantic / irrational view. I like "boyscouts" as well, so that people who disagree with you are painted as child-like and overly idealistic.
Romantic and irrational, sort of like, "It'll come back, despite the fact that it's broke and has no rational basis and doesn't have a policy cohort that could stop making mistakes in a million years, it'll come back, you just have to BELIEVE."
Talk all you want about pushback and the green shoots of reform. The state hasn't stopped indebting itself for the gain of a narrow segment of the population.
Markar, exactly.
"for the gain of a narrow segment of the population."
how many americans played the home-ATM or house flip game?
maybe what isn't remarkable is the fact that BT, GE, etc, are just hedge funds attached to incidental businesses, but that a few individuals and businesses that aren't leveraged-asset schemes are still out there. maybe the moneycenter banks are just slightly more politically connected than the rest of us.
all predicted, even a picture drawn for the special needs crowd, here:
1 thru #5
YouTube - Geithner Plan I
stick with it, a dispassionate, laconic even explanation
no wonder the market was up big Tuesday, all those rat faced, weasel eyed rodents skittering about the trading posts, muttering "I don't give a flip who does what to whom, tonight I'm going home with steak for dinner."
Byzantine Ruins writes: "The state hasn't stopped indebting itself for the gain of a narrow segment of the population."
...narrow segment...?
Don't you mean the country club membership committee?
HollywoodHack (homepage, profile) wrote (in reply to...) on Wed, 5/27/2009 - 4:34 am
how many americans played the home-ATM or house flip game?
While being urged to by Alan Greenspan. Remember, spending is patriotic, we have to deny Osama his victory. I was sure there for "math is hard, let's go shopping" as state policy. The population were made into ignorant "consumers" instead of citizens and then instructed to jump off a cliff for profit. People who didn't go along were at a distinct economic disadvantage. Given that crap = status contest, it had real consequences.
The reason the bets were made by the bankers is because they knew there was no loss, that they would be bailed out to the extent that they had engineered there own systemic criticality for just that purpose.
I'm not saying the population was admirable, I'm saying they were pushed.
"Now is not the time for outrage fatigue. Plenty of time to unseat a Representative."
please show snark on/off when snarking
volker the viking (profile) wrote on Wed, 5/27/2009 - 4:41 am
...narrow segment...?
Don't you mean the country club membership committee?
Of a single country club, yes.
Byz: Pushed? That's a bit harsh, isn't it? If someone were pleasuring you how much time would you give them to stop?
"The reason the bets were made by the bankers is because they knew there was no loss, that they would be bailed out to the extent that they had engineered there own systemic criticality for just that purpose."
To a extent I agree, but even the bankers didn't expect this big of mess hence the size of the problem and offshoots of problems it has caused. They are stretching it far more thinner than they want.
The Sun is awake and firing again. Solar Max in 5 years?
Eras End (profile) wrote on Wed, 5/27/2009 - 5:40 am
To a extent I agree, but even the bankers didn't expect this big of mess hence the size of the problem and offshoots of problems it has caused.
Oh agreed. Like the Chinese, they found it's easier to ride the tiger than to get off. Or in the immortal words of Chuck Prince:
“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing".
MBA Purchase Applications
Supply is enormous and demand, despite rock-bottom interest rates, is weak: the plain facts for the housing sector where building disappointments are making it harder to remember the occasional good news from the sector. MBA's purchase applications index has been one of the biggest disappointments, indicating no improvement at all in demand. The purchase index edged higher to a still very weak 256.6 in the May 22 week. The refinance index, which has been a bright spot, remains strong but did fall back 19 percent to 3,890.4. Rates remain low but they did jump up the latest week, up 12 basis points to 4.81 percent for 30-year fixed mortgages. Existing home sales data for April, a key indicator for the housing sector, will be posted at 10:00 a.m. ET.
"US Recession May End Next Quarter"
......and in further news, Black Star Ranch has succeeded in teaching their cows to fly.
a number of comments come to mind...
I am shocked, shocked, I tell you!!!
or
Aye you going to believe my or your lying eyes!!!
Give the banks their money, lets get this over with, so that we can move on. They are going to get the money anyway...
Fed checkbook open. Erm, think we'll have some 5-years, uh, mebbe some 10s, riiiight, 100pt spread? Fine, whatever. No, no, account's fine, check'll clear, sure. Why you lookin at me like that? I'm good for it. You know I am. Hey, we're partners, huh? C'mon, we go back, like, $9T man!
Ghesh. Some people. Ok, man, see you tomorrow. Pick up some 10s, yeah? A bundle. Uh huh, you too, don ever change, man.
C
"US Recession May End Next Quarter"
Well remember that the recession that "ended" in 2001 didn't really end until 2003.
"Actually, you may as well let the banks bid on their own assets, since increased bids would raise prices and presumably lower the eventual government subsidies."
No, by allowing the banks to bid up the assets, the Fed and Treasury end up paying MORE to the bank for the same asset, INCREASING the government subsidy.
"Well remember that the recession that "ended" in 2001 didn't really end until 2003."
ac, you know some wonder if there hadn't been a home-ATM available if it would be over even now.
"The purpose of PPIP is to remove the toxic legacy assets from the bank's balance sheet, not to allow the banks to game the program at taxpayer expense."
Bwahahahahahahahahahahaahhaahahahahahahahahahahahhaahhahahahahahahahahahahahahahahahaha!
Oh, do tell! The purpose is to make certain the kleptocrats suffer no losses. It is most definately to allow these criminals to profit at taxpayer expense. It's design explicitly makes this so. All this noise is that even given the HUGE benefit, the greedy bastards want more.
Next thing you'll try to argue CR, is that the gov't actually gives a shit about the citizens, and that it is here to help us.
ac, you know some wonder if there hadn't been a home-ATM available if it would be over even now.
Maybe not, but we would be a lot closer to recovery and being a first world nation than we are now.
yep. My thots 2
any bidding technique that is not allowed on e-bay should not be allowed in PPIP
....PPIP HAS to be gamed to be effective. There will be a lobbied loophole somewhere that will enable a wide "gray-area" for interpretation as to banks buying and selling their own excrement.
GM bankruptcy talks collapse.
JPM says ccard loses will be 9%.
Futures flat.
Bizarro World.
Banks will be indirect buyers. See my comment at 1:18
"....PPIP HAS to be gamed to be effective."
I disagree, it is just a smoke screen to allow more looting under the guise of "getting credit moving again". As if credit flow was the problem. Like taking Metamucil to get the bowels moving again after suffering a shot gun blast to the abdomen....
"There will be a lobbied loophole somewhere..."
That's not a bug, it's a feature...of ALL legislation. How else to our rulers legalize the bribes?
"GM bankruptcy talks collapse."
Yes Rob, but, they are trying to convert Opel before hand....desperately....with Obumble help...
I guess when the gov't orders/arrainges such illegal conversions of assets, it's no longer illegal...or something
..........I should have used the "/snark-on" command, Misean. The FedGov DOES have a lot of Metamucil stock though.....
Banks will be indirect buyers. See my comment at 1:18
But then why are they lobbying to be direct buyers?
“The offer probably cost them more to print out than the offer is worth,” [said] Gary Thomas, a retired auto mechanic and GM bondholder........Thomas, 56, said he has “hundreds of thousands of dollars” of his savings in the automaker’s bonds and has joined a group of individual creditors called GM Bondholders Unite."
Good old Gary wants what is owed him. He's the type of investor Obama warned us about. "Big-money speculative investors".
OT, WaPo reports the U.S. now considering a 10% VAT
?!!?
Yup, we need to pile a new regressive tax onto bankrupt taxpayers to feed the pigmen and remake health care in god's image. Lock and load.
This story brings back to mind some lyrics from a Crosby, Stills & Nash song, "Anything At All". The lyrics:
Anything you want to know should be perfectly clear
You see just beneath the surface of the mud
There's more mud here
Surprise
David Crosby 1977
"WaPo reports the U.S. now considering a 10% VAT"
Well, if the VAT is being considered TO REPLACE the Federal Income Tax Code - I'm ALL FOR IT. But it won't replace it, It will supplement it
A VAT tax is a great idea. Since the banksters are confident of their value added taxing those transactions will obviously serve to highlight the importance of their actions.
More taxes will only fuel the Black Market for labors and goods! Bartering clubs will come back. Throw more gas on the fire!
This latest chimera ruse lowers the bar just a wee bit more, and just solidifies our overseas creditors worst fear...
We are buggering the buck vis a vis our financial institutions machinations, knowingly or not.
Black Star Ranch,
Exactly my thoughts. They might promise to lower income taxes, or FICA, or Medicare, but in the end they won't. The original income tax was only supposed to affect the top 1% of wage earners, the rich. We see how that ended up. We will need to tell D.C. what CA voters told Sacramento. Hell, no.
"Bartering clubs will come back."
.......I think they're still around, alive and well.........
WaPo reports the U.S. now considering a 10% VAT?!!?
At least the sources quoted in the article were upfront about why this wasn't being considered more seriously: it would be political suicide.
It isn't often that I find myself thankful that our politicians are considering only the political consequences of an action.
I remember organized Bartering clubs in Denver got in trouble with the Government for for issuing some kind of credit script. They don't like competition.
Some bright college student will publish an open source barter index, and presto, the one world currency gets a step closer.
The fact the banks are even asking....... if anyone had any doubt as to the true color of a banker... now you know. Pure criminal sociopathic corruption. To any banker reading this. PHUCK YOU!!!
Why don't they just put out a blanket statement from the White House.......F-U Taxpayer!
"Some bright college student will publish an open source barter index, and presto, the one world currency gets a step closer."
Would fit right in with todays technology! Back side opportunity!
Yalt:
Dead Thread but my answer is: I don't have a WSJ subscription so I haven't read the story.
I described how the PPIP is supposed to work. If the banks want to use govt $, we should
be very suspicious as it is likely to be for their own selfish benefit.
I'd guess that they: 1) use govt $ for the equity portion (no skin in the game whatsoever!), and/or
2) have their in-house asset managers "manage" the toxic assets so the banks can collect fees.
Wow, such a blatant attempt to scam public money. If that's not a conflict of interest, I don't know what is. It's like your right hand selling to your left hand.
Unfortunately, it seems like the regulators still trust banks to regulate themselves. "Oh no, they won't be bidding up their own assets. It'll be a fair, transparent process!"