Bulls, Bears & Bucks #25: Shiny happy people

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Op maandag 22 september 2008 11:02 schreef waht het volgende:
Exclusive: Foreign banks may get help
Misschien toch wel hulp voor de buitenlanders.

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Op maandag 22 september 2008 12:21 schreef Drugshond het volgende:
Als je Nederlandse financials koopt zit er tussen je ogen en de achterkant van je hersens niks meer

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Op maandag 22 september 2008 12:42 schreef simmu het volgende:
toch geen algehele consensus in het congras voor paulson zn plannetje:
grumble

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Op maandag 22 september 2008 12:42 schreef simmu het volgende:
toch geen algehele consensus in het congras voor paulson zn plannetje:
grumble

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"Democrats believe a responsible solution should include independent oversight, protections for homeowners and constraints on excessive executive compensation," Pelosi said in her statement.

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Op maandag 22 september 2008 11:14 schreef elcastel het volgende:
Ik vraag me af of ze in de VS hier nog wat aan gaan doen : Superbonus voor Lehman top . Ik kan me niet voorstellen dat ze met een reddingsplan komen over de rug van de belastingbetaler met de wetenschap dat de eerste 2,5 miljard $ aan bonussen opgaat voor mensen die de boel niet in het gareel kunnen houden.

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What in holy hell is an RTC? Good question.

So all the banks and big companies that lost money can take all their CDOs, CDSs, subprime stuff and every other shitty investment that backfired, and stuff them into a big trash can euphemistally called a Resolution Trust Corporation. This has two huge advantages - it legally protects them from debt repayment problems and other subtle bankruptcy problems, and it shores up their balance sheets and immediately enables their share price to skyrocket now the debt has gone bye-bye.

Immediately, previously-insolvent investment banks can now go and borrow money and act like this whole business was just a meaningless, forgetful night of snorting coke from a hooker’s ass.

Now the RTC has to be supported by Uncle Sam, who basically has to put the infrastructure budget for - well - pretty much everything on hold and start printing money 24/7.

The great American taxpayer gets left by massive T-bill repayments together with a multi-trillion debt that will take generations to pay off, and the people in investment banks can start buying Ferraris, golf courses and private jets.

Now if I could use an RTC, I’d be happy. Just to emphasize how glorious this scheme really is, think about it as if an RTC existed for your family. Here’s how it would work for mine:

I dump all my credit card debt, mortgages, car loans, college loans and every other damned rope around my neck and stick it in the RTC.

I go and get new credit cards and start all over again.

My neighbors figure out how to pay off the RTC while I can’t decide on the trim for my new Mercedes.

Bron: Resolution Trust: the mother of all scams

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My Letter to my senator
Dear Senator Obama-

Chances are most if not all of the major commercial and investment banks are insolvent. Not one of them is opting out of the do-not-short list, and they don't seem to have the confidence in their survival to opt out of the L3 asset swap program Secretary Paulson is proposing.

It is also very likely that acutely dangerous systemic risk already exists, not merely from direct lines of credit among the banks, but especially from credit default swaps, which if activated by more than one large bank default would probably bring down many others. Remember, though, that this systemic risk is highly concentrated in the top 25 or so banks in the world, and does not jeopardize the 6,000 other community banks in the U.S.

Third, it is also highly probable that as this recession worsens, and as housing values continue to sink, forcing more foreclosures, the large banks will be even closer to collapse.

Having worked for many years in the banking industry and been closely involved with risk management and derivatives, I can tell you that it looks like catastrophe is already here.

What Sec. Paulson wants you to believe is that catastrophe is approaching, but it can be averted if only Congress acts urgently to give him the extraordinary authority he is requesting. The implication is if you don't give him $700 billion in borrowing authority within a week, markets will collapse and it will be all your fault.

We've seen this drill before, with the Patriot Act and with the Iraq War authorization. The scare tactics, the urgency, the implied threat of blame for any failure - this is what the Bush administration does. Some of you in the Senate were able to stand up to this pressure, and that type of strength is desperately needed now.

If insolvency is here now for the big banks, the last thing you want to do is throw $700 billion of money that is not yours at bailing out the banks who created this disaster. You'll need every bit of that money to protect the taxpayers and their deposits in these banks when these financial companies are thrown into the bankruptcy courts. You'll need that money to make sure consumer deposits are protected with insurance, and you'll need it to keep the healthy parts of these banks that deal with consumers and businesses functioning until they come out of bankruptcy.

And forget about comparing Paulson's plan to the RTC. These L3 assets aren't homes, condos, or commercial real estate that can be easily sold at the right price. They are bits of paper giving the bond holder the right to some small portion of thousands of mortgages, a right that is shared with all the other investors, who are required to agree on what is done with foreclosed properties in the pool. This is one of the reasons no one wants to buy this stuff, and no one will for many years until it is crystal clear what the final losses will be.

Once you give Paulson the authority he seeks, he will buy these securities at 65 cents/dollar, then quietly auction them off at a nickel each. It will be "unfortunate but necessary" to revitalize the banking industry, even though you will discover the banks won't be lending after this is all over to any but the finest credits. You will have rewarded the banks for their calamitous decisions, stuffed the taxpayers with huge losses, squandered your remaining ability to shore up the FDIC, not prevented the big banks from collapsing anyway, done nothing to help the community banks that will constitute the new banking system in this country when these problems are solved, and in the end made the situation much worse.

If you want to do something practical, require the SEC to go into these banks, open up their L3 holdings to public scrutiny, auction off a sampling of these securities, and apply those prices to the L3 portfolios of all the banks. In this way we will know which banks are insolvent. You won't need to go through this charade of having the Treasury take ownership of these assets, because the core of the problem is not that these assets are clogging up bank balances sheets, as Paulson says (which is tantamount to saying, by the way, that no one will buy them). The core of the problem is that there is no transparency about these portfolios and their real worth. Congress doesn't need $700 billion of our money to create that transparency, and if it shows as I suspect that many of these banks are insolvent, that's why we have bankruptcy courts. You can certainly protect the banks from bank runs while they are in bankruptcy.

Paulson is basically rolling you and the rest of Congress into giving him unprecedented power to protect his friends on Wall Street. This decision you are making is probably as momentous as the Iraq War resolution. Don't fall for this bailout disguised as the only way to prevent Armageddon. Armageddon is already here - at least for the big banks - and it needs an entirely different solution. Spend our money protecting us, by ensuring the FDIC is properly funded, by throwing these too-big-to-fail banks into bankruptcy if they truly are insolvent, by preserving the healthy parts of these banks while in bankruptcy, and bringing them back out again so they function under much better safety and soundness regulations. We've had airlines functioning properly and safely for years while in bankruptcy, and there is no reason we can't do the same with banks.

Please, please, do not fall for some useless compromise or bipartisan agreement that gives the administration what it wants in the end. Kill this proposal here and now, protect us from this bailout, and deal with the real problem - the insolvency of the major banks, not the paper that is supposedly blocking their lending capabilities.

Sincerely,

Numerian September 21, 2008 - 12:26am

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“You weep for Santiago and curse the Marines; you have that luxury. You have the luxury of not knowing what I know: that Santiago 's death, while tragic, probably saved lives and that my existence, while grotesque and incomprehensible to you, saves lives.”
--Col. Nathan R. Jessep, A Few Good Men

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Op maandag 22 september 2008 12:21 schreef Drugshond het volgende:
Als je Nederlandse financials koopt zit er tussen je ogen en de achterkant van je hersens niks meer

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Op maandag 22 september 2008 15:33 schreef francorex het volgende:

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Drugshond die link is wel goed! Voel je niet geremd om regelmatig BNR-radio te posten. zeker als het interessant is.

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Op maandag 22 september 2008 16:13 schreef pberends het volgende:

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Die man is echt manisch depressief .

Wie is dat in Godsnaam?

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Op maandag 22 september 2008 16:25 schreef Drugshond het volgende:

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Kees de Kort.... een soort van Hans Dorrestijn (ook deze heeft wel humor) maar hij zit in de financiële wereld.
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