Anon wrote:
"With everyone paying back TARP, the treasury obviously thinks that the loan losses are done"
Please view the Instructional Video.
Just the opposite--they want to sell high.
Remember, the TARP deal was that the "taxpayers" get preferred stock in the companies to reap the capital gains if the prices went up. That's what "a taxpayer stake" in the company means.
That version of TARP got purged from memory like a bad dream. The "new" TARP idea, since the stocks did go up, is that the banks keep all the capital gains and pay back the principle with market rate interest of 0%, keeping the taxpayers' stake for themselves.
They want out of TARP now, because if they don't sell high they'll lose the taxpayer-funded billions they can pocket and run.
It's just another taxpayer fleecing before the Dark Age the banks see coming more clearly than most.
Monday, December 14, 2009
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FDR- How do you know there are still a lot of loan losses left?
ReplyDeleteFdr:
ReplyDeleteDo you think this end of cycle (kondratieff winter) it is more severe bec this indeed is the end of a "mega cycle"?
Why do you think that the majority of the people in this world are asleep?
How did you wake up?
thanks,
chocolateMan
Just to clarify, are you saying,
ReplyDeleteThe banks got a zero percent loan which they are now exchaging for shares of their company that they gave out as collateral?
IE, bank of america received $10 for giving the gov 10 shares of stock valued at $1. Now, bank of america is giving the $10 back for a stock that is now valued at $2 a share ($20 dollars total)
How is the FED directly buying equities not inflationary? Dollar heading higher, equities heading higher, commodities heading higher, even GLD heading higher. Bonds of course heading lower. Are you sure you don't have your methodology backwards?
ReplyDeleteFDR- just a question.
ReplyDeleteAt what point during inflation would using equities as a hedge not be prudent any longer?
I was just perusing the offerings over at Zero Hedge and see that a piece by John Williams entitled Prepare for the Hyperinflationary Great Depression has the most hits I think I've ever seen any article receive on that site. Talk about all being on the same side of the boat. I guess old habits die hard (and ultimately quite expensively).
ReplyDeleteWell, I think I answered my own question on "Just to clarify..."
ReplyDeleteMoreover, when you mean "sell high" you are referring to their additional stock issues that they are putting into to the market place to payoff their TARP liabilities.
I am still baffled by who is buying all of these secondary offerings.
"FDR- How do you know there are still a lot of loan losses left?"
ReplyDeleteBecause most banks have yet to write down subprime. Take GS, they've been marking up their sub-prime junk to cover other losses. It's all part of the grand facade known as mark to market.
"Market" price is up to the marker. Too bad you can't sell for anything you want or they'd actually be rich instead of flat broke...
"Moreover, when you mean "sell high" you are referring to their additional stock issues that they are putting into to the market place to payoff their TARP liabilities."
ReplyDeleteYes I think that is a good analysis...
I thought you might enjoy this:
ReplyDeleteThe Pilgrims of Plymouth Colony were the first Americans to receive any type of government bailout. The local government at the time was the Pawtuxet Indians. They stated that the Plymouth Colony was too large to fail and they needed to provide them with a bailout (of food). By doing this it helped get the Colony get back on its feet and then the Colony returned the favor by taking their land, spreading smallpox and relocating the Tribe to crappy unusable land called a reservation. This was the first type of wealth redistribution ever done on American soil.
Creativity counts!
Well, my second question was answered,
ReplyDelete"I am still baffled by who is buying all these secondary offerings."
I guess with people buying citi at 3.15 it would mean gamblers / speculators who want a cheap price for the high risk.
The poor govt is stuck 30 billion dollars worth they coverted at 3.25. Suckers.... Oh wait, that includes me because I am a US citizen.
Not to worry though, the govt will be able to sell those for much more in the future. NOT!
What a bunch of BS.
FDR,
ReplyDeleteAny thoughts on your friend Ben Bernanke's designation as Person of the Year??
FDR
ReplyDeleteIf Ben is Person of the Year , we are doomed as country.
With oil rebounding yesterday on surprise decrease in inventory, does that mean all the idle refinerys will be up and running in no time?
"With oil rebounding yesterday on surprise decrease in inventory, does that mean all the idle refinerys will be up and running in no time?"
ReplyDeleteOil inventories dropping - means wholesalers think the price is going to fall, so they sell their inventory forward (a form of short position). No one wants to hold inventory during a price decline.
So, the Word is the FED will be forced by politicians to raise rates to get banks lending. If this does not work, they will drop the lending standards of FRE and FNM and just flood the system with fresh cash. With all of these tools to combat deflation and the fact that soon our currency will be backed by nothing but RMBS and CMBS held on the FED's books, what keeps deflation chugging through all this nonsense? I know your going to say that the FED can't raise rates and that Lending to those that don't qualify will just create future defaults, but the point is just to jolt the orient to life.
ReplyDelete"So, the Word is the FED will be forced by politicians to raise rates to get banks lending."
ReplyDeleteThe Fed rate is currently 833% higher than the market rate for same term cash (the 3-M Treasury). They certainly aren't trying to help banks. They are trying to suffocate non-cartel bank competition and seize their assets. Ask Lehman and Bear.
The Fed's actions speak louder than a cluless Politican's words.