American Investment Banking on the Ropes - Lehman / Citigroup etc. - the 8.5 trillion Bailout

Ard-Taoiseach wrote:

cactus flower wrote:

On being questioned on competitive bidding for consultancy to the programme Paulson says " We have procedures here to deal with conflicts but we're under time pressure of time and we can't go through the detail of them here..." (to the Senate Committee - 2 minutes ago)

That's a bit of a cop out.

Ard-Taoiseach, would you buy a used car off this man ?

cactus flower wrote:

Ard-Taoiseach wrote:

cactus flower wrote:

On being questioned on competitive bidding for consultancy to the programme Paulson says " We have procedures here to deal with conflicts but we're under time pressure of time and we can't go through the detail of them here..." (to the Senate Committee - 2 minutes ago)

That's a bit of a cop out.

Ard-Taoiseach, would you buy a used car off this man ?

No, he's from the government and he's here to help. RUN!

cactus flower wrote:

Ard-Taoiseach wrote:

cactus flower wrote:

On being questioned on competitive bidding for consultancy to the programme Paulson says " We have procedures here to deal with conflicts but we're under time pressure of time and we can't go through the detail of them here..." (to the Senate Committee - 2 minutes ago)

That's a bit of a cop out.

Ard-Taoiseach, would you buy a used car off this man ?

I wouldn't. I was listening to some of the hearing. I was under impressed by many of the answers. They were evasive and the proposal really has not been thought through or the prime considerations are not what is being claimed.

Squire wrote:

cactus flower wrote:

Ard-Taoiseach wrote:

cactus flower wrote:

On being questioned on competitive bidding for consultancy to the programme Paulson says " We have procedures here to deal with conflicts but we're under time pressure of time and we can't go through the detail of them here..." (to the Senate Committee - 2 minutes ago)

That's a bit of a cop out.

Ard-Taoiseach, would you buy a used car off this man ?

I wouldn't. I was listening to some of the hearing. I was under impressed by many of the answers. They were evasive and the proposal really has not been thought through or the prime considerations are not what is being claimed.

Did you see the people at the back of the hall waving "NO CASH FOR TRASH" posters

They certainly hit the mark!

Squire wrote:

I wouldn't. I was listening to some of the hearing. I was under impressed by many of the answers. They were evasive and the proposal really has not been thought through or the prime considerations are not what is being claimed.

As tickerman says, they are debasing the currency on purpose and without purpose ... he believes the market is making up the public mind on the purchase of the bad assets...and it's saying NO. Interesting point by him. The Fed were apparently buying on the stock market on Friday which is why it lifted but reality set in yesterday and today ("Toxic Tuesday").

Maybe Congress will listen to the market instead of General Paulus and Bernanke - hard to believe that two people can have so much say and power ...

Auditor #9 wrote:

Squire wrote:

I wouldn't. I was listening to some of the hearing. I was under impressed by many of the answers. They were evasive and the proposal really has not been thought through or the prime considerations are not what is being claimed.

As tickerman says, they are debasing the currency on purpose and without purpose ... he believes the market is making up the public mind on the purchase of the bad assets...and it's saying NO. Interesting point by him. The Fed were apparently buying on the stock market on Friday which is why it lifted but reality set in yesterday and today ("Toxic Tuesday").

Maybe Congress will listen to the market instead of General Paulus and Bernanke - hard to believe that two people can have so much say and power ...

It reminds me in some way of Lisbon, in that the big sticks of "we know best" and "it will hurt if you're stubborn about it" are wielded by the Fed at Senate, Congress and public. It makes people dig the heels in and want to say No. Neither right nor left is happy to give Paulson a blank cheque ad why would they be? If this is voted through it will mean slashing of public expenditure to put cash in financiers pockets, and will be a form of financial coup over the public purse.

Did you watch the tickerman's solution? It's three parts - get banks to declare all assets clearly and how they're valued; do something to the over the counter derivatives; and get institutions to get the leverage down to 12:1 (Bear Stearns had 1 for every 33 they had loaned.

I don't understand the derivative stuff he is talking about and I don't know how banks could de-leverage so quickly. Otherwise his line is common sense and from what he is saying today about the response of the market to the bailout it sounds infinitely wiser than doing what the Toxic Two want to do.

Any thoughts yourselves? If someone had a clue about the derivatives stuff he is talking about feel free to spout away on that, it'll be lapped up.

Still wearing the suit, I see, and liberally quoted at the Senate Comittee today.

1) I thought the point was that they don't know themselves what their "assets" are.
2) He's lost me. Love the expression "absolute rabbit dogs" though. Credit default swaps sound bad. It sounds like they're not able to perform.
3) Leverage - isn't the whole point they don't have the wherewithal to do this?

Does he really think they have the resources to reduce the leverage? Under Paulson's mattress? I can't see how this would overcome the problem of people having debts they can't repay. I think he is offering a rock instead of a hard place and what he suggests would mean a massive collapse - which is probably unavoidable anyway.

He was quoted on the Senate Comittee hearing today ?? There's hope for the keyboard warriors of the world yet

Here's a good article on financialsense about Credit Default Swaps - sounds like they went totally mental with their new toy once it got out of the box ... the subprime mortgage fiasco sounds like the Waltons compared to this ...

Quote :

While attention has been focused on the relatively tiny US „sub-prime“ home mortgage default crisis as the center of the current financial and
credit crisis impacting the Anglo-Saxon banking world, a far larger problem is now coming into focus. Sub-prime or high-risk Collateralized Mortgage Obligations, CMOs as they are called, are only the tip of a colossal iceberg of dodgy credits which are beginning to go sour. The next crisis is already beginning in the $62 TRILLION market for Credit Default Swaps. You never heard of them? It’s time to take a look, then.

http://www.financialsense.com/editorials/engdahl/2008/0606.html

Paulson is beginning to look like the boy with his finger in the dyke. Someone in the Senate has actually told him that they wouldn't buy a used car from him. The FBI are now investigating 26 Corporate heads and rising. As the French say, the US are exorcists, they will want bad ones to be caught.

City voter registrations are going through the roof.

FBI? Now they're starting to see sense at last.

Auditor #9 wrote:

FBI? Now they're starting to see sense at last.

One from Rhonda on P.ie

Max Keiser - good find.




Some analysis on the similar story which happened in Sweden
http://www.creditwritedowns.com/2008/08/swedish-banking-crisis-response-model.html

Buffet buys the preferred stock in Goldman Sachs ... is he expecting them to be buying the less toxic of the assets and successfully hunting down Osama bin Leveraged and bleeding their pounds of sub-prime flesh in their caves?

Pin thread on Buffet : http://www.thepropertypin.com/viewtopic.php?f=19&t=13693

Anorakphobia and others on pi.e

Anorakphobia wrote:

I'll have the desk cleared for 10am your time.

Did you see Buffets deal?
Incredible.

He has leant $5billion to Goldman Sachs for which he gets
1.A 10% coupon
2. An option to buy $5 billion of "preferred stock" (no down the swanee Ordinary A class for our warren) at any time in the next 5 years at a 20% discount to the current market price.

And this "deal" is what is driving world markets higher this morning???
A 10% coupon (7% above prime!!!!) a 20% in the money option and preference entitlements above alll shareholders in teh event of calmity.
If i was an institutional shareholder of GS I'd sell my entire holding immediately.

An unmitigated joke.

http://www.politics.ie/viewtopic.php?f=161&t=24783&p=1370961#p1370750

Bloomberg says that only 30% of voters think there should be a government bail out.

Obama is favoured over McCain to deal with the economy and the government is blamed by the majority for the economic crisis.

The majority are against bailing out the auto manufacturers.

I listened to a fair bit of that hearing yesterday and what kept running through my mind was haven't Ben and Hank a real nerve. The pair of them were evasive and misleading, if my understanding of such matters is in anyway reliable. The bit about Hank being able to take decisions that would not be open to scrutiny beggars belief. Was that put in to distract us or do they really think we are that stupid. Also they have thrown this up as an emergency yet claim they were working on it for several months. This has a whiff about it.

You would need to come up with a scheme that bypasses the pair of them. IMO Karl the ticker man should be given a job! He is spot on markets rely on confidence.

Squire wrote:

I listened to a fair bit of that hearing yesterday and what kept running through my mind was haven't Ben and Hank a real nerve. The pair of them were evasive and misleading, if my understanding of such matters is in anyway reliable. The bit about Hank being able to take decisions that would not be open to scrutiny beggars belief. Was that put in to distract us or do they really think we are that stupid. Also they have thrown this up as an emergency yet claim they were working on it for several months. This has a whiff about it.

You would need to come up with a scheme that bypasses the pair of them. IMO Karl the ticker man should be given a job! He is spot on markets rely on confidence.

On Buffett ask what other interests does he have, where is his money?

Squire wrote:

I listened to a fair bit of that hearing yesterday and what kept running through my mind was haven't Ben and Hank a real nerve. The pair of them were evasive and misleading, if my understanding of such matters is in anyway reliable. The bit about Hank being able to take decisions that would not be open to scrutiny beggars belief. Was that put in to distract us or do they really think we are that stupid. Also they have thrown this up as an emergency yet claim they were working on it for several months. This has a whiff about it.

You would need to come up with a scheme that bypasses the pair of them. IMO Karl the ticker man should be given a job! He is spot on markets rely on confidence.

To be brutally honest it is more of a stench than a whiff.

I think the banks should be nationalised and their books should be opened to public view - take the Tickerman on to help audit them.

cactus flower wrote:

I think the banks should be nationalised and their books should be opened to public view - take the Tickerman on to help audit them.

I think they need to look more at the people who can't pay the mortgages and less at the spivs. It wouldn't be that hard to set up a secure system and turn a lot of those sub primes into assets and move forward. You may take a hit for a few years but eventually it would turn. At the very least use anti trust legislation so that no one can have more than say 7-8% of the market. Then they are not too big to be allowed to go down.

Private Equity Firms and Hedge Funds are another lot that need to be roped in and made to register with Securities Exchange Commission.

http://www.guardian.co.uk/world/2008/sep/28/usa.creditcrunch

Another package has been "almost agreed"- only half the original amount unless Congress vote a second 350 billion through. As yet, there doesn't seem to be any wording released. Would love to see it though.

Quote :

Anonymous said...
Here's a back to basics solution and ya boo sucks to anyone who believes that giving drugs to an addict for a year is a great idea!
1. Propping up a failed model is stupid, so start a new one. Take all banks assets onto the Government balance sheet, while a better model is constructed.
2. Make the production of all goods sold in the USA subject to the same workplace standard applied to US goods, with a Federal body (quarterly inspections by different staff members) obligatory.
Ok that fixes the drug and the drug dealer. Next comes rehab.
3. Make individual and company borrowing restrictions the same. There is no reason why a vehicle should have laxer standards than are applied to an indidividual.
4. Cut defence spending by 75%, particualrly on hardware that is of dubious use. So eliminate all spending that doesnt have a purpose. It may not have escaped everyones attention, but before we all forget, the pentagon spends as much as this bail out EVERY YEAR.
5. Set the maximum borrowing amount to the combination of three times income for any individual or company.
6. Stop ratign agencies being paid by the borrowers they rate and make the BIS or IMF insure against downgrades.
7. To fix the MBS problem, break up all the pools into individual mortgages and then re-bundle them.
8. Do no not offer any refinance to mortgage defaulters unless those NOT in default have the same terms applied to their mortgages OR other households are offered thechance to give their existing homes in exchange for the over specified and expensive homes (why should a defaulter have a better home than a non defaulter). This would migrate and give main street the chance for a property upgrade to clear modern houses and put defaulters in worse quality homes.
9. Re-start a mass immigration policy to target 3-5 million migrants entering the economy.
10. Spend 700 billion on broad economy employment programs in infrastructure to rival the standardsbeing put in place in China and Qatar right now.

September 28, 2008 5:59 AM

Good list, I thought: should add on a wealth tax and oil tax to be spent on renewables development.

Some details of the deal and good responses - the same suicra as before with a few band aids - Paulson get to provide oversight over Paulson ....

http://www.nakedcapitalism.com/2008/09/maybe-deal-maybe-not.html?showComment=1222619100000#c8137286778472869831

What strikes me about this is the utter ruthlessness of Bush and Co. in being prepared to risk trashing any possible alterative deal in order to push through a massive transfer of public funds to bail the wealthy who have benefitted from the Republican's bubble.

Did he have a hat-on or did he not have a hat-on.

The British government have just nationalised Bradford and Bingleys 50 billion pound loan book. B and B will be taken over by Banco Santander.