Wilbur Ross on the Banking System
He discusses borrowed reserves versus equity, and coming bank failures:
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Wednesday, March 12, 2008 | 03:00 AM | Permalink
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Oh hell, another great reason for the market to overeact to the upside! Barry how come every time the market gets around the August lows of last year, Bernanke comes in with a big psydo-stimulus plan? Is there something magical about those levels?
Posted by: JustinTheSkeptic | Mar 12, 2008 4:43:42 AM
A snipet from an Article by Douglas Elmendorf, who is a former FED official
"...More generally, a capable lender of last resort is likely to make money on its lending, because it steps in only when financial markets are sufficiently self-destructing that the feared assets are highly likely to increase in value when panic subsides. We may have reached that point regarding mortgage-backed securities in the U.S. economy."
Question: how many here feel that the FED will end up "making money," on these pieces of crap paper?
Posted by: JustinTheSkeptic | Mar 12, 2008 6:02:20 AM
the fed won't make or lose money on the "crap" paper because they are not taking that paper credit risk, they are taking counterparty credit risk on banks and primary dealers.
Posted by: jck | Mar 12, 2008 7:32:17 AM
This is good gov't consumer confidence up 4 points in last week. That's great right?
Except for this part:
"Also, 53% of those polled said their own finances were in good standing, up from 50% in the prior week."
Only 53% of the people think there finances are in good shape out of 1000 Americans? That's just plain old terrible! And some of those who think it's okay probably aren't okay at all.
Posted by: John Borchers | Mar 12, 2008 7:33:11 AM
Is The Big Picture going to blog it's favorite "Client #9" t-shirts????
Posted by: Chief Tomahawk | Mar 12, 2008 8:14:06 AM
Justin:
It's not stimulus, it's prop-up!
They are not making the bad debt disappear; they are just helping liquidity in a market that's seizing up!
Posted by: D. | Mar 12, 2008 8:38:24 AM
cash (asset equiv) is cheap plentiful and hoarded
is that Communism or the early reorganization years of Capitalism?
how does the surf class pull the major dudes out of their mess?
does our 21st century intellect; jihod embedded sentiment; ... allow a civil outcome?
Posted by: Greg0658 | Mar 12, 2008 8:41:42 AM
Humana down 25%. Even health care is not safe because of high drug costs.
Inflation is everywhere and running wild regardless of what the core rate shows.
Posted by: John Borchers | Mar 12, 2008 8:54:42 AM
ps - didn't hit Socialism
migrants and nomads; fed up with taxes and life as we know it (or incapable otherwise); de-evolving as a society; dumpster diving from tent suburbs
next step forward; roundups incarcerations exterminations; for the greater good
is that good for Cpitalism when the shelves and walls of a home have lost their luster?
Posted by: Greg0658 | Mar 12, 2008 9:00:48 AM
D, how come then, did the FED official say that there is a strong possibility that they will make money, if they don't end up possessing anything? I'd sure like to be able to make money that way?
Posted by: JustinTheSkeptic | Mar 12, 2008 9:39:33 AM
Hey Justin,
It is possible but improbable the the Fed can make money on this swap. They will no doubt charge some nice fees and will probably continue to 'roll' the semi-toxic waste. Big 'IF' the dealers calm down and quit sniping each other, the Fed can 'put' the stuff back to them. I really expect them to monitize this slop. Wow, a new term...'swap a slop'.
As pawnbroker of last resort, it will be interesting to see if they can tell gold from brass.
Posted by: Ross | Mar 12, 2008 10:18:48 AM
Someone should give the gov an eye exam.
If I had a dog as ugly as Spitzer's tart, I'd shave its ass and make it walk backwards. What a horse (whore's) face.
Posted by: 49er | Mar 12, 2008 9:48:34 PM
