BANKS: THIS IS A STICK-UP!
The banks are planning their next great theft of the American public. They are actually planning ways to game the PPIP so that they can buy assets from themselves using taxpayer dollars. They are going to slap you in your face, rob you at gun point and the government is going to stand there and let it happen. This is unconscionable. The FT reports:
US banks that have received government aid, including Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets to be sold by rivals under the Treasury’s $1,000bn (£680bn) plan to revive the financial system.
The plans proved controversial, with critics charging that the government’s public-private partnership – which provide generous loans to investors – are intended to help banks sell, rather than acquire, troubled securities and loans.
Ironically, the Republicans are the only ones who seem to have had a sane idea in the last few weeks after 8 years of intelligence block:
Spencer Bachus, the top Republican on the House financial services committee, vowed after being told of the plans by the FT to introduce legislation to stop financial institutions ”gaming the system to reap taxpayer-subsidised windfalls”.
Mr Bachus added it would mark ”a new level of absurdity” if financial institutions were ”colluding to swap assets at inflated prices using taxpayers’ dollars.”
The M2M change clearly throws a wrench in the PPIP. No private buyer in their right mind would buy a substantial amount of these assets because the banks now have no incentive to sell them at distressed levels. But, if the banks can saddle the taxpayer with the losses while taking marginal mark-downs it’s basically a win-win for them and a lose-lose for the taxpayer.
I’m not one for anarchy, but someone might want to tell Home Depot to stock up on pitchforks because this is not going to be pretty when it all goes down.
Honestly pragcap, you can't do anything to stop this. You might think you can, but the rich and govt elites run the game in a plutocracy, always have, always will. The only thing you can do is try to profit from it. I bought GS at 79 and FAS at 4.9. I know what you are going to say, my attitude is why things never change. Oh well. I'm up so much in the markets at the moment, I am looking to a early retirement to New Zealand. Good Luck,.
Of course you are correct. I am glad for anyone that makes money investing. I am all for trying to benefit from this, but that doesn't make it okay. Personally, I haven't touched banks in a long time because I don't understand their balance sheets. Thats the end of the story for me. I don't invest in anything that I don't completely understand. Good for you on your profits. Nothing wrong with playing the system, but if you were making your money by directly taking it out my pocket (as the banks are doing) we would not be having the same friendly conversation.
It's outright theft. And theft is not part of a healthy capitalist market.
Its possible that if things turn soon and jobs come back and house prices jump 50% again, then people will forget about all this BS going on and just accept it, but if it doesnt improve soon, then trust me, people will lose confidence, and riots will start to break out and god knows what happens. Why? because these people already lost almost everything, jobs, homes, money for food. I honestly dont think things will improve anytime soon. But you are right, the rich and the politicians have to much power right now and can rig this anyway they like but one day, it will all end and it will end ugly.
Good luck to you TMO, I hope you lock in your gains and move to NZ soon..(good place to avoid all this BS and safe from any potential conflict). Smart decision
In my thorough history of bubbles and supply gluts, I have yet to come across a situation where an overhang as large as this one results in a v-shaped recovery. It has never happened. Could be a case of "thing are different this time", but as Sir John Templeton said, more dangerous words have never been spoken in the stock market….