naked capitalism

Anonymous says:

"What will they say come Monday if another major bank fails — I will not use the name," Bennett said.

Coyness rules. So obviously the solution — to paraphrase that legendary South Seas era blind pool prospectus — is "a Treasury fund to buy distressed assets of great advantage, but no one to know what they are."

Perhaps Senator Bennett's alarmed by a story in the Guardian, not realizing that it refers to another country:

————

Spanish banking giant Santander is in high-stakes talks with the government over a last-minute rescue deal to take over Bradford and Bingley and avert a Northern Rock-style run on the bank.

As fears mounted this weekend over the future of the former building society, savers were withdrawing funds online and a steady stream had arrived at its 337 branches across the country asking to withdraw their money.

Sue Matthews, a 46-year-old housewife from Clifton, Bristol, was one of the many who was transferring life savings. 'I have decided to withdraw all my funds. They told me not to worry, but my savings are bigger than the amount the government promises to protect.'

The urgency to resolve the future of B&B was heightened by concerns over Fortis, one of the largest banks in the Low Countries. Belgian and Dutch officials were fighting over the weekend to maintain confidence in Fortis after investors marked its shares down by more than 20 points on Friday.

http://www.guardian.co.uk/business/2008/sep/27/bradfordbingley.banking2

————

Blimey buggerall, what a cock-up. Since the US Treasury doesn't HAVE 700 billion dollars in the first place, the only thing which would give me confidence is seeing Weimar Ben's printing presses set up under bright lights in a glass house, and run 24 hours a day with webcams trained on them.

When I can see the currency bales being loaded into the fleet of Goldman Sachs and JP Morgan and Citigroup trucks, I will know that we can pay our bills. At least until tomorrow.

Dream of Zimbenwefication …

– Juan Falcone

Anonymous says:

I have no doubt that the Treasury is keeping the panic up to get the bill passed. Heinous yes, surprising no. I firmly believe the seizure of WAMU on a Thursday (rather than the customary Friday) was done for that very reason. WAMU, struggling for months, didn’t have enough liquidity to last one more day? And coincidentally gets seized just as the talks collapse? Sheesh.

Moopheus says:

Didn’t the folks investing in the money market funds understand that getting higher yields on an uninsured investment meant there was a risk they’d take a loss? Isn’t one of the rules of gambling not to gamble with money you can’t afford to lose? With all the other problems, I don’t see why we need to waste a dime to save those funds.

doc vinegar holiday says:

I think Skilling should be set free and that anyone involved in Enron fraud should be pardoned ASAP! I also think we should start a fund to clone Ken Lay’s DNA, so that his loved ones can tap into these potential riches once Daddy is back up and running (as a fully working zombie).

This could all be included as a rider by Bush and then Paulson can grant himself and Friends Of Angelo (Mark Foley too) SPEs or QSPEs and transfer The Loot from The Plan out of The Caymans and move it to China tax free, where they all will be cloned and rule happily ever after…

Great job boys, heck of a great job!! Americas finest hour with the lowest rated Congress in American history! Heck of a job and now, let’s turn this country over to Palin!

Anonymous says:

Buy the rumor, sell the news

If the rumor is a governmental spending plan that could keep stocks from falling,
and the news is the approval of a bank shareholder and debt investor bailout
where taxpayers borrow $700 billion from their children
to fund shareholder dividends and bond interest payments
which may have little actual immediate impact other than a few hundred Dow points
do credit markets unfreeze on the news?
Probably not

Does bailing out those who caused this mess make real estate prices bottom?
Probably not

Do lending standards loosen?
Probably not

And then after Tuesday, September auto sales, earnings warnings and forecasts,
and non-farm payrolls on Friday

In 1929, the market crashed on October 29

In 1987, the market crashed on October 19

Unlike the platitudes of the pundits and politicians
how many October 2008 corporate earnings releases
could report falling sales and rising borrowing costs
and predict a not so good looking holiday season?

When does Joe Six Pack’s confidence fall off a cliff?

How many people have told you they have already gotten out?

If you had $100,000 to invest, what would you buy today?

ruetheday says:

cash only:

I know that’s what Treasury said, but how on earth do you manage a deposit insurance system where only accounts opened before a certain date are covered? That just sounds like ill-conceived sillines.

jest says:

the whole bank failure = great depression redux argument is in itself fear mongering, because deposits weren’t insured in the 1920′s.

saying we need to dump toxic waste on the gov’t balance sheet to protect bank deposits is absurd.

Anonymous says:

Fortis? You have to be friggin kidding me! Seriously give me a break – they’re a dental insurance co. no?

Thank G-d Ben Stein has written a wonderful article in people – language…

http://www.nytimes.com/2008/09/28/business/28every.html?ref=business

Anonymous says:

The GOOPER whores showing ‘honesty’ and ‘courage’.

As far as I can tell, their main objection was to the ‘equity kickers’ added by the Democrats.

The GOOPERS have led this country to ruin but at least we have creationism taught in our schools.

Knute Rife says:

Why should it be any surprise that the junior senator from Utah is just as big a…um…”booster”, yeah that’s it, of the White House party line as the senior senator from Utah? Or that his grasp on the facts when engaging in such boosterism should be any more tenuous?

As for Stein, can anyone tell me with a straight face that he hasn’t been pushing for deregulation and “free markets” for years with the rest of them? There are those of us who saw the thrift crisis coming out of Garn-St. Germaine and the current mess coming out of Gramm-Leach-Bliley, but do not number Stein with us Cassandras. And his grasp of CDSs is positively Reaganish in its masking of incomprehension as simplification.

Anonymous says:

The Treasury took all the teeth out of the MMF plan almost immediately because it started a run on the banks. Had they kept it in place, the same thing was about to happen in reverse — the banks flooding the markets with paper to meet withdrawals. The FDIC couldn’t carry the weight of the failures that would line up, and the Treasury has (rightfully) taken the plan down, down, down ever since. Last update I heard – which was not publicized by anyone other than the ABA – is that the plan is subject to a 90 day trial period, to be continued if successful. No major fund company is going to take the gov’t up on the offer. They’ll cut deep into their own fees with the premium, and they’ll kill one of their best tools – the bank channel. None of these firms have the capacity to run individual accounts on a retail / commercial level, nor are they going to want to meet the Patriot Act burdens of the banks even if they could gear up for small accounts.

The commercial paper market is done one way or the other, unless they let AAAs borrow right off the Fed facility. I don’t know if any of the lawmakers have the stomach for that. If only the $50b were enough to capitalize a new, private sector bank who could pick up the slack.

Francois says:

If so many Congresspeople insist on this plan (while others oppose it for reasons that are not entirely, hmmm, facts-based?), despite a tremendous opposition from the voters at 40 days from elections, the question becomes:

Cui bono? What’s in it for them?

Richard Kline says:

Yo Matt, I should let this pass, but I can’t re: Petraeus in your simile. Now, I won’t dispute that he is a competent military commander and better than those he replace; having studied many, I think that this is a true statement. But the changes in Iraq had _NOTHING_ to do with his abilities, and hence do not correlate with his capacities. This is a long analysis not really fitting for this context, so I won’t go over that contention now. But Petraeus and his three myriads had really nothing to do with the changes in the insurgency, and I mean that advisedly; in fact, he was taken by surprise by those changes, and they had begun before he was appointed.

I say this because the analogies which will be drawn from our Iraq experience will have major implications for the next major foreign wars we insert ourselves into, and more are coming, in the mid-term if not in the next Administration. And the ‘Petraeus succeeded, and because he was better’ meme will do us a world of damage in due course, despite it’s substantive inaccuracy. I will be arguing this for years, but our getting this wrong now—and the country _has_ gotten it wrong, and so will remember it wrongly—will have deep costs down the road.