No, it's worse! On the other hand, this isn't a bank run: Citi and BofA aren't suffering from liquidity problems. They have all the liquidity they need, thanks to the Fed. The problem is one of solvency: the equity markets simply don't believe that the banks' assets are worth more than their liabilities. http://seekingalpha.com/article/114964-nationalize-citigroup-and-bank-of-america
Talking with some folks today about nationalization. Ever read about Hal Moore in the IaDrang Valley........"Broken Arrow". An American unit is being overrun. Sometimes, you just need to pony up and say, 'that's it." It may be time to say "nationalization". Leave a few solid banks, wipe out the equity, and get on with it. Get somebody in there to run these things correctly. But, there is a huge backlash waiting. On the sell side, brokers use fixed income as "safe " investments. Go look up the holdings of the common on BAC, C, etc. Huge positions in the money centers. but, the preferreds..... they pepper all thes retirement, retail, pension accounts with preferreds. The govt pfd position, as I understand it, is above the previous issued issues. So, you wipe out the common, the pfd's, and most of the retired/about to be retired population. Oh, don't forget the "Wealth Management Brokers" and the firms. Lawsuits will be coming out the wazoo. And int the brokerage industry, they don't believe in E & O insurance. Most insurance companies make you buy it for their products. It pays in all cases except fraud. But the brokers don't have it. They 've already paid billions for Auction Rates, what will they do when the 'safe' stuff is gone, and they get sued for that. Not enough money in the world. The more you look, the more you see, there is no way out of this without a horrible amount of pain. I think if you watch the politicians really closely, study the body language, they are scared shitless........of you and me. They know what they did, they know they really can't stop it, and they are just drawing it out. It's going to be horrible. Calpers is already out 185 billion: http://www.sacbee.com/business/story/1515220.html so, when do they say "you can't retire", or "you can retire on half benefits".? When it's everybody, how do we bail "everybody" out? I don't know either.
Thats the problem with this whole scheme. There is going to be less and less capital. Eventually everyone will be a bank and applying for aid. This is a huge step backwards. Obama has no idea what is going on and the political is still hijacked by the same clowns who got us here in the first place.
Worse - they are trying to cure the disease THEY caused with the same crap that caused the disease - excessive lending! At least they could have a different remedy than the same crap that got us here.
Now isn't it amazing, you can hear/read more common sense right here than you'll ever hear in the Halls of Congress. Will Rogers said over seventy five years ago, if they want to put a statue of me in Washington, I want it facing Congress, so I can keep an eye on them.
Just learning about this whole fiasco so help me out. If the government were to nationalize, would they nationalize all the banks? Why would the common share holders be wiped out? Wouldn't the government still make money being several large banks? Why couldn't they give this money out to share holders, just like it has always been? Seems to me you just need someone there with enough capital to make sure there is always money. Why can't these banks just borrow more money from the fed? I am guessing there is a limit to the amount you can get? How is this determined? Thanks for the help guys.
Yep, my mistake. I guess everything is ok, then. Seriously, this is a better representation. The decline in real estate represents a portion of CalPERS losses since the fund hit a high of $247.7 billion on June 30, 2007. It fell to $239.2 billion a year later and since then has plunged a further 23%, to $184.2 billion as of Monday. http://articles.latimes.com/2008/nov/13/business/fi-calpers13 My point was/is, these are egregious losses, and sell side guys pitch the same stuff over and over. These losses, to some degree, will be repeated 49 times, or 56 if you listen to Obama, plus, all the large private pensions. If you are an actuary, how do you pay benefits with this loss? Easy. They are after municipalities for more taxes. So, buy side guys, highly compensated even at these levels, made a ton, took inordinate risk, and screwed up. They still get paid. The Press isn't on them yet, but it's coming.