I see the proposal by the FED / Treasury on a couple of different levels. The Bush administration has to do something before they loose control of the issue to the Democratic Congress. The issue of a 30 bil "bailout" for BSC while the housing market continues to effect Joe Public is like red meat for the Dems. The Fed's rescue of BSC moved (especially taking in 30 bil of toxic paper) into an area of Wall Street that has been touched since possibly the 30s. Nobody will know for at least a couple of years if that 30 bil will take a big hit, break even, or even make the FED some money ... but my money is that a couple of years from now Congress will be appropriating some (maybe a lot) money to help cover the FEDs loss on 30 bil loan. If the Federal Gov is going to spend 30 bil in loan gaurantees then some type of control needs to be put in place. Whether those controls are inforced effectively or enforced at all is another whole debate. The banking and investment world has changed significantly in the past 30 years and this crisis is going, I hope, to at least help the regulators to institue new rules that match the banking and investment world of 2008. Even more important then rewriting the regulations for Wall Street is revising the regulations for mortgages. If we are going to live in a world of securitized loans, then rules need to be put in place that ensure that all involved in the loan hold some responsiblity (i.e. they are on the hook for how that loans performs) for the loan. The root of the entire housing problem and credit crisis comes down to when the people who orginated loans realized they had no financial stake in the outcome of the loan ... PARTY TIME! I tend to be netural on the subject of regulation. To little regulation and a few make the world a terrible place for the rest of us to live in. To much and you living in the Soviet Union. Wall Street is always going to have regulation. How much regulation and whether it is current to the situation are the keys. CFMTrader
Are you sure it's time to short the market? I believe Monday is going to be one hell of a big rally. It's the people's reaction that count.
This is a worldwide financial powers grab - not just in the U.S. The game as everyone knew it is going to change - financial power is going to be more and more centralized - http://www.nytimes.com/2008/03/29/b...&ex=1207368000&partner=MYWAY&pagewanted=print
Exactly right. Its a contrived power grab. Notice the proposed powers include the carte blanche authority to intercede with bailouts whenever risk or theoretical risk "threatens" the system. Total and complete bullshit.
And how do we know its BS? A noteworthy poster (Gnome) said the housing crisis was totally avoidable if underwriters were forced to carry homeloans for a 5 year minimum. Holding risk would put to bed all the shoddy lending and rating practices that created the mess in the first place ( since the writers would be forced to eat their own crap). Its that friggen simple. Now, this douche-bag Paulson and Cabana Boy Bernacke have put forth HUNDREDS of regulatory and authority expansion provisions to snoop and control the entire fucking system --- where NONE is needed. Of course, we are told, this is "necessary to FIX THE SYSTEM". BULLSHIT. Its crystal clear what their intentions are. This is NOT a free Country or a free market. This is Totalitarian Commie Banking. Command and Control. How do you like your free market now?
Maybe what this is really about is that they have realized that the PPT is no longer a powerful enough tool with which to control the markets, they need to also be able to see what everyone is doing. My conspiracy theory for the month. Given that there are alternatives to US exchanges why would people, especially those who generally put a large premium on secrecy when it comes to their strategies, not simply remove themselves from this new level of scrutiny by migrating to exchages in other less intrusive countries? The added benefit being that they also reduce their USD risk or cost of a USD hedge.
PROBLEM-> REGULATION-> PROBELM + PROBLEM -> REGULATION PROBLEM + PROBLEM + PROBLEM -> REGULATION -> PROBLEM + PROBLEM + PROBLEM + PROBLEM-> REGULATION-> PROBLEMx5 -> REGULATION -> ........END OF HISTORY
No, not at all. Why do most people here on ET seem to think that the Fed's actions only revolve around the stock market? Has anyone ever heard of the Economy? Go figure. :eek:
Oh, you mean that allowing investment funds to LEVERAGE themselves up to 33:1 to buy various mortgage securities is the "free-market" unregulated way to go? You've got to be kidding.