I think the reverse will happen...like when the Fed. issued Brady bonds to bail out S. America.... they (the Fed.) will issue Benny Bonds to bail out the banks...you'll swap your radioactive CDO's for a bucket of 30 year Benny Bonds which you can then sell for newly printed US greenbacks..... you can bet your ass that JP Morgan and Citi wont get hurt....
Not being a conspiracist, but I do question the timing of ... elimination of the "Tick Test", starting NEXT WEEK. (After nearly 7 DECADES in force) http://www.sec.gov/rules/final/2007/34-55970.pdf extension of exemption for Banks from the definition of "Broker" http://www.sec.gov/rules/other/2007/34-55991.pdf BS "willingness" to self-bailout to the tune of billions. markets worldwide trading at or very near multi-year highs. Just pondering Osorico
I don't doubt that they'll try. I don't know if you saw it, but organized religion is polling at all time low numbers. The Public is sick of it all. I think they'll have a more difficult timebailing out banks than they have in the past. People are sick of everything connected with Government, Wall St. , incl Wall St.Health Care, Bus Service, - you name it. It's going to be a hellof a week with a light crowd.
But if Moody's & S&P don't downgrade any of the CDO debt, shouldn't that lessen the blow for a while? There won't be a run on the bank(?) :eek: Long term things don't look good though.
Long Term was bailed out. CDO's are going to be bailed out. MOST OF THE LENDING were to lower income, class levels. The Poor and Minorities will lose their homes. Wall Street will continue to rally. SUBPRIME lending problems is old news and the market has the current Bear Stearn's situation built in. Only the sheep are starting to fall into "OH NO" THE SKY IS FALLING crowd. Its just talking heads and CNBC. Yes, SubPrime lenders were scam artist, and yes they will be bailed out by the idiots in Congress....but this song and dance has been going on for decades. :eek:
Lemme 'splain sumpin' to ya...... The Prime Brokers and Money Center banks will protect the capital they have. This will be kicked upstairs so fast, it'll make your teeth fall out. They took a step Friday they hadn't taken before in the Mark to Market. They will do whatever they can to call in these debits - too late of course. The sky is falling. Three years ago Fiserv was clearing for a bunch of scumbags. They took a ten million dollar hit on some naked short position, and left the clearing business. Fidelity will find out with Brooksteet what it's on the hook for, and will scramble, not only to recover what it can from that mess, but to look at the hundreds of others it clears for........and so on. Easy money is yesterday's story.
Moody's and S&P are in enough hot water to let it go this long, CDOs tranches are everything from AAA rated paper to BBB- and the losses are pinned on the BBB- stuff first and then the losses move up the rating scale.... who in the world allowed subprime CDOs to be rated AAA? give you one guess the rationale is the first 25% of the losses are picked up by the AA and below rated paper..... trouble is, what happens if 50% of the portfolio defaults? makes for full employment for the lawyers
btw, I asked my money market mutual fund if any of the A to AAA paper in the fund was of the CDO variety and they wouldn't give me an answer... so if a lot of the A paper is really D paper, the money market funds will be forced to dump massive amounts onto the market or what there is left of it...
The problem is the Federal Reserve is owned and controlled by these Wall Street bankers and their cronies. Open your eyes man. read and learn. http://www.apfn.org/apfn/reserve.htm "...The Federal Reserve System is not Federal; it has no reserves; and it is not a system, but rather, a criminal syndicate. It is the product of criminal syndicalist activity of an international consortium of dynastic families comprising what the author terms "The World Order" (see "THE WORLD ORDER" and "THE CURSE OF CANAAN", both by Eustace Mullins). The Federal Reserve system is a central bank operating in the United States. Although the student will find no such definition of a central bank in the textbooks of any university, the author has defined a central bank as follows: It is the dominant financial power of the country which harbors it. It is entirely private-owned, although it seeks to give the appearance of a governmental institution. It has the right to print and issue money, the traditional prerogative of monarchs. It is set up to provide financing for wars. It functions as a money monopoly having total power over all the money and credit of the people...."