It's A Sham, The Banks Are Insolvent

Discussion in 'Economics' started by pspr, May 16, 2009.

  1. pspr


    "The chairman of $7 billion distressed Private Equity firm MatlinPatterson calls a spade a spade and in the process exposes the entire Geithner plan for the complete sham that it is. His comments before the Qatar Global Investment Forum were captured by the Daily Telegraph's Evans-Pritchard earlier, and Zero Hedge republishes the piece in its entirety as it presents every nuance of our predicament with masterful simplicity..........

    Mr Patterson said the US Treasury is out of its depth and seems to be trying to put off drastic action by pretending that the banking system is still viable.........."
  2. sprstpd


    Put your head in the sand and inflate like crazy. Eventually everything will be okay!
  3. I tend to agree with the article, but they have a big vested interest in encouraging people to sell their equities. Here is the last line of the article:

    Matlin Patterson, however, has missed the Spring rebound, the most powerful rise in equities in over 70 years. “We shorted the equity rally because we thought it was lunatic. We’ve kept adding positions seven times, and we’re still holding,” he said. Ouch!
  4. Unless the inflation succeeds - in which case we're screwed (inflation is Public Enemy Number One, tied with deflation & stagflation in a three way race, as a killer of the economy)....

    ....Unless we have deflation - in which case we're screwed (deflation is Public Enemy Number One, tied with inflation & stagflation in a three way race, as a killer of the economy)....

    ...Unless we have stagflation - in which case we're screwed (stagflation is Public Enemy Number One, tied with inflation & deflation in a three way race, as a killer of the economy)....

    It's all about JOBS.
  5. I can't argue the importance of jobs, but stagflation is high unemployment coupled with lowered buying power and almost no wage increase for those lucky enough to have a job (fueling an economic death spiral). It doesn't get much worse in a modern economic system. I give it #1.

    Deflation for an extended period of time would have a matching decrease in wages (assuming companies want to stay in business) and almost certainly more lost jobs, so although items are cheaper, most people earn less money and purchasing power stays the same or lowers, and any debt accumulated before the deflationary period would effectively increase. An entire nation with excessive debt cannot carry this extra load and would spiral into a depression, much like the stagflation scenario. To me that's #2.

    Inflation for an extended period would suck ass, no doubt, but wages should increase with the higher cost of living. As wages increase any debt taken on before the inflationary period would effectively decrease, which is what we desperately need. This is the least terrible of the three scenarios and the direction I think we're headed.

    Inflation is evil, evil, EVIL! But who does it hurt the most? Those that owe the debt (the vast majority of the country) or those that OWN the debt (those that accumulated the vast majority of the wealth during the boom years)?
  6. jnorty


    buy sell you're right inflation is bad but heres the problem. We're traders trying to make money and its feasible the gov't can hyperinflate all assets to the moon thus killing shorts. even though our standard of living will drop huge the lemmings won't know what hit them immediately as there assets are rising but at 1/3 the rise of inflation. So silently they'll be wiped out. BUT IRONICALLY SHORTS WILL BE TORCHED AT THE SAME TIME. something to think about.
  7. Eight


    Hard assets inflate at the rate of inflation pretty muchly, do they not? Farmers and homeowners with gold should be ok. Stocks and such do not keep up in a hyperinflationary scenario so paper assets like retirement IRA accounts will not be able to keep up. If we get hyperinflation we will all be Forex traders probably...
  8. Nope. With Scams like these... they'll always be able to "print" money ... and on our dime.

    Banks profit from capital raising
  9. jnorty & , 4444CJones4444, I think conventional wisdom has it that stocks fare poorly in a high inflation environment because input costs on everything used to produce goods and services rise, and businesses don't have the ability to pass on the full throughput costs to their customers, and margins get squeezed badly.

    I think Eight was speaking to this point.

    I've never heard anyone espouse the notion that high inflation environments are favorable to equity markets.

    If I'm wrong about this, someone please educate me.
    #10     May 16, 2009