Paul Krugman is right on bank nationalization and the Austrians don't get it

Discussion in 'Economics' started by Daal, Feb 23, 2009.

  1. Daal


    FDIC got a $30b credit line with the treasury, I dont have any doubt at even slighly problem that line will be expanded to $100b or more. Plus the FDIC has a claim on the equity of the entire banking system($1.4T I belive) through their fees. Since the Treasury is providing equity for banks and the FDIC takes a bit of it out, the FDIC essentially is getting money from treasury up to unlimited amounts

    And I would disagree with C and letting the system collapse producing a better end result. But more importantly, Geithner and Obama would disagree as well. The C bonds that I own are at 65c on the dollar and I'm still short the stock, if there is a debt to equity swap(which I can pull a Pimco and say no) I will get the new highly capitalized C and with less toxic assets, not the end of the world
    A $2T in assets if they remove all unsecured debt($500b). This creates a bank with more than 4-1 TCE leverage, of course the ROE would be low though

    I agree totally with this point. The uncertainties are so high that I think liquidity is everything in this enviroment, which is why I believe guys like Soros and PTJ are much better models than people like Buffett since they can probably get 90%+ liquid in a week or less if it looks like a deep depression is coming, while buffett is stuck in illiquid stuff and if the ship goes down he will go with it
    #31     Mar 2, 2009