More generalizations. They better have something specific for Sunday night. Unreal. GIVE THE MARKET SPECIFICS! WHO WHAT WHEN HOW MUCH What part of "Panic" do they not get?
The former head of Solomon Bros. was on CNBC this morning. He was not drinking the Paulson kool-aid. He said the Treasury team is TOO Goldman Sachs oriented.
dude US fundamentals are strong. banks are safe and sound. the greatest human in history sheila told us so
Actually, his speech was very enlightening to me and here's how: Paulson has $700 billion to play with, to as he put it, to use as efficiently and effectively as possible ( Get the MOST BANG for the BUCK). Yeah, Treasury may buy some MBS assets, however , they really dont want to do this on a large scale. They want to take the easy way. Direct Equity Investment into Financial Institutions, means what in the grand scheme of things? IE..... $ 700 BILLION LEVERAGE 10:1 IN THE BANKING SYSTEM IS ......$ 7 TRILLION IN AVAILABLE CAPITAL!!!!! Seems to me you can start a NICE new party with....................... $ 7 TRILLION!!!!
lol good point! Although if you buy 700 bil of MBS @ .20 on the dollar your buying 3.5 trillion face value!!!!!!!!! I'm thinking the MBS will outperform the bank stocks. Unlesss the banks take the cash and double down on the MBS. lol
No you dont understand.. The banking system is leverage 10 : 1. For every 1 dollar in capital they have , they can go out and lend 10 dollars. Thats 10 dollars to someone who can use it to make more investments... ie real estate, inventory, expand their business, what ever... Its a multiplier effect for the economy. Not all MBS are bad, in fact only say 1- 3 % are ultimately worthless, the rest still payoff. But because of several negative issues like MARK TO MARKET ACCOUNTING, DECLINING PROPERTY VALUES , these banks and investment banks have had declining capital because of the leverage used in the system. Property values have already dropped 30 - 50 %. so thats not a problem any more, come on how much lower will it go! -- Paulson wants to re- capitalize the Financial system to the toon of $700 Billion which then gets leverage 10:1 back into the economy. $$$ 7 TRILLION in available capital to the economy, really its much more because of multiplier effect
Paulson is the worst communicator I have ever seen. How in the world such a mediocrity became Chairman of GS... I cannot even imagine... But he must be the world's most ruthless corporate infighter. Jim Rogers said to day Paulson is just bailing out his pals... The whole "bailout" process is gonna be rigged. Even the basic premise to reflate a bubble is corrupt.