At the time we had a new Fed President (Greenspan) who was untested and untrusted. We had other things going on in the markets in general, none of them particularly good.
We have no trust in the markets today. None.
I cannot value anything in this market. Absolutely nothing. And this sort of lie is part of the reason:
Feb. 19 (Bloomberg) -- U.S., U.K., and European regulators are in talks to jointly regulate the $28 trillion credit-default swap market, the Federal Reserve said today.
Regulators including the Fed, U.K.’s Financial Services Authority, German Federal Financial Services Authority and European Central Bank met today to discuss a possible information sharing agreement, the Fed said in a statement on its Web site. The goal would be to apply consistent standards to the market and provide support across jurisdictions, the Fed said. "
This was supposed to be done last year, remember? By the end of the year we were supposed to have an implementation plan to get this done with the infrastructure in build-out going on right now.
Instead we have The Fed lying again about the issue.
Why?
Because Bernanke knows - these contracts cannot be covered as the people who wrote them have ZERO, or close to it, in capital!
This is what the market DID as a direct and proximate consequence of Geithner's and President Obama's actions (or rather, their inability to come to the table with anything approaching an actual plan)
That's a decline of 87 S&P "handles", or about ten percent in less than two weeks.
But that's not all. Have a look at the BKX, the banking sector:
That's a decline of thirty percent in the banking index in the same two week period.
THIRTY PERCENT.
Folks, this is the very definition of "no confidence." A thirty percent loss in two weeks, in the very sector that we were promised would be "saved" by our new President, and that two weeks has passed without one iota of a plan being actually released.
How much lower can it go?
I have it on good authority that there is very strong support of stock prices at zero, and if you look at charts of Bank of America (closed under $4 today), Citibank (closed under $2.50), Wells Fargo (closed at $12.01), Fifth-Third ($1.21), SunTrust ($6.70) along with dozens more you will find that all of them are in fact racing directly towards that very heavy support right at that zero boundary. Many of these stocks have been cut in half or more in the last two weeks.
Mr. President, you cannot come to Washington and write checks with your mouth you are unable to cash, and expect the market to put up with it. The market is bigger than you, or any other President, as you have just learned.
You also cannot expect any bank to be able to raise capital with a stock price measured in fractions of a penny, and that's exactly where they are all going in the here and now unless you and Tim Geithner get up on stage tomorrow and put a stop to this foolishness.
Your inept and outrageously incompetent handling of this mess has led to the destruction of one third of the equity value of banks in the United States in less than two weeks. Your ineptitude is in fact greater than George Bush and Hank Paulson, who managed to take a third off the BKX but they took more time to do it than you did.
In short your and Timmy's policies thus far are an abject failure and we are now sitting on the abyss in the market with a literal potential for a waterfall selloff that initiates tomorrow and translates into Monday exactly as happened, and as severe, as in 1987.
And further down, he put this in to give you an idea of the immediacy of the peril:
Quote:
Whatever your plan is Mr. President and Mr. Geithner, and I presume it is NOT what I outlined above, I recommend that you get it out in the public right now. Overnight, with enough time for it to sink in - and certainly NOT 30 minutes before the market opens tomorrow morning for Options Expiration as Bernanke thought he'd do in August of 2007. We've had enough liquidity destroyed due to government game-playing - we can't afford to have any more traders carried out on their shields that provide necessary liquidity in the markets.
LINK
Obama has been president for one month. During the previous 8 years, George W Bush and dimwit former US Labor Secretary Elaine Chao rarely met their monthly jobs creation target. If there aren't any jobs in the US, there is no need for any bank.
ReplyDeleteAlan Greenspan and Elaine Chao have both chirped "health sciences: registered nurse, xray tech, physical therapist, doctor, dentist, physicians assistant." Those retraining in health sciences face 2-5 years of wait lists, entrance exams, prerequisites, and courses while supporting themselves and their families, not a great prescription for economic recovery. At least Greenspan has lived long enough to see himself discredited.
One comic detail: Greenspan's love for Ayn Rand. Why would someone trained in math and economics adopt the principles found in a work of fiction? Why didn't Greenspan pick Tolkein or Barbara Cartland? You get the point.
Yeah , the banks falling apart have nothing to do with trillions of dollars in derivatives, years of greed, shady lending practices, etc. etc. etc, just with what Obama has said the past few weeks. Get real! There is a real debate to be made about how much, if any, government should interfere with this mess but to act as though the past few decades of over consumtion, over leverage and a take now pay later attitude is just assinine!
ReplyDeleteThe economy is now like a building in that awful moment of suspension just after the demolition charges have gone off. Viewed from afar it still seems standing, though all the inner supports have been blown. Moments later it collapses. Obama is taking office in just this moment of awful suspense. But the charges have already gone off, and there isn’t anything he can do to prevent the fall. Blaming him for what is about to happen is like blaming the NYFD for 9/11 as they arrived at the scene after the towers fell.
ReplyDeleteBrother can you spare a dime.
ReplyDeleteBuy as much gold and or silver as you can if you can right now dont delay.
Dont be suckers, this moook compiles this crap so he can sell his $3.00 "Survival Guides".
ReplyDeleteOut and about this weekend and you could not find a parking spot for your 50,000 dollar SUV at any shopping center in an Atlanta suburb.
I was almost trampled by bluehairs toting their purchases back to the Lexus.
Tough times yes but there are way too many smart people with dreams to fufill in this country.
Dont throw in the towel on the US yet.
Get a pair and carry on!
You cannot blame Obama for this mess! This has Bush's signiture all over this economy. It's too late to repair it now. I suspect total choas by the populace is only weeks away! We are sailing on a sinking ship and the depth of its death will be deep!
ReplyDeleteTo the Paraclete: You are already living in some kind of dreamland. A few wealthy people spending their easy procured money and profits from the backs of their poor paid employees; is far from a smart comment or dreams of so- called smart people! This economy will never be repaired now (if ever) through dreams, but hard work from those people who are subject to abuse in life from ilks like you!
ReplyDelete