Tuesday, April 21, 2009

Give Me $3, and I'll Give You $2

Great deal. That's what Congressional Oversight leader Elizabeth Warren, is saying is the "best case" scenario for taxpayer return on bailout funds. But don't tell that to Geithner, who was trotted out on his Obama/Bernanke leash after dismal corporate results this morning to assure us most banks were over-capitalized. This will again point to the failings of the stress tests, which will not end up having tested anything stressful at all. Even cattle-prodded bulls like Marketwatch chief economist Irwin Kellner, had this to say. "Regardless of the results of the government's stress tests, you can be sure of one thing: Every bank will come in above average, just like all the children who live in Lake Wobegon."

Wake up, Wake up, Wake up! Caterpillar took its first loss in 17 years today, and crapped on Obama for not providing more infrastructure relief. Bank of Mellon profits were down 51%, perennial bull Blackrock saw profits plunge 65%, the NYT...dead industry, dead profits, down 30% last 2 days. How can anyone truly believe things are getting better for those of us not sitting in Goldman's chair?

Credit card defaults are at all-time highs, ditto student loans. Delaying ARM resets is a sham because those loans are negative amortization; the balances are still climbing. We're just delaying the big kaboom until next year. Is it any wonder why banks are hoarding TARP funds in their coffers? Loaning money to Americans is a losing game.

A panel of economists, including Nobel winner Joseph Stiglitz and Simon Johnson, formerly of the IMF, testified before Congress today that basically their action to date have been disastrous. "In short, our bailouts run the risk of transferring large amounts of money, often in non-transparent ways, to those banks that did the worse job in risk management - hardly principles on which normal market economics is based," said Stiglitz. But if we've learned anything during this debacle, it's that our government won't listen to those who have been in the know, those like Taleb, Janszen, and Roubini. They will put our future in those already vetted by their banking masters, such as Summers and Geithner, those who have been dead wrong about everything to date.




1 comment:

Anonymous said...

Disturbing point that natural de-selection is taking place...encouraging the weak, inept, and stupid to survive...and even rewarding the culprits who dreamed up pie-in-the-sky profit schemes... Even a kid as in middle school kids realize the futility of making bad loans to people who do not deserve them...and these banks knew...

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