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View Diary: Obama vs. Usury?  Why Not? (Updated) (251 comments)

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  •  What part don't you agree with? (1+ / 0-)
    Recommended by:
    polar bear

    What's missing from Obama's plan is any accountability for the institutions whose bad books are being shielded.  

    I don't agree with the plan period. There really isn't a single reason to bail out these banks. Accountability is avoided by keeping them in business. They are insolvent now. Their risk ratios would be way below the minimum if they brought all the loans back they had securitized and put a true value to the assets they  have on their balance sheets.

    The problem is that Citibank alone has two trillion in assets held up by around 100 Billion in tangible assets (after we pumped 45 billion into them) which still has them leveraged at 20:1. If those assets are over valued by just 10% now they are insolvent. If you go through the other banks balance sheet using a 5% then a 10% loss rate or over valuation rate on the majors that have over a trillion in assets, you can see why they aren't lending.  If they have  loss rate of 3% as this crisis develops they are sunk unless we pump more money into them.

    If you look at the amount of ALT -A, Option ARMs and Ninja loans resetting in the next year and the average default rate, they may need trillions more since credit default swaps have multiplied the problem.
    The money that has been wasted so far has just brought their so call risk ration above minimum levels based on their historical loans. If they increase their loan loss reserves to reflect the real default rate , that too would make them insolvent. Forget about new loans. They can't handle what they have on their books now even after a fill up at treasury.

    In other words there is an a variety of ways they could fail even with us throwing 100s of billions into the banks that it's hard for me to imagine any scenario where they can recover before we start defaulting on our own bonds.  

    This makes for a good read on how banana republics crash and burn and how we are starting to look like one.

    This under the WTF category

    "Paul Krugman is Wrong about securitization".

    Here's BD at work on the Huffington Post with the same load.

    I suspect there are more out there. No economist or anyone who knows what securitization has done is defending this. The securities are bonds which are loans and should be booked as such. If they did, their ratios would be way out of whack jst from that. Remember the off balance sheet shenanigans that brought Enron down? These are starting to look  the same. Of course the banks that were involved in that scam are the same ones involved in this one. At some point you have say enough is enough.  

    It's a long way to go , just to get to back to when it was bad.

    by Dburn on Sun Mar 29, 2009 at 04:21:37 PM PDT

    [ Parent ]

    •  yes - Goldman/Moody's more corrupt than Enron/AA? (1+ / 0-)
      Recommended by:
      polar bear

      Back when Enron did this, at least their accountant Arthur Andersen was prosecuted and convicted.

      But this time, the people who gave worthless paper AAA ratings - Moody's and S&P -- are never mentioned.  Have they no liability to the people who bought all that paper?

      Is it because unlike Enron, Moody's clients are too big to fail?
      Is it Warren Buffett's influence (big Berkshire Hathaway stake in Moody's)?
      Are there a bunch of lawsuits about to happen?

      How come 6 months later there's even less accountability than in the Bush years?

      Do you get it?  You seem pretty informed on these things...

      •  That article I left a link for you (0+ / 0-)

        Explains a lot. This is bannana republic shit.I'm not sure why these people in Washington believe so much in Wall Street. There is absolutely no evidence that Wall Street has one bone of honesty in it. They knew the Bankers who put these large financial centers together liked action and boy they gave it to them.

        The bankers of old were discarded and a new breed was born. The idea of fiduciary responsibility was discarded for fast returns, big bonuses and getting so big that they became as powerful as the Govt.

        Once they pass a certain level of wealth it's all about power. Then you have public servants doing nothing but mingling with the rich and powerful and soon they feel rich and powerful. Hell they have 4 trillion dollars at their disposal.

        Somehow they all just disconnected from the people they serve. The press is no help when they focus on little bright shiny things because knowledgeable reporters are far less preferable than TV personality with white teeth.

        I went over to and got the shit scared out of me today. I'd like to talk to the guy but I didn't want to pay the subscription fee today. Maybe later this week, I may spring for the $89.00 so I can see how he got his numbers.

        If your into finance and economics, it's a fricking snuff site. lol

        It's a long way to go , just to get to back to when it was bad.

        by Dburn on Sun Mar 29, 2009 at 07:22:15 PM PDT

        [ Parent ]

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