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Originally posted by Seany
reply to post by Hx3_1963
ty sir , I think my question was , my fault for not being clearer ,soz,
Are these figures from an "open market" somewhere
or an analyst figures ?
Does anybody remember that the last people who brought in 3% equity partners to take control of an off-balance sheet hedge fund in a no-loss deal designed solely to absorb toxic assets at inflated prices, were sent to jail by the government for misleading the public? Their names were Andrew Fastow, Jeffrey Skilling and a raft of other managers, at Enron.
The goal of their off balance sheet partnerships was to conceal where and when the real losses had occurred and thus who was responsible for them, until some later date when they could either be transferred back onto the public (Enron's shareholders) in a way they would not notice, or at least after the Enron managers had a chance to unload their shares.
Now we have a virtually identical scheme, but this time it's being promoted jointly by the banks and the US Treasury. Once again the effort is to construct a vehicle into which toxic assets can be transferred at inflated prices, positioning the public to take the losses while disguising them in the short term, and giving the managers of our biggest banks a chance to both profit now and then sell out ahead of the public.
Perhaps Lay, Skilling and Fastow should be hailed as innovators in the field of public finance.
Let's parse that, why don't we?
Auction of 1 Trillion. Let's be generous and say that the auction goes for $.40 on the dollar. First loss therefore = $600 billion
That means $400 billion is now the "value" (Mark to Market exposure for the loosers anyone?)
Now, according to the article above, the FDIC will guarantee, non recourse, 85%. That means that $340 billion is guaranteed by the FDIC. Second Loss is therefore = $340 billion
Now, according to the article above, the TREASURY will put up 80% of the remaining $60 billion. Second loss is therfore = $48 billion.
The remaining amount $12 billion, is what the private investors have to put up to purchase $1 Trillion dollars!!!!! in assets. 1.2 % equity to control a nominal $1 trillion.
For a return on investment of only 50%, they would then need to only collect $18 billion dollars.
Who wants to bet JP Morgan and GS ex employees will be the ones buying up the 1 trillion in mortgages!
Too bad the rest of the world will explode anyway.
The top Republican on the Senate Budget Committee says the Obama administration is on the right course to save the nation's financial system.
But Sen. Judd Gregg of New Hampshire also says President Barack Obama's massive budget proposal will bankrupt the country.
Gregg says he has no regrets in withdrawing his nomination to become commerce secretary. He pulled out after deciding he could not fully back the administration's economic policies.
The senator said Obama's spending plan in the midst of a prolonged recession would leave the next generation with a country too expensive to live in.
Gregg appeared Sunday on CNN's "State of the Union."
"I just wanna say that the only thing less popular than putting money into banks is putting money into the auto industry," Obama said.
"Eighteen percent are in favor," Kroft pointed out. "Seventy-six percent against."
"It's not a high number," Obama acknowledged, with a chuckle.
"You're sitting here. And you are laughing. You are laughing about some of these problems. Are people gonna look at this and say, 'I mean, he's sitting there just making jokes about money.' How do you deal with, I mean, explain the…mood and your laughter," Kroft asked. "Are you punch drunk?"
"No, no. There's gotta be a little gallows humor to get you through the day," Obama explained. "You know, sometimes my team talks about the fact that if you had said to us a year ago that the least of my problems would be Iraq, which is still a pretty serious problem, I don't think anybody would have believed it. But we've got a lot on our plate. And a lot of difficult decisions that we're gonna have to make."