Financial system "hail mary"....

The Financial crisis that is front and center and caused ATS to develop a global meltdown forum is facing a make or break moment in the form of the treasury secretary trying to put together a Bank Plan

he announced details today


One thing you must first understand about this crisis is that it was basically the collapse of the "shadow banking system" and there revenue generator for the past several years.........know as Securitization.........securitization was a source of credit that outpaced actually BANK LOANS. Securitization has fallen more than 90 % since peak levels in 07!!!!

so it's not that banks are not lending that is killing the economy it is that the credit which kept the economy afloat became equally dependent on the securitization industry to keep the economy afloat........this pillar collapsed....and with it took the economy with it

Now here is where Geithner Bank plan comes in with the Public private bullet points that summarize his plan announced today which will also combine with the soon to be launched TALF lending facility annound a few months ago that was basically waiting for the Shadow banking system to be artificially resessitated via the gov't bascially taking alot of the risk so that private investors can flock to buy toxic asset purchases that they may be able to temporaily turn into gems...while transferring the liabities from banks to mostly the gov't while the private investors do the lifting.

the treasury has to be very CAREFUL announcing the details of this plan and that IMO is why the market did not rally today on the news. GEITHNER has to be very deceptive and not let the sheeple realize how much tax payer money is really on the hook.......so he kind of has to talk tough as he announces the plan ........which will bascially take a few hundred billion at least and then let the private sector leverage that amount times 20,30, 40 (with the guarantee that the private sector can't lose more than they put up) yet they can gain high returns that they were spoiled by in the early part of the decade. Should the losses be big the gov't /taxpayer will be stuck with them.

there are 3 scenario's that i see possibly resulting from this bank plan that will include the public private partnerships to revive the shadow bank system and the credit genratted via the securitzation process (which collapsed and is the cause of alot of the degeneration in the economy) regarless with the fact is was not something sustabinable anyway.

first is that private investors cherry pick a few shovel fulls of what is a very big heap of toxic trash from banks who are destined to surive the consolidation of power and that many investors make out big time and some will lose and the gov't may have moderate losses but the finacial sector balance sheet will not get cleaned up much and this plan wil be a "failure" to those trying to revive the "lending". but more of a life jacked thrown to connected private money as a last ditch "at least we tried effort.

second is that the private sector goes all in.......they are hungry and greedy ...yet more careful ....and the gov't gives them such a sweet deal (yet must hide that from the sheeple's perception thru leverage which will maginify the losses exponentiall compared to the couple hundred billion the gov't puts up in "seed money" ) this could have two effects ........it works to revive the securitization and credit creation because the gov't work to backstop most all of the risk (deceptively again!) and the economy floats at a lower level for the couple years that this is accomlished for and hedge funds and connected investors make a absolute killing and the banks balance sheets are made whole.....then years later the crap most likely hits the fan.(best case scenario?) and the gov't and taxpayer (debtors) is faced with the final choice of writing off alot of the public debt or allowing both the pubic and gov't to sink into third world style starvation and living standards...seriously!

........the other option is that the private money goes all in and has all losses covered (deceptively) and the gov't losses big time within a year or so and the losses overwhelm the gov't / taxpayer via this route the gov't similiarly may feel pressure to bailout the pubic debt or face riots unseen in USA history....and then gov't officialls may try to jump ship into the private sector as the Soverignty and reputation of the Gov't goes into the graveyard.

P.s There may be other than those 3 scenarios but those are they way i see it........at the very least it is a plan that puts all the reward onto private investors and all the risk onto taxpayers...that is why many in the investment community have noted that private captial is DROLLING at the opportunity to participate....i didn't run spell check so shoot me.

I don't expect many comments but if i get them i will be happy ) one most also realize that a real solution would involve cutting these company's up into pieces that could be allowed to fail without posing systematic risk and to reduce there leverage as well.....here the puppets talking about this? NO

[edit on 10-2-2009 by cpdaman]

IMO this will do nothing to help the economy. They're big solution is throwing more money at the problem so banks can start lending again, increasing federal and personnal debt.

Now i'm sorry, but you can't get out of debt, when you're economic system is based around it.

I've said it before and i'll say it again, the only solution is to let it burn to the ground and rebuild it.

As long as we need to create debt in order to create money and vise versa, we'll never be out of this. Were simply compounding the problem so that future generations can deal with it.

~Keeper

reply to post by cpdaman


I got the feeling that our treasury secretary has not clue how the economy is going to be fix.

That was my take from his press conference and his congress hiring.

Originally posted by marg6043
reply to post by cpdaman

 

I got the feeling that our treasury secretary has not clue how the economy is going to be fix.

That was my take from his press conference and his congress hiring.

I got the feeling they ARE NOT DUMB

they have two problems

1. the sheep are trying to wake up

2. the financial elite have only a matter of time to get their bailouts....yet they have to KEEP IT ON THE DOWN low.

So Geithner had to be PURPOSEFULLY obscure when describing the details of the PLAN.......and yes i do believe there are more to be worked out but the bottome line IMO will be

THEY ARE TRYING TO TAPDANCE around what will be a HUGE subsidy by the Sheep/Joe 6 pack/ Chump taxpayer

does anyone else not see this!

As an aside the stock market went down because geithner had to be obscure about the details because he has to walk a tight rope appeasing the public but realizing the only way THIS public private plan will work is if they FLEECE the taxpayers without them initially understanding how they will get fleeced and the amount of risk that is being taken on by gov't thru the use of leverage. (the sTk mkt going down yesterday on uncertainty was an acceptable risk in order to do this)

THE banks aren't going to participate in price discovery of there assets unless they getting a heck of a deal (IMO) ........and private investors are heard to be LINING UP for this (and they wouldn't be doing this unless there losses are minimized ...essentially covered) ........so put 2 and 2 together guys....... this is either a small plan that will benefit some private investors that are connected and not do much for the whole system...or it is a massive taxpayer subsidy thru hidden leverage that could cleanse the banking system but leave the gov't /taxpayers on the hook for many many trillions

[edit on 11-2-2009 by cpdaman]

Capman your theory sound good, but you have to understand that without a plan for the gullible tax payer to make taxable income is not going to work.

The wealthy elite already have the government working on their side, the bail out is going on we wanted or not and the money will be use as they see fit we wanted or not.

So we are to get the brunt of the bill, debt and interest against we wanted or not, by the time Americans tax payer get the cojones to fight back this rats will be long gone to brighter, more profitable and greener pastures.

Don't you think?

actually i have been questioning wether i have been too tough on geithner .....bubble vision is getting me wondering.....BUT i go with my instinct based on the history of politicians

i think if the gov't comes to the side of the debtors and forces the creditors to take some pain as well as writedown the losses for the public......then the system will go thru some pain (deep recession for a couple years) and then be able to cleanse itself and grow again (at least for a few more decades).......the way things are going now they are trying to rejuvinate a broken system....at the expense of the people.....in the typical short cited.....cowardly....selfish interest.......that will increase the changes of bankrupting the country should they go this route (unless a last second "stick save" writes down the debt for the people and takes the gov't down instead....otherwise or quite possibly either way this can bring about various levels of reduced standard of living that resembles the third world style standard of living...... so until (the current path ) changes.......i will interpret all they say thru the perspective of a white collar criminal mind in an attempt to read between the lines


the bulls are on parade .....not only in big finance but in nearly every major industry and the pathetic regulators are either too corrupt or too intimidated and the people will be taken for all they have....there is NOT some magic level of corruption that will be reached when the border line criminals turn themselves in ....it is going to take force by the people


p.s I emailed this guy www.michael-hudson.com... who was also the economist for Kucinich's presidential run, among other bigger achievements and got a response from him that i was DEAD on

i could post a copy of the email and his response for anyone that cares but i wrote it very efficiently and thus i believe making better ...easier to understand points then in my opening post.

[edit on 11-2-2009 by cpdaman]