I understand this may be the first time some people come to this website should this come up on a google websearch but don't throw the baby out with
the bathwater ....hear this out...why i believe the bank plan has a loop hole that covertly screws taxpayers.....
here is an article by the wall street journal which i found VERY misleading
i am attatching a copy of a reply i sent in the forum (but the thread is locked) so it did not get posted....so here goes.....
"The good news is that much of the risk will be borne by the banks' common and preferred shareholders and their long-term unsecured creditors -- as
opposed to by taxpayers. This makes sense since shareholders and creditors were the ones who bet on banks in the first place. We'll also stop
repeating the mistakes we made with Fannie and Freddie"
Misleading as usual.....
When Gov't gives Private investors 90% leverage (and does not require them to pay it back should they lose) they will have more incentive to overpay
for this "Uncertain toxic debt".....the reason the gov't is doing this is because the Banks are not willing to sell this stuff at current mkt
"And by the way, if banks want Uncle Sam to buy all those "toxic" assets, the government is now going to do it alongside private capital. These
investors aren't going to overpay, so that game is up as well."
they entice Private investors to pay above mkt prices (coincidentally the only prices at which banks are willing to engage in "price discovery" by
leverging up the private sector and NOT Requiring them to pay back loaned money on a loss (The Gov't/ taxpayer will eat that...thank you very much) .
The losses will be born out by the common and preferred shareholders the Gov't /Taxpayers and smaller losses by some Private investors (while some
make a killing) , meanwhile The Foreign Bond Holders will be made nearly whole (So they can keep *buying and financing our DEFICIT...* just like with
fannie/freddie these creditors will make sure there risk is very limited
However i wonder wether this will not just be a smaller cherry picking opportunity for some insiders who can separate some trenches of ground beef
from spoiled meat.......because while some Private investors may over pay....after all their goal is to make money OR **********unless there is some
way the Private investors can "act" like they took a "loss" and still win (i.e assume the artifically high price they paid w/ gov't leverage was
then the "current fair price" ........and then at some time period later compare that with the current (unleveraged fair mkt price) they can
say....... well gee ....i lost money i don't have to pay the gov't loan back....BUT.....they can still sell it for more than what they paid (the
amount of capital they put in) i.e 10 cents on the dollar...make a profit....without Paying the loaned money back (the taxpayer eats the
i would ask you to read between the ****'s again and see if this is indeed
1. a plausible loop hole driven by the greed of washington trying to game this bailout as another profit making opportunity for those in "the club"
2 .which also coincidentally makes foreign bond holders happy ( and they still buy our treasury debt to finance our deficit)
3. covertly scr%w the taxpayer (because the taxpayer is getting outraged) so they had to get cute with hidding scr%w job.....
anyone have an opinion that gets this type of stuff i would appreciate it.........rockpuck....studio...TJ ghost....bueller
[edit on 22-2-2009 by cpdaman]
[edit on 22-2-2009 by cpdaman]