Geithner Summary In 30 Seconds.....

I have to admit that even i ( already with ultralow expectations ) was shocked at the poor performance from Geithner. Here is a good summary ( see Geithner Plan Smackdown Wrap ) as usual via Naked Capitalism & The Geithner plan — what the pundits say including some quite "funny quotes" via FT Alphaville. Make also sure you don´t miss Save Us, Jim Cramer, You're Our Only Hope! from Henry Blodget via Clusterstock :-)

Ich muß gestehen das sogar ich ( hatte eh schon fast nicht messbare Erwartungen ) ziemlich geschockt von dem gewesen bin was Geithner da gestern veranstaltet hat. Eine treffende Bestandsaufnahme wie erbärmlich die gestrige Performmnace gewesen ist verweise ich mal wieder an Naked Capitalism ( siehe Geithner Plan Smackdown Wrap ) & The Geithner plan — what the pundits say mit einigen sehr "amüsanten" Zitaten via FT Alphaville. Denke das sich zudem ein Blick auf Save Us, Jim Cramer, You're Our Only Hope! von Henry Blodget via Clusterstock lohnt :-)

Hat tip iTulip



He doesn´t look confident at the end of his first major speech, doesn´t he..... ?

Er strahlt nicht gerade Zuversicht am Ende der Rede aus, oder....?

Hat tip FT via Naked Capitalism

On the other it is probably not the worst sign that bank stocks have tanked yesterday ( part was profit taking / sell the news ) . This might indicate that the high hopes from Wall Street for their "cash for trash" bet is at least "postponed". But this is really giving only a cold comfort..... Also disappointing ( but not unexpected ) to see that Obama ( see Obama on Bank Nationalization via Paul Kedrosky ) is still far underperforming the promise of "change"....... This is even more troubling because it seems he is offering the correct diagnosis but has not the guts for the necessary action ( see comment from Option Armageddon)

Auf der anderen Seite sind die fallenden Bankaktien ( teilweise sicher auch Gewinnmitnahmen bzw buy the rumor, sell the fact...) ein Indiz dafür das die Hoffnungen von Wall Street auf eine massive Überbezahlung Ihrer Schrottpapiere so zumindest nicht kurzfristig aufgeht. Aber das kann natürlich nur ein schwacher Trost dafür sein das erneut wertvolle Zeit ins Land geht und sich immer mehr die Erkenntnis durchsetzt das selbst nach einem Jahr immer noch vollkommen planlos ( das ganze wird nur noch dadurch getoppt das immer noch bewußt die alten Lösungen die bisher nicht funktioniert haben bevorzugt werden - siehe Cartoon & Obama on Bank Nationalization via Paul Kedrosky) agiert wird. Die ganze Geschichte wird umso ärgerlicher wenn man bedenkt das Obama das Problem wohl erkannt hat, Ihm aber offensichtlich der Mumm fehlt das Notwendige zu veranlassen ( siehe Kommentar von Option Armageddon )

More fun with John Steward....

The Daily Show With Jon StewartM - Th 11p / 10c

Clusterf#@k to the Poor House - Wall Street Bailout

Daily Show Full Episodes
Important Things With Demetri Martin

Funny Political News
Joke of the Day

Revisiting The Bear Stearns / Maiden Laine Portfolio......A Foretaste Of What To Expect From The "Bad Bank".......

I expect similar outcomes when Geithner is coming up with "cash for trash" overpaying for highly inflated assets & probably leaving the bondholders without any or a significant haircut..... .... See also Bad Bank, Bad Pricing.... & the Update from Naked Capitalism......On top of this add the populism ( see Confirmed: Executive Pay Caps Are A Joke ) from Obama and it is clear that this is change we can´t believe in..... UPDATE: Excellent rant David Sirota: "Obama's Team of Zombies" (Updated: Frank Rich on Geithner) via Naked Capitalism

Denke das dieses Beispiel schon einmal vorwegnimmt was uns ( STEUERZAHLER ) die Bad Bank bringen wird...... Siehe auch Bad Bank, Bad Pricing.... sowie das Update von Naked Capitalism. Das ganze wird noch unerträglicher wenn selbst der Heilsbringer Obama sich immer mehr als ganz gewöhnlicher Populist herausstellt ( siehe Confirmed: Executive Pay Caps Are A Joke ). Bisher muß man bei Ihm leider das Fazit ziehen das eher der Spruch "We Can´t" angebracht ist...... Wenn man sich Leute wie Geithner ins Boot holt muß einen das allerdings auch nicht weiter wundern....... UPDATE: Traurige Bestandsaufnahme von Anspruch und Wirklichkeit David Sirota: "Obama's Team of Zombies" (Updated: Frank Rich on Geithner) mal wieder via Naked Capitalism

Structured finance paramnesia, Bear Stearns edition FT Alphaville

The transaction was not structured with adequate over- collateralization…

Ever was it so.

Point in case: the Maiden Lane/Bear Stearns portfolio, which, since June, has declined by $4.22bn in value. See Bloomberg’s Chart Of The Day.

> Make sure you see the chart ( Go to the GRAPHIC icon ). And it is safe to say that things will get worse.......

> Der Chart ist einen Blick wert ( Auf das Icon Graphic klicken ) . Und es so ncht mutig zu behaupten das die Verluste weiter dramatisch ansteigen werden....

The “equity” tranche of the Maiden Lane deal, by which JP Morgan takes the first hit on any losses, was, at $1.15bn, a pretty flimsy sliver of subordination, even by 05′ vintage CDO standards. And of course, it has been far overrun by the current losses, which are now eating into the Fed/taxpayer-owned tranch.

Amid swap lines and liquidity facilities of many tens, if not hundreds of billions, it’s easy to dismiss $4.22bn as a drop in the ocean. But forget not that we’re talking pure credit risk for the Fed here. These are unchartered territories.

Keep smiling:

The central bank’s Board of Governors wrote in a Dec. 29 report to Congress that it didn’t expect “any net loss to the Federal Reserve or taxpayers” from the Bear Stearns holdings.

UPDATE:

Yves Smith over at Naked Capitalism has a scathing criticism of the Obama Administration’s plan to fix the nation’s banks.

“The Obama Administration is as obviously and fully hostage to the interests of the financial services industry as the Bush crowd was. We have no new thinking, no willingness to take measures that are completely defensible (in fact not doing them takes some creative positioning) like wiping out shareholders at obviously dud banks (Citi is top of the list), forcing bondholder haircuts and/or equity swaps, replacing management, writing off and/or restructuring bad loans, and deciding whether and how to reorganize and restructure the company. Instead, the banks are now getting the AIG treatment: every demand is being met, no tough questions asked, no probing of the accounts (or more important, the accounting).”

AMEN!

Bad Bank, Bad Pricing.........

When you combine my initial thoughts ( see Is There Anybody Out There Believing That There Will Be A "Transparant" Bad Bank........? ) with the latest insight from Naked Capitalism & add the example from the NYT to the mix i think the cartoon describes very well the model that will be used from the governments around the world to justify the inflated "market prices" for the purchases or guarantees of the assets that will cost the taxpayer around the globe trillions.....

Denke wenn man sich meine letzten Vorhersagen ( siehe Is There Anybody Out There Believing That There Will Be A "Transparant" Bad Bank........? ) und das Posting von Naked Capitalism ansieht und das mit dem folgenden Beispiel der NYT kombiniert dürfte klar werden das die Regierungen weltweit "Berechnungsmodelle" analog dem Cartoon nutzen werden um die hyperinflationierten "Marktpreise" zu rechtfertigen zu denen die Positionen letztendlich erworben bzw garantiert werden. Die weltweiten Steuerzahler dürfte diese "Kreativität" Billionen kosten.....

Risks Are Vast in Revaluation of Assets NYT
The wild variations on the value of many bad bank assets can be seen by looking at one mortgage-backed bond recently analyzed by a division of Standard & Poor’s, the credit rating agency.

The financial institution that owns the bond calculates the value at 97 cents on the dollar, or a mere 3 percent loss. But S.& P. estimates it is worth 87 cents, based on the current loan-default rate, and could be worth 53 cents under a bleaker situation that contemplates a doubling of defaults. But even that might be optimistic, because the bond traded recently for just 38 cents on the dollar, reflecting the even gloomier outlook of investors.

> This conclusion from Calculated Risk & sums it up

> Diese Feststellung von Calculated Risk umschreibt das Desaster treffend.....

To be worth even 38 cents on the dollar, this must be a senior tranche. The lower tranches have absorbed most of the losses so far, and that is why S&P is currently valuing the bond at 87 cents on the dollar, but any higher default assumptions, and the value of this bond will plummet. I'm amazed, given that these are no money down 2nds that the loss severity is only 40 percent.

The bond analyzed by S.& P. is just one of thousands that the government might buy or guarantee should it go forward with setting up a “bad bank” that would acquire $1 trillion or more of toxic assets from banks.

The value of these securities is based on the future cash flow they provide to investors. To determine that, traders have to make assumptions about the housing market and the economy: How high will the unemployment rate go in the coming years? How many borrowers will default? What will homes be worth?

The Standard & Poor’s group, Market, Credit and Risk Strategies, which operates independently from the company’s credit ratings business, has been studying troubled securities for investors and banks. The bond that is trading at 38 cents provides a vivid illustration of the dilemma in valuing these assets.

The bond is backed by 9,000 second mortgages used by borrowers who put down little or no money to buy homes. Nearly a quarter of the loans are delinquent, and losses on defaulted mortgages are averaging 40 percent. The security once had a top rating, triple-A.

> Finally Joseph Stiglitz via Jesse´s Cafe Americain

Obama’s administration is moving closer to buying the illiquid assets currently clogging bank’s balance sheets and preventing them from boosting lending, people familiar with the matter said this week.That amounts to swapping taxpayers’ "cash for trash,” Stiglitz said yesterday

AMEN!