On a day where someone in the Administration (or a friendly) leaks out that "Hey, surprise, the banks are acing those Stress Tests", comes another floater that, get this, we, the public, should buy stocks and bonds of those toxic assets that the banks don't want to keep (but want to get paid for, just the same).
U.S. Imagines the Bailout as an Investment Tool
During World War I, Americans were exhorted to buy Liberty Bonds to help their soldiers on the front.
Now, it seems, they will be asked to come to the aid of their banks — with the added inducement of possibly making some money for themselves.
As part of its sweeping plan to purge banks of troublesome assets, the Obama administration is encouraging several large investment companies to create the financial-crisis equivalent of war bonds: bailout funds.
The idea is that these investments, akin to mutual funds that buy stocks and bonds, would give ordinary Americans a chance to profit from the bailouts that are being financed by their tax dollars. But there is another, deeply political motivation as well: to quiet accusations that all of these giant bailouts will benefit only Wall Street plutocrats.
Is this the Summers and Geithner version of the Clean Skies Act?
And, right there is the rub.
All those billions in bailouts are benefiting only those "Wall Street plutocrats"
Christ, I mean, the whole game has been rigged for them.
Now, the Obama Team wants to go into to backwoods carny mode, telling us to "Step right here ...Have we got a deal for you"?
So, along with already giving the dwarfs, finks, phonies and frauds of Wall Street our tax dollars, we are supposed to slip on the Uncle Sam suit, go all-jingoistic and start giving them our "disposable income"?
Will there be retro-Dough Boy posters, substituting soldiers, with slimy "financial instrument" sellers, extorting us to "Get into the Fight - Buy Toxic Asset Bonds"?
The embrace of smaller investors underscores the concern in Washington and on Wall Street that Americans’ anger could imperil further efforts to stimulate the economy with vast amounts of government spending. Many Americans say they believe the bailout programs — and the potentially rich profits they could yield — will benefit only a golden few, including some of the institutions that helped push the economy to the brink.No shit, Dick Tracy!
For the investment managers, the benefits are potentially large. These big firms can charge healthy fees to investors for taking part. They will also have the marketing prestige of being the firms the government turns to at a time of crisis to help sort out the country’s financial mess.Oh please, give me a break!
Translation here is "They will also have the marketing prestige of being the Governments' hand-picked front man"
We made reference to this once, already, but it looks more-and-more like the Obama Administration has hired the Lincoln Group to hawk their shit.
And those Bank Stress Tests ...
"Romper, bomper, stomper boo. Tell me, tell me, tell me, do. Magic mirror, tell me today. Have all banks had fun at play?"
From Yves Smith;
The whole point of this charade exercise was to show the big banks weren't terminal but still needed dough, and I am sure it will prove to be lots of dough before we are done. But they now have the Good Housekeeping seal, so the chump taxpayer can breathe easy that the authorities are taking prudent measures to make sure his money is being shepherded wisely.It’s been awhile, but this is a legitimate moment of crises;
If you believe that, I have a bridge I'd like to sell you.
How does one parse tripe like this? First, the public private partnership program, aka cash for trash, is voluntary. Banks are not being compelled to sell. The idea that the banks "have to sell" is a canard. Second, the gaming of the program has already started (notice no lecture from Geithner about that?), so there is pretty much no risk that anyone will take a loss on the values they have in their books. The best summation of how bad this will get is from Rortybomb, who expects all the old Enron tricks to be employed (notice the terms of the PPIP prohibit the fund managers from gaming the process, not the banks trading among themselves. You can drive a truck through this oversight. And the Treasury has remained silent as the banks themselves have been loading up their balance sheets with toxic sludge, paying more than private investors are willing to bid).
I'm sure all the bankers understand full well the massive disconnect between talk and action, and are dutifully following Treasury's lead in maintaining appearances.
Help Me Mr. Wizard!
Thursday, April 09, 2009