[lbo-talk] NYC on the government teat

sandyinchina sandyinchina at gmail.com
Sun Jan 4 01:27:27 PST 2009


James Heartfield <Heartfield at blueyonder.co.uk> wrote:


>> Do you think that letting them "go to the wall" would have no effect
>> on the real economy?
>
> well, let's be realistic, there is going to be some considerable contraction
> of the economy ('real' or otherwise). What's more, financial services are
> going to contract, too. The bailout just delays the inevitable, and at
> some cost. Better to expose the banks to the full cost of their errors
> to force them to reform, than to indulge their weaknesses.

What I don't understand is why they decided to bail them out by buying "toxic assets" at above market price. Why touch the securities at all? Offer to buy the mortgages themselves, or preferred stock, at a suitable discount. Leave everything else as their problem.

One fairly senior gov't bozo was asked about mortgage-based assets that were worth about 30 cents on the open market but carried on Citibank's books as an asset worth 60 cents. What would the gov't offer? He said he wasn't sure, maybe around 55. Why? The question should be do you offer 20 or go all the way up to 28.

One of the unions had an analysis done of a gov't deal vs. Warren Buffet's deal with the same company. Gov't paid roughly double what Buffet did for similar assets. Why?

I understand that the company's worth more after Buffet buys in, both in assets and intangibles like market confidence. But not double.


>From where I sit, it appears the crooks in Washington
are giving lots of tax money to the crooks on Wall Street, for no particularly good reason, and probably with no useful effect

-- Sandy Harris, Quanzhou, Fujian, China



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