RSS available
| MarketTicker Forums Read Message in General |
User: Not logged on
|
| Top | Forum Top | Login | Control Panel | FAQ | Register | Logout |
| Showing Page 1 of 2 | First | 1 | 2 | Last |
| User Info | Some exchanges seen on Mish's blog in forum [General] | |||
|
Cheaptrader Posts: 39 Incept: 2008-02-06 
|
This Bam_Man guy makes an interesting observation: Mish's Global Economic Trend Analysis Bam_Man Wednesday, September 24, 2008 4:34:06 PM Most still seem totally baffled as to why this "bailout" is being rammed down the throat of the American people. As far as the US Treasury and Federal Reserve is concerned, there are 16 VERY good reasons why this "bailout" MUST go through ASAP. They are: BNP Paribas Securities Corp. Bank of America Securities LLC Barclays Capital Inc. Cantor Fitzgerald & Co. Citigroup Global Markets Inc. Credit Suisse Securities (USA) LLC Daiwa Securities America Inc. Deutsche Bank Securities Inc. Goldman, Sachs & Co. RBS Greenwich Capital HSBC Securities (USA) Inc. J. P. Morgan Securities Inc. Merrill Lynch Government Securities Inc. Mizuho Securities USA Inc. Morgan Stanley & Co. Incorporated UBS Securities LLC. These are the primary dealers in US Treasury securities. Between them, THEY PURCHASE THE VAST MAJORITY OF US GOVERNMENT SECURITIES SOLD AT AUCTION and then re-sell them to their foreign and domestic customers. When they have a problem (like hopelessly impaired balance sheets), the US Treasury has a problem. The impaired balance sheets of many of the primary dealers is starting to hinder their ability to participate in Treasury auctions. This could lead to failed Treasury auctions in the very near future. Anyone who is still puzzled as to the nature of the Wall St/Washington relationship needs look no further than this. This is the crux of the problem and the reason why the Treasury Department is forcing this bailout on the American people. MethodMan Wednesday, September 24, 2008 4:50:07 PM @bam_man: good analysis. That's why I say if we really, really want to end this charade you have the power, at your fingertips, and it's so simple: just don't fund it. Don't buy treasuries. Treasuries will be needed by the trillions to fund the bailout, and you buy them, you're supporting it, directly. Not only that, you are also voting for debt that future generations must service. Now, the government can then choose to print. But that will end the game, permanently for them. Bam_Man Wednesday, September 24, 2008 4:58:56 PM @MethodMan: The amount of Treasuries purchased by individuals through the 'Treasury Direct' program is literally a drop in the bucket. The primary dealers do the Treasury's 'heavy lifting' when it comes to financing. Can you imagine Paulson sitting in front of a Congressional committee saying "We have to bail out the primary dealers at taxpayer expense so they can continue to participate fully in Treasury auctions"? Not likely. Instead we get vague references to some sort of impending financial Armegeddon. Much more persuasive I think. They are doing just what you suggested MethodMan Wednesday, September 24, 2008 5:07:37 PM @Bam_Man: what I mean is through 401k/pension allocations. Banks have (had) this money to play with because they have retirement fund depositors. If BANKS had the same amount of customer outcry about "supporting the bailout with treasuries using my deposits" their tune would change very fast. If foreign banks see US buyers leaving, well, you have your auction failure and then some. Bam_Man Wednesday, September 24, 2008 5:29:16 PM The whole point of this $700 billion 'gift' to the primary dealers is to keep the US Treasury bubble from bursting. Even at today's ridiculous artificially low Treasury yields, the interest on the Federal Debt is over $400 billion per year. This year's budget deficit was around $400 Billion. With next year's budget deficit expected to approach or maybe exceed $1 TRILLION, they will need to have the primary dealers be able to absorb an ADDITIONAL $600-$700 Billion. Do you think they plucked that $700 Billion figure out of thin air? Paulson's plan is to give the primary dealers $700 billion of balance sheet relief with the understanding that they replace DOLLAR FOR DOLLAR the toxic mortgage securities they offload to the Taxpayer with newly issued US Treasuries. Makes getting through next year's "challenging Treasury calendar" a heck of a lot easier. No Tin Foil required here. It is simply a matter of financing the Gubbermint. Bam_Man Wednesday, September 24, 2008 6:17:04 PM @GoldmanSachs- Jim Willie makes for entertaining reading, but he is W-A-Y out there. This whole thing is about lining up financing for next year's HUMUNGOUS Federal Budget Deficit in advance. The $700 Billion "gift" allows the primary dealers to handle $600-$700 Billlion more in expected 2009 Treasury issuance than they were able to do this year. They were able to handle $400+ Billion this year, so with $700 Billion of "help", they should be able to absorb the $1 Trillion next year. This how you go about financing (or at least try to) a $1 trillion budget deficit without printing. The real reason for this "bailout" is not that complicated and does not require any Tin Foil at all. Can you imagine Paulson and Bernanke telling a Congressional Committee that we expect the economy to completely tank next year and that the budget deficit is going to approach or exceed $1 Trillion? And by the way we need you to help the Primary Dealers out with $700 Billion in balance sheet relief at taxpayer expense so that they can help us finance it. No. They can't do that. So this is what we get. Vague references to "financial meltdown". It's not like they are out-and-out lying. Failed Treasury auctions will not produce pleasant consequences for anyone in the US. Bam_Man Wednesday, September 24, 2008 6:34:05 PM My point is that this "bailout" is not part of some Wall Street conspiracy to loot the US Treasury and taxpayer. Sorry to spoil everybody's fun. Rather, it is how the Treasury gets prepared to finance next year's gigantic budget deficit without printing. I have said before that I am sure that the Chinese have already made "the phone call". The one where they say "You start printing and we start selling." This approach keeps them in the game. The taxpayer gets benefits from this as well. Assuming the primary dealers get the $700 Billion in balance sheet relief and are able to absorb the $1 Trillion in new issuance next year, the taxpayer avoids a tax increase and interest rates stay low. Bam_Man Wednesday, September 24, 2008 6:58:48 PM @sumdumguy asked: "Why do we need primary dealers? Why not sell Treasuries directly at an open auction?" Primary dealers insure that there is ALWAYS a COMPETITIVE bid for Treasuries and they distribute the Treasuries they buy to their customers throughout the world. They serve as the Treasury Department's distribution network and insure that there is ALWAYS a RELIABLE and DEEP market for US Treasuries. When it comes to meeting the funding needs of the US Treasury, they are INDISPENSABLE. That is why this "bailout" must/will become law. Bam_Man Wednesday, September 24, 2008 7:06:07 PM @BlindSight- If I am correct in my assumptions, then this really is not a "bailout". The Treasury is helping its distribution network to get ready to handle a whopper of a budget deficit next year. It is not a giveaway. The Treasury (and therefore the taxpayer) stands to get real benefits from this deal. Those would be NO NEW TAXES and a continuation of very low interest rates. Both these things are essential for there to be any chance for an economic recovery next year. The thing that is giving people fits is that it looks worse than it really is. Paulson and Bernanke get low marks for salesmanship. Goldman Sachs Wednesday, September 24, 2008 7:08:59 PM @Bam_man What if there is a boycott by foreign purchasers of treasuries (SCO, and perhaps Germany) such that the primary dealers are unable to finance treasury auctions? I mean, we need a net influx of $2 billion a day of foreign cash just to stay afloat already, right? MethodMan Wednesday, September 24, 2008 7:11:34 PM "Failed Treasury auctions will not produce pleasant consequences for anyone in the US" I would like to tell that to my credit card company when they fail to "buy" my credit line request of ten million dollars. Oh, shucks, you mean I will have to live within my means? Funding this is refunding the credit bubble and malinvestment when it should have deflated. Doing this scheme, we push even more debt out against our nation's future prosperity. We set ourselves for an uncertain, even harder fall, when it could just be moderately painful now. Bam_Man Wednesday, September 24, 2008 7:16:33 PM @GoldmanSachs: If that were to ever happen (and it could) the primary dealers would be stuck with the US Treasuries. It is true that foreign appetite for Treasuries is not infinite. In that case, this "bailout" would amount to yet another swap facility. The primary dealers would have essentially swapped their toxic MBS/CDO's for Treasuries. Not so bad for them. Paulson and Bernanke are covering all the bases here. They are not evil or stupid. They are just lousy salesmen. 2008-09-24 22:42:09
| |||
|
Brucelee Posts: 835 Incept: 2007-09-12 detroit, mi
|
i'd like to hear what kd thinks about this.
---------- "There is no way it can be allowed to be more prosperous than those it has failed, and those who pay its salaries." - Bozonian 2008-09-24 23:29:31
| |||
|
Shaunt79 Posts: 794 Incept: 2007-06-26
Chandler, AZ
|
Well this is the first explanation of the $700 billion figure. Although it could be that they easily expect that amount to be withdrawn from Money Market accounts (which is just as big of a crisis). If Commercial Paper fails, it will have a big effect on the real economy.
2008-09-24 23:38:41
| |||
|
Cubguy99 Posts: 1314 Incept: 2007-07-24
Online
|
Well so far there's been no sign of a lack of demand for treasuries. The problem is the opposite, too much demand, causing flight to safety and driving spreads wider. ---------- Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few as possible escaped the common misfortune. -John Kenneth Galbraith commenting on the behavior of the stock market during the Great Depression 2008-09-24 23:42:51
| |||
|
Zanni-baby Posts: 922 Incept: 2007-11-09
the Valley
|
my spidey sense says this may be the very underbelly of the tiger. it's got all the makings of how and why their exit strategy is so urgent that this thing not break on their clock.
---------- As for all the Banksters-It's all said in one word: GOUT! 2008-09-24 23:47:20
| |||
|
Sanitystream Posts: 498 Incept: 2007-08-11
|
One last message from that exchange: Bam_Man Wednesday, September 24, 2008 8:37:48 PM @StandardDeviation: Kindly show me where you summed it up nicely in 25 words or less. I would be honored to read your brilliant yet succinct analysis. The reason the real truth cannot be stated by anyone is obvious. They would have to state flat out: "The economy is going to hell in a handbasket and the deficit next year is going to go through the roof. To get ready to finance this whopper of a deficit, we are going to have to help out our primary dealers by giving them $700 Billion in balance sheet relief. The Treasury will do this by buying distressed assets from them at above market prices." Nobody can come out and say that. Period." 2008-09-24 23:56:45
| |||
|
Realistic Posts: 2673 Incept: 2008-02-15
California
|
Definitely an interesting point. Look at that firm list. FOREIGN BANKS operating here in America. Note that the Treasury doesn't want to limit it's primary dealers from the bailout. Maybe this is tinfoil, but it is certainly believable considering next year's budget crisis and the fiscal year rolling over RIGHT NOW. BNP Paribas Securities Corp. Bank of America Securities LLC Barclays Capital Inc. Cantor Fitzgerald & Co. Citigroup Global Markets Inc. Credit Suisse Securities (USA) LLC Daiwa Securities America Inc. Deutsche Bank Securities Inc. Goldman, Sachs & Co. RBS Greenwich Capital HSBC Securities (USA) Inc. J. P. Morgan Securities Inc. Merrill Lynch Government Securities Inc. Mizuho Securities USA Inc. Morgan Stanley & Co. Incorporated UBS Securities LLC. What scares congress more? People not getting an Auto Loan, or the Treasury not being able to keep the US Treasury market going. Hmmmm....which one to choose. ---------- "Insolvent Banks refusing to accept IOUs from an Insolvent State would be laughable if it weren't so damn pitiful." - LOL Damn... 9 percent plus unemployment, and ma bell being investigated... help I'm in the 80s! - Jeffrey_thomason Last modified:
2008-09-25 00:03:11 by realistic
| |||
|
Eternalblue Posts: 3883 Incept: 2007-08-09 
sokali
|
this is a ****ing death spiral, using more debt to wedge open channels for existing debt. KD was right, we shouldn't have let even the feddie/fannie bailout happen, or even the stimulus. Those obviously did nothing to improve our deficit. US debt is going to ****ing explode. ---------- all pullbacks are bear traps 2008-09-25 00:06:18
| |||
|
Realistic Posts: 2673 Incept: 2008-02-15
California
|
They underestimated this year's borrowings. We will have borrowed $792B in money from US Treasuries for this fiscal year. Hmmmmmm...next year is going to be worse.
---------- "Insolvent Banks refusing to accept IOUs from an Insolvent State would be laughable if it weren't so damn pitiful." - LOL Damn... 9 percent plus unemployment, and ma bell being investigated... help I'm in the 80s! - Jeffrey_thomason 2008-09-25 00:19:41
| |||
|
Etz3l Posts: 8658 Incept: 2007-06-26
|
$700B to bail the PD's THIS month. What's next? first-born male? right of first-night? For how long do we play this extorsion bull****? Tell'em to **** off now and get it over with [****_you] ---------- I could slit my wrists and people would cheer - L. Blankfein.  http://www.youtube.com/watch?v=p8jm61vk2.... Last modified:
2008-09-25 01:59:16 by etz3l
| |||
|
Ksfq Posts: 1007 Incept: 2007-07-11
California
|
Interesting. Primary dealers must meet certain liquidity and quality requirements. So, if all of the existing primary dealers withdrew from the list of primary dealers (since they are pretty much insolvent), then funding of US dept will skyrocket. I belive this is one of the problems which needs to be addressed. So, then Paulson should just ask to nationalize set of primary dealers - take over them and do all of the business. And then we will reform the system. In long term, we should not need primary dealers at all. That is so 60s. 2008-09-25 00:21:05
| |||
|
R0h1tp Posts: 783 Incept: 2008-02-20
Austin, Texas
|
If this mother****er actually passes, I am leveraging on my Dollar/Euro short big time.
---------- If you’re looking for the bottom of the market there’s a special offer − buy one, you get the next one free. 2008-09-25 00:24:08
| |||
|
Realistic Posts: 2673 Incept: 2008-02-15
California
|
Actually R0h, if it doesn't pass you should seriously go short US Treasuries and get out of the dollar.
---------- "Insolvent Banks refusing to accept IOUs from an Insolvent State would be laughable if it weren't so damn pitiful." - LOL Damn... 9 percent plus unemployment, and ma bell being investigated... help I'm in the 80s! - Jeffrey_thomason 2008-09-25 00:26:53
| |||
|
Lumpeninvestor Posts: 819 Incept: 2007-10-16
98072, USSA Online
|
http://www.federalreserve.gov/boarddocs/.... 2008-09-25 01:53:14
| |||
|
Rocketshoe Posts: 404 Incept: 2007-09-07
Los Angeles
|
Were Lehman and Bear on that list before they failed?
2008-09-25 02:00:18
| |||
|
Joe-bob Posts: 1548 Incept: 2007-09-18
|
Realistic wrote..Actually R0h, if it doesn't pass you should seriously go short US Treasuries and get out of the dollar. Waitaminute. ...shouldn't I go short TLT if it DOES pass??? 
---------- écrasez l'infâme -Voltaire To punish the oppressors of humanity is clemency; to forgive them is barbarity. —Robespierre Last modified:
2008-09-25 02:33:55 by joe-bob
| |||
|
Av8rphil Posts: 1817 Incept: 2007-06-26
Platte City, MO
|
If this is true, then the 700 billion only helps out the primary dealers. So banks like WB and WM would be toast - no $$ for you guys. THe XLF would probably rise on passage of the 700 billion bailout bill as 32% of the XLF is BOA, CITI, GS, JPM, MER, & MS. http://www.sectorspdr.com/spdr/compositi.... or would the 68% that gets nada drag the XLF down?? ---------- "Two things in life are infinite: the universe and human stupidity; and i'm not sure about the universe" -Einstein 2008-09-25 02:17:26
| |||
|
Downside Posts: 1187 Incept: 2007-12-16
San Francisco Bay Area
|
Quote:
As Doug Noland would say, Ponzi Finance Dynamics. No matter how much money you throw at the problem the next round is bigger because it's a freakin' Ponzi scheme. ---------- “Sometimes a concept is baffling not because it is profound but because it's wrong.” - Edward O. Wilson "If you do as everyone else does don't be surprised when you get what everyone else gets" "After home prices go down to one-tenth of the highest price homeowners paid, then buy." - Sir John Templeton< 2008-09-25 02:19:21
| |||
|
Fourredfish Posts: 3311 Incept: 2007-06-26
Seattle - Where Spencer Elden's penis became famous.
|
Then what's gonna happen if they only get 150 billion?
2008-09-25 02:24:57
| |||
|
Etz3l Posts: 8658 Incept: 2007-06-26
|
---------- I could slit my wrists and people would cheer - L. Blankfein. http://www.youtube.com/watch?v=p8jm61vk2.... 2008-09-25 02:42:30
| |||
|
Martin Posts: 676 Incept: 2008-01-23
|
I don't understand this. I looks like he is saying the government needs to create an additional 700 billion deficit now and give the money to the primary dealers so they will have money to deal with an additional deficit (based on before bailout figures) 700 billion deficit next year. So the government wants to move next year's additional 700 billion deficit forward to now, and then still have another 700 billion deficit next year paid for by this years additional deficit? This makes no sense to me. Can someone explain this please?
2008-09-25 06:36:07
| |||
|
Lilvern1 Posts: 3051 Incept: 2007-09-28 EVV, IN
|
I don't beleive the Primary Dealer arguement. Clever thought, but I don't buy it. If Paulson wanted to help the Primary Dealer's balance sheet all the would need to do is expand the time limts and funding on the the Primary Dealer Credit Facility (PDCF). This is one of the "alphabet soup" facilities that has been set up in the past year. As the name indicates, the mission of the PRIMARY DEALER Credit Facility is provide credit to the primary dealers. There is already this mechanism up and running(for several months now) to aid Primary Dealers. All Paulson would need to do is take this already existing facility and increase the total amount it can exchange for debt, extend the loans limts out to say, three months, then when three months are up extend to 6 months, etc. Increasing thr size of tfacilities like this and increasing their time limits is no big deal. Paulson would not need Congressional approval to do this and he has, in fact, already done so with the TAF with no hassle at all (other than the flak that knowledgable folks like TFers, Mish and the like put out. Look at all the problems Paulson is having already in dealing with Congress and the public with the bailout plan. If the whole point was to aid Primary dealers then why would he go through all this hassle of Congressional approval, setting up a brand new faclity, winning public support, appeasing foregin bond holders, when you could use an already existing facility that no one in Congress, public, or forgeign central banks, seems to care about? ---------- 4 out 5 Mayor Quimbys surveyed agreed - **** YOU YANKEES! 2008-09-25 07:09:51
| |||
|
Goldbrick Posts: 1500 Incept: 2008-01-23
Indiana
|
The Bam_Man's plan sounds like the old shell game, dazzling the mark with sleight of hand.
---------- "The higher I go, the crookeder it gets." --Michael Corleone 2008-09-25 07:14:35
| |||
|
Steviepointer Posts: 1134 Incept: 2007-07-30
WI
|
"Actually R0h, if it doesn't pass you should seriously go short US Treasuries and get out of the dollar. " Actually, you would want to stay in the dollar. Not passing would make physical dollars priceless. Unless of course, they printed. 2008-09-25 09:00:11
| |||
|
X5920014 Posts: 50 Incept: 2007-07-27
|
This also could explain why they are so reluctant to ask for equities...they can't nationalize foreign banks...
2008-09-25 09:28:14
| |||
| Top | Forum Top | Login | Control Panel | Logout |
| Showing Page 1 of 2 | First | 1 | 2 | Last |