Next disasters developing

Japanese banks advice has never been helpful as they are not shrewd investors – how could they no Jewish blood or gens in their system. The recommendation to catch falling knives as things have gotten cheaper is exactly the way many sovereign funds lost hundreds of billions buying bank stocks. We are still in the early part of the depression and that not the time play the carry trades as they may be right for a few weeks ultimately they will loose money on those trades as the timing to exit is even missed by the best sometimes.This is interestingly the exact wrong perception and delusion the stars do tell will be around for a few months but on the other hand thats the making of money destruction as some try to be smart based on not really thinking through what the situation is. Bloomberg reported today that the US government is already hooked up for 9.7 tril for the financial rescue which comes close to my figures thereby I do count them as losses – in the report they are split up in 3 tril paid out and 6.7 guaranteed by the FED FDIC and Treasury. That is the smoother version to describe it but at the end those moneys will mostly never return or be activated as losses for the latter ones. For the taxpayer that means flushed out of their pockets which is only true to some degree as part may be hooked on the foreign bond buyers as I explained earlier.
This ideas of Geithner to create a bad bank with private capital is the most stupid thing I ever heard and proves he is not up to the task. Private equity as a principle will only buy distressed assets at a discount to take the risk – in this kind of situation is no win-win option at all. If they guarantee part of those the private equity gets the discount but the taxpayer has no benefit at all only the banks will get higher prices sponsored by taxpayers. This are all model ls which have no interest for taxpayers at all – they have nothing to win but all to loose.

Excerpt 1

Japan’s Investors Savor Strong Yen in Hunt for Assets

Feb. 9 (Bloomberg) — Daiwa SB Investments Ltd. is urging clients to put their money into Brazil, Mexico and Turkey after the yen’s 55 percent gain against their currencies made emerging markets a bargain. A year ago, it wasn’t recommending any developing nation funds.

“A lot of assets have gotten extremely cheap and Japanese investors are looking to park their money somewhere,” said Kenichiro Ikezawa, who oversees about $3 billion as a fund manager at the second-largest brokerage in Tokyo. “Emerging markets including Brazil, Mexico and Turkey look attractive. We would like to invest more in such countries.”

Exceprt 2

Bank Bailout Plan Revamped

Treasury Secretary to Unveil Private-Sector Partnership to Buy Troubled Assets

Treasury Secretary Timothy Geithner is expected to announce that the government will become a partner with the private sector to purchase banks’ troubled assets, according to people familiar with the matter.

The plan for a so-called aggregator bank, a variation on a theme that Obama administration officials have wrestled with for weeks, is among four main components of Mr. Geithner’s bailout revamp, which he is expected to announce Tuesday.

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Timothy Geithner

The effort to restore confidence to the financial system comprises a broad range of tools and government agencies. It includes fresh cash injections into banks; new programs to help possibly 2.5 million struggling homeowners; a significant expansion of a Federal Reserve program designed to jump-start consumer lending; and, lastly, the mechanism to allow banks to get rid of bad assets.

The administration’s plans have evolved over the past several weeks as it has considered and discarded a host of ideas, with financial markets anxiously awaiting details. Mr. Geithner had planned an announcement Monday but delayed it a day to allow the focus to remain on the stimulus bill in Congress.

The aggregator bank, which some refer to as a “bad bank,” would be designed to solve a fundamental challenge: How can banks purge themselves of their bad bets without worsening their weakened condition?

The entity would be seeded with funds from the $700 billion financial-sector bailout fund, but the idea is that most financing would come from the private sector. Some critical elements remained unclear, including exactly how the government would entice investors to participate in the private bank, given that they can already buy soured assets on the open market if they want to. The government will likely offer some type of incentive, such as limiting the risk associated with buying the assets.

~ by behindthematrix on February 13, 2009.

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