我也谈谈Treasury Plan

swordevil

This plan will NOT work, period. The reason is very simple:

1) there is no clearing price acceptable to both banks (seller) and the investor (buyer), even with government funding and debt guarantee. At this time, all loans on banks balance sheets are effective marked at par ($100). From an investor's perspective, however, it is impossible to offer any price north of $70 given the latest credit performance of the mortgage loans. While $70 is already a generous offer, the banks will NOT be able to take advantage of it because the $30 upfront writedown will penetrate their thin capital immediately the banks become insolvent.

2) the government has just discussed compensation restriction for banks received TARP money and now they want to form partnership with private capital. This is such a joke. No sane investor will jump in without considering possible financial and political ramifications. As a matter of fact, most funds are very reluctant to take advantage of the newly released TALF program, because they don't want to become AIG 2nd.

3) the government promised $500 bil to $1t in the program. However, US government does not have the money and they need to either raise it or print it. I would argue neither is feasible. a) foreign investors will think twice now before they purchase any US debt. b) the Fed has just expanded their balance sheet by more than 1 trillion. If they print another trillion, that is more than 15% of US GDP and will cause hyperinflation in no time. So I don't think US government has the money it promised.

In summary, this plan is just a super HYPE whose ineffectiveness will soon be priced in the stock market.

Maxie

By the time it happens or NOT happen SPX would have seen 900 and FAZ would be 9 already.

swordevil

No one believes in the rally. People are just riding the rally, including myself.

2# Maxie

Maxie

Some people got burnt. Including me. (and some big money funds too)

No one believes in the rally. People are just riding the rally, including myself.

2# Maxie
swordevil 发表于 2009-3-23 21:58

Maxie

i still firmly believe this rally with no significant pullback is getting ridiculous, just like three weeks ago, the mindless pushing down seemed so endless and hopeless.

this too, shall pass.

swordevil

The pullback comes as early as tomorrow. This is a huge bull trap.
5# Maxie

Maxie

Anyway, your analysis has merit. No one really knows how the bad assets could be evaluated. My guess is that Fed is going to be really creative in pricing this kind of shit. Meanwhile, as you said, marking down the junk would put some banks out of business. Well, maybe that's in Fed's plan too. By that time they would come out and say, hey, who said we were irresponsible dirtbags? we let some banks fail too!

coexist

Anyway, your analysis has merit. No one really knows how the bad assets could be evaluated. My guess is that Fed is going to be really creative in pricing this kind of shit. Meanwhile, as you said, ma ...
Maxie 发表于 2009-3-23 21:05

that's possible, which is Uncle Ben's proceeding words.

jilier

Good point !

Maxie

really? did he say that some major banks are going out of biz soon?

if O8 and Co wants to keep their politically correct image for whatever reason, the "strong medicine" won't be beneficial to all wall streeters. Otherwise he's just such a pussy giving up his fight too fast. Or maybe he is, who knows.

that's possible, which is Uncle Ben's proceeding words.
coexist 发表于 2009-3-23 22:15

fzfz

1# swordevil

可以这般玩吗？

B银行"资助"C公司
A政府97%- 和 C公司3%+ 买B银行的垃圾 （$100 or $99.99 for $100)

这买卖对B银行不错吧。C老板也不亏吧。