Bailout plan
Time to nationalize undercapitalized banks
Filed under: Citigroup Inc. (C), Goldman Sachs Group (GS), Morgan Stanley (MS)
hank paulson’s aim to spend $700 billion of your wherewithal to buy some share of the $13 trillion benefit of toxic waste — in the form of mortgage-backed securities (mbss) and collateralized debt obligations (cdos) makes little sense. it involves a reverse auction in which the financial institutions (fis) that carry on this junk entreat to see who can retail it to the treasury for the lowest price. the fi’s have no incentive to participate in this scheme because to do so would lead to major write-downs and leave a capital hole in their compare sheet that they can’t burden.
The basic problem here is that banks lack capital. The simple solution, which occurred to me this morning after reading an op-ed piece by Paul Krugman, is for the government to buy the banks and help them raise the capital they need so they can resume lending. There is so much political damage from the current catastrophe that nationalizing the banks as I propose really won’t hurt that much more. I am not sure how much it will cost — but we’ve already nationalized Fannie, Freddie and AIG so why not make a list of all the under-capitalized viagra kaufen commercial and investment banks and let the government take them over.
Bailout plan buoys stocks
NEW YORK — Stocks rallied Monday as investors placed bets that a recovery in the financial and housing sectors is more likely to occur after the U.S. government’s move to bail out …
Compared to the $700 billion that Paulson wants for his wacky plan, we could buy up Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), and Goldman Sachs (NYSE: GS) for about $200 billion (roughly 10% over their current market value). In light of the $800 billion spent so far, that $200 billion would be chump change. And if the government runs them right, it can sell their shares back to private investors once we get through this period of “adjustment” and make a nice profit for taxpayers.
Action News 36 - WTVQ - Lexington, Kentucky - Bunning: Bailout Plan …
Joomla! - the dynamic portal engine and content management system … Tuesday, 22 July 2008 20:47 Senator Jim Bunning says a plan to bail out mortgage giants Fannie Mae and Freddie …
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Citi shares and has no financial interest in the other securities mentioned.
Bush’s Bailout Bait-and-Switch
The Motley Fool - The good news: The plan doesn’t interfere too much with the free markets. The bad news: The plan doesn’t interfere too much with the free markets.
Bailout plan boosts stocks
Wall Street was encouraged Monday by the Bush administration’s plan to bail out Fannie Mae and Freddie Mac — sending the Dow up nearly 350 points before later retreating …
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