Thursday, March 26, 2009

COCKTAILS (OF THE TOXIC VARIETY) ON THE HOUSE

Well, well, well. Look who's taking advantage of the "Geithner Plan." Ritholtz has a short piece about Citi and BOA buying toxic assets lately:
As Treasury Secretary Tim Geithner orchestrated a plan to help the nation’s largest banks purge themselves of toxic mortgage assets, Citigroup and Bank of America have been aggressively scooping up those same securities in the secondary market

* * *
both banks have been [aggressive] in their buying, sometimes paying higher prices than competing bidders are willing to pay.
This is the logical outcome of Timmy's "Plan." If you know the government is gonna broker a bunch of deals to buy garbage at above-market prices (through outright purchase, leveraging, guarantees, etc), why the hell wouldn't you buy up as much of that garbage as possible at the current market prices? That's good business, right?

Especially when you consider that the money they'll spend to make these market-rate purchases came directly from the taxpayers in the form of "bailouts."

I believe this is called playing with house money. And we're the house. But unlike Vegas (and Wall St.), in this example the house always loses.

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11 Comments:

Blogger Weaseldog said...

This is logical. It makes good business sense.

It's not good for the USA, but the banks are corporations. They don't owe the USA any allegiance. They exist to extract money and give it to their owners. that is their purpose. The rest is incidental.

9:37 AM  
Anonymous Applesaucer said...

So Dumbya and Fauxbama are back-to-back Yeltsins. Handing it all over to Goldman, Morgan, PIMCO, Blackrock, etc.

Who is going to be the American Putin, I wonder? Putin is popular in Russia, notwithstanding his anti-Democratic actions in office.

Wanna know why Putin is so popular there, despite being a Tyrant? Because Russia got robbed blind by the Oligarchs and Putin has stuck it to them.

Fauxbama believers: you are suckers.

Applesaucers

7:41 PM  
Blogger DED said...

Obama Seeks Input From Banking CEOs

Images of foxes and hen houses spring to mind.

10:46 AM  
Blogger Weaseldog said...

Yeah Obama is leading a brainstorming session to find a way to keep stealing, without pissing us off.

3:24 PM  
Blogger Mike said...

They don't owe the USA any allegiance. They exist to extract money and give it to their owners. that is their purpose. The rest is incidental.

Yet we're supposed to believe that the banks' health is instrumental to our economy.

Dumbya and Fauxbama are back-to-back Yeltsins.

Looks that way.

Images of foxes and hen houses spring to mind.

Yeah Obama is leading a brainstorming session to find a way to keep stealing, without pissing us off.


Horrendous.

8:24 PM  
Blogger Edwardo said...

It's the Mussolini business model at work, and mark my words. it's going to cause one helluva shitstorm going forward.

11:26 PM  
Blogger Mike said...

It's the Mussolini business model at work

Does that mean at least we'll get a public transportation system with trains that run on time?

7:54 AM  
Blogger Edwardo said...

As you have probably surmised, Mike, it's the Mussolini business plan minus enhanced functioning of public transport.

1:19 PM  
Blogger Mike said...

Let's hope we can avoid the Mussolini governmental plan.

1:25 PM  
Blogger Edwardo said...

And now you know how the bank's managed their very temporary profitability in January and February.

http://zerohedge.blogspot.com/2009/03/exclusive-aig-was-responsible-for-banks.html

10:17 PM  
Blogger Weaseldog said...

Yes Mike, the papers will always report that the trains run on time.

Just remember, Ignorance is Strength.

4:01 PM  

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