Posted on 01/18/2009 7:49:41 AM PST by TigerLikesRooster
The rescue has failed: it's time to fess up, reboot and start again
Last Updated: 9:40AM GMT 18 Jan 2009
Comments 16 | Comment on this article
It's official. Government policy isn't working. As bank shares collapse amid renewed carnage on global markets, we now know the worst isn't over.
This crisis just entered a whole new phase. Gordon Brown's "rescue plan" lies in tatters. Perhaps now the Prime Minister – and his counterparts across the Western world – will do what needs to be done.
Regular readers know what's coming next. I've been writing the same thing for months. But I make no apologies – for this ghastly episode will only end once senior bank executives are forced, under threat of custodial sentence, to FULLY DISCLOSE to one another and the authorities, on the basis of all available evidence, the extent of their sub-prime liabilities.
I accept that's not easy. The toxic debts have been sliced, diced and securitised – then sold on many times. Millions of trades must be unravelled, often across international borders.
But this onerous task must be done. Then the losses must be written-off. Only after such purging will the banks begin to rebuild mutual trust – allowing the interbank market to reboot, so restoring the credit lines that are so vital to the broader economy. And all this needs to happen BEFORE more public money is spent recapitalising our banking sector.
(Excerpt) Read more at telegraph.co.uk ...
This is true.
Ping!
actually it has started working. it just takes time for the markets to adjust.
Can you say “The price of gold is now 12,000 quatloos per ounce.”
I knew you could...
The Democrats are about to go on a trillion dollar shopping spree for support of the DNC. Ain’t no way they’re giving that up.
LOL
“The rescue has failed: it’s time to fess up, reboot and start again”
***********************
In my opinion, it has NOT failed—it only needs be renamed as to its actual intent, the same old intention that has been picking up steam since 1848....
Ref
Red From The Start...
http://tinyurl.com/2dg9y2
That is very true.
They (banks) all demanded a bailout ‘or else’, and yet when the government came to the rescue, they sat on the funds to self preserve. Ignoring the very reason government bailed them out in the first place.
And Americans KNEW this was going to happen, did not trust the banks and corporations and were ignored.
Thanks Bush, Congress and Senate. Every last one of you that voted for this nightmare and sent me your lame a&& excuses in an email on why you did.
...my sense is that the banks could all fail...I’ve seen it happen to me....it only took 5 days:
Sunday....the newspaper paper published a story that the bank had unsecured loans.
Monday....people waited at the front door for the bank to open to get their money.
Tuesday....the line was around the block
Wednesday....they sent for an armoured car full of cash from the Fed to try and stem the flow.
Thursday....fist fights broke out in the lobby of the bank.
Friday....the bank did not open.
Moral of the story:NO BANK CAN TAKE A RUN
After throwing trillions of taxpayer dollars at banks to try to save them, the government would then shut down the insolvent banks. Now wouldn't that just demonstrate central planning foolishness in spades?
One problem. WE DON’T HAVE ANY MONEY LEFT!
Cheers!
Forgot the / sarcasm tag?
Can you offer some proof it has started working?
Yep—It’s working so great C is now at $3 bucks a share, BOA is at $7 and just had to go back to the taxpayer for another $20+ billion AND guarantees on over $120 billion. And they cut their div to 1 cent. /rollseyes
They key to whether it is working is not the price of banking stocks or the stock market in general. The key is are banks lending. Once banks start lending, real estate prices will stablizes, homes will start being built again, and cars will start selling. And banks are starting to ease credit and make it available to more and more people. Banks were not looking at people with credit score below 720 a few weeks back, now some are looking at people with 680 or better. We still have months to go before we see positive growth, but we are headed in the right direction.
The reason for the stock tankage is that they need more government money to keep them afloat due to rising bad loans (Citi lost over $8 billion last quarter and BAC/MER combined lost over $17 billion). The two in this case are directly correlated. I have yet to see any signs of credit expansion. Even if it did start to expand slightly in several months—have you seen the looming Option Arm & Alt A reset chart? Those are going to default at a much higher rate than the ‘subprime’ as most people’s payment goes up by 50-100% even if the rate stays the same on reset.
No, banks are not picking up their lending. Where are you getting that idea from??? The banks AREN’T lending more. I’ll need some definitive proof if I’m going to believe your seemingly erroneous assertion.
http://www.federalreserve.gov/releases/h8/Current/
http://www.turkishweekly.net/news/63368/us-bank-crisis-deepens-as-ecb-rate-cut-expected.html
“The large banks in the U.S. are not lending, and they’re desperate to conserve capital,” said Dan Alpert at Westwood Capital in New York. “Banks only remain going concerns because the federal government is topping up their equity.”
http://seekingalpha.com/article/113237-banks-lending-and-the-economy
“Right now, the commercial banks are not lending, and there doesn’t seem to be much reason to believe that they will pick up their lending any time soon. “
http://www.euractiv.com/en/BreakingNews?GUID=TRE50220O&_xsl=Article
“The BBC and The Times newspaper both reported on Saturday that the government was considering a second bailout because measures taken so far had failed to get banks lending again.”
http://www.freerepublic.com/perl/post
“S&P: Bank lending to slow “dramatically” in 2009 in Latin America”
I could go on for weeks posting these articles.
Signs of credit market thaw begin to emerge
Companies are selling bonds at a rate not seen since last
updated 1:33 p.m. ET, Fri., Jan. 16, 2009
NEW YORK - Credit markets are beginning to thaw after months of a deep freeze.
In a promising turn that could bolster the economy, companies are selling bonds at a pace not seen since last spring. At the same time, companies are finding it easier to issue commercial paper, the short-term loans necessary for quick access to cash.
Global sales of new corporate debt jumped to $82 billion last week, the highest since $103 billion last May and nearly double the level seen right before the credit crisis intensified in September, according to data-tracker Dealogic.
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