Great rant from Fleckenstein on the Paulson/Banker "Super SIV" house of cards
No need to beat around the bush. The banks (and US Treasury) are trying to create this SIV super-fund in order to avoid or delay a significant "mark to market" of the mortgage cancer they have on their books. Period. The losses are real, the cancer is spreading, and they're doing all they can to keep the truth from their shareholders and the financial community.
Even Alan Greenspan and Warren Buffet think this whole thing stinks. And it does. To high heaven.
Here's Fleck. And get ready for the crash when this whole deceptive plan caves in, and even the bankers rush to the exits.
This week I have another entity of entitlement to add to the list: "SIV Mae" (SIV = structured investment vehicle). That seems a fitting description of the super-duper bailout put together by the Goldman Sachs (GS, news, msgs) subsidiary known as the U.S. Treasury Department. (Goldman itself doesn't appear to be participating in the bailout, which is interesting.)
When I first heard about this, I was outraged, disgusted and slightly depressed. I thought, here we go, another bailout.
Barney Frank and friends are trying to bail out the homeowners. Wall Street, the Treasury Department and the Bank of England appear determined to do whatever it takes so that we have absolutely no price discovery on any mortgage-related assets that may have gone bad -- thereby giving a pass to the folks who've made obscene amounts of money conceiving and marketing them.
To quote a knowledgeable friend of a friend: "How anyone can look at the creation of this fund as anything other than a cynical way of moving an existing pile of crap from one place to another is beyond me. The fact that no one seems to think there is anything wrong with it (and I include the regulators) tells you just how 'fixed' the markets' problems are.
"The level of terror that must exist in the boardrooms of the banks and regulators that peered into Pandora's box this summer must be extreme."