So yes, they'll get bailed out, even if that means wiping out their shareholders. That will stop the banks from having to mark to market their CDO cancer for another few weeks or months.
But eventually, as sure as night turns into day, some of the banks will have a come-to-jesus moment (auditors anyone? SEC anyone? Sarbanes Oxley anyone?), and they will fail or be taken over for a song. And the most toxic of the toxic lenders - Countrywide, IndyMac, WaMu and First Fed - will be amongst the first. (I'm short WaMu and should be short a lot more of these houses of mortgage fraud).
Here's Cramer's highlights. Love him or hate him, he knows what's going on out there, and he's using his platform to try to influence the bail-out-players now (like he did with his Fed rant).
Bottom line - watch for the Saudis, Kuwaitis and hell any old Arab with coin to come riding in on a pale horse to bail out these turds. ABK, MBI Need -- and Will Find -- Capital
So let's go find some bailout money for the monolines, for the Ambacs and the MBIAs. Let's just get it. Let's hold hands and make sure these don't collapse because they could take us with them.
That's the tenor right now of the banks and brokers as these two institutions threaten to bring down the whole CDO house of cards.
Yet, still, they are in the "too big to fail" category. If you capitalize these companies, then you can maintain the AAA ratings on the higher CDO tranches and not have to take the hit to capital that would force banks to collapse.
These are the epicenter of ground zero. If you had to save one or two institutions to rescue the system, these two are actually more important than WaMu or Countrywide.
That's saying something.
December 24, 2007
Jim Cramer says if bond insurers MBIA and Ambac aren't bailed out, the banks will fail. Quick - someone call the Arabs!
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21 comments:
Jim might want to read this article
http://business.theage.com.au/americans-walk-from-loans/20071223-1iqr.html?ref=patrick.net
Wait this is the USA we are too big, too smart, we are AMERICAN'S damn it..... this does not happen here!
Why do you assume it will be Arabs on that white horse? China and Japan have far more USD holdings at risk, and they desperately need to prop up our consumption spending so their export economies don't tank.
IMO these initial rescue deals are trial balloons to test if the pols in DC and Joe Sixpack are ready for the main attraction. We screamed bloody murder when the Chinese tried to buy controlling interest in an obscure oil company, and Dubai tried to buy management of a few ports. When the SHTF, our banking system will need 500X that level of "investment" to stay solvent.
Foreigners will have controlling interest in several Wall Street banks before this is over. Hopefully the days of big Wall St bonuses is over. I don't think the Chinese and Arabs will be dishing out million dollar bonuses to 25 year-olds.
What's the point of bailing MBIA et al?
Even if made solvent today they can't cover the 000's of billions of future ticking bombs.
Not just mortgage bombs but all the muni junk they insured will blow up too when the SHTF and the munis implode.
what sort of terms are the SWFs getting from the financial sector for their cash infusions? are they getting rates comparable to junk?
anyone know of a good summary w/ the recipients, the SWF, the amount, and the terms?
and i totally agree w/ bank dick- these SWFs are just easing into it. they'll go for less stressed sectors like utils after they get the okay from Wall Street, er i mean Congress.
Whoever buys these insurers is basically buying the losing side of a pile of bets that will be coming due for years to come. They have no way to figure out the total losses till they get to the other end of a very long tunnel.
Endless capital infusions with no return - sounds like a job for a government program rather than private capital. If I were running foreign money, I would look for attractive pieces of the debris from Wall St. IBs and banks and let the US gov get stuck with the mortgage insurers.
bank dick said...
‘Why do you assume it will be Arabs on that white horse? China and Japan have far more USD holdings at risk, and they desperately need to prop up our consumption spending so their export economies don't tank.’
Umm, because the Chinese and Japanese are smart enough not to buy loans that won’t ever get paid off by its borrowers.
The little success these Asian peoples have, was created with discipline and hard work
From sweat shops in china to military style work ethic in Japan.
Arab sheiks on the other hand, have been very fortunate to be squatting on real estate that happened to have black liquid gold mines underneath.
They know the party wont last forever (with alternative energy seeds being planted everywhere).
In an attempt to hold on to the desert palaces and literally the life of kings.
They are desperately looking to diversify, and are simply not smart enough to understand what they’re buying.
Nature just does not allow a free ride to anyone, the rich men with diapers on their heads may end up holding the bag in the end.
To the oil rich families its easy come easy go.
On fox news a few days ago resident tool Mike Norman insisted China and Abu Dhabi are merely "investing" in these companies. Expect more "investing" like this in the future as banks and bond insurers become more desperate for money and one day they going to wake up and and they will have sold 51% of the company to foreigners.
BUT IVE BEEN HOLDING QUALITY BANK SHARES FOR MORE THAN TEN YEARS THRU MERGERS,AND BUY OUTS AND IM AGAIN 10 PERCENT DOWN., NOT INCLUSING DIVIDENDS...
I was trying to give a gift of camel riding lessons and desert care of goats and lambs (sure to be a bull market in '08)to a friend but could not find a camel store in the yellow pages. Any suggestions? I looked under "camel" 'arab' 'middle eastern' 'terrorist' 'mortal enemy' 'douchebag' but still no luck?
Also, am looking for a how-to book on that snappy Arab head dress thing. The rappers are missing out. Headscarves will be in in '08.
Thank You.
Anonymous said...
Foreigners will have controlling interest in several Wall Street banks before this is over
Hey Anon, Wall Street has always been owned by foreigners. Who do you think the British are, your cousin? The British are the most dangerous foreigner to the well being of the United States.
they're going to buy every asset they can knowing their oil is running out
Uhm since when do we listen to Cramer? Funny how when Cramer agrees with you, he is a sage. When he disagrees with you he is a Wall St shill.
You have no credibility anymore Keith.
That is the game plan.The fact that Ambac ,and others can't insure the crooks was well known years ago by insiders.Now the giveaway starts in earnest.
Surely most have heard or read the stories of infrastructure being sold to foreign banks,and countries.ie;Freeways in california are being prepped for toll roads,the Panama Canal is China's now ,and there is this thing called deep storage Gold(or any other resource) where the laws,and regulation are non existent to foreign countries.
Will it be enouph? Hell no ,because the bottom will fall out of commodities at some point in the future ,and china will eat their own investments,while Wall Street buys it all back for pennies on the dollar,or repos it,or we start a war with them ,and do what we did in WW2-nationalize the resource back into the US corporate structure.Works well whn you have a huge military.
because the bottom will fall out of commodities at some point in the future
That's where you are wrong. Would people rather own commodities or paper currency that is being inflated? Look at Zimbabwe when you think that commodities are riskier than currencies. You could have $1 million in the bank and it would be worth a roll of toilet paper in a matter of months. I would rather diversify to several foreign bonds. History has shown that when countries go too deep into debt, they must inflate their way out. There's no other way around it.
It doesn't matter how much money, or from whom, gets thrown at these people. As long as housing prices continue to fall, which they will, there is no way out out of this. Throw money at the lenders and bond insurers so mortages can be written today, but when those homes are worth 15% less in a few months we are right back to the mess we have right now.
At this point, any bailout activity whatsoever (and there has been a lot of it at the institution and government level) will either deepen or lengthen the collapse. Even if an institution gets a bailout and avoids an otherwise big hit to its bottom line, the amount of money that will make it possible will just shift and AMPLIFY the problem. The amplification will be enacted since:
1. Like any cost of credit, such a transfer will be cost, PLUS.
2. The near immediacy of the bailout will inform the miscreants in the institution that they are now bullet proof with respect to their latest scam. They will immediately re-double their efforts to enlarge that line of business.
I'm thinking that in order to achieve the full Depression needed to finally settle the accounts of the long-deferred crash of the 1980s and short deferral of the one of the early 2000s, we need to push liquidation. Large-sector bailing will assist to that end. So, in a sick way, I say: YES TO BAILOUTS. We need to bankrupt millions of people, thousands of corporations, and hundreds of local governments. Bailouts will achieve that.
I'm also saying YES since obviously I have no control of, or influence with, all levels of what's supposed to be MY government. I'm obviously just a serf compared to them. Well, the reality is that I'm an ARMED serf. Since they're intent on creating a society where the gun will become a significant tool, and I'm well armed, then I basically GIVE UP on them, and must now prepare to live by the law of the gun. The alternative is just to turn myself in to the local FBI office and arrange my prison cell in advance. At least under the law of the gun, I have a chance ... but under the law of the elites, I have NO CHANCE.
Well we could ask the Israelis to give us back our $30 billion for the weapons we gave them. That could bail us out. But they won't do that will they Our so called Aly is an aly in name only. I guess we'll have to call the Arabs and the Japanese and Chinese then.
LIBERTYFORUM.ORG HAS AN ARTICLE TODAY ABOUT HOUSEHOLD PRODUCTION CAPABILITIES FOR/OF 3 CENTS A GALLON.AUTO FUEL............ PLEASE SEND TO THE CHINA GOVT
Eric Dinallo, the NY Superintendent of Insurance, who was formerly on Spitzer's attack team when he was AG, until he went through the revolving door to work at Morgan Stanley as a compliance MD, is now trying strong arm the commercial banks to prop up the Bond Insurers??? What a farce! It will never happen and the markets will crash because of his misguided headline-grabbing antics!
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