Farewell Capitalism – Oct. 21, 2008

With the recent nationalization of U.S. financial institutions, we’ve seen the death of capitalism. When will they have the funeral? It doesn’t take long for “rugged independence” to become pigs feeding at the public trough. See article below from WStreet Market Commentary, Oct 13 with my comments in italics. Read their wish list and see if you can spot any semblance of capitalism and responsibility for their actions.

What Banks Want

Henry Paulson summoned the best in the business to discuss what financial institutions feel is necessary to get the gears of commerce working again. Lloyd Blankfein (Goldman Sachs), John Mack (Morgan Stanley), Vikram Pandit (Citigroup), Jamie Dimon (JP Morgan), and Ken Lewis (Bank of America) laid out the steps needed to get the sector moving again.


> International coordination and cooperation by financial regulators
> Fair value accounting (Gerold comment – i.e. pretend their toxic garbage securities are worth something)
> Market manipulation (What happened to the “Free Market?” I don’t remember the funeral.)
> Inter-bank lending (Will only restart with REAL accounting.)
> President’s working group (President’s Plunge Protection Team – see Market Manipulation above)

Near Term:

> New public capital (compliments of the taxpayer, of course.)
> New private capital (dependent on “new public capital” above)
> “Open bank” assistance and depositor confidence
> Public purchases of MBS (taxpayers buy the bank’s toxic garbage)
> Public insurance for assets (taxpayers guarantee)
> Strengthening financial institutions (at taxpayer’s expense, of course)
> Foreclosure prevention (at taxpayer’s expense, of course)
> Enhance liquidity at the Federal Home Loan Banks (taxpayer funded, of course)
> Expansion of money market guarantee program (Ditto)

Intermediate Term:

> Stimulus plan for housing  (taxpayer funded, of course)
> Expansion of FDIC failure resolution procedures (Ditto)
> Office of insurance information
> Credit default swaps (Ditto)
> Systemic regulatory reform (an admission of guilt, perhaps?)

I notice there’s no Long Term. Strange.

Disclaimer: I’m not an investment advisor and these articles are for commentary only. For specific advice you should consult your own investment professional.

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About gerold

I have a bit of financial experience having invested in stocks in the 1960s & 70s, commodities in the 80s & commercial real estate in the 90s (I sold in 2005.) I'm back in stocks. I am appalled at our rapidly deteriorating global condition so I've written articles for family, friends & colleagues since 2007; warning them and doing my best to explain what's happening, what we can expect in the future and what you can do to prepare and mitigate the worst of the economic, social, political and nuclear fallout. As a public service in 2010 I decided to create a blog accessible to a larger number of people because I believe that knowledge not shared is wasted.
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