Monday, September 29, 2008

Who is remaking the US financial system?

Dismemberment and the witless protection program

FIVE investment banks-- GONZO? GONZO!

Bear Stearns was dismembered and given over to JPMorganChaseBear (not a real name except perhaps for some Native American and not long enough to be Hawaiian).

Merrill Lynch threatened probably by AIG's coming troubles and the direct fallout that it might suffer from that and its exposure, JUMPED into the arms of LynchBoACouuntrywide (not a real name - or strategy).

Lehman is gone and its demise sent new ripples though markets and now BOND HOLDERS fear risk for the first time. That smacked the credit derivatives market and hard.

Goldman and Morgen Stanley
Goldman and Morgan Stanley SURVIVE but in new forms under the government's new WITLESS PROTECTION PROGRAM, going undercover as commercial banks. Will they stay that way when this crisis blows over? If so why didn't Goldman go after any of the treasure trove of bank deposits that have been 'on sale'? Inquiring minds want to know.

Behind the scenes...
As AIG was being dealt with, why was the head of Goldman the only private sector guy in the room? Oh he was not representing Goldman's interest? He was representing the market. Right. Let's see former Goldman Guy heads treasury. Former Goldman Guy at NY Fed's open market desk. Former Goldman guy heads what-used-to-be Wachovia. Never mind. No pattern here.

So our large stand-alone investment banks, merchant banks, are gone...

As commercial banks fail the 'government' is arranging marriages. BofA got Countrywide. JPMorganChaseBearMOOO now has Wah!-MOOoo. Citibank gets 'walk-over-ya' (CitiWachovia?). But why not Wells-Fargo? Who decides? Oh these are auctions done in secret with the FDIC..ohhh I understand.

Wasn't Wachovia supposed to have been a potential suitor for Morgan Stanley? What would that have been: the financial zombie club? or StanleyWalkOverMe?

How could that have been considered? There is more misdirection out there than at a convention of magicians.

We can see why so many are angry. Now there is some concern that because the Fed's are taking warrants in private firms, that alone means they have been anointed and are 'too something' to fail. Isn't that dangerous?

By the time the democrats gain office, even if they win the White House, the financial sector will already have been re-configured. It isn't Iraq but is the same formula. Declare a crisis and something must be done in such a hurry opposition melts away and cannot form a significant counter to your plan. Maybe they modify it but they can't stop it. Once again a brilliant move by the administration to get what it wanted. Makes you wonder though doesn't it? Governing by means of crisis. Is that the new keystone of democracy?

1 comment:


The financial system needs to be rebuilt not remade.