by ReverseEngineer » Mon 23 Feb 2009, 05:44:29
40% is likely chosen as the publicly disseminated number in order to "reassure" the market that the Goobermint will not take a controlling interest in the banks. Neglecting the fact that a 40% share is by far a controlling interest in either Citibank or BofA, since no other investor owns anywhere near such a large piece of the pie.
In order to further prop up the banks before true nationalization is forced, I would bet the thinking is that Goobermint purchase of 40% would keep the banks shares from slipping any further, but even if true this doesn't stop the hemorrhagging of funds on the balance sheet. The fundamental fact of life is that these are money losing businesses in a rapidly deflating economy. The fact is that all the assets on their books, from commercial loans to stocks and municipal bonds are ALL worthless, or at least only worth possibly 20% of what they were once valued at. So WHEN (not if) said banks get nationalized, for at least as long as this monetary system is kept floating we get left holding the bag on trillions of dollars in bad investments that are ON the books, and that doesn't even account for CDS and CDO contracts that are off balance sheet. A monetary black hole that never can be paid off of course.
What I find astounding and not the least bit annoying is the refrain coming from the Obama spokesmen that they are "committed to maintaining a PRIVATE banking system" and even if nationalized will return the banks to Private hands as quickly as possible. Hello. The whole REASON we have this problem is because the banking system is held in private hands and not in the hands of who truly should own it, the people of the country using it, duh. That a tiny group of Elite should own and skim profit off an entire NATION is absurd, anti-democratic and utterly poisonous to the country owned by such banksters. If there is one reform that Obama MUST make if he is to truly CHANGE America, it is to do what Andrew Jackson did and KILL THE BANK. However, at least so far Obama appears to be as owned by the banksters as his predecessor Georgie Porgie was.
Regardless of this, Nationalization will take place here simply because these banks cannot pay their bills and they are swamped with toxic debt, which the Banksters want no part of. They WANT to be left with whatever good assets there are to run their private business on the side and skim off those people while the rest of us sink in the toxic mess they left behind. If the so called "good bank" is created and left private, this would speak to the utter corruption of the Obama administration, it must not be allowed to occur. I am hopeful that the demonstrations will prevent it, we will see on that one.
In the short term here, as I said this week should be eventful, we will see if it passes muster among the group members here asa true "bloodbath". Its hard to get agreement on this here, these days entire countries can go bankrupt and its perceived as just business as usual, not a bloodbath. It seemingly must hit the members here over the head, or more precisely in their own bank accounts for it to be considered a bloodbath. A bank holiday or the ATM system going down appears to be the only thing members here would accept as a bloodbath. That I *think* is still a ways off, at least I hope so since it would probably put a crimp on my getting back to the Last Great Frontier on Thursday. Time will tell though, and meanwhile I would definitely bet the market short this week. Should be Party Time for Da Bears.
Reverse Engineer
