Friday, June 26, 2009

Warrants of the Federal Kind


WASHINGTON (MarketWatch) -- The Treasury Department set out a roadmap on Friday on how it intends to sell its stakes in banks held in warrants. Under the government's $700 billion bank bailout, when a bank repays the government it is allowed to repurchase the warrants at a fair market price. The plan announced Friday sets out procedures for reaching an agreement on the price involving independent appraisers. If the banks choose not to repurchase the warrants, Treasury said that it will sell the warrants through an auction process over the next few months.
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four months of a rising stock market are thus explained. As soon as they dump this crap we can expect the mother of all selloffs.

BTW: "Warrants of the Federal Kind" because "Warrants of the California Kind" are coming soon.

24 comments:

wagga said...

Someones gotta beat Sweet Cashback to a triple First!

Northern Renter said...

Curse you, Wagga! I haven't been murst in a while.

NR

PS Dawg, finally you put up an image of a hot babe. Hubba hubba!

Rob Dawg said...

Hubba Hubba?

Curse you, you know my dietary restrictions. No sweet cash back baby back ribs for me.

Lou Minatti said...

we can expect the mother of all selloffs.

Yep, I am expecting this. I missed the huge juicy March-June profits. But I am not smart like the traders on Wall Street. Then again, I haven't lost a single dime in this entire clusterfwak.

At least not yet.

W.C. Varones said...

Check out the Rolling Stone article on Goldman Sachs.

Sun said...

A lot of people on this blog seem to be very well versed in macro/econ/markets, so your take on the market is quite interesting. My only objection to some of the comments concerning irrationally in the market is the big I; i.e. anticipated Inflation.

I believe the Fed has been trying desperately to ramp up inflation using every trick in the book (including the latest stint of the Fed buying US T-bonds). The collapse in the housing market has created this incredible mudslide that even uncle Sam can’t seem to overcome. Nonetheless, I don’t expect they will stop until they are successful, even if that means sending out freshly printed $100(s) to every man women and child. Guess we will see, I had thought that was a factor in the market upswing. Yes, in the short run we could see a huge pullback.

Rob Dawg said...

Sun,
That's the general idea. The Fed is trying to monetize a massive evaporation of asset wealth AND reduction in the velocity of money. Absolute disaster in the making. The Fed cannot pull back all the virtual printing as easily as they dispersed it. For now asset devaluation is adsorbing everything the Fed churns out but by next Fall or Q1 '10 that decline will stop and an uptick in velocity is sure to appear. That's the Fed trap. This is why the smart money is in the short end of every market. They want to be able to move fast when the switch from deflation to inflation gets thrown.

Bill in NC said...

Well, the Fed can sop up liquidity, but there has to be the political will to do so.

Politicians love inflation...the debt is greatly reduced in real terms without explicitly raising taxes, and they get to blame someone else.

Oh, and why you can't live in Kalifornia even on six figures a year:

http://bit.ly/zBWWG

Ashley said...

Michael Jackson was a homosexual pedophile.

sm_landlord said...

@Bill in NC: Tell me about the taxes here. :-( It's absolutely insane, and I cannot see any visible evidence of where all of the tax money is going, other than the occasional freeway widening project. I suspect that there is a secret power generating station somewhere in the state that burns dollar bills for fuel.

@Rob,
I remain concerned that the Fed will do something drastic when it comes time to drain money, and make an even worse mess of things than they already have.

But I don't understand why one would want to be short everything when we hit that inflection point. Inflation does not necessarily mean that the stock market will crash, for example. At least not right away. But if the Fed jacks interest rates up to Volker levels, of course the market will collapse at that point.

wagga said...

Anybody here remember Carter's "Misery Index"?

IIRC it was the sum of prime + unemployment + inflation.

Orange10 said...

The real unemployment/underemployment rate in this country is probably rapidly approaching 1 in 3 people.

Boomers to Younger Generations -- Drop Dead!!

Likkered Up said...

The Misery Index was inflation+unemployment. From Wiki there was also the Barro Misery Index, which included some other things.

Jean ValJean said...

Add one more strange and untimely death:
Billy Mays Found Deat At Home.

edgar said...

The banks raise money from the fedres & the fedgub then the fedgub raises cash from the banks, round and round:

http://jessescrossroadscafe.blogspot.com/2009/06/tax-revenues-slump-as-us-budget-deficit.html

wagga said...

Billy Mays is the exact reason God gave us MUTE buttons on our remotes.

Yeah, Nancy Grace, too.

con said...

Hello all -- what does the term VOD mean as used by Casey in this quote?

"I talk to Bill about Muncy loan and tell him to go for stated/stated since I’m having problems doing a VOD of my wells fargo account."

Santa Flipper Clause said...

Ho Ho Ho - It's Santa Flipper Clause

@con -- Santa thinks VOD is verification of deposits

Santa F. Clause

Ashley said...

The whole Serin family should be exiled to Uzbekistan.

Let that 3rd-world crap-hole deal with them.

Jean ValJean said...

Madoff Sentenced to full 150 years

Judge Denny Chin has sentenced Bernard L. Madoff to 150 years in prison. Chin gave Madoff the maximum of 20 years on several of the counts, which will be served consecutively. For a brief moment, the courtroom erupted with applause.

Property Flopper said...

Wagga - Nancy Grace is the reason remotes have Off buttons and/or allow you to change the chanel. She is annoying even when muted.

Property Flopper said...

CA Senate just passed the budget. Let's see if Arnie really will veto it. He has threatened to, but if he does, we're looking at IOU's going out...

H Simpson said...

From what I have been reading and seeing on tv, no bank is going to bid on that trash, and the banks do not want to discount. So it remains to be seen if the scam works. Maybe the Fed ought hire Bernie Madhoff. I hear he has lots of free time on his hands..

Of bigger concern is the the fact the banks in China are about to auger in.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5675198/Chinas-banks-are-an-accident-waiting-to-happen-to-every-one-of-us.html

This could be the straw that does the world in and makes 1929 look like good times.


Now for some important news.
Koi (thats a kind of fish) poachers go high tech.

http://www.theregister.co.uk/2009/06/29/carp_rustlers/

No word if they can detect koi ponds from pools turned swamps.

h.

Jean ValJean said...

That's easy. They just look for ponds in full view of the sun.

Everyone knows that the sun will magically create solar algae.