Successful Trading Tips with John Bougearel

While we can all share a consensus about reforms along the lines of shrinking, rationalizing, nationalizing,the powers that be last week (Geithner and Summers) confirmed their goals are to prop up and preserve the zombified financial system and get people spending again , to leave the banks privatized at taxpayer expense. Every policy is geared towards mistaken goals.

These guys are driving drunk on the credit they create out of thin air (the cost of which is passed directly onto you and me)and killing us with whatever alphabet soup vehicles they choose to get behind. These guys need behavior modification folks, we need them off the road. We need MADD on WS and Capitol Hill. They won’t do that without court-ordered push back. We need to take these matters to court, remove them from the offices they hold, and ban them from the Empire or whatever you want to call this crumbling edifice. Reform is not even remotely possible until these drunks get off the credit-creating highways. They are reckless human beings with no regard for the lives of others.

As Obama prepares to implement the part II of Paulson’s TARP I, his top economic advisor wants to restore a flawed economic model that brought America to its knees. Only in America, right?

The focus for TARP II Summers says has shifted from stabilizing the financial system to getting people to spend again.

“The focus isn’t going to be on the needs of financial institutions,” Summers said. “Of course we need to stabilize financial institutions — without a stable financial system the economy can’t work — but the priority has to be getting credit flowing again so that people can buy cars, so that people can get mortgages, so the economy will operate.

Summers simply doesn’t get it. We are drowning in debt and all Summers can think of doing is to drown us with even more debt. Summers is advocating a priority shift to get people repeating the same addictive behaviors that got them into this mess.

Out of what woodwork did Obama pick his team of advisors with such lunatic notions about what the economy needs. Where do these notions come from? Truly garbage in begets garbage out. Ahh, an epiphany, they simply create it out of thin air at the same time they are printing up all that money/debt. The policy and the actionable strategy go hand in hand, and serve each other well. One must have a suitable rationale for creating more indebtedness, no? And we as Americans being spoonfed such deep wisdom, being trusting souls that we are, are supposed to believe them because they are the so-called expert authorities. These same authorities got us into this mess. Proposing the same solutions that got us in this mess is only making matters much worse.

“Obama — backed by the conclusions of a broad range of economists — believes that China is manipulating its currency,” Geithner told Senators in written testimony. “The question is how and when to broach the subject in order to do more good than harm.” Obama’s team will “forge an integrated strategy on how best to achieve currency realignment in the current economic environment.”

Thank God for some push back on this statement of lunacy from Geithner.  Morgan Stanley’s Stephen Roach said allowing the yuan to strengthen would be “economic suicide” amid an economic slump. “I’ve never seen an economy in recession voluntarily raise their currency. It’s horrible advice.”

South Africa’s FInance Minister Trevor Manuel chipped in “Shouting from Washington to Beijing is not going to make a difference,”

John Bougearel

O-badbank-ma ought to take a cue from Meridith Whitney who opined. “Simply removing ‘toxic’ assets from bank balance sheets will not directly cause banks to increase lending,” Whitney wrote in a note today. The banks likely won’t participate in selling assets if the Obama administration wants to pay fair market value for the assets “as capital hits would be too dear,” Whitney said.

“We believe private capital will readily invest in businesses that make money and grow,” Whitney wrote. “However, the banks do not fit this description.” Meredith’s point here will have standing for the foreseeable future and possibly a decade or more.

“If a bank were to sell its ‘bad’ assets into a ‘bad bank,’ it would still be left with lower earnings power from higher losses on ‘good loans’ and the requirements to build reserves, lower earnings power from lower assets and a higher legacy expense structure, or both,” Whitney wrote.

Even stripped of their bad assets, what’s left of the bad banks will still be bad banks. Here is the new math: Bad Banks - Bad Assets = Bad Bank.  Washington needs to hire someone capable of such simple math as Meredith Whitney. She’d be a whiz on the Hill.

source:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aDhbCDKbK380