New Bailout Plan: Buy Toxic Bank Stocks
By Grant Hall
TREASURY WILL NOT BUY JUNK BANK DEBT
Treasury Secretary, Henry Paulson has scrapped the plan he sold to your representatives. He changed his mind from buying illiquid, bad, mortgage debt, (Graham, 2008) and has opted to attempt to prop up the ailing financial industry through the purchase of stock in financial institutions.
The shift occurred within weeks after Paulson proposed the emergency plan to save the financial system. And, while his credibility is suffering, (Christie and Matthew, 2008) the money is in the bank, so to speak. All of this was done within weeks after he claimed financial conditions would worsen-if he were not given 700 billion dollars, a figure that has ballooned, (CNBC, 2008) into the trillions. All of this was accomplished as Paulson was given no oversight and apparent immunity from any future legal charges.
FROM JUNK BONDS TO JUNK STOCKS
What about the shift from the original plan-the one that was the premise for the whole bailout affair? Remember the one about buying bonds (debt) carried on the books of banks that were not marketable? His new idea to buy stock-preferred or otherwise, is not much better-if at all, for the biggest of the big are falling like stones from the sky. Citicorp ( C ) common stock is selling for under four dollars a share. Bank of America ( BAC) is near Ten. Both are at decade plus lows, just like the S&P 500, the most widely held security (SPY) of all.
So, you see what the market thinks of the Paulson plan.
This writer proclaimed the foolishness of it all, (Hall, 2008) and pleaded for laissez faire in this bear market. Markets always do what they have to do-eventually and no entity-not even government can stop the primary trend.
PAULSON GIVEN POWER OF ATTORNEY OF AMERICA
What about the “no oversight” provision of this so-called bailout plan? Since when does government appointed “officials” have no accountability? Why on earth would anyone endorse a no oversight provision in the most important and most expensive economic stimulus plan in the history of the world? Ask your representatives. They misrepresented you as unofficial polls recorded broad dissatisfaction from the public on this so-called bailout fiasco.
Why did Congress not insist on a viable business plan complete with an empirical study with confidence levels of probable success from Paulson and his crew? Does Congress not understand the importance of a business plan in order to establish a probability of success? Why were the American people not allowed to vote on the biggest, most important, most expensive, economic plan in the history of western civilization?
Perhaps it was all according to a plan implemented by only a few at the expense of many-and many more to come.
Think this type of “management” of “venture capital” would fly in the real world of private business without repercussions in the form of fraud charges and civil lawsuits and perhaps criminal charges? No. Then, why, ladies and gentlemen are you letting a non-elected government official get away with the blatant misuse of your “venture capital” that was obtained through deception and outright fraud-in the opinion of this experienced, investor-writer?
Welcome to the new Amerika.
1.Australasian Investment Review, Markets Hammered as Bailout Fails, www.ArticlesBase.com, September 30, 2008
2.Break The Bailout, 2008, www.Bailout.com
3.Christie, Rebecca and Benjamin, Matthew, Paulson Credibility Takes Hit With Rescue-Plan Shift (Update2), November 13, 2008, www.Bloomberg.com
4.CNBC, Financial Crisis Tab Already in the Trillions, November 17, 2008, www.CNBC.com
5.Daily Graphs Online, 2008, www.DailyGraphs.com
6.Ellis, David and Lubby, Tami, Problem Bank List Keeps Growing, www.CNN.com, 2008
7.Graham, Jed, In Major Reversal, Treasury Won’t Buy Bad Mortgage Debt, Investors Business Daily, November 13, 2008
8.Hall, Grant, Bailout: Power Ruse in Disguise, October 30, 2008, www.PrivacyCrisis.com and www.RepublicBroadcasting.org
9.Hall, Grant, Privacy Crisis: Identity Theft Prevention Plan and Guide to Anonymous Living, James Clark King, LLC, 2006, www.PrivacyCrisis.com
10.Loeb, Gerald, Your Battle for Investment Survival, Wiley, 2007
11.Moyer, Elizabeth, So Far, Washington is on the Hook for $5 Trillion, November 12, 2008, www.MSNBC.com
12.O’Neil, William J., How to Make Money in Stocks: A Winning System in Good Times or Bad, McGraw-Hill, 3rd Edition, 2002
Copyright: James Clark King, LLC, November 23, 2008