Paulson is a fool!

[Mega]

Why in Gods name say this when we are trying to get Libor running again?
http://www.signonsandiego.com/news/b...n-capital.html
Mike

[GRG55]

Re: Paulson is a fool!

Why in Gods name say this when we are trying to get Libor running again?
http://www.signonsandiego.com/news/b...n-capital.html
Mike

7:54 a.m. March 3, 2008


WASHINGTON – U.S. Treasury Secretary Henry Paulson Monday said that financial institutions should seize the opportunity to raise fresh capital if they think they need it, for both their own and the sake of the wider economy.

“The big message that I am giving to financial institutions is that if you think there is any likelihood that you are going to need capital, and it is available today, go get it,” Paulson said during a question and answer session after a speech to an economic policy conference.

Because he knows SWF bail-out funds for the banks may not be available to them tomorrow.

[Tulpen]

Re: Paulson is a fool!

Why in Gods name say this when we are trying to get Libor running again?
http://www.signonsandiego.com/news/b...n-capital.html
Mike

Good advice, we have a solvency crisis, and by the way not a liquidity crisis, so his comments make a lot of sense.

But first the banks need to get clean books without any skeletons, then investors will buy in.

[Mega]

Re: Paulson is a fool!

If they don't lend to each other there be NOTHING to buy into!
Mike

[Tulpen]

Re: Paulson is a fool!

If they don't lend to each other there be NOTHING to buy into!
Mike

Paulson's comment is not about lending but about infusing new capital. Banks could do this through public offerings. But as I said before, that only works if the books are clean. And so far banks are not willing to come 100% clean otherwise this mess would have been over already.

It seems that Bernanke is getting that now and I fear he won't be the stock market and banking kneepad boy for much longer.

A stock market crash would actually help here, by flushing out all the BS the financial system has right now we could start clean.

[FRED]

Re: Paulson is a fool!

Paulson's comment is not about lending but about infusing new capital. Banks could do this through public offerings. But as I said before, that only works if the books are clean. And so far banks are not willing to come 100% clean otherwise this mess would have been over already.

It seems that Bernanke is getting that now and I fear he won't be the stock market and banking kneepad boy for much longer.

A stock market crash would actually help here, by flushing out all the BS the financial system has right now we could start clean.

But isn't this exactly the bind that Japan found itself in? Insolvent banks were too big to fail without crushing the economy so they were maintained and along with it so was the uncertainty. Not the case in the US with lots of little S&L's in the 1980s. The market was allowed to clear but this time it appears the market can't be allowed to clear.