the US treasury will be nationalizing banks - when will they close the market?

[grapejelly]

http://www.bloomberg.com/apps/news?p...efer=worldwide

Oh, did I write "nationalizing" I meant "buying stock in", silly me :p

Oct. 9 (Bloomberg) -- The government is planning to buy stakes in a wide range of banks within weeks as the credit freeze increasingly threatens to tip the U.S. economy into a deep recession.


Treasury Secretary Henry Paulson and top aides are still considering options on how the purchases would work, including having the government acquire preferred stock, two officials informed of the matter said.


The move would be a shift in emphasis in Paulson's original intention for the $700 billion bailout package passed by Congress last week. While the Treasury still aims to buy troubled mortgage-backed securities from financial institutions, a direct capital injection would offer more immediate relief.


``The Treasury is no longer looking for one silver bullet,'' said Steve Bartlett, president of the Financial Services Roundtable, which represents 100 of the biggest firms in the industry. ``They have to proceed on all fronts.''


The Treasury aide named to run the office that will implement the rescue package, Neel Kashkari, is scheduled to speak Oct. 13 in Washington on progress in putting plans together.


$200 Billion
Bartlett said that buying into the banks would be ``a major piece of the puzzle'' and that an infusion of $200 billion would be ``plenty adequate'' to kick start the plan.

Interestingly, Russia already has nationalized banks and there is nothing left for them to do. They said they "injected" US$200 billion into their banks and stocks fell 20% and they closed the stock market.


Question: When will "they" announce the market is closing? And I am not kidding. Dead serious. There has never been a quicker more interventionist approach to a supposedly "Free market" nor of course, a more disastrous one.


I predict the market will be shut down by "regulatory authorities". Can't believe I am saying this.

[ASH]

Re: the US treasury will be nationalizing banks - when will they close the market?

I predict the market will be shut down by "regulatory authorities". Can't believe I am saying this.

Reminds me of EJ saying events will rapidly spiral out of control, and even the appearance that regulators and public officials have control will be lost.

By dropping so sharply following the coordinated rate cut, I think the markets are signalling they have lost faith that the regulators and public officials are on top of things. I haven't been around very long, but this sure looks like capitulation to me.

In short, I can believe you're saying this.

[grapejelly]

Re: the US treasury will be nationalizing banks - when will they close the market?

Reminds me of EJ saying events will rapidly spiral out of control, and even the appearance that regulators and public officials have control will be lost.

By dropping so sharply following the coordinated rate cut, I think the markets are signalling they have lost faith that the regulators and public officials are on top of things. I haven't been around very long, but this sure looks like capitulation to me.

In short, I can believe you're saying this.

Yes. The Russian example is quite illustrative. Once "they" "do" everything they can...and stocks still slide...they will turn to worse medicine than ever. And worse.

[Serge_Tomiko]

Re: the US treasury will be nationalizing banks - when will they close the market?

I would not be surprised if trading is suspended on the NYSE tomorrow. Padlocked is another story.

[Supercilious]

Re: the US treasury will be nationalizing banks - when will they close the market?

http://www.bloomberg.com/apps/news?p...efer=worldwide

Oh, did I write "nationalizing" I meant "buying stock in", silly me :p

I guess they will use any excuse to push some more treasuries in the global financial system. I can't find any reliable, close to real time data, (they are dumping paper from the "hellecopter" to fast to be counted), but I would guess they have about 2-3 big bags (trillion) left to dump, plus they have all the Fannie & Freddie vaults as a buffer full of surrogate treasury paper.

Interestingly, Russia already has nationalized banks and there is nothing left for them to do. They said they "injected" US$200 billion into their banks and stocks fell 20% and they closed the stock market.

Yep, but here is different. IMHO in Russia they are nationalizing banks as a measure of last resort. Here they are creating the artificial shocks and make the banks the treasuries dumping places of last resort.

Question: When will "they" announce the market is closing? And I am not kidding. Dead serious. There has never been a quicker more interventionist approach to a supposedly "Free market" nor of course, a more disastrous one.

There is a paradigm shift. The old model with commercial-banks, investment-banks and brokerages is dead. They were all mixed together in a soup so the best pieces of meat vegetables and potatoes could be scouped/extracted and transported into the new toys (private equity funds of funds) without anybody notcing.

Yes, the soup in the bowl has decreased in level with only about 30% but that 30%that have gone, were the high nutritional value solid ingredients (meat, potatoes- hard cash). What is left is just a diluted "vegetable tea" mixed with a watery "beef/bull bullion" for flavor.

The new model is made of:
-private equity funds of funds -as big commercial banks
-leveraged low-tier hedge funds- as brokerages
-virtual elements of notional structured derivatives (such as ETN's, SIV's of CDS, etc )- as investment banks
-private/unregulated OTC "dark markets"- as open and transparent markets.

IMHO the small investor (anybody below QIB level) will be limited to buy into open traded hedge funds (the new brokerages for J6P) Try to go on your own and you buy silver at $20/oz or GM shares at $20 ea, or Lehman Opta ETN's

I would be like investing on the market using e-Trade as brokerage but without being able to choose your stocks. this new type of "e-trade" will become mandatory wealth management advisor. Your only resort would be to change the "brokerage"

I predict the market will be shut down by "regulatory authorities". Can't believe I am saying this.

They cannot shut down the unregulated OTC markets, and since the "dark markets" feed of the regulated markets, any shut down of regulated markets would be just scare tactics.

The cure for this con-job "paradigm shift" is simple: separate completely the 144A unregulated "dark markets" from th open regulated markets. Just make it so no QIB can operate with both types of securities and on both markets (this was the reason to separate investment banks form commercial banks in the Glass Steagall Act)

Of course, in order to do that we must first get rid of the Fed ... completely and permanently (with a constitutional amendment if possible)

[godraz]

Re: the US treasury will be nationalizing banks - when will they close the market?

Reminds me of EJ saying events will rapidly spiral out of control, and even the appearance that regulators and public officials have control will be lost.

The second biggest lie of all is the one that presumed the "appearance" of *CONTROL* had anything to do with actually *being in control*

It does appear that this naked lie is soon to pay respect to the first biggest lie: We just do not have the control -- the control is the lie!

But that won't stop those who were supposedly in control from trying to control the uncontrollable.

A grand and tragic human history lesson is upon us. The wreckage of which one can only hope for a mildly disastrous outcome rather than any of the worst ones that seem to fatefully beckon. :eek:

"[T]here is no otherness to the insanity that threatens us now. The insanity is what we call normal, and it is all our own." -- Verlyn Klinkenborg, NYTimes 4.11.07

"It was your skill and your science
That led you astray.
And you thought to yourself,
I am, and there is none but me."
Isaiah 47:10

[ocelotl]

Re: the US treasury will be nationalizing banks - when will they close the market?

Remember that in 1982 Mexican Crisis, Mexico did nationalize the banks. Even when exchange rate was set by decree, there was no control of it, or of any monetary event. It was a rebuilding of Mexican economic system in 1987 that brought some stability to Mexican system.

Which reminds me a previous post on bank nationalization...

"We have already been ransacked. Mexico is not finished. They will not ransack us again!"

José López Portillo y Pacheco, September 1st, 1982.