lorenzo63
Age quod Agis
..Permettimi una postilla... nn vanno d'accordo con chi gli impone regole ..
ed un tetto all' appetito..
Macroeconomia Crisi finanziaria e sviluppi
- Creatore Discussione METHOS
- Data di Inizio
ed un tetto all' appetito..
paologorgo
Chapter 11
paologorgo
Chapter 11
Updated: The Pelosi Graph -– Alright Already
Just because people apparently won't stop sending it to me unless I post it, here is House Speaker Nancy Pelosi's graph of accelerating job losses in the U.S.
It's pretty, and I like the shadowing effect, but it's worth reminding yourself that the thing is seriously flawed.
Now, I'm not dismissing the idea that this downturn is bad. It is. And I'm wearing out readers saying that I think the closest parallel is the Depression. But trying to make the point via inappropriate graphs just panders to those who think the Obama administration is engaged in economic fear-mongering.
[Update] Justin Fox at Time has done a useful comparison graph:
http://paul.kedrosky.com/archives/2009/02/09/the_pelosi_grap.html
Just because people apparently won't stop sending it to me unless I post it, here is House Speaker Nancy Pelosi's graph of accelerating job losses in the U.S.
It's pretty, and I like the shadowing effect, but it's worth reminding yourself that the thing is seriously flawed.
- The graph is in absolute terms, not percentage terms. In a growing workforce, that is misleading. Admittedly the percentage losses this time around are still higher than in the last two recessions, but it's not as bad as the above figures make it out.
- Measuring the current recession against the last two is highly selective. What's so special about 1990 and 2001? Matter of fact, both were fairly moderate recessions, certainly nothing like the 1982 recession, for example. Better yet, why not compare against all recessions, or a distribution of same?
Now, I'm not dismissing the idea that this downturn is bad. It is. And I'm wearing out readers saying that I think the closest parallel is the Depression. But trying to make the point via inappropriate graphs just panders to those who think the Obama administration is engaged in economic fear-mongering.
[Update] Justin Fox at Time has done a useful comparison graph:
http://paul.kedrosky.com/archives/2009/02/09/the_pelosi_grap.html
ilfolignate
Forumer storico
Fed, azioni banca centrale stanno riducendo difficoltà
WASHINGTON, 10 febbraio (Reuters) - Le Fed ritiene che uno schieramento di programmi straordinari finalizzato a stabilizzare il credito e il sistema bancario abbiano migliorato le condizioni di mercato e ridotto le tensioni nonostante un contesto di negative notizie economiche.
Lo ha detto oggi il presidente della Fed Ben Bernanke. "Siamo stati incoraggiati dalle risposte a questi programmi" ha detto Bernanke in una testimonianza preparata per la Commissione Servizi finanziari della Camera dei Rappresentanti Usa.
Sforzi aggressivi da parte della Fed e altre banche centrali in risposta alla profonda crisi finanziaria degli ultimi 18 mesi hanno contribuito a ridurre a livello internazionale i tassi di prestito interbancario e hanno un po' ridotto le pressioni sulla liquidità alla fine del 2008, ha detto.
I funzionari della Fed stanno valutando la possibilità di fornire al pubblico maggiori informazioni sui bilanci Fed e sulle politiche di impiego, ha detto Bernanke.
WASHINGTON, 10 febbraio (Reuters) - Le Fed ritiene che uno schieramento di programmi straordinari finalizzato a stabilizzare il credito e il sistema bancario abbiano migliorato le condizioni di mercato e ridotto le tensioni nonostante un contesto di negative notizie economiche.
Lo ha detto oggi il presidente della Fed Ben Bernanke. "Siamo stati incoraggiati dalle risposte a questi programmi" ha detto Bernanke in una testimonianza preparata per la Commissione Servizi finanziari della Camera dei Rappresentanti Usa.
Sforzi aggressivi da parte della Fed e altre banche centrali in risposta alla profonda crisi finanziaria degli ultimi 18 mesi hanno contribuito a ridurre a livello internazionale i tassi di prestito interbancario e hanno un po' ridotto le pressioni sulla liquidità alla fine del 2008, ha detto.
I funzionari della Fed stanno valutando la possibilità di fornire al pubblico maggiori informazioni sui bilanci Fed e sulle politiche di impiego, ha detto Bernanke.
yellow
Forumer attivo
Usa, sì del Senato al pacchetto anticrisi da 838miliardi $
........................................................................................................................................
però
Dato che il 'Grand Old Party' al Senato hai numeri per fare ostruzionismo,
nel corso delle trattative dei giorni scorsi i democratici sono stati costretti ad accettare alcuni tagli.
........................................................................................................................................................
Il via libera del senato è arrivato dopo l'appoggio dato al pacchetto da tre senatori repubblicani a cui sono state fatte una serie di concessioni fiscali che però non sono piaciute ai democratici della Camera.
.........................................................................................................................................................
Il negoziato tra Camera e Senato per accordarsi su un pacchetto comune quindi appare difficile
e verrà affidato a una commissione bicamerale
che elaboreràun nuovo testo che dovrà a sua volta essere di nuovo votato prima della firma presidenziale.
Da parte sua Obama cerca di chiudere quanto prima un accordo sperando addirittura di arrivare a una firma nei giorni prossimi.
........................................................................................................................................
peròDato che il 'Grand Old Party' al Senato ha
i numeri per fare ostruzionismo, nel corso delle trattative dei giorni scorsi i democratici sono stati costretti ad accettare alcuni tagli.
........................................................................................................................................................
Il via libera del senato è arrivato dopo l'appoggio dato al pacchetto da tre senatori repubblicani a cui sono state fatte una serie di concessioni fiscali che però non sono piaciute ai democratici della Camera.
.........................................................................................................................................................
Il negoziato tra Camera e Senato per accordarsi su un pacchetto comune quindi appare difficile
e verrà affidato a una commissione bicamerale
che elaborerà
un nuovo testo che dovrà a sua volta essere di nuovo votato prima della firma presidenziale. Da parte sua Obama cerca di chiudere quanto prima un accordo sperando addirittura di arrivare a una firma nei giorni prossimi.
stockuccio
Guest
per farsi un'idea migliore aspettiamo i provvedimenti annunciati e non ancora comunicati per l'immobiliare
coinvolgere i privati ... dato i precedenti rimango scettico ... http://econompicdata.blogspot.com/2009/02/tarp-review-taxpayers-paid-too-much.html
c'era oggi un preventivo commentino acidognolo di Shedlock ... 500 billion per banche che capitalizzano 158
... http://globaleconomicanalysis.blogspot.com/2009/02/insanity-prevails.htmlhttp://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_Kg205BvIqo
certo che lasciar fallire, nazionalizzare, bad bank .... e aggiungo un calcio ai banchieri cattivi
... in USA pare proprio non si possayellow
Forumer attivo
per farsi un'idea migliore aspettiamo i provvedimenti annunciati e non ancora comunicati per l'immobiliare
coinvolgere i privati ... dato i precedenti rimango scettico ... http://econompicdata.blogspot.com/2009/02/tarp-review-taxpayers-paid-too-much.html
c'era oggi un preventivo commentino acidognolo di Shedlock ... 500 billion per banche che capitalizzano 158
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_Kg205BvIqo
certo che lasciar fallire, nazionalizzare, bad bank .... e aggiungo un calcio ai banchieri cattivi
Un saluto ad una mente critica ( peculiarità apprezzabile )
Comunque non è detto che i banchieri e gli azionisti bancari ne usciranno indenni,
tra il detto e il non detto e la vacuità ( forse voluta )
di Geithner potrebbe nascondersi un cavallo di Troia :
P.Krugman
The Rorschach plan (wonkish, or at least hard to read)
An old joke from my younger days: What do you get when you cross a Godfather with a deconstructionist? Someone who makes you an offer you can’t understand.
I found myself remembering that joke when trying to make sense of the Geithner financial rescue plan.
It’s really not clear what the plan means;
there’s an interpretation that makes it not too bad, but it’s not clear if that’s the right interpretation.
The plan deserves praise for what isn’t in it, at least as far as I can tell.
There doesn’t seem to be provision for mass purchases of toxic waste at premium prices;
there also doesn’t seem to be a massive “ring-fencing” guarantee against private losses on bad assets.
In that sense the plan is better than what the last few weeks of leaks led us to expect.
What is in it, in reverse order:
1. Super-TALF: a big expansion of the Fed’s quantitative easing, with Treasury backing. I’m OK with that.
2. Private-public purchases of questionable assets;
as I understand it, private investors would be the junior partners,
so this is probably not a big giveaway (unless there’s huge public financing, in which case it amounts to ring-fencing after all).
I also suspect it wouldn’t accomplish much, but no harm, no foul.
3. Stress test: everything depends on how this is actually implemented. What happens if, or more likely when, a major money center bank is stress-tested and found to have negative net worth?
One possibility is that the auditors are told to come up with a different answer; that’s a big concern.
The other is that the bank is effectively nationalized;
as I read the language that could be achieved as part of the public capital injection.
So what is the plan? I really don’t know, at least based on what we’ve seen today. But maybe, maybe, it’s a Trojan horse that smuggles the right policy into place.
METHOS
Forumer storico
Grafico interessante. Dunque siamo penso ormai ai livelli dell'81 però non credo che abbiamo toccato il fondo e qualcosa mi dice che i tempi di recupero saranno maggiori di quella dello 01. Impressionante...
stockuccio
Guest
ciao Yellow, ben ritrovato
la cosa più simpatica del grafico è che il Bureau of Labor Statistics implicitamente ammette che la recessione è iniziata nel dicembre 2007 .... come tutti sanno da un pezzo ... e come è stato negato per mese e mesi e mesi
io tifo sempre per i banchieri cattivi alla gogna
tanto per dire, vedevo la pubblicità di CheBanca o come diavolo si chiama ... io a Geronzi non do un milionesimo di centesimo
riporto Nouriel Roubini
It Is Time to Nationalize Insolvent Banking Systems
A year ago I predicted that losses by US financial institutions would be at least $1 trillion and possibly as high as $2 trillion. At that time the consensus such estimates as being grossly exaggerated as the naïve optimists had in mind about $200 billion of expected subprime mortgage losses. But, as I pointed out then, losses would rapidly mount well beyond subprime mortgages as the US and global economy would spin into a most severe financial crisis and an ugly recession. I then argued that we would then see rising losses on subprime, near prime and prime mortgages; commercial real estate; credit cards, auto loans, student loans; industrial and commercial loans; corporate bonds; sovereign bonds and state and local government bonds; and massive losses on all of the assets (CDOs, CLOs, ABS, and the entire alphabet of credit derivatives) that had securitized such loans. By now writedowns by US banks have already passed the $1 trillion mark (my floor estimate of losses) and now institutions such as the IMF and Goldman Sachs predict losses of over $2 trillion (close to my original expected ceiling for such losses).
But if you think that $2 trillion is already huge, our latest estimates RGE Monitor (available in a paper for our clients) suggest that total losses on loans made by U.S. financial firms and the fall in the market value of the assets they are holding will be at their peak about $3.6 trillion. The U.S. banks and broker dealers are exposed to half of this figure, or $1.8 trillion; the rest is borne by other financial institutions in the US and abroad. The capital backing the banks assets was last fall only $1.4 trillion, leaving the U.S. banking system some $400 billion in the hole, or close to zero even after the government and private sector recapitalization of such banks. Thus, another $1.4 trillion will be needed to brink back the capital of banks to the level they had before the crisis; and such massive additional recapitalization is needed to resolve the credit crunch and restore lending to the private sector. So these figures suggests that the US banking system is effectively insolvent in the aggregate; most of the UK banking system looks insolvent too; and many other banks in continental Europe are also insolvent.
There are four basic approaches to a clean-up of a banking system that is facing a systemic crisis:
1. recapitalization together with the purchase by a government “bad bank” of the toxic assets;
2. recapitalization together with government guarantees – after a first loss by the banks – of the toxic assets;
3. private purchase of toxic assets with a government guarantee and/or – semi-equivalently - provision of public capital to set up a public-private bad bank where private investors participate in the purchase of such assets (something similar to the US government plan presented by Tim Geithner today for a Public-Private Investment Fund);
4. outright government takeover (call it nationalization or “receivership" if you don’t like the dirty N-word) of insolvent banks to be cleaned after takeover and then resold to the private sector.
Of the four options the first three have serious flaws: in the bad bank model the government may overpay for the bad assets – at a high cost for the taxpayer - as the true value of them is uncertain; and if it does not overpay for the assets many banks are bust as the mark-to-market haircut they need to recognize is too large for them to bear.
Even in the guarantee (after first loss) model there are massive valuation problems and there can be very expensive risk for the tax-payer (an excessive guarantee that is not properly priced by the first loss of the bank, the fees paid and the value of equity that that the government receives for the guarantee) as the true value of the assets is as uncertain as in the purchase of bas assets model. The shady guarantee deals recently done with Citi and Bank of America were even less transparent than an outright government purchase of bad asset as the bad asset purchase model at least has the advantage of transparency of the price paid for toxic assets.
In the bad bank model the government has the additional problem of having to manage all the bad assets it purchased, something that the government does not have much expertise in. At least in the guarantee model the assets stay with the banks and the banks know better how to manage and have a greater incentive than the government to eventually work out such bad assets.
The very cumbersome U.S. Treasury proposal to dispose of toxic assets - that was presented by Treasury Secretary Tim Geithner today - can be best understood (subject to the large fog of uncertainty about its many details) as combining taking the toxic asset off the banks’ balance sheet with providing government guarantees to those private investors that will purchase them (and/or public capital provision to fund a public-private bad bank that would purchase such assets). But this plan is so non-transparent and complicated that it received a thumbs down by the markets as soon as it was announced today as all major US equity indices went sharply down.
The main problem with the Treasury plan – that in some ways it may resemble the deal between Merrill Lynch (ML) and Lone Star (LS) - is the following: Merrill sold its CDOs to Lone Star for 22 cents on the dollar; and even in that case ML remained on the hook in case the value of the assets were to fall below 22 as LS paid initially only 11 cents (i.e. ML guaranteed the LS downside risk). But today a bank like Citi has similar CDOs that, until recently, were still sitting on its books, at a deluded and fake value of 60 cents. So, since the government knows that no one in the private sector would buy those most toxic assets at 60 cents it may have to promise a guarantee (formally or informally by putting capital into a public-private bad bank that will receive extra lending from the private sector) to limit the downside risk to private investors from purchasing such assets. But that implicit or explicit guarantee would be hugely expensive if you need to induce private folks to buy at 60 what is worth only 20 or even 11. So the new Treasury plan may end up being again a royal rip-off of the taxpayer if the guarantee is excessive given the true value of the underlying assets. And if instead the implicit or explicit guarantee is not excessive (if the public-private bank truly tries to discover the value of such assets as in the formal Treasury proposal) the banks need to sell the toxic assets at their true underlying value that implies massive writedowns that will uncover the insolvency of such banks. I.e. the emperor has no clothes and a true valuation of the bad assets – without a huge taxpayers’ bailout of the shareholders and unsecured creditors of banks – implies that banks are bankrupt and should be taken over by the government.
Thus all the schemes that have been so far proposed to deal with the toxic assets of the banks may be a big fudge that either does not work or works only if the government bails out shareholders and unsecured creditors of the banks.
Thus, paradoxically nationalization may be a more market friendly solution of a banking crisis: it creates the biggest hit for common and preferred shareholders of clearly insolvent institutions and – most certainly – even the unsecured creditors in case the bank insolvency hole is too large; it provides a fair upside to the tax-payer. It can also resolve the problem of avoiding having the government manage the bad assets: if you selling back all of the assets and deposits of the bank to new private shareholders after a clean-up of the bank together with a partial government guarantee of the bad assets (as it was done in the resolution of the Indy Mac bank failure) you avoid having the government managing the bad assets. Alternatively, if the bad assets are kept by the government after a takeover of the banks and only the good ones are sold back in a re-privatization scheme, the government could outsource the job of managing and working out such assets to private asset managers if it does not want to create its own RTC bank to work out such bad assets.
Nationalization also resolves the too-big-too-fail problem of banks that are systemically important and that thus need to be rescued by the government at a high cost to the taxpayer. This too-big-to-fail problem has now become an even-bigger-to-fail problem as the current approach has lead weak banks to take over even weaker banks. Merging two zombie banks is like have two drunks trying to help each other to stand up. The JPMorgan takeover of insolvent Bear Stearns and WaMu; the Bank of America takeover of insolvent Countrywide and Merrill Lynch; and the Wells Fargo takeover of insolvent Wachovia show that the too-big-to-fail monster has become even bigger. In the Wachovia case you had two wounded institutions (Citi and Wells Fargo) bidding for a zombie insolvent one. Why? Because they both knew that becoming even bigger-to-fail was the right strategy to extract an even larger bailout from the government. Instead, with nationalization approach the government can break-up these financial supermarket monstrosities into smaller pieces to be sold to private investors as smaller good banks.
This “nationalization” approach was the one successfully taken by Sweden while the current US and UK approach may end up looking like the zombie banks of Japan that were never properly restructured and ended up perpetuating the credit crunch and credit freeze. Japan ended up having a decade long near-depression because of its failure to clean up the banks and the bad debts. The US, the UK and other economies risk a similar near depression and stag-deflation (multi-year recession and price deflation) if they fail to appropriately tackle this most severe banking crisis.
So why is the US government temporizing and avoiding doing the right thing, i.e. take over the insolvent banks? There are two reasons. First, there is still some small hope and a small probability that the economy will recover sooner than expected, that expected credit losses will be smaller than expected and that the current approach of recapping the banks and somehow working out the bad assets will work in due time. Second, taking over the banks – call is nationalization or, in a more politically correct way, “receivership” – is a radical action that requires most banks be clearly beyond pale and insolvent to be undertaken. Today Citi and Bank of America clearly look like near-insolvent and ready to be taken over but JPMorgan and Wells Fargo do not yet. But with the sharp rise in delinquencies and charge-off rates that we are experiencing now on mortgages, commercial real estate and consumer credit in a matter of six to twelve months even JPMorgan and Wells will likely look as near-insolvent (as suggested by Chris Whalen, one of the leading independent analysts of the banking system).
Thus, if the government were to take over only Citi and Bank of America today (and wipe out common and preferred shareholders and also force unsecured creditors to take a haircut) a panic may ensue for other banks and the Lehman fallout that resulted from having unsecured creditors taking losses on their bonds will be repeated again. Instead if, as likely, the current fudging strategy - of temporizing and hoping that things will improve for the economy and the banks - does not work and in 6-12 months most banks (the major four and the a good part of the remaining regional banks) all look like clearly insolvent you can then take them all over, wipe out common shareholders and preferred shareholders and even force unsecured creditors to accept losses ( in the form of a conversion of debt into equity and/or haircut on the face value of their bond claims) as the losses will be so large that not treating such unsecured creditors would be fiscally too expensive.
So, the current strategy – Plan A - may not work and the Plan B (or better Plan N for nationalization) may end up the way to go later this year. Wasting another 6-12 months to do the right thing may be a mistake but the political constrains facing the new administration – and the remaining small probability that the current strategy may by some miracle or luck work – suggest that Plan A should be first exhausted before there is a move to Plan N. Wasting another 6-12 months may risk turning a U-shaped recession into an L-shaped near depression but currently Plan N is not yet politically feasible.
But with the government forcing Citi to shed some of its units/assets and the government starting stress tests to figure out which institutions are so massively undercapitalized that they need to be taken over by the FDIC the administration is putting in place the steps for the eventual and necessary takeover of the insolvent banks.
You can expect a similar path and an eventual government takeover of most financial institutions in other countries – such as the UK – where many banks are effectively insolvent.
So while Plan A is now underway today’s very negative market response to this Treasury plan suggest that it will not fly. Markets were expecting a more clear plan but also a plan that would bail out shareholders and creditors of insolvent banks. Unfortunately that is not politically and fiscally feasible. It is thus time to start to think and plan ahead for for Plan N (“nationalization” of insolvent banks).
la cosa più simpatica del grafico è che il Bureau of Labor Statistics implicitamente ammette che la recessione è iniziata nel dicembre 2007 .... come tutti sanno da un pezzo ... e come è stato negato per mese e mesi e mesi
io tifo sempre per i banchieri cattivi alla gogna
tanto per dire, vedevo la pubblicità di CheBanca o come diavolo si chiama ... io a Geronzi non do un milionesimo di centesimo
riporto Nouriel Roubini
It Is Time to Nationalize Insolvent Banking Systems
A year ago I predicted that losses by US financial institutions would be at least $1 trillion and possibly as high as $2 trillion. At that time the consensus such estimates as being grossly exaggerated as the naïve optimists had in mind about $200 billion of expected subprime mortgage losses. But, as I pointed out then, losses would rapidly mount well beyond subprime mortgages as the US and global economy would spin into a most severe financial crisis and an ugly recession. I then argued that we would then see rising losses on subprime, near prime and prime mortgages; commercial real estate; credit cards, auto loans, student loans; industrial and commercial loans; corporate bonds; sovereign bonds and state and local government bonds; and massive losses on all of the assets (CDOs, CLOs, ABS, and the entire alphabet of credit derivatives) that had securitized such loans. By now writedowns by US banks have already passed the $1 trillion mark (my floor estimate of losses) and now institutions such as the IMF and Goldman Sachs predict losses of over $2 trillion (close to my original expected ceiling for such losses).
But if you think that $2 trillion is already huge, our latest estimates RGE Monitor (available in a paper for our clients) suggest that total losses on loans made by U.S. financial firms and the fall in the market value of the assets they are holding will be at their peak about $3.6 trillion. The U.S. banks and broker dealers are exposed to half of this figure, or $1.8 trillion; the rest is borne by other financial institutions in the US and abroad. The capital backing the banks assets was last fall only $1.4 trillion, leaving the U.S. banking system some $400 billion in the hole, or close to zero even after the government and private sector recapitalization of such banks. Thus, another $1.4 trillion will be needed to brink back the capital of banks to the level they had before the crisis; and such massive additional recapitalization is needed to resolve the credit crunch and restore lending to the private sector. So these figures suggests that the US banking system is effectively insolvent in the aggregate; most of the UK banking system looks insolvent too; and many other banks in continental Europe are also insolvent.
There are four basic approaches to a clean-up of a banking system that is facing a systemic crisis:
1. recapitalization together with the purchase by a government “bad bank” of the toxic assets;
2. recapitalization together with government guarantees – after a first loss by the banks – of the toxic assets;
3. private purchase of toxic assets with a government guarantee and/or – semi-equivalently - provision of public capital to set up a public-private bad bank where private investors participate in the purchase of such assets (something similar to the US government plan presented by Tim Geithner today for a Public-Private Investment Fund);
4. outright government takeover (call it nationalization or “receivership" if you don’t like the dirty N-word) of insolvent banks to be cleaned after takeover and then resold to the private sector.
Of the four options the first three have serious flaws: in the bad bank model the government may overpay for the bad assets – at a high cost for the taxpayer - as the true value of them is uncertain; and if it does not overpay for the assets many banks are bust as the mark-to-market haircut they need to recognize is too large for them to bear.
Even in the guarantee (after first loss) model there are massive valuation problems and there can be very expensive risk for the tax-payer (an excessive guarantee that is not properly priced by the first loss of the bank, the fees paid and the value of equity that that the government receives for the guarantee) as the true value of the assets is as uncertain as in the purchase of bas assets model. The shady guarantee deals recently done with Citi and Bank of America were even less transparent than an outright government purchase of bad asset as the bad asset purchase model at least has the advantage of transparency of the price paid for toxic assets.
In the bad bank model the government has the additional problem of having to manage all the bad assets it purchased, something that the government does not have much expertise in. At least in the guarantee model the assets stay with the banks and the banks know better how to manage and have a greater incentive than the government to eventually work out such bad assets.
The very cumbersome U.S. Treasury proposal to dispose of toxic assets - that was presented by Treasury Secretary Tim Geithner today - can be best understood (subject to the large fog of uncertainty about its many details) as combining taking the toxic asset off the banks’ balance sheet with providing government guarantees to those private investors that will purchase them (and/or public capital provision to fund a public-private bad bank that would purchase such assets). But this plan is so non-transparent and complicated that it received a thumbs down by the markets as soon as it was announced today as all major US equity indices went sharply down.
The main problem with the Treasury plan – that in some ways it may resemble the deal between Merrill Lynch (ML) and Lone Star (LS) - is the following: Merrill sold its CDOs to Lone Star for 22 cents on the dollar; and even in that case ML remained on the hook in case the value of the assets were to fall below 22 as LS paid initially only 11 cents (i.e. ML guaranteed the LS downside risk). But today a bank like Citi has similar CDOs that, until recently, were still sitting on its books, at a deluded and fake value of 60 cents. So, since the government knows that no one in the private sector would buy those most toxic assets at 60 cents it may have to promise a guarantee (formally or informally by putting capital into a public-private bad bank that will receive extra lending from the private sector) to limit the downside risk to private investors from purchasing such assets. But that implicit or explicit guarantee would be hugely expensive if you need to induce private folks to buy at 60 what is worth only 20 or even 11. So the new Treasury plan may end up being again a royal rip-off of the taxpayer if the guarantee is excessive given the true value of the underlying assets. And if instead the implicit or explicit guarantee is not excessive (if the public-private bank truly tries to discover the value of such assets as in the formal Treasury proposal) the banks need to sell the toxic assets at their true underlying value that implies massive writedowns that will uncover the insolvency of such banks. I.e. the emperor has no clothes and a true valuation of the bad assets – without a huge taxpayers’ bailout of the shareholders and unsecured creditors of banks – implies that banks are bankrupt and should be taken over by the government.
Thus all the schemes that have been so far proposed to deal with the toxic assets of the banks may be a big fudge that either does not work or works only if the government bails out shareholders and unsecured creditors of the banks.
Thus, paradoxically nationalization may be a more market friendly solution of a banking crisis: it creates the biggest hit for common and preferred shareholders of clearly insolvent institutions and – most certainly – even the unsecured creditors in case the bank insolvency hole is too large; it provides a fair upside to the tax-payer. It can also resolve the problem of avoiding having the government manage the bad assets: if you selling back all of the assets and deposits of the bank to new private shareholders after a clean-up of the bank together with a partial government guarantee of the bad assets (as it was done in the resolution of the Indy Mac bank failure) you avoid having the government managing the bad assets. Alternatively, if the bad assets are kept by the government after a takeover of the banks and only the good ones are sold back in a re-privatization scheme, the government could outsource the job of managing and working out such assets to private asset managers if it does not want to create its own RTC bank to work out such bad assets.
Nationalization also resolves the too-big-too-fail problem of banks that are systemically important and that thus need to be rescued by the government at a high cost to the taxpayer. This too-big-to-fail problem has now become an even-bigger-to-fail problem as the current approach has lead weak banks to take over even weaker banks. Merging two zombie banks is like have two drunks trying to help each other to stand up. The JPMorgan takeover of insolvent Bear Stearns and WaMu; the Bank of America takeover of insolvent Countrywide and Merrill Lynch; and the Wells Fargo takeover of insolvent Wachovia show that the too-big-to-fail monster has become even bigger. In the Wachovia case you had two wounded institutions (Citi and Wells Fargo) bidding for a zombie insolvent one. Why? Because they both knew that becoming even bigger-to-fail was the right strategy to extract an even larger bailout from the government. Instead, with nationalization approach the government can break-up these financial supermarket monstrosities into smaller pieces to be sold to private investors as smaller good banks.
This “nationalization” approach was the one successfully taken by Sweden while the current US and UK approach may end up looking like the zombie banks of Japan that were never properly restructured and ended up perpetuating the credit crunch and credit freeze. Japan ended up having a decade long near-depression because of its failure to clean up the banks and the bad debts. The US, the UK and other economies risk a similar near depression and stag-deflation (multi-year recession and price deflation) if they fail to appropriately tackle this most severe banking crisis.
So why is the US government temporizing and avoiding doing the right thing, i.e. take over the insolvent banks? There are two reasons. First, there is still some small hope and a small probability that the economy will recover sooner than expected, that expected credit losses will be smaller than expected and that the current approach of recapping the banks and somehow working out the bad assets will work in due time. Second, taking over the banks – call is nationalization or, in a more politically correct way, “receivership” – is a radical action that requires most banks be clearly beyond pale and insolvent to be undertaken. Today Citi and Bank of America clearly look like near-insolvent and ready to be taken over but JPMorgan and Wells Fargo do not yet. But with the sharp rise in delinquencies and charge-off rates that we are experiencing now on mortgages, commercial real estate and consumer credit in a matter of six to twelve months even JPMorgan and Wells will likely look as near-insolvent (as suggested by Chris Whalen, one of the leading independent analysts of the banking system).
Thus, if the government were to take over only Citi and Bank of America today (and wipe out common and preferred shareholders and also force unsecured creditors to take a haircut) a panic may ensue for other banks and the Lehman fallout that resulted from having unsecured creditors taking losses on their bonds will be repeated again. Instead if, as likely, the current fudging strategy - of temporizing and hoping that things will improve for the economy and the banks - does not work and in 6-12 months most banks (the major four and the a good part of the remaining regional banks) all look like clearly insolvent you can then take them all over, wipe out common shareholders and preferred shareholders and even force unsecured creditors to accept losses ( in the form of a conversion of debt into equity and/or haircut on the face value of their bond claims) as the losses will be so large that not treating such unsecured creditors would be fiscally too expensive.
So, the current strategy – Plan A - may not work and the Plan B (or better Plan N for nationalization) may end up the way to go later this year. Wasting another 6-12 months to do the right thing may be a mistake but the political constrains facing the new administration – and the remaining small probability that the current strategy may by some miracle or luck work – suggest that Plan A should be first exhausted before there is a move to Plan N. Wasting another 6-12 months may risk turning a U-shaped recession into an L-shaped near depression but currently Plan N is not yet politically feasible.
But with the government forcing Citi to shed some of its units/assets and the government starting stress tests to figure out which institutions are so massively undercapitalized that they need to be taken over by the FDIC the administration is putting in place the steps for the eventual and necessary takeover of the insolvent banks.
You can expect a similar path and an eventual government takeover of most financial institutions in other countries – such as the UK – where many banks are effectively insolvent.
So while Plan A is now underway today’s very negative market response to this Treasury plan suggest that it will not fly. Markets were expecting a more clear plan but also a plan that would bail out shareholders and creditors of insolvent banks. Unfortunately that is not politically and fiscally feasible. It is thus time to start to think and plan ahead for for Plan N (“nationalization” of insolvent banks).
METHOS
Forumer storico
Il Tesoro, la Fed e il Senato impegnano altri tremila miliardi di dollari per contrastare i micidiali effetti della tempesta perfetta!
Prima ancora che il Senato desse, in serata il tanto sospirato via libera del Senato al piano di rilancio dell’economia statunitense dopo l’attacco diretto mosso da Obama nella sua prima conferenza stampa dalla Casa Bianca, Timothy Geithner il nuovo ministro del Tesoro ha svelato i dettagli dell’utilizzo della seconda tranche da 350 miliardi di dollari prevista dal TARP approvato dal Congresso a metà di ottobre del 2008, un mese esatto dopo che il trio Bush-Paulson-Bernspan aveva deciso di lasciare fallire la storica investment bank Lehman Brothers.
Che le cose non sarebbero andate come le maggiori banche a stelle e strisce speravano era stato chiaro ascoltando nei giorni scorsi le dichiarazioni sia di Obama sia del suo coetaneo Geithner, che avevano avvertito con chiarezza che il tempo degli aiuti pressoché incondizionati e a fondo perduto fortemente voluti dall’ex (?) investment banker Hank Paulson erano definitivamente tramontati e, infatti, solo 100 miliardi di dollari andranno a ricapitalizzare le banche, ma queste acquisizioni di azioni privilegiati saranno accompagnate da condizioni molto stringenti sia sui sistemi di compensation dei top manager, ma anche dei loro subordinati, che su un significativo incremento dell’offerta di credito alle famiglie e alle imprese.
La destinazione di meno di un terzo delle risorse disponibili a quegli interventi diretti nel capitale delle banche che avevano fatto la parte del leone nel precedente stanziamento e che erano stati pressoché integralmente utilizzati in favore delle sei grandi banche superstiti e della nazionalizzata compagnia di assicurazioni AIG è stata spiegata dal nuovo ministro del Tesoro con il comportamento che le stesse banche stanno tenendo in questi mesi, giungendo a dire che stanno operando contro l’obiettivo di favorire una ripresa dell’economia, un obiettivo che ha caratterizzato sia gli ultimi mesi dell’amministrazione di George Bush che questo primo scorcio di quella di Barack Obama, anche se non ha fatto riferimento né ai 20 miliardi di dollari di bonus elargiti né ai 47 miliardi di dollari di minori impieghi effettuati.
Molto più interessanti le modalità di utilizzo di altre due tranche da 100 miliardi di dollari l’una, la prima verrebbe fornita alla Federal Reserve per permetterle di incrementare da 200 a 1.000 miliardi di dollari il programma di sostegno al credito al consumo e all’utilizzo delle carte di credito, mediante l’acquisizione, attraverso intermediari finanziari, di titoli della finanza strutturata nei quali gli stessi sono stati impacchettati, acquisizione che dovrebbe anche consentirne lo spacchettamento e l’eventuale rinegoziazione delle condizioni al fine di evitare il default dei prestiti sottostanti. Si tratta dello stesso programma che sta cercando di rivitalizzare il mercato delle Commercial Papers che costituiscono uno strumento essenziale per soddisfare il fabbisogno di credito a breve termine delle imprese.
Nel delineare le caratteristiche della cosiddetta Bad Bank per la quale sono previsti altri 100 miliardi di dollari, Geithner ha chiarito che si tratterà di una joint venture tra pubblico e privato che dovrebbe, quindi, avere un fondo di rotazione di 200 miliardi di dollari, che potrebbe consentire, secondo il responsabile del dicastero del Tesoro, l’acquisizione di titoli della finanza strutturata per un ammontare dal valore facciale compreso tra i 500 e i 1.000 miliardi di dollari, il che comincia a delineare anche il livello del prezzo che verrebbe corrisposto alle banche e che molto difficilmente sarà superiore al 20-25 per cento del valore nominale, in linea con la maxi operazione realizzata per la defunta Merrill Lynch dall’ex Chief Executive Officer, John Thain.
L’ultima fetta, prevista in almeno 50 miliardi di dollari, è forse quella più importante in quanto è destinata a favorire la rinegoziazione dei mutui subprime o ARM al fine di evitare che anche nel 2009 si ripeta quella valanga di procedure di foreclosure che ha già caratterizzato il 2007 e il 2008 e che ha dato luogo a una miriade di vendite all’asta delle abitazioni che, a loro volta, hanno largamente contribuito al crollo dei prezzi delle case in tutto il paese.
Ovviamente, Geithner ha sostenuto che non ha alcuna intenzione di gettare i soldi dei contribuenti al vento, anche perché, soprattutto se la montagna di titoli della finanza strutturata acquisiti sia dalla Federal Reserve che dalla Bad Bank verranno opportunamente trattati, potrebbe rivelarsi anche un buon affare, una considerazione che sembrerebbe avallare le critiche sempre più diffuse ai modelli matematici di valutazione delle possibilità di default che hanno giocato un ruolo tutt’altro che secondario nel meltdown finanziario in corso, un’ipotesi, quella di Geithner, che potrebbe rivelarsi ancora più fondata ove, mediante opportune rinegoziazioni volte a garantire il ripagamento del debito, si finisse per scoprire che le menzionate percentuali di delinquency rates stimate sono realmente esagerate!
Forse conoscendo perfettamente da giorni i dettagli del piano del nuovo ministro del Tesoro, molti tra i capi delle maggiori banche statunitensi si sono precipitati a dire che non si avvarranno degli aiuti pubblici, sino a spingersi, come ha fatto la potente e ancor più preveggente Goldman Sachs, a promettere di fare il bel gesto di restituire quanto ricevuto nei mesi scorsi.
Gli operatori e gli investitori hanno fatto, ovviamente, la somma di tutto questo e hanno immediatamente iniziato a vendere a mani basse le azioni delle grandi banche statunitensi, anche di quelle che avevano vissuto nei giorni scorsi performance positive come non se ne vedevano da tempo, un’ondata di vendite che ha colpito in particolare le banche universali quali Bank of America, Citigroup, Wells Fargo e J.P. Morgan-Chase, mentre appena più contenute sono state le flessioni delle quotazioni delle due ex Investment Banks superstiti, la già citata Goldman Sachs e Morgan Stanley, un andamento molto pesante del settore finanziario che ha spinto in profondo rosso i tre principali indici azionari di Wall Street che hanno chiuso in calo di oltre il 4 per cento.
Ricordo che il video del mio intervento al convegno della UIL sulla crisi finanziaria è presente nella sezione video del sito dell’associazione Free Lance International Press all’indirizzo http://www.flipnews.org/ .
Pubblicato da marco sarli a 6.32
Prima ancora che il Senato desse, in serata il tanto sospirato via libera del Senato al piano di rilancio dell’economia statunitense dopo l’attacco diretto mosso da Obama nella sua prima conferenza stampa dalla Casa Bianca, Timothy Geithner il nuovo ministro del Tesoro ha svelato i dettagli dell’utilizzo della seconda tranche da 350 miliardi di dollari prevista dal TARP approvato dal Congresso a metà di ottobre del 2008, un mese esatto dopo che il trio Bush-Paulson-Bernspan aveva deciso di lasciare fallire la storica investment bank Lehman Brothers.
Che le cose non sarebbero andate come le maggiori banche a stelle e strisce speravano era stato chiaro ascoltando nei giorni scorsi le dichiarazioni sia di Obama sia del suo coetaneo Geithner, che avevano avvertito con chiarezza che il tempo degli aiuti pressoché incondizionati e a fondo perduto fortemente voluti dall’ex (?) investment banker Hank Paulson erano definitivamente tramontati e, infatti, solo 100 miliardi di dollari andranno a ricapitalizzare le banche, ma queste acquisizioni di azioni privilegiati saranno accompagnate da condizioni molto stringenti sia sui sistemi di compensation dei top manager, ma anche dei loro subordinati, che su un significativo incremento dell’offerta di credito alle famiglie e alle imprese.
La destinazione di meno di un terzo delle risorse disponibili a quegli interventi diretti nel capitale delle banche che avevano fatto la parte del leone nel precedente stanziamento e che erano stati pressoché integralmente utilizzati in favore delle sei grandi banche superstiti e della nazionalizzata compagnia di assicurazioni AIG è stata spiegata dal nuovo ministro del Tesoro con il comportamento che le stesse banche stanno tenendo in questi mesi, giungendo a dire che stanno operando contro l’obiettivo di favorire una ripresa dell’economia, un obiettivo che ha caratterizzato sia gli ultimi mesi dell’amministrazione di George Bush che questo primo scorcio di quella di Barack Obama, anche se non ha fatto riferimento né ai 20 miliardi di dollari di bonus elargiti né ai 47 miliardi di dollari di minori impieghi effettuati.
Molto più interessanti le modalità di utilizzo di altre due tranche da 100 miliardi di dollari l’una, la prima verrebbe fornita alla Federal Reserve per permetterle di incrementare da 200 a 1.000 miliardi di dollari il programma di sostegno al credito al consumo e all’utilizzo delle carte di credito, mediante l’acquisizione, attraverso intermediari finanziari, di titoli della finanza strutturata nei quali gli stessi sono stati impacchettati, acquisizione che dovrebbe anche consentirne lo spacchettamento e l’eventuale rinegoziazione delle condizioni al fine di evitare il default dei prestiti sottostanti. Si tratta dello stesso programma che sta cercando di rivitalizzare il mercato delle Commercial Papers che costituiscono uno strumento essenziale per soddisfare il fabbisogno di credito a breve termine delle imprese.
Nel delineare le caratteristiche della cosiddetta Bad Bank per la quale sono previsti altri 100 miliardi di dollari, Geithner ha chiarito che si tratterà di una joint venture tra pubblico e privato che dovrebbe, quindi, avere un fondo di rotazione di 200 miliardi di dollari, che potrebbe consentire, secondo il responsabile del dicastero del Tesoro, l’acquisizione di titoli della finanza strutturata per un ammontare dal valore facciale compreso tra i 500 e i 1.000 miliardi di dollari, il che comincia a delineare anche il livello del prezzo che verrebbe corrisposto alle banche e che molto difficilmente sarà superiore al 20-25 per cento del valore nominale, in linea con la maxi operazione realizzata per la defunta Merrill Lynch dall’ex Chief Executive Officer, John Thain.
L’ultima fetta, prevista in almeno 50 miliardi di dollari, è forse quella più importante in quanto è destinata a favorire la rinegoziazione dei mutui subprime o ARM al fine di evitare che anche nel 2009 si ripeta quella valanga di procedure di foreclosure che ha già caratterizzato il 2007 e il 2008 e che ha dato luogo a una miriade di vendite all’asta delle abitazioni che, a loro volta, hanno largamente contribuito al crollo dei prezzi delle case in tutto il paese.
Ovviamente, Geithner ha sostenuto che non ha alcuna intenzione di gettare i soldi dei contribuenti al vento, anche perché, soprattutto se la montagna di titoli della finanza strutturata acquisiti sia dalla Federal Reserve che dalla Bad Bank verranno opportunamente trattati, potrebbe rivelarsi anche un buon affare, una considerazione che sembrerebbe avallare le critiche sempre più diffuse ai modelli matematici di valutazione delle possibilità di default che hanno giocato un ruolo tutt’altro che secondario nel meltdown finanziario in corso, un’ipotesi, quella di Geithner, che potrebbe rivelarsi ancora più fondata ove, mediante opportune rinegoziazioni volte a garantire il ripagamento del debito, si finisse per scoprire che le menzionate percentuali di delinquency rates stimate sono realmente esagerate!
Forse conoscendo perfettamente da giorni i dettagli del piano del nuovo ministro del Tesoro, molti tra i capi delle maggiori banche statunitensi si sono precipitati a dire che non si avvarranno degli aiuti pubblici, sino a spingersi, come ha fatto la potente e ancor più preveggente Goldman Sachs, a promettere di fare il bel gesto di restituire quanto ricevuto nei mesi scorsi.
Gli operatori e gli investitori hanno fatto, ovviamente, la somma di tutto questo e hanno immediatamente iniziato a vendere a mani basse le azioni delle grandi banche statunitensi, anche di quelle che avevano vissuto nei giorni scorsi performance positive come non se ne vedevano da tempo, un’ondata di vendite che ha colpito in particolare le banche universali quali Bank of America, Citigroup, Wells Fargo e J.P. Morgan-Chase, mentre appena più contenute sono state le flessioni delle quotazioni delle due ex Investment Banks superstiti, la già citata Goldman Sachs e Morgan Stanley, un andamento molto pesante del settore finanziario che ha spinto in profondo rosso i tre principali indici azionari di Wall Street che hanno chiuso in calo di oltre il 4 per cento.
Ricordo che il video del mio intervento al convegno della UIL sulla crisi finanziaria è presente nella sezione video del sito dell’associazione Free Lance International Press all’indirizzo http://www.flipnews.org/ .
Pubblicato da marco sarli a 6.32
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