Ambac "Bailout Plan" Fails to Materialize
This morning all the message boards were buzzing with the "secret" that a bailout plan for Ambac insurance was about to be unveiled. Longs battled shorts on the message boards and the cast of CNBC was breaking their own arms patting themselves on the back. The markets were seeing a good lift, and promised so much more when the "surprise bailout" announcement was to be made. Trading was suspended in ABK stock as the big moment neared. And then.....
...ABK basically will be selling a bunch of stock that nobody would want to raise around 1-1.5 Billion dollars to "protect" their AAA rating. HAHAHAHAHAHA!! Too Funny!
Seriously, this was probably the funniest and most reveling day the financial world has seen in a while. After 3 weeks of meetings, planning, and rumor running, all that could be done for ABK was to issue a ton more stock? Things must be pretty bleak indeed. That was the funny part, the total lack of anything substantial for ABK.
What was revealing is the fact that IF a conglomerate of banks had out together a ton of coin to back ABK (still far less than their expected losses) the markets would have gone parabolic to the upside. The point here is that the market is STILL looking for a quick and easy patch to paint over the credit mess and make it go away. This shows the kind of lack of understanding of the underlying issues that have caused this problem to balloon to massive proportions.
The debt driven, credit and finance based economy of the past 5 years will not unwind overnight. It will not be fixed by moving a few assets between balance sheets to hide losses. This will take time and pain. Playing with fake ratings, delaying the sale of dead assets, and hiding the gigantic amounts of real estate now "owned" by the banks will not change anything. You can bank on it.
Just Tell The Truth Already
Even after a whole day and night to let it go, I am still fuming over the latest comments by Bernanke as it relates to the "principal reductions" for bad loans. I am not the only one, as the blogosphere has been on fire with outrage and argument.
I wish that the FED, the banks, and the government would just come clean about what is going on. I have had it with all the baby talk about a slowing economy. I am sick of hearing about the small number of troubled mortgages that need our help. I am tired of oil (and later gasoline) going up in price because the FED cannot stop cutting interest rates. Yes, I am annoyed in general. Right now, tomorrow even, Bernanke and the heads of the 4 largest banks should be on CNN and made to answer, in no ambiguous language, the following questions:
- How was possible for someone that makes $30,000 to get a mortgage for $500,000?
- How can a total default of just 10% of ALL mortgages cause a epic collapse of the entire US banking system?
- Why is it your mission to make the dollar worthless?
- Why in the world is this MY problem?
- Why are you so stupid?
- Why do you make so much money for being stupid?
- How can I get that job?
- How do you sleep at night?
- At what point do you think the average person, when faced with your silly "if the system fails you will be hurt along with everyone else" threat just say "So What!"
Sorry to rant, but the events of the past few days have really turned my stomach. The era of no responsibility must come to an end. We are all to blame. Perhaps not YOU in particular, but we all (collectively) have been guilty for years of electing fools and morons to office. This is what you get. As a US taxpayer and citizen, I want my 9 questions answered in no uncertain terms. Use the comments section to ask a few of your own and I will post a compilation of them either tomorrow or Friday. Try to make them good!
Have a good night.