Tuesday, 10 February 2009

Geithner fluffs it

L: 21% S:0% G: 21% N: 21% ~ $D 21% $G 111% $V 1% $P 0%

Given that the market was looking forward to the creation of an aggregator (big bad bank) or at least a detailed plan. The market got absolutely none of this, it sounds like the plan is to lend money to hedgefunds and private equity firms, and to give them backstops if they go and buy these bad assets. The reasoning behind this is that the private capital will stop the government overpaying. pffff sounds like a cop out. They've also said the they are still working the mechanism, its also hilarious that he came out and started pointing fingers at the previous administrations actions, if Raven rememebers it correctly he was involved and it was the democrats and Obama who were calling the shots, but hey its only "bankers" that are at fault for anything and only they have to say sorry and beg forgiveness of the public. The plan of involving private capital is pretty dim to me, you're basically selling a free call option to a hedge fund to buy these assets, sheesh the Raven would love to be offered that deal, its a great structure - they are going to be able to rip the face off the public and look like a hero - "I'd 'ave some of that, MINE, your size is my size"! He also feels really very sorry for Bernanke, the House Financial Service Committee is financially illerate, they don't have questions or even a clue as to what they are doing. We've just had a Republican being critical of Bernanke for not following Milton Friedman's thoughts as to how to stop a depression, eh what? does the guy even get what is going on? did he read Friedman and Schwartz? The Raven can only shake his head.

The market reaction to Geithner was fair, a ~4% sell off, he's covered his shorts and had sold out his longs at the beginning of the day, neither at great levels, but it does take most of the chips off the table. Total risk on the whole portfolio is now ~30bps.

The Raven is keeping his eyes on a couple of potential longs if we panic a bit more perhaps: CSCO, DB1, JPM and GS. The one thought that doesn't sit very nicely is passing comment that he heard that Obama hadn't quashed the rumour that Summers would take over from Bernanke and that he'd been conspicuous in his lack of praise for Bernanke. Guess the scape goating and witch hunting will continue.

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