Forbes has text of speech here
The Dictator of Treasury is in Europe to talk about Global Governance of the financial markets with his couterparts in the Group of 20 largest economies in the world
Posts Tagged ‘Geithner’
Geithner addresses the G-20
Saturday, March 14th, 2009CitiGroup – Geithner never sleeps
Friday, March 13th, 2009Now that the US Government defacto owns CitiGroup, and Robert Parsons – a man with no experience in banking – is it CEO, what is the first major initiative that CitiGroup announces? Going into the stock brokerage business in Vietnam, Malaysia, Indonesia and Thailand.
Did you know that President Obama’s mother worked for Timothy Geithner’s father in Indonesia? Peter Geithner ran the SouthEast Asia Program for the Ford Foundation, and was their first representative to China. Tim Geithner graduated from high school in Thailand and is fluent in Japanese and Chinese. Connecting any dots yet?
How is helping businesses in SouthEast Asia raise money to start businesses “saving American jobs”?
Giethner and China
Thursday, March 12th, 2009Geithner wants G-7 to stop blaming China
One really interesting aspect of Dictator of Treasury Tim Geithner’s biography is that he lived most of his youth in Asia. His father worked for the Ford Foundation handing out money, and his father had met Barack Obama’s mother, who worked for the elder Mr Geithner in Indonesia.
Timothy Geithner is fluent in both Japanese and Chinese.
Worrried yet?
GE, BofA sell $18B in FDIC debt
Monday, March 9th, 2009Just a day after the FDIC announced it may be insolvent this year – and with responsible smaller banks crying foul (We’re paying for the mistakes of the reckless banks), GE Capital (which was NOT a bank) has issued $8B in bonds guaranteed by the FDIC and BofA (which recently said it was a mistake to accept TARP funds) has issued $8.5B in FDIC backed loans because Credit Default Swaps on their own lending is getting too expensive (because people selling the swaps believe the chance of default is going up).
If CitiGroup is allowed to fail, there is really no doubt the FDIC goes with it. All the cards are on the table now, and the United States is holding a pair of 3s and bluffing – and the other people at the table know the cards we are holding.
FDIC to borrow its way to solvency
Friday, March 6th, 2009The “solution” to the FDIC being insolvent is for the US Treasury to loan the FDIC $500 billion (It currently insures around $4 trillion sitting in bank accounts – probably more by now)
The problem with this? The total revenue the FDIC raises by assessing a fee to banks on their insured deposit accounts is $2 billion a year. It takes a long time to pay back $500 billion at $2 billion a year.
To dig the hole deeper, part of the mortgage cram-down bill’s language (probably to blackmail the American Banker’s Association into supporting it) is making the “temporary” insurance limit raise from $100k to $250k per account permanent.
The stupidity and unintended consequences continue.
Bloomberg on Geithner
Wednesday, February 25th, 2009A -very- long article about Timothy Geithher – who he is, where he came from, the problems that he faces.
It’s important to keep in mind that Bloomberg is not an observer just standing on the sidelines. Bloomberg’s own investment advisor is the guy just named to run the GM/Chrsyler auto bailout project for Tim Geithner, and Bloomberg’s terminals are used by subscribers to access the Treasury’s “temporary” Commerical Paper funding program (and probably other things).
The article mentions a number of times that the Credit Default Swap market needs a marketplace to increase transparency of the risks. I wonder if Bloomberg has any interest in running that?
AIG “investment” going sour
Tuesday, February 24th, 2009Remember when the US Government stepped in to “Save” AIG? (even though AIG is an insurance company and not a bank). At the time, various people in the government suggested that in the long run, the taxpayers would make a profit.
Now AIG says it is going to convert the Preferred shares we (the taxpayers) bought into common shares. They can’t afford to pay the 10% interest that the preferred stock requires. That was the whole point – that this would make the “investment” temporary and force AIG to quickly pay off the US Treasury by buying back the preferred stock.
That’s not what AIG is proposing. Like CitiGroup, they want to take the US Treasury from the front of the line to get paid, and put them at the end of the line – so if/when AIG declares bankruptcy the US Treasury is holding only worthless common stock.
The bizarre part of this notion is that AIG thinks converting preferred stock to common stock is -their- decision. That’s not how preferred stock works. The owner of the stock decides when or if they wish to exercise their conversion option, usually based on the common stock getting above the conversion price by enough to justify letting go of the guaranteed interest income stream.
They’re talking like they have a friend inside the US Treasury (Geithner comes to mind) who is agreeable to this. It’s time to say “NO” to AIG.
What is going on here is that most people do no realize their life insurance policies and annuities have no government “insurance” protection.
Insurance company policies are typically guaranteed by a state run Guaranty Fund. The fund has no assets of its own – the only tool it has to stand behind insurance policies is to impose an assessment on the other insurance companies that haven’t failed (making them more likely to fail, also). Unfunded Insurance Guaranty funds are completely unprepared to deal with the largest insurance company in the world failing.
When people realize their insurance policies and annuities are at risk, a “run” can begin on insurance companies as people withdraw the “cash value” of their whole life policies or demand an early termination of their annuity.
This has happened before – in 1933, regulators declared an “insurance holiday” to stop runs on the insurance companies. Here is the story in Time Magazine from April 1933.
We have a Car Czar now (or do we?)
Monday, February 23rd, 2009Just when you think it can’t get stranger. After Tim Geithner and President Obama declare they really don’t need a Car Czar after all (just the money), Steven Rattner appears to be assuming that role.
Steven Rattner is the founder of Quadrangle – a private equity firm with a long history of deal making in the major leagues of finance. That’s not totally surprising – the talk is that for a GM/Chrysler bankruptcy deal to happen, the government needs private equity money driving the process. More importantly, they need a “kick ass and take names later” guy to make the painful decisions and tell people “the way it is going to be”. Think of Danny DiVito’s character in “Other People’s Money” and that pretty much sums it up. I’m actually having a twinge of optimism now.
The “kicker” about Mr Rattner is he is the man who manages the finances of New York City Mayor Michael Bloomberg.
Bank Bailout – Geithner still doesn’t get it
Monday, February 23rd, 2009Or maybe even worse – maybe Geithner does get it and his purpose is to destroy the US Economy.
The US Treasury (and related agencies) have released the official statement about the talks with CitiGroup on Sunday. The plan is little more than a vague plan to “pump more money” into the banking system.
The only substantive change is to convert the preferred stock ownership (which had a guaranteed interest rate) into common stock ownership. This moves the US Treasury to the end of the line if the bank fails. You may remember Senator Dodd had said that in the long run, the first batch of TARP money would end up making a profit for the US Government. That is now even less likely.
The stock market immediately headed down. How many times does this have to happen before the people around Geithner realize he is the problem, not the solution?
Total carnage for today – US Stocks lost almost 4% today. Time grows short for the leadership of this country to get a clue.
February 23 2009 – holding Europe together
Monday, February 23rd, 2009European leaders are trying to figure out how to keep a unified strategy to fend off collapse, and not have each country pursuing their own interests. [good luck on that!] Reading Material
The NY Times (and IHT which they own) and the Wall Street Journal say the US Treasury met on Sunday with CitiGroup to discuss converting the preferred stock the US Treasury holds into common stock. This would take “debt” off the balance sheet, but squeeze out the existing common stock holders. No cash is generated to CitiGroup by doing this. It only changes the financial ratios to make them look less insolvent – and removes the obligation on the preferred stock to get paid “interest” first in line. This is rearranging the deck chairs on the Titanic. It doesn’t change the ultimate outcome.
The US Treasury is also talking to banks (CitiGroup?) about coming up with $40 billion in Debtor in Possession funding for a GM/Chrysler Bankruptcy. According the accounts “Everything is on the table”. I hope the UAW is ready to embrace “change”.
Once the US Treasury can tell banks who to lend to and for what reason (or no reason), the lessons we didn’t learn from Fannie Mae and Freddie Mac will explode. Expect CitiGroup to be forced to loan money now to a full range of businesses which have no chance of ever making a profit – to advance a political agenda and harvest a new crop of political party donations for the party in power or pay back favors to special interest groups (like the UAW).
Trading in Hong Kong [China] is up sharply (3%+). Japan is down slightly, as one of the major Japanese lenders filed for bankruptcy protection, and signs that Japan may not be quite as strong as people had thought.
Markets in Europe are open, up about 1-2%
Pre-market trading in futures suggest the US Stock market will open about the same as Europe – up 1 to 2%