Monday, July 5, 2010

Bernanke Panky

Readin' over Bloomberg way about how the Fed bought up all the shit that everyone knew was shit and said was shit, but which Bernanke's Federal Reserve said was all "investment-grade" shit. Which was shit.

Check out some of the Great Big Shit Pile the Federal Reserve bought from banks, and thence told the American public that they were not only going to get repaid but would make a small profit! Woo hoo! This'll be great! Who could possibly complain about a "bailout" if you were going make a profit? Ahh, those precious Wall Street wizards really were on our side.

Except, it was all a load of shit from the Great Big Shit Pile, the same shit pile everyone knew was a shit pile, a big one, and that the banks were desperately trying to keep covered with leaves, straw, and denial, lest anyone feint, or riot, at the sight and smell of it; Maiden Lane LLC , the American taxpayer-owned, once $28.8 billion "asset" closet, is now worth a whopping $27 billion and shrinking fast:
The so-called assets included collateralized debt obligations and mortgage-backed bonds with names like HG-Coll Ltd. 2007-1A that were so distressed, more than $40 million already had been reduced to less than investment-grade by the time the central bankers testified. The government also became the owner of $16 billion of credit-default swaps, and taxpayers wound up guaranteeing high-yield, high-risk junk bonds.

Maiden Lane ... was created to hold the assets the central bank acquired to facilitate JPMorgan Chase & Co.’s purchase of Bear Stearns.

When Bernanke and Geithner testified in April 2008, $42 million of the CDO securities the Fed would eventually buy had been downgraded to junk, data compiled by Bloomberg show. By the time the central bank funded its $28.8 billion loan to Maiden Lane 12 weeks later, about $172 million of such securities the Fed purchased were rated below investment grade

More than 88 percent of Maiden Lane’s CDO bonds and 78 percent of its non-agency residential mortgage-backed debt are now speculative grade ...

Maiden Lane also contains commercial real-estate loans and other mortgage debt.
American tax payers own commercial real estate paper! That's great news!

Federal Reserve Chair, Ben Bernanke, "received a doctorate in economics from the Massachusetts Institute of Technology, ..." Never has a "piled high and deep" attribute been more assiduously assigned to so appropriate a person as Ben Bernanke. I'm thinkin' MIT ought to stick to programmable mechanical robots, stop spitting out programmable economic ones.

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