Vultures Waiting for Chow Time
The NY Times reports on what any Wall Street observer can see is quite obvious. Obama & crew are now "inviting" the private sector - hedge funds, vulture funds - to buy up toxic loans as a means to move them off banks' balance sheets more quickly.
Simply put, we'll see the private sector sitting, watching and salivating because they know Obama and the Treausry are impatient and need to close a deal. The hedge funds want low risk, high reward and are quite willing to wait it out for a great deal. The less savvy Treasury will eventually bumble into one.
This is a classic poker table standoff where the guy with all the chips just keeps holding out until the rest of the table drops out one by one. This standoff is being played out on a number of fronts - most prominently with the banks limiting their lending and with the Congressional partisan divide on the stimulus plan - and the postponement of normalcy feeds the pessimism, especially when accompanied with daily layoff announcements.
This political dynamic of the standoff is the reason why the masses perceive the world's economies falling into a sinkhole. Today's vague, uncertain announcements on the progress of the stimulus package just reflects this frustrating state of affairs we're in. Today's selloff was a natural.
Nice take. It's easy to have mass media fog your reality-what's-really-going-on goggles.
Thanks for the lens cleaner.
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Pat: Of course, the private sector and Wall Street cronies will scoop up the rich rewards embedded in these toxic assets-- and throw the bones to distressed homeowners.
Better to take taxpayer's money, pay down or pay off mortgages and recast all rates to 4 percent. A direct and immediate cash infusion like that would put money back in the banks, free up household cash flow and provide an audible sigh of relief from hordes of distressed homeowners. And people would start spending again, and businesses could stay in business--and taxes would start flowing.
But as you say, the Vultures get first pickings.
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Pat,
I like the Vulture analogy. But my preference is to identify the Vultures as sharks.
The sharks will wait until the right time to attack and ravage their prey and the rest of us "minows" will gobble up what tid bits are left in the murky waters that lay ahead.
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