So here I am in a cold Atlanta marking the swearing in of President Barack Obama a historical day that I will cherish forever. Where else could I be if not in Washington DC but the home of the civil rights movement led and driven by Dr King and hundreds like him finally a dream has come true a black president leading the most powerful nation on earth. The challenges for President Obama and his administration are huge but Americans have the knack of resilience and will overtime bounce back. Expect large intervention by the Washington administration to kick start this ailing economy but things are about to change it will take time; President Obama has made the economy the central theme and won’t tolerate failure.
Now back to the Banks who have brought us back to square one just when they are sapping the bailout cash, Bank Of America (BoA) announces last Friday Jan 16th a $15.1 billion write down of Merrill Lynch assets, say what !! Yes $15.1 billion when will Merrill Lynch stop seeping losses? Two things to bear in mind the take over by ML was a shotgun wedding plotted by secretary Paulson, the Federal Reserve, Ken Lewis boss of BoA and John Thain of ML. Once Lehman Bros had gone into bankruptcy a hasty arrangement by the above led to no due-diligence of ML’s books a transaction that should have taken months took days. ML’s executives must have known about the toxic monster sitting off balance sheet but blame must also go BoA and its execs. What angers me about this whole mess is that in mid-December 2008 Ken Lewis told Ben Bernanke the Fed chief that BoA was struggling to digest ML’s “monstrous losses” so guess what you guessed it Paulson and Bernanke cooked up the massive bailout of $138 billion last Friday. The bank was handed $118 billion in guarantees to underwrite toxic assets of ML plus a $20billion cash injection. Added to all this Citigroup announce a $8billion write down before splitting the business into two “Bad bank, Good bank” Citi will now keep its core healthy business in a new entity “Citicorp” and all non core toxic assets will be moved to “Citi Holdings” Citi need cash and off loaded Smith Barney its brokerage arm to rival Morgan Stanley.
My prediction is this how much longer will government pour tax payers money into these banks? At some point enough will be enough just as we are seeing in the UK with Royal Bank of Scotland (RBS) announcing they will probably post losses of 20 billion pounds some $41billion dollars. As the shares fell to 10.3pence on the news of the colossal losses. On closing my prediction before June 2009 will see at least 3 banks nationalized in the UK and the US. The British government already has a 70% percent stake in RBS; government at some point will draw the line into pumping more taxpayer’s money into these banks. The Obama administration will make some swift and dramatic announcements on Jan 21st that will affect us all and the markets whatever happens things will get worse before they get better.
Now back to the Banks who have brought us back to square one just when they are sapping the bailout cash, Bank Of America (BoA) announces last Friday Jan 16th a $15.1 billion write down of Merrill Lynch assets, say what !! Yes $15.1 billion when will Merrill Lynch stop seeping losses? Two things to bear in mind the take over by ML was a shotgun wedding plotted by secretary Paulson, the Federal Reserve, Ken Lewis boss of BoA and John Thain of ML. Once Lehman Bros had gone into bankruptcy a hasty arrangement by the above led to no due-diligence of ML’s books a transaction that should have taken months took days. ML’s executives must have known about the toxic monster sitting off balance sheet but blame must also go BoA and its execs. What angers me about this whole mess is that in mid-December 2008 Ken Lewis told Ben Bernanke the Fed chief that BoA was struggling to digest ML’s “monstrous losses” so guess what you guessed it Paulson and Bernanke cooked up the massive bailout of $138 billion last Friday. The bank was handed $118 billion in guarantees to underwrite toxic assets of ML plus a $20billion cash injection. Added to all this Citigroup announce a $8billion write down before splitting the business into two “Bad bank, Good bank” Citi will now keep its core healthy business in a new entity “Citicorp” and all non core toxic assets will be moved to “Citi Holdings” Citi need cash and off loaded Smith Barney its brokerage arm to rival Morgan Stanley.
My prediction is this how much longer will government pour tax payers money into these banks? At some point enough will be enough just as we are seeing in the UK with Royal Bank of Scotland (RBS) announcing they will probably post losses of 20 billion pounds some $41billion dollars. As the shares fell to 10.3pence on the news of the colossal losses. On closing my prediction before June 2009 will see at least 3 banks nationalized in the UK and the US. The British government already has a 70% percent stake in RBS; government at some point will draw the line into pumping more taxpayer’s money into these banks. The Obama administration will make some swift and dramatic announcements on Jan 21st that will affect us all and the markets whatever happens things will get worse before they get better.
