Broad Oak: your emotional support animal

Friday, July 29, 2011

Banks' final grab: the land

UPDATE: It's happening! Unbelievable!

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Robert Wenzel comments approvingly on a course of action mooted in a meeting of primary dealers and the US Treasury held at midday today. The idea:



"Dealers suggested that the Treasury might be able to repo their MBS portfolio to raise cash."



Yes, I should think banks would like to suggest that: have the government that bailed them out, now sell the MBS (mortgage-backed securities) back to them at fire-sale prices. 31 million mortgages - about half of all the mortgages in the USA - delivered into the hands of the swindlers.



What daring. It is almost Biblical in the scale of its impudence.



For the record, let's list these players:



BNP Paribas Securities Corp.

Barclays Capital Inc.

Cantor Fitzgerald & Co.

Citigroup Global Markets Inc.

Credit Suisse Securities (USA) LLC

Daiwa Capital Markets America Inc.

Deutsche Bank Securities Inc.

Goldman, Sachs & Co.

HSBC Securities (USA) Inc.

Jefferies & Company, Inc.

J.P. Morgan Securities LLC

MF Global Inc.

Merrill Lynch, Pierce, Fenner & Smith Incorporated

Mizuho Securities USA Inc.

Morgan Stanley & Co. LLC

Nomura Securities International, Inc.

RBC Capital Markets, LLC

RBS Securities Inc.

SG Americas Securities, LLC

UBS Securities LLC.



You'll note that six of them are now Limited Liability Companies (LLC), the latest to convert being Morgan Stanley (as of May 31, 2011). Apparently, this has a tax advantage for derivatives dealers; but I wonder whether not having shareholders while also avoiding personal liability is an equally important consideration, as we approach the endgame, when bank shares may finally burn up.



Imagine what Thomas Jefferson and Andrew Jackson would say, if they could see how in the Land of the Free a tiny elite not only owns most of the cash, bonds and shares, but now aspires to seize the real estate. America is approaching a peak of wealth inequality and mass servitude comparable to the condition of England in the eighteenth century, but without the hopes offered by the Industrial Revolution.



INVESTMENT DISCLOSURE: None. Still in cash, and missing all those day-trading opportunities.

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