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    Default Re: the 'No Consequences' Economy

    Well, there _might_ be consequences...

    April 9 (Bloomberg) -- Kenneth Moelis, the former president of UBS AG's investment bank, said Wall Street firms may have to eliminate as much as 35 percent of employees as leveraged lending dwindles and the pace of mergers and acquisitions slows.
    http://www.bloomberg.com/apps/news?p...&refer=finance

    And the Fed doesn't have infinite ammunition so there's the possibility it'll all end in tears (Though I guess the point of the article you posted is roughly that specific people should be taking the pain, not everybody together)

    The Fed now has to buy risky paper from the banks or lend the banks the Fed's own riskless assets at 1-2% yields to maturity on short paper against risky assets. There is no capital gain cushion built into the banks selling to the Fed for cash as in a normal reflationary cycle.
    The Fed has already sponsored 3 new lending facilities, yet is having still more discussions on what to do next.
    http://globaleconomicanalysis.blogsp...terrified.html

    And on a more specific front, Mish is calling shenanigans on Citigroup (and Golden Sacks reported an increase in the value of their hard-to-value assets or something )

    Citigroup is cash strapped. To raise cash it has agreed to sell $12 billion worth of leveraged loans it was holding at a reported 90 cents on the dollar. Earlier today in Less Than Meets The Eye at Citigroup, Goldman I noted that in order for Citigroup to get a price of $12 billion for the loan portfolio it sold, it had to agree to indemnify the buyers of the first 20% of losses. Tonight more details are emerging.
    http://globaleconomicanalysis.blogsp...citigroup.html
    http://globaleconomicanalysis.blogsp...citigroup.html
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    Default Re: the 'No Consequences' Economy

    ^^^ true there may be some consequences ... however the CEO's of the financial houses that will be laying off 35% of their present employees will see INCREASED bonuses next year thanks to the increased profits via payroll reduction !!! The article's point was that the CEO's should be taking an equal share of consequences ... which has NOT been the case, nor is it likely to become the case.

    The other half of the article was directed towards 'Joe Sixpack' who bought an overpriced house he couldn't afford 2-3-5 years ago based on a 'liar loan' and super-low 'teaser' rate early year mortgage payments - who is going to be rewarded for his irresponsibility via a gov't bailout, i.e. by allowing his neighbors to make up the difference on his mortgage payments via increasing their taxes, while Joe gets to keep the increased home equity.

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