Wednesday, September 24, 2008

Goldman's Credit Seizure Requires Drastic Taxpayer Medicine, as Prescribed by Dr. Carlyle

What blew up last week? The rich wouldn’t lend to rich at other than payday loan rates. They don’t pay that kind of interest, so the credit market locked up.

The crisis was created on Wall Street via unregulated credit derivative markets. It occurred in closed off conference rooms, inhabited by big money men.

Wall Street’s credit default swaps soared 9x from last summers junk level. Who did Goldman Sachs call to complain about the usury foisted upon them by their big money brothers? Ex-Goldman CEO, now Treasury Secretary Hank Paulson.

Now he’s proposing a taxpayer bailout to the tune of $1-2 trillion. The feds opened the door for other big money men, the private equity boys, to buy into failing banks. These are the same banks that will offload their junk onto the public.

1. Banks prices deflated
2. Investment by PEU’s, private equity underwriters
3. Banks dump their junk at premium prices, including 2nd liens, credit card debt, student loans, and car loans
4. Share prices rise
5. PEU boys profit handsomely

Warren Buffet just sunk $5 billion into Goldman Sachs. The Carlyle Group's financial division lobbied hard the last year to open up the gates for their billions. Carlyle's division head is Olivier Sarkozy, the brother of the French President. Yesterday, Nicholas spoke of capitalism gone unhinged at the United Nations. His brother works for a prime beneficiary of that unhinging.

Stay tuned. The deals will be fast and furious. Carlyle is sure to come out a winner.