Master Liquidity Enhancement Conduit (MLEC) wtf?

[kickysnana]

on edit links added

Am I the only one who sees this? This is THE definition of a sewer.

Now it is very appropriate because the bad paper that it is meant to deal with is a load of crap but are they actually going to try to repackage this load of crap in front of everyone one more time and sell it again?

:banghead:

The Smoke and Mirrors SIV Rescue Plan
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x29431

Citibank Implosion - Next Northern Rock?
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=389&topic_id=2050119

Credit crisis strikes UBS, Citi, Credit Suisse
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=3012464

U.S. Stocks Drop After Citigroup Says Consumer Credit Worsening
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=3029240

[soothsayer]

1. ok, you lost me. more detail?

[Jackpine Radical]

2. Read the links, child.

Read the links.

[brokensymmetry]

3. The market sees it - else it wouldn't be down.

This scam is so painfully obvious. Of course
it won't work. Certainly it won't "save" the
housing market.

I'm a doom & gloomer anyway, and this insanity
makes the condition worse.

[fasttense]

4. They did the same thing in 1998 to bailout the hedge funds.

New York organized the bailout and the Fed cut the interest rates to help them out.

But it didn't stop the dotcom bubble burst in 1999 (of course I have my suspicions that it wasn't so much the dotcom bubble bursting but the hedge funds' fake money going into those dotcom stocks that caused the pop) and the losses were still fairly large in 1998:

Among the investors who lost their capital in LTCM (according to press
reports) were:

· LTCM partners - $1.1 billion ($1.5 billion at the beginning of 1998, offset by their $400 million stake in the rescued fund)
· Liechtenstein Global Trust - $30 million
· Bank of Italy - $100 million
· Credit Suisse - $55 million
· UBS - $690 million
· Merrill Lynch (employees' deferred payment) - $22 million
· Donald Marron, chairman, PaineWebber - $10 million
· Sandy Weill, co-ceo, Citigroup - $10 million
· McKinsey executives - $10 million
· Bear Stearns executives - $20 million
· Dresdner Bank - $145 million
· Sumitomo Bank - $100 million
· Prudential Life Corp - $5.43 million

The market obviously sees it as a desperate attempt to stop the inevitable.

[donkeyotay]

5. Yes, they are doing this in public. Now if only we could get this deal.

Suppose you bought a house and took out a mortgage. You lost your job. You owe, but can't pay. No problemo. First, simply move your mortgage out of your name into your uncle's SIV, or special investment vehicle. Next, create a fund to buy the assets in your SIV. Next, create the paper for the fund to pay your mortgage with. Have the treasury sprinkle some holy water on it.

This is great. Ordinary people no longer have to lose their shirts. We'll all be rich!

[Monk06]

6. That's a pretty suscinct decription of how the liquidity shell game works

Next trick: if you borrow money to go to Hawaii,
the banks will give you a free trip to Hawaii.

Makes perfect sense.