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Weekly Wrap: Geithner's op-ed
Reviewing the week's headlines on Wall Street and beyond.
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For our Weekly Wrap of Wall Street and beyond we've got Lizzie O'Leary from CNN in Washington and our New York bureau chief Heidi Moore.
On Treasury Secreatry Tim Geithner's op-ed in the Wall Street Journal:
Lizzie O'Leary: I think he is speaking to the very specific audience of the Wall Street Journal editorial page and the folks who read the Journal as well for the news. What is going on right now, lest Americans forget, Congress passes a law. But then the most important part of that for the lobbying industry -- and all the industries watching the law, in this case Dodd-Frank -- is the implementation phase. So the big stuff isn't in place and he's trying to kind of bang the drum while people are fine tuning the regulatory parts of this act.
On the state of Wall Street:
Heidi Moore: The market is just going to do what the market's going to do. It would be great to read into [the market gains] that the market is picking up on the very soft elements of a recovery we've been seeing. But what we know is that last year, when everything was falling apart in Europe, the market was still up. So we should roll with it while we can.
For more, click on the audio player above.
Last year when the European markets were roiling, the US and European banks had successfully protected their sovereign debt investments in CDS just waiting for the sovereign default to come. There was no heavy lifting in making sure that CDS would be protected at 100% on the dollar, because the same players that protected these investments in the subprime loan market were there to protect these sovereign debt investments. The investments left to take the fall....there had to be write-downs to make this all seem legitimate, were mainly the pension and municipal funds, just as in the subprime loan meltdown. Geithner convinced the Europeans that using taxpayer money to stabilize the banks rather than letting them take the hit and be broken down, keeps them living to see another day of fraud and mayhem!
The second part of the rally last year was the announcement of the $25 billion mortgage fraud settlement that basically let the banks off the hook for the massive fraud and allowed them to keep fraudulent gains. This decision was a transitional phrase for the mortgage loan scheme.....all players safe from prosecution and all fraudulent profits secured.....now they are off on round two of the mortgage fraud that keeps on giving.....bundling and selling foreclosures for rental property. With the Savings and Loan dead, Pottersville is now the future these markets see for you and I!
What's not to rally? That is why you saw the markets rally during these unsettled times.
