Tuesday, November 25, 2008

Shell game

If you recall way back when Trader Hank announced the first bailout plan that was necessary in order to stem the decline of Western civilization he was going to buy toxic mortgage securites that were clogging the financial system.

End result? Capital injections into banks.

Now he is going to announce that in order to stop the Visigoths from storming Rome he is going to help 'investors' buy toxic credit card,student loan, auto loans and probably a couple derivatives that are valued by how many coins Guisseppe has in his pocket when he goes to the fountain.

End result? Capital injections into the 'investors' and the banks.

Do we really need to give a hand-out to private equity funds?

The assumption is that the comment Hanky Panky made to Dickie Fuld that he wants to crush the bad hedgies and regulate the rest es la verdad, and if so who else had enough U.S. pesos to buy but private equity?

(2nd assumption here is that sovereign wealth will sit it out.)

To understand the world of private- equity please consider the following from yesterday's WSJ:

TPG boss David Bonderman told a conference in Hong Kong this month that, unlike hedge funds, which allow investors to get their money out in as little as 45 days, "private equity all has long-term lockups. So you may like our performance, but you're my partner for the next 12 years." Mr. Bonderman then made a loud smooching sound, sending the audience into hysterics.

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