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The Government: Your Portfolio Manager

Bennet Sedacca Oct 28, 2008 11:37 am


		State control of banks seeming more and more plausible.

It has made trading much more difficult, markets far less liquid, etc. Welcome to the law of unintended consequences.

One last thing, before I announce my new Socialistic portfolio (the one I would rather not own). It's my belief that the Fed’s commercial-paper program is there to keep GE (GE) (and GE credit) from seizing up.

Yes, I think General Electric has some problems, but this too shall pass, comrade, as the Fed and Treasury are here to spend our hard-earned cash.

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And without further ado, allow me to share our portfolio, the one I was told we own as citizens:

Nuclear-waste CDO’s that the Fed exchanged for Treasuries last year
Fannie Mae (FNM)
Freddie Mac (FRE)
AIG (AIG)
American Express (AXP) commercial paper
GECC commercial paper
National City (NCC) (via TARP money for PNC to buy)
The "Chosen 9": Citibank (C), Wells Fargo (WFC), JPMorgan (JPM), Bank of America (BAC), Merrill Lynch (MER), Goldman Sachs (GS), Morgan Stanley (MS), Bank of New York (BNY), State Street (STT). These banks were given no choice, they were force-fed.
PNC (PNC), Capital One (COF), SunTrust (STI), Regions Financial (RF), Fifth Third (FITB), BB&T (BBT), KeyCorp (KEY), Comerica (CMA), Northern Trust (NTRS), Huntington (HBAN), Valley National (VLY), UCBH (UCBH), City National (CYN), First Niagara (FNFG), Old National (ONB), Marshall & Illsley (MI) - many of these banks needed the money, and, in fact, many would otherwise be goners in a free market.

So there we have it, Comrade. I'm sure the list will expand to auto makers, life insurers and others, including municipalities. Banks will become nothing more than government-controlled utilities, where they're told what they can pay and to whom.

Welcome to the USSA - the United Socialistic States of America, a place where I cannot choose how to take risk, now what's in my portfolio.


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Comments (7)

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Jim M

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10-28-2008, 2:36 pm
Place your bets: Hiding behind the opaque glass of transparency lurks the question which begs the answer of who has what. Trillions of Derivatives, CDO's, and SIV's all makes of exotic debt instruments leverage to the hilt as Read More

Glenn Leech

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10-29-2008, 9:25 am
Are chipmunks, squirrels and ants smarter than people? The real problem in our economy for a long time has been the rapidly declining discretionary income of the average household. When we created social security back in t Read More

Luciano Samitier

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10-29-2008, 5:28 pm
I agree with Prof Sedacca. Actually after seeing his series of "Guess who has..." I decided to stay the sidelines. However, Imagine you let GE, GM, C, JPM, BAC, etc fail, and then let the free market rescue their remnants. Read More

John Erickson

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10-29-2008, 9:19 pm
I'm very grateful that I found your site in 2007. You've helped me make my way thru this and make not loose money. Now I've had a wild idea thats bugging me and I'd like it to bug you. Back when Hank charged onto the scene Read More

Bri Hop

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10-30-2008, 2:44 pm
Actually people like Phil Gramm and the "deregulatoring free market" thinkers (who said the investment banks can manage the risks) were instrumental in creating this train wreck and forcing the FED to act in regards to the credit system a Read More


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