PPIP Has Buyers But Can It Find Sellers?
I don't usually agree with Rochdale banking analyst Dick Bove, but this is a very good discussion from FBN.
Bove says:
- "On P-PIP, I don't think it's going to be very much of anything." He's right.
- He says that the absence of sellers and existence of buyers "means the assets are undervalued." He's wrong. The reason there are no (or few) sellers is because of the change to FASB 157. The mark-to-market, fair-value accounting nonsense from a few months ago. Why sell and take a loss if you can keep the asset locked in the closet of fairytales and purple unicorns.
And this assumes his supposition is even true. After all, who would admit publicly that they're going to be a seller. It's akin to a sick animal signalling the vultures circling overhead that it will be dying shortly, so 'come on down.' No bank CEO is that obtuse. Bove doesn't have a clue about seller participation. He could be right, but it would be a lucky guess. Only FDIC, Treasury and Fed officials know who the sellers are.
Best line @2:40: "Citigroup has always been a snake pit and a mess. It's the perfect example of how not to run a company. It's been one disaster after another. Just like the New York Yankees."
We never covered it but PIMCO and Bill Gross chose not to play in Geithner's toilet bowl.
