By MICHAEL GRAY
Most news outlets treated President Barack Obama’s bank CEO summit as the head tellers being called to the woodshed to be punished for getting the country in troubled and then paying the culprits too much in bonuses.
The CNBC’s off the world along with major newspapers said compensation reform was topic one on the agenda. If that was the case, then we are in serious trouble. Bonuses and other salary questions are a smokescreen for Congress and Main St.
The bank stress tests and balance sheet derivative exposure had to be the principal agenda item at the table. Treasury chief Tim Geithner, and White House economic team members Larry Summers and Christina Romer sat in on the meeting.
The photo op afterward allowed Team Obama to show the public they were with taxpayers in their demand for reform, again just window dressing.
April will be the cruelest month for all these banks as Washington releases its public private partnership in pricing the toxic paper-recycling plan.
This plan will have many of the banks hitting new lows as the marks on balance sheets are shown to fictitious pricing with no basis in reality. On the back of this announcement will come the results of the stress test, which all will pass, because of grade inflation, and will have no bearing on the financial health of the bank.
Look for the Dow Jones to be at the 6,500 level by month’s end.
China’s Dollar Menu
With G20 scheduled to meet Tuesday in London, global finance ministers are scrambling to avert a huge schism between China and US over its dollar strategy. Just today Chinese central bankers have asked for global reserve currency to be the number one item on the agenda.
The Chinese, who hold the largest stake in dollar-dependent assets, are talking down their book to such an extent that the back-channel discussions must heated.
According to Treasury Department figures China holds $740B in US notes and although its appetite for debt has slackened China still is the largest buyer.
Although Fed chief Ben Bernanke will challenge the Chinese in buying up debt going forward through his “quantative easing” strategy of buying Treasuries in an attempt to lower longer term lending rates.
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