Vigilant Investor

Around Vigilant Investor, we always say “follow the money.”  No doubt, there is a history in the United States of bailouts that always happen to benefit the biggest in Wall Street.  (Some call it a deliberate bailout  game.)   Wall Street risks lots of money.  Wall Street makes huge profits.  The economy blows up, and Wall Street is bailed out, although the biggest seem to absorb the assets of the weak at extreme discount.  This has a long history in banking relative to expanding and contracting money supply, so we’re keeping track during this crisis.

U.S. Government

1. Nationalizes 50% of mortgage market with Fannie Mae and Freddie Mac
2. Buys 80%, $80 billion stake in AIG, world’s largest insurer.

Bank of America

1. Buys Countrywide Financial, largest U.S. mortgage originator, on cheap, May 2008
2. Buys (mergers with) Merrill Lynch as Merrill on cusp due to bad portfolio

JPMorgan

1. March 2008: Buys Bear Stearns on extreme cheap with Fed guarantees
2. September 25, 2008: After changing charter to bank holding company the prior week (from investment bank), buys Washington Mutual’s banking operation for pennies when WaMu seized by FDIC.

Goldman Sachs

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