The Circle of Credit

Here we go again=JPM is going to loan Blackstone and Carlyle group 2bln. Where is JPM getting the money? More than likely from the FED Discount window. Where is the money going? Probably to buy some of the toxic garbage from C's balance sheet. Once again the FED is becoming the banker of last resort using JPM to skirt the law and implement its program. Blackstone, Apollo and TPG are in the process of buying some LBO loans from Citi-some are probably their own paper for 90 cents on the $, but backed buy a 20% indemnity from C. This is to sidestep the issue of marking the paper to true mkt and thus forcing the rest of the garbage portfolio to be marked accordingly. The deeper the problem, the elaborate the balance sheet manouevers.