Saturday, September 20, 2008
Tom Maguire is awfully smart on the bailout, with an assist from Kevin Drum. Friendly reminder that at today's estimate of $700 billion, we're talking 4.9% of first year GDP. That is a bit less than twice the cost of the S&L bailout of twenty years ago, including the RTC piece, again as a percentage of first year GDP. Calculations here for those of you new to the party. Whether that is distressing or reassuring depends, I suppose, on your appetite for sticking it to the kids.
I dunno. Tom seems to be waffling as to whether it's liquidity or it's insolvency. In either case, I don't see how the reverse auction solves anything because you'll get crummy prices for either reason.
Is hope a plan? No. And true, the government has broader obligations than just making a profit, but the obligation is to the public, not to the banks etc. The government should take them for what they're worth and then resell the institutions.
What should be happening is the government letting them drown and somebody else buying up their assets for a song. New blood is in order. A bailout further entrenches the current Wall Street power structure.
The bailout is ridiculous, and not needed, and only taxes future generations. (And both candidates want to increase govt spending?) NESARA as drafted by Dr. Barnard is the only way out of our fiscal and monetary mess. Force balanced budget, abolish income and capital taxes in favor of 14% sales tax on everything else except rents, groceries, insurance, and medical services; new monetary tools to ensure 0% inflation; abolish compound interest on secured loans in favor of simple monetization fee, and require principals be paid before before banks are allowed to collect on the monetization fee. No payment no matter how small will always reduce a debt to zero, banks more willing to prevent foreclosures and will turn around funds for more loans sooner. No more of this pay for 2.5 houses just to own 1. Pay for just 1.5 and be done with it in 17 years. National debt paid off in 30 years while standard of living doubled within a generation. NESARA (not the hoax, but Dr. Barnard's original version). A 21st century engineered solution for a 21st century economy. Google the NESARA Institute.
Bailing out foreign banks holding these toxic assets ... wonderful.
You know, a trillion here, a trillion there. After awhile, it adds up to real money. Wonder when the geniuses in DC figure that out?
I too have been wondering about Glass-Stegall, but more, wondering WTF Washington's been doing in between undermining the administration? everyone else noticed a boom in housing, driven by speculation on real estate, and increasingly easier access to capital, ending in no-income verification and kooky derivative mortgages.
What committee owned watchdogging this?
Even as we speak, hundreds of MBAs, each fearing for his next multi-millions dollar bonus, are in their offices (and have been all weekend) reviewing portfolios of assets. They are separating the "good" bad assets from the "bad" bad assets and transferring them to shelf corporations for registration tomorrow. Once the pressure is off and the government cash is flowing, they profit from these much smaller but new funds, knowing that, if the new funds fail, they can go to the same government window and be bailed out.
I am also certain that the family and good friends of brave congressmen like Biden, Dodd, Rangel, Boxer and other members of the Congressional Black Baucus will share in the appreciation of these wealthy MBAs and members of the financial mafia,