Saturday, September 27, 2008
Paul Kedrosky is also burned out on our political class:
Take your third deep breath in ten days. Because we stand at a precipice in U.S. markets. Congress is playing political brinkmanship with the biggest financial decision of our generation. We just had the largest bank failure in U.S. history. Credit spreads have widened to the point of gibbering meaninglessness. And some people are still nattering about what might be the perfect variant of the Paulson bailout plan.
Listen. There is no perfect. As Voltaire wrote, "Le mieux est l'ennemi du bien". The perfect is the enemy of the good. No plan is perfect; no plan will be static. But standing on the precipice and inching every closer to the abyss is stupid and suicidal. We need to ease the pressure in the system by moving to allow losses to be written off over longer periods, by getting bad paper out of institutions so counterparty trading can happen, and perhaps by some easing as well. Take preferred shares along the way, absolutely, but credit markets can't be left like this for much longer.
Some people don't care. A few just haven't thought it through, but others are so wrapped in their anti-Wall Street vendettas, their ideological purity and their Calvinist moralizing that they would rather see everything come down around their ears -- look at all the shiny creative destruction! -- than worry that it's their economy too.
There is more, including bad words.
But this is a strawman.
The same people who got us in this mess want a blank check and no oversight and we should trust they will get us out.
They already gambled their own money into oblivion and now they want to go double or nothing with ours.
The paulson plan is not good. It only works if you believe the market already bottomed. I think houses are overpriced. Paulson thinks he can hold and win.
The dodd plan is worse. It offers little oversight and the ability to also deal in credit card and student loan debt, and funnels any profits into other funds!
The idea of profit is crazy, but even if I'm wrong and we do make a profit, that money should not be spent on more programs!
They need to stop pushing these stupid bad plans, take a deep breath, and make a good one, not a rushed one. That's what they should have done this week, but they didn't.
Dodds plan will reward the government for bad decisions and penalize businesses that screw up less. Its not smart.
I'm usually in favor of non-perfect action over inaction (I've been on enought committees in cubicle land to have learned that) but a bad rushed plan can also do more harm than good. (See "new deal")
Maybe a depression would do the country good. Houses would become affordable for survivors. Gasoline prices would go down. Democrats would have no money to waste. The obesity problem would disappear. Lefties would have to join the army to eat. Others lefties would have to sing hymns to get free soup at churches.
Meanwhile, country folks will survive.
It's time to listen once again to the song "A Country Boy Can Survive" by Hank Williams Jr. Here's the link:
Not so sure the Government needs to be provider of liquidity on this bad paper. Both Warren Buffett and the CEO of several major hedge funds said they would love to be able to buy this bad paper at the governments price
I don't expect a "perfect" plan. I just want the best plan . Best doesn't mean perfect. I just don't think reasonable consideration has been given to other plans. We need to get this as close to right as we can, and that means taking a little time to consider all the opeions people are presenting.
I've heard (Newt, was it?) that if we just eliminated the "mark-to-market" accounting rule, that would go a long way to easing the troubles. There was some second thing mentioned along with that, but I can't recall it off the top of my head at the moment.
I just don't want to rush into the government using taxpayer money when they can't say for sure if that will be the end of the problem...
"Maybe a depression would do the country good."
You know, I'm of the same mind. We've had it far too easy for far too long. It would certainly do today's youth a world of good to learn what hardship really can be, because gods know that they've got no idea.
Jeeze, I sound like my grandfather.
I was listening to one of the financial advisor shows on the radio this morning. He said the problem was related to Sarbanes Oxley, which stipulates that the companies have to value their assets every day. The value has to reflect the days market. If there is no one buying then the value is zero.
Sounds a little simplistic, but if there is any truth to this then maybe the quick fix is to revise the daily valuation law.
I lost my job in the Post Cold War recession of '91. I had a wife and 5 children at home, a mortgage and was on my way to making $100,000 a year at the rime. I went 18 months without full time employment, and the most I brought in part time was $15 an hour. I never recovered financially, and have yet to reach the comfortable wage rate I once had. During that whole time and for years afterward I tried to think of some sort of upside to what happened to my family, and there wasn't one. That was a RECESSION. Any one who thinks a DEPRESSION is going to have some kind of magical "silver lining" is gravely mistaken.
That's life, Tyree. Sometimes you get the bear, and sometimes the bear gets you.
Maybe if you had developed better survival skills at an earlier age, you would have done better.
I did very well in the Cold War recession of '91, and I was in the aviation industry, which saw big cutbacks at the time. You have to MAKE things happen. No risk. No gain.
Don't have a good job? Start a company. Be market-driven, not product-driven. The global marketplace tells you how to make money in good times and bad.
I've sent Rep. Sue Myrick 2 emails urging her and the Cantor group to hold the line and not negotiate away free-market/conservative principles. It's easy for those on the left to scream panic and demand action when the action they are pushing is pure, left-wing, socialistic largess.
Frankly (and I don't say this lightly) I'm ready for a political showdown as I'm tired of the incessant leftward drag of our country by socialist politicians, academic elites, and the MSM.
Our answers are better than their's, both in the short and long term. Why should we not fight for lower taxes, pro-growth incentives for business development, and sensible accountability, not stifling regulation?
I have a wife of 2 years, a baby due in 30 days, and less than I would like in savings/liquidity. I'm scared of where we might be headed and do believe something should be done. However, I'm not willing to sacrifice what I believe at my core to satisfy the left-wing political class that will use use every opportunity to advance their socialist agenda. I don't disagree with the diagnosis, but will not provide this government and those on the left a blank check to be bludgeoned with for the remainder of my life.
It is time we on the right accept the following reality: the left in our country, and the world as a whole, does not seek to exist with those of us on the right. They seek to destroy us politically. They do not seek common ground, they seek a burial ground. If we do not begin to approach them in the same manner, we will cease to exist as a political voice.
In short, I'll not trade in my core beliefs so that this liberal led government, with socialistic intervention, can "save" my ability to have a big house, 2 cars, and flat screen tv.
We must do something, but we must do the right (correct and conservative)something...
DEC - Economic down turns hurt people who are not numbers. Encouraging them so that people have a chance to "sharpen their survival skills" is crazy. One of the byproducts of the last depression was a global world war. That is quite a downside, if you ask me.
"And some people are still nattering about what might be the perfect variant of the Paulson bailout plan."
I am not asking for a "perfect" plan, but I draw the line where some on Congress want funds funneled into activist agencies like ACORN to sign on to a recovery plan
You don't sharpen your survival skills during an economic downturn, Tyree. You sharpen them before the downturn if you don't want to learn lessons the hard way.
Personally, I think World War II in Europe had its roots in the Treaty of Versailles of 1919, not in the Great Depression. (Yes, there were other factors.)
As John D. Rockefeller said shortly after the crash of 1929, "In the 93 years of my life, depressions have come and gone. Prosperity has always returned and will again."
In Japan's case, the existence of the British Empire inspired the Japanese. The Japanese basically said, "Britain is a small island nation. We are a small island nation. We can do the same thing."
On this planet you are either predator or prey. Ups and downs are part of life (unless you live in a left-wing country, where you experience only downs). Get used to them.
I'm not advocating economic downturns. But I don't fear them.
Besides, the remark about hymns should have tipped you off that I had a smile on my face when I wrote the comment. (DF82 picked it up. You can tell by his amusing response. But he's right. Americans are too soft.)