Current Financial Mess

[TheAnvil 0]

I do NOT like this fucking bailout. As a matter of fact, I am 100% against it in its current state for myriad reasons.

I do NOT like government intervention in markets at all. Placing such a large amount of $$ in one branch's hands to expend as it sees fit on bad debts of creditors seems to violate the Appropriations clause of the Constitution on the part of the Congress. I mean that's a LARGE chunk of the budget. That would give the Treasury Department a GREAT portion of control of the loan market. The amount is obscene - how was it determined? I could go on.

Incremental steps could be taken prior to appropriating that obscene amount to the Executive branch with such a broad mandate. Or ANY amount, in fact. We'd be REMISS if we didn't take steps prior to injecting taxpayer $$ into the market. Fools, in fact. I'd like to see the following:

- Market-mark accounting rule should be modified.
- Re-examine the well meaning but punitive Sarbanes-Oxley act. Especially the section - 404 is it - for small businesses. THe SEC has mitigated this a bit, but cost of accounting is exorbitant and not good for the economy.
- CRA provisions of 1995 should be repealed. Like it or not, they helped cause this fucking mess. Deal with it.

The above two things could be done with some ease and would have an immediate effect on the market. After the above, we could look at a much SMALLER injection of capital into the market if necessary, though in principle I am TOTALLY against it, and do it in a sane time-frame with adequate debate and examination. If, after adequate examination, an injection of capital into the market to cover bad debt would STILL be necessary AFTER mark-market accounting rule modification, the amount of oversight I would require would be obscene.

Further, any capital going into the market would NOT be a grant, but a loan. I want that money BACK in the Treasury - with interest and one heck of a fee to be collected over the long term - say 20-50 years, the latter being a bit long but about the most I'd be willing to wait (with an increased interest rate) to recoup those taxpayer funds.

I'd want the $$ to go out in increments, each one to be reviewed and approved by 2/3 majority of both houses of Congress. Say - $10 billion increments max. One increment every two months maximum.

Any current exec of any bank receiving taxpayer $$ under this program would have his/her severance bonus approved by congress. I hate this. It makes my fucking blood boil. I don't think the government should have ANY business setting the salary or bonus of anyone not in government service. But in this case, I think it's fair. And it makes my blood fucking boil. Saying zero isn't fair to those who have done a good and honest job - and they are there. This dis-fucking-gusting government intervention should end as expenditure of funds to the banks themselves end. No compromise. Yes, I know some people want the gov't to cap executive compensation for all companies - and they're all fucking idiots and mental midgets of the lowest order. This would be for companies receiving market injection funds only.

My initial thoughts on a way out of this mess. If we're going to descend into the fringes of socialism at all, even for a short period, to save our capitalist system - and I DON'T FUCKING WANT THAT TO HAPPEN AT ALL - then we should require an extrication plan written in stone. If we take the right steps, I don't think the injection would be necessary - and definitely not at the levels currently being requested. Do you realize the amount of work and documentation it would take a department to justify a request of such magnitude during the normal budget cycle? FUCK.

Some random Anvil thoughts. Anyone have any along the same lines?

Vinny the Anvil
Post Traumatic Didn't Make The Lakers Syndrome is REAL
JACKASS POWER!!!!!!

[livendive 8]

I mostly agree with you, and find the following statement ironic:

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If we're going to descend into the fringes of socialism at all, even for a short period, to save our capitalist system - and I DON'T FUCKING WANT THAT TO HAPPEN AT ALL - then we should require an extrication plan written in stone.

Blues,
Dave

"I AM A PROFESSIONAL EXTREME ATHLETE!"
(drink Mountain Dew)

[TheAnvil 0]

It's ironic as hell...and I don't like it at all. Should be unnecessary.

Vinny the Anvil
Post Traumatic Didn't Make The Lakers Syndrome is REAL
JACKASS POWER!!!!!!

[jcd11235 0]

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I do NOT like government intervention in markets at all.

Historically, unregulated markets don't work well in the long run.

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Market-mark accounting rule should be modified.

How would you modify it? It serves a valuable purpose, allowing shareholders access to realistic values of corporations' investments. Eliminating the requirement, as has been suggested in another thread, would indeed be a very bad idea. I'm interested to hear what modifications you have in mind.

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Re-examine the well meaning but punitive Sarbanes-Oxley act. Especially the section - 404 is it - for small businesses.

How do you suggest §404 contributed to the mortgage crisis?

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CRA provisions of 1995 should be repealed. Like it or not, they helped cause this fucking mess. Deal with it.

No, they didn't. In fact, they may have actually mitigated the crisis. According to The Community Reinvestment Act: A Welcome Anomaly in the Foreclosure Crisis

Our study suggests that without the CRA, the subprime crisis and related spike in foreclosures might have negatively impacted even more borrowers and neighborhoods. Compared to other lenders in their assessment areas, CRA Banks were less likely to make a high cost loan, charged less for the high cost loans that were made, and were substantially more likely to eschew the secondary market and hold high cost and other loans in portfolio. Moreover, branch availability is a key element of CRA compliance, and foreclosure rates were lower in metropolitan areas with proportionately greater numbers of bank branches.

Prior to the foreclosure crisis, some had suggested that the boom in subprime mortgage lending, by easing access to credit for LMI borrowers, rendered the CRA irrelevant or obsolete. However, the demise of subprime lending, even if only temporary, and the lower proportion of high cost loans made by CRA Banks even when the subprime market was thriving, suggest that the CRA still has a vital role to play.

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Further, any capital going into the market would NOT be a grant, but a loan. I want that money BACK in the Treasury - with interest and one heck of a fee to be collected over the long term - say 20-50 years, the latter being a bit long but about the most I'd be willing to wait (with an increased interest rate) to recoup those taxpayer funds.

Every bailout proposal I've heard involves loans, not grants. I agree that grants would be a bad idea. Personally, I think you might be a little too generous with your timeframe for repayment, but I haven't looked closely at it.

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I'd want the $$ to go out in increments, each one to be reviewed and approved by 2/3 majority of both houses of Congress. Say - $10 billion increments max. One increment every two months maximum.

The problem with that suggestion is that in some cases, $10 billion would not provide sufficient capital to make the bailout effective.

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Any current exec of any bank receiving taxpayer $$ under this program would have his/her severance bonus approved by congress.

I'm not sure it was Congress that did it, but the CEO's of Fannie & Freddie lost their golden parachutes. I suspect other CEO's will receive similar treatment. I hope so.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[SkyDekker 1,465]

Well, you get what you vote for.....

I have said it before, the man has a history of bankrupting anything he comes in contact with, now he has done it with the US.

Regardless of whether this package gets accepted or not (and I am pretty sure it will, welcome to the feelings those had who were against the invasion of Iraq), we are witnessing the end of the US as the economic powerhouse.

Bush certainly doesn't get all the blame, but it all happened on his watch....and we all know where the Buck is supposed to stop....

(btw, I agree with the thoughts and economics behind you post, it is however very ironic to see Bush standing there and telling people the US should socialize the financial system)

[Amazon 7]

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(btw, I agree with the thoughts and economics behind you post, it is however very ironic to see Bush standing there and telling people the US should socialize the financial system)

Hey as long as it protects the Bush Family fortune as well as all the other fortunes the Friends of the Administration have amassed under this massive raid on the treasury.. its all good.

Those of us who have been telling people for YEARS that this much deficit spending was going to paid for one day.... and we were called all kinds of names by our right wing detractors....

WELL... the old adage of "I Told you so"......does come to mind...

It just has happened a tad faster than many of us thought.

[NoShitThereIWas 0]

Vinnie, even though I know you and I are on opposite ends of the political spectrum (and I would be willing to bet money you voted for Bush) and I wouldn't vote for Bush if he was the last piece of dung on the planet, I would vote for YOU for President in a heartbeat because I think you are so damn brilliant! I miss you Vinnie!!!

Roy Bacon: "Elvises, light your fires."

Sting: "Be yourself no matter what they say."

[nerdgirl 0]

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… we should require an extrication plan written in stone. If we take the right steps, I don't think the injection would be necessary - and definitely not at the levels currently being requested.

Concur. De-creating a new organization or budget line item is even more difficult than creating one. An exit plan or roadmap should be part of the legislation, imo.

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Do you realize the amount of work and documentation it would take a department to justify a request of such magnitude during the normal budget cycle?

Yes.

VR/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[kallend 2,106]

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Vinnie, even though I know you and I are on opposite ends of the political spectrum (and I would be willing to bet money you voted for Bush) and I wouldn't vote for Bush if he was the last piece of dung on the planet,

But according to the GOP in 2000, Bush was better qualified to be president than McCain.

...

The only sure way to survive a canopy collision is not to have one.

[ChasingBlueSky 0]

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It's ironic as hell...and I don't like it at all. Should be unnecessary.

Isn't it funny how Ron Paul was right?

Bailout or not, nothing will change. The free market is not there anymore to help capitalism. It is there to make money for those that feel they are the smartest person in the room. Give them enough rope....

_________________________________________
you can burn the land and boil the sea, but you can't take the sky from me....
I WILL fly again.....

[jcd11235 0]

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Isn't it funny how Ron Paul was right?

What, specifically, was Dr. Paul right about? Links to the relevant claims would be appreciated.

If anything, this financial crisis offers further evidence that Austrian economic theory is not valid in the real world.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[ChasingBlueSky 0]

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Isn't it funny how Ron Paul was right?

What, specifically, was Dr. Paul right about? Links to the relevant claims would be appreciated.

If anything, this financial crisis offers further evidence that Austrian economic theory is not valid in the real world.

Considering that Peter Schiff was a supporter and advisor to Ron Paul?
http://www.youtube.com/watch?v=IU6PamCQ6zw

_________________________________________
you can burn the land and boil the sea, but you can't take the sky from me....
I WILL fly again.....

[jcd11235 0]

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Considering that Peter Schiff was a supporter and advisor to Ron Paul?
http://www.youtube.com/watch?v=IU6PamCQ6zw

That was an interesting video, especially with the benefit of a couple years of hindsight. Thanks for posting it. Mr. Schiff made some very reasonable observations and comments, but in those comments he stayed away from the most important tenet of Austrian economic theory, the belief that any government regulation or intervention in the economy is bad.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[joedirt 0]

You really miss the point. They're saying these bubbles are created by artificially low interest rates set by the government. THAT IS THE INTERVENTION that causes the problem. Things have to deflate to become healthy again. That is his point.

The politicians throw these trinckets out there for each side to fight over but it's all bullshit. It's not deregulation at the root of the cause. It's not "community reinvestment" programs either. If the money wasn't available it would not be an issue. The money will always find somewhere to go. The government DID intervene after the dotcom bust, which created an even bigger bubble that we are dealing with now. They lowered rates down to 1 percent by 2003 or so.

At least that is the argument of the Austrian school Schiff subscribes too. I don't know for sure he's right but from what i've seen it makes more sense than anything else i've heard. Economics is a social science, any one particular philosophy has hardly been "proven".

[speuci 0]

Interesting article I dug up: http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&&scp=2&sq=STEVEN%20A%20HOLMES&st=cse

Now ask yourself this: If you were Bush, would you have killed the Clinton policy? Hell no you wouldn't, you would be labeled racist.

RE: Mark-To-Market
Agree with OP, we should undue FAS 157 and loosen mark-to-firesale-price. Should be some other regulatory scheme which keeps asset-holders honest, but damned if I'm smart enough to know what that is.

RE: Bailout
Me thinks the greatest problem with the bailout is calling it a bailout. To me, bailout used to mean government assumption of a corporations liabilities with the concurrent wiping out of all equity holder stakes.

This "Bailout" is rather an investment. Government buying on its own account mortgage related CDO's. Government could stand to make a KILLING on this (provided some people still make their mortgage payments)

[marks2065 0]

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Vinnie, even though I know you and I are on opposite ends of the political spectrum (and I would be willing to bet money you voted for Bush) and I wouldn't vote for Bush if he was the last piece of dung on the planet,

But according to the GOP in 2000, Bush was better qualified to be president than McCain.

we all make mistakes. until bush the dem's made the big mistakes, now the dem's took back the honor with the ban failures.

[kallend 2,106]

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Vinnie, even though I know you and I are on opposite ends of the political spectrum (and I would be willing to bet money you voted for Bush) and I wouldn't vote for Bush if he was the last piece of dung on the planet,

But according to the GOP in 2000, Bush was better qualified to be president than McCain.

we all make mistakes. until bush the dem's made the big mistakes, now the dem's took back the honor with the ban failures.

Well, thank you for admitting 8 years of mistake.

Why should anyone trust the GOP to do better this time around?

...

The only sure way to survive a canopy collision is not to have one.

[joedirt 0]

That was the same year the Glass Steagal act was repealed. Really though, i'm sure Bush loved how the housing boom made for a very mild recession. These things just showed the money where the path of least resistance was.

[marks2065 0]

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Vinnie, even though I know you and I are on opposite ends of the political spectrum (and I would be willing to bet money you voted for Bush) and I wouldn't vote for Bush if he was the last piece of dung on the planet,

But according to the GOP in 2000, Bush was better qualified to be president than McCain.

we all make mistakes. until bush the dem's made the big mistakes, now the dem's took back the honor with the ban failures.

Well, thank you for admitting 8 years of mistake.

Why should anyone trust the GOP to do better this time around?

why should anyone trust Obama with the relationships he has with radical groups and people that ran fannie and freddie into the ground?

the deficit under Bush has a little to do with 911, katrina, rita, failed clinton era problems, so i do not put all this on him. even when he has tryed to do the nright thing he has run into road blocks by the oposing party. if you eliminate terrorists and natural disasters i think Bush's rankings go way up. i also think if another person was president and had to face these disasters they wouldn't fare to well either.