October 2, 2008
It's Christmas in October! To paraphrase Mencken, writes Mike Flynn, the bailout bill is neat, plausible, and wrong.
Help Reason celebrate its next 40 years. Donate Now!
Try Reason's award-winning print edition today! Your first issue is FREE if you are not completely satisfied.
I can see it now.
There's an election coming up and we have a say in Wall Street
firms decisions. But being the morally pure, uncorruptable people
we are, we would never attempt to grease the skids in
October to help the incumbents. That would be unthinkable. It would
all become apparent to the electorate 6 months after the the
votes are counted.
But I don't have a degree in economics so I'm probably
underestimating the danger we all face (a recession, they happen
and are not the end of civilization) and overstating the theorized
dangers this all represents. Right?
Is America really this fucking stupid?
I can think of nothing scarier than the notion that the gov't
sitting in on the board meetings of financial companies. Why
shouldnt' they? After all, after this Bill passes, they will be
major stakeholders in these companies.
And why shouldn't government bailout the pension liabilities of GM
or Ford? Frankly, there is more justification for that, than the
self inflicted damage of the banks and finance companies.
So fucked up. Reason.com is like an oasis of sanity in this
mess.
J sub D
"Is America really this fucking stupid?"
American isn't (this whole bailout bs is very unpopular with most
of the electorate), but yes, congress is that stupid.
American isn't (this whole bailout bs is very unpopular with
most of the electorate), but yes, congress is that
stupid.
90% of the congresscritters running for re-election will win
another term. I ask again,
Is America really this fucking stupid?
Under this plan, however, federal bureaucrats and their
outside contractors would decide which assets to buy. They would
ostensibly go from institution to institution, review the books,
and say, "We'll buy this and that; you hang on to those." The
government will be actively investing taxpayer funds in individual
securities and then managing the portfolio until such time as it
decides to sell.
And, the best part: Paulson and his minions will be actively
seeking the worst assets, and paying a premium for
them, to get them off the books without forcing the banks to
recognize the true loss. Anybody who thinks these assets will ever
be sold at a profit is nuts, or worse.
J sub D | October 2, 2008, 5:50pm | #
But I don't have a degree in economics so I'm probably
underestimating the danger we all face (a recession, they happen
and are not the end of civilization) and overstating the theorized
dangers this all represents. Right?
J sub -
No, shit is more fucked up than cyclical 'recession'.
If you want, i'll point you to a few indices that (added together)
give an idea about the issue. But it takes a little experience to
see the problem. Check this
http://economix.blogs.nytimes.com/2008/09/25/how-to-track-the-crisis/
TED spread is a good indicator of the problem level - also the case
shiller index room to drop. We are probably going back to 2002
level asset values.
Treasury expects to pay some unknown premium above any current market price for mortgage-backed securities (MBS).
Boo-fucking-ya...
we. told. you. so.
But it's all going to be profitable... or something. Where's my
free goddamned pony?
*Cleaning the firearms*
Some commentators have drawn parallels to the Savings & Loan bailout in the 1980s, when the government established the Resolution Trust Corporation to dispose of the assets of failed thrifts.
Comparitively, the Savings & Loan bailout was throwing small
change into a shallow pond compared to this boondoggle.
It was uncovered by the market, as analysts realized that much of the company's story was fiction. Markets with free flows of information are the best guard against meltdowns.
All hail short-selling. Oh, and those curmudgeons who keep
pestering, "So, how do you make your money again?"
"There does seem to have been a comprehensive failure by the
ratings agencies to appropriately analyze the MBS, but torts are a
better way than new regulations to correct this."
By "torts" I suppose Mike means "trial lawyers," because only a
bang-up trial lawyer could come up with a lawsuit--it would have to
be a class-action job--that could actually collect some real cash
from the rating agencies. Are the guys at Bear Stearns, FM1 &
FM2, Lehmans, and AIG going to be able to collect? What about
anyone who's owned stocks over the past year? Reason and trial
lawyers together! Economic disaster makes stange bedfellows, I
guess.
Site comments/questions:
Media Inquiries and Reprint Permissions:
(310) 367-6109
Editorial & Production Offices:
3415 S. Sepulveda Blvd.
Suite 400
Los Angeles, CA 90034
(310) 391-2245