I'm in complete agreement. The current banks obviously cannot manage themselves and should be allowed to go bankrupt. Other banks with better management will take their place. These same people have been screaming for the free market to work (sending jobs and money over seas), why not let it work for them? My only condition would be that nobody currently involved in any of these banks would be allowed to work in the banking industry or any level of government.
They could still work at Wal-Mart alongside the people they've screwed in the past.
is that it isn't big enough. The American taxpayer should not just bail out Wall Street past screw-ups, but its future screw-ups as well. Just put it on the national credit card.
Plus, the taxpayer should bail out homeowners who can't possibly afford the houses they "bought". The taxpayer should also bail out people that charged too much to their credit cards, bought those huge SUV's that get no gas mileage, and any businesses in America that might get into trouble because they make shitty products (like the airlines and automakers).
And while we are at it, the American taxpayer should bail out foreigners too. After all, the American taxpayer has an endless amount of capital to draw on, so it would be a crime not to spend it right now.
My message to Congress is: "Go Big or Go Home!"
A few trillion for Wall Street is just not enough. We need to start thinking in the quadrillion!
This is really bad news for China holds I believe it's 20% (or is that all foreigners) of US debt...it's significant.
Meanwhile in Wall Street stocks are way up thinking this is some great gift waiting under the Christmas tree.
I have an issue with not letting the home prices fall. The reality is people simply cannot afford these prices. A $2000 a month mortgage is obscene and that's still often the type of situation one is in trying to buy a home.
Hillary was pretty tame in her WSJ article for she called a while ago a freeze on foreclosures to stop the entire slide and a redo on the system.
Least we not forget Biden was one of the big pushers of the bankruptcy bill which won't let bankruptcy judges renegotiate mortgages so people can stay in their homes.
Bottom line they have been and are squeezing the middle class, blood from a stone and they sucked the middle class dry a while ago and here we are.
Why didn't people think of this before? Just give Wall Street a few trillion dollars in taxpayer money and then everything is made right.
What I don't understand is why should we stop at a few trillion? Why not a quadrillion? Then not only will everything be made right for America, but for the rest of the world too.
And if we gave Wall Street a quintillion then we would make things right for the rest of the universe as well.
It'll make a great movie. The American taxpayer will save the universe through the altruistic Wall Street bankers.
I read the CBO statements and it's fairly clear (and don't let me just put them on the hook, other analysts are saying this) that this might not work at all and instead backfire.
It appears they must address liquidity somehow but beyond that, why they are not using things like a HOLC or RFC is beyond me. Use systems known to work.
I just disagree that saving the dollar and a federal government run by unelected idiots on Wall Street is what needs to be done.
I think what needs to be done is a return to independant banking systems based on the state- right down to the minting of money- and a restriction on trade across state borders to the barter system.
After reading the gloom and doom predictions if Paulson doesn't get his credit card soon, I did some checking and ya know, there are a whole bunch of nifty alternatives out there in economics land that might be more useful for day- to-day Americans and small businesses than Wall Street:
And of course, there's Grandma Flo's general advice on money and banking:
Prime applies to banks and beef and its the best - accept no substitute (no sub-prime loans for anyone ever - prime is the best rate for the best risks)
If I can see it I believe it (do not accept paper assets unless you can reach out and touch the paper's bottomline owners - you can't see the house behind the mortgage, don't buy the MBS)
Bet on a maker not a faker (manufacturers are better investments than market driven speculative issuesover the long run)
If you live above your means you're gonna splat when you hit (live below your means whenever possible)
A conservative banker may not be rich, but he's less likely to wind up poor
Greed is a foundation built on quicksand - it never stops sinking and taking you down with it
Your wealth is not your assets less liabilities - its what you have in the way of friends, family and future-focus
Thoughts?
DoubtingTom2
Doubt is an honorable state in the face of unjustified certainty. - Uncle Max
Then I for one suggest that we do not have an economy, just a ponzi scheme con job, and that Wall Street and Credit should be made ENTIRELY illegal. Pump in whatever cash you need to everybody to enable all loans to be paid off, then set the usury rate at 0%, because anybody running a business on credit is being reckless and stupid.
Oh what a way the tables of turned, do you recall any countries that the US refused to do business with in the past?... hmmm maybe countries like Cuba.. does the word EMBARGO ring a bell? Well it looks like our Chinese counterparts are taking a lesson from our actions and giving us a taste of our own medicine. If China, one of our biggest trading partners says to “stop interbank lending to US financial institutions” that says a mouthful for worldwide sentiment. I can also expect Japan and other countries to follow suit. And I actually agree with them. Force the US to PROVE itself to the world before allowing them to continue the game. It feels as if the Us is sitting on the bench, while China and the other once “3rd world” countries are on the starting line up. I say we substitute Paulson, Bernake, Bush and Cheney. I wonder how much that would help our image.
There's an honest argument that I think should be looked at.
The FDIC solution.
The FDIC does not insure all deposits, just those beneath $100,000.
Maybe something similar needs to be used for the purchase of failed financial assets.
How much of the financial wealth tied up in these banks is owned by shareholders who have massive holdings?
It's one thing for the government to act to insure the value of small holdings like grandma and grandpa who've got $100,000 from their 401 K, but it's a whole other thing to give a billion of taxpayer funds to one individual.
So first, let's set a cap. The federal poverty line (A) for a family of four is $21,200. The average American life expectancy (B) is 78.1 years.
So the bottom line is that a family could live their entire lives without working a single day (A x B) if they had $1,655,720. Let's be generous though and set the cap at $2 million.
What this means is that government payouts to the holders of failed financial securities will be capped at $2 million. Everything above that is written off as a personal loss.
Let's have a government financial insurance package, not a bailout. And as with any government insurance means testing must be part of the equation.
The real question is what percentage of the securities that the US government wants to buy are excluded if we include a threshold such as this?
If the issue in the first place is that the securities in question have no value without government intervention, then there is no 4th amendment issue with an insurance plan of this sort.
We need a banking system, but we should toss out the current hucksters. Make the investment banks eat their losses, clean out the old management, and if need be nationalize the part of the banks that actually loans to real businesses.
The banks should be forced by auditors to acknowledge their junk assets. If they can't take it, they should be forced to declare bankruptcy. If need be the bankruptcy process can be run to nationalize the banks. Steps should be taken to expedite this process.
The housing market should be allowed to fall. Housing prices should be allowed to fall, and if homeowners can't afford existing prices, the lenders should be forced to take their losses, and accept lower mortgage payments based on revaluations of the houses.
Next, we need more investment in manufacturing, and the new businesses. We should have a bank devoted to lending money to create manufacturing jobs. When companies shut down, the government should provide assistance for fired employees to create new companies, possibly competing with their former employers. If employers know outsourcing is likely to lead to their employees starting competitors, it may become less common.
Nice to be where folks actually think through problems rather than attack personalities. I think the idea of letting folks in homes stay there and rework their mortgages to meet the owner circumstances makes a good deal more sense than the current foreclosure process.
$100 or 200 a month paydown of principal with owners maintaining and insuring the property is better than a bank carrying it as defaulted collateral that the bank (or Fannie or Freddie) has to maintain at their cost.
As for marking-to-market the housing already in foreclosure, here's a proposal. Convene grand juries (multiple) in each locale and have the jurors go to the site, walk around, then tell what they'd pay for the house today. Throw out the highest and lowest figures, average the remaining quotes and set the taxable, mortgage and market value of the property to that figure. This eliminates a lot of the potential abuse that is going to occur as "the professionals" try to value the properties.
I think that American ahistoricity has caught up with us: as I recall, the problem that set the '29 depression into motion was too much concentration of capital in too few hands. So why are we letting BofA and other folks snatch up the failing firms? Maybe we ought to think reginally and locally with investments and focus on manufacturing in some parts of the US, irrespective of how "sexy" that does or does not look in DC or NYC.
Not sure how you would allow them to fail in such a way as to pick them up so fast. By failure, are you implying that we wait until all these financial institutions seek bankruptcy protection? Because if that's the plan, then we may be in a far worse situation. I agree that if the plan put forth has a 50-50 chance, then let's do something better.
You know, the heart of the matter comes down to capital requirements because the derivatives contracts are technically in default. And by that, keep in mind what they define as default in regards to CDOs and swaps, is different than what you and I may think of as "default." Similar, but still different. They are in default because of certain mortgages. Why not simply concentrate on those mortgages first? As George Soros explained, we may be better off insuring that essentially "reset" the CDOs from default into good standing. You take care of the troubled homeowner and we're on the starting path to reform.
Robert sounds like Pauly is doing what he dose best. IMO. destroy companies.
"Disabled and discouraged workers".
Of course, if we added THOSE into the labor pool, they fear, we'd have a real panic on our hands.
It was Paulson who pushed through Goldman Sachs partnership with China while he was CEO.
Just as I had suspected this thing appears more and more to be precipitated by our "banker" , china calling in their chits.
Little wonder, "Hu" Paulson caves to china every chance he gets.
Does GE even really make anything anymore? it seems they are just a finacial services company
Little wonder they are now finding thems selves in trouble, a sort of micro cosm of th whole economy
shift away from wealth producing and [prosperity sharing mechanisms to wealth shifting and concentrating activities
I'm in complete agreement. The current banks obviously cannot manage themselves and should be allowed to go bankrupt. Other banks with better management will take their place. These same people have been screaming for the free market to work (sending jobs and money over seas), why not let it work for them? My only condition would be that nobody currently involved in any of these banks would be allowed to work in the banking industry or any level of government.
They could still work at Wal-Mart alongside the people they've screwed in the past.
is that it isn't big enough. The American taxpayer should not just bail out Wall Street past screw-ups, but its future screw-ups as well. Just put it on the national credit card.
Plus, the taxpayer should bail out homeowners who can't possibly afford the houses they "bought". The taxpayer should also bail out people that charged too much to their credit cards, bought those huge SUV's that get no gas mileage, and any businesses in America that might get into trouble because they make shitty products (like the airlines and automakers).
And while we are at it, the American taxpayer should bail out foreigners too. After all, the American taxpayer has an endless amount of capital to draw on, so it would be a crime not to spend it right now.
My message to Congress is: "Go Big or Go Home!"
A few trillion for Wall Street is just not enough. We need to start thinking in the quadrillion!
This is really bad news for China holds I believe it's 20% (or is that all foreigners) of US debt...it's significant.
Meanwhile in Wall Street stocks are way up thinking this is some great gift waiting under the Christmas tree.
Toxic Toys From China more like.
I have an issue with not letting the home prices fall. The reality is people simply cannot afford these prices. A $2000 a month mortgage is obscene and that's still often the type of situation one is in trying to buy a home.
Hillary was pretty tame in her WSJ article for she called a while ago a freeze on foreclosures to stop the entire slide and a redo on the system.
Least we not forget Biden was one of the big pushers of the bankruptcy bill which won't let bankruptcy judges renegotiate mortgages so people can stay in their homes.
Bottom line they have been and are squeezing the middle class, blood from a stone and they sucked the middle class dry a while ago and here we are.
That and their ponzi scheme of derivatives.
Why didn't people think of this before? Just give Wall Street a few trillion dollars in taxpayer money and then everything is made right.
What I don't understand is why should we stop at a few trillion? Why not a quadrillion? Then not only will everything be made right for America, but for the rest of the world too.
And if we gave Wall Street a quintillion then we would make things right for the rest of the universe as well.
It'll make a great movie. The American taxpayer will save the universe through the altruistic Wall Street bankers.
Sign me up for the next bailout!!
I read the CBO statements and it's fairly clear (and don't let me just put them on the hook, other analysts are saying this) that this might not work at all and instead backfire.
It appears they must address liquidity somehow but beyond that, why they are not using things like a HOLC or RFC is beyond me. Use systems known to work.
I agree that something has to be done.
I just disagree that saving the dollar and a federal government run by unelected idiots on Wall Street is what needs to be done.
I think what needs to be done is a return to independant banking systems based on the state- right down to the minting of money- and a restriction on trade across state borders to the barter system.
After reading the gloom and doom predictions if Paulson doesn't get his credit card soon, I did some checking and ya know, there are a whole bunch of nifty alternatives out there in economics land that might be more useful for day- to-day Americans and small businesses than Wall Street:
http://www.ithacahours.org/
http://www.grameen-info.org/
http://www.usworker.coop/
And of course, there's Grandma Flo's general advice on money and banking:
Prime applies to banks and beef and its the best - accept no substitute (no sub-prime loans for anyone ever - prime is the best rate for the best risks)
If I can see it I believe it (do not accept paper assets unless you can reach out and touch the paper's bottomline owners - you can't see the house behind the mortgage, don't buy the MBS)
Bet on a maker not a faker (manufacturers are better investments than market driven speculative issuesover the long run)
If you live above your means you're gonna splat when you hit (live below your means whenever possible)
A conservative banker may not be rich, but he's less likely to wind up poor
Greed is a foundation built on quicksand - it never stops sinking and taking you down with it
Your wealth is not your assets less liabilities - its what you have in the way of friends, family and future-focus
Thoughts?
DoubtingTom2
Doubt is an honorable state in the face of unjustified certainty. - Uncle Max
Then I for one suggest that we do not have an economy, just a ponzi scheme con job, and that Wall Street and Credit should be made ENTIRELY illegal. Pump in whatever cash you need to everybody to enable all loans to be paid off, then set the usury rate at 0%, because anybody running a business on credit is being reckless and stupid.
Oh what a way the tables of turned, do you recall any countries that the US refused to do business with in the past?... hmmm maybe countries like Cuba.. does the word EMBARGO ring a bell? Well it looks like our Chinese counterparts are taking a lesson from our actions and giving us a taste of our own medicine. If China, one of our biggest trading partners says to “stop interbank lending to US financial institutions” that says a mouthful for worldwide sentiment. I can also expect Japan and other countries to follow suit. And I actually agree with them. Force the US to PROVE itself to the world before allowing them to continue the game. It feels as if the Us is sitting on the bench, while China and the other once “3rd world” countries are on the starting line up. I say we substitute Paulson, Bernake, Bush and Cheney. I wonder how much that would help our image.
There's an honest argument that I think should be looked at.
The FDIC solution.
The FDIC does not insure all deposits, just those beneath $100,000.
Maybe something similar needs to be used for the purchase of failed financial assets.
How much of the financial wealth tied up in these banks is owned by shareholders who have massive holdings?
It's one thing for the government to act to insure the value of small holdings like grandma and grandpa who've got $100,000 from their 401 K, but it's a whole other thing to give a billion of taxpayer funds to one individual.
So first, let's set a cap. The federal poverty line (A) for a family of four is $21,200. The average American life expectancy (B) is 78.1 years.
So the bottom line is that a family could live their entire lives without working a single day (A x B) if they had $1,655,720. Let's be generous though and set the cap at $2 million.
What this means is that government payouts to the holders of failed financial securities will be capped at $2 million. Everything above that is written off as a personal loss.
Let's have a government financial insurance package, not a bailout. And as with any government insurance means testing must be part of the equation.
The real question is what percentage of the securities that the US government wants to buy are excluded if we include a threshold such as this?
If the issue in the first place is that the securities in question have no value without government intervention, then there is no 4th amendment issue with an insurance plan of this sort.
Hey NDD - off topic slightly - I see Bonddad gave you a plug on his recent Huffington Post article
good show!
We need a banking system, but we should toss out the current hucksters. Make the investment banks eat their losses, clean out the old management, and if need be nationalize the part of the banks that actually loans to real businesses.
The banks should be forced by auditors to acknowledge their junk assets. If they can't take it, they should be forced to declare bankruptcy. If need be the bankruptcy process can be run to nationalize the banks. Steps should be taken to expedite this process.
The housing market should be allowed to fall. Housing prices should be allowed to fall, and if homeowners can't afford existing prices, the lenders should be forced to take their losses, and accept lower mortgage payments based on revaluations of the houses.
Next, we need more investment in manufacturing, and the new businesses. We should have a bank devoted to lending money to create manufacturing jobs. When companies shut down, the government should provide assistance for fired employees to create new companies, possibly competing with their former employers. If employers know outsourcing is likely to lead to their employees starting competitors, it may become less common.
Nice to be where folks actually think through problems rather than attack personalities. I think the idea of letting folks in homes stay there and rework their mortgages to meet the owner circumstances makes a good deal more sense than the current foreclosure process.
$100 or 200 a month paydown of principal with owners maintaining and insuring the property is better than a bank carrying it as defaulted collateral that the bank (or Fannie or Freddie) has to maintain at their cost.
As for marking-to-market the housing already in foreclosure, here's a proposal. Convene grand juries (multiple) in each locale and have the jurors go to the site, walk around, then tell what they'd pay for the house today. Throw out the highest and lowest figures, average the remaining quotes and set the taxable, mortgage and market value of the property to that figure. This eliminates a lot of the potential abuse that is going to occur as "the professionals" try to value the properties.
I think that American ahistoricity has caught up with us: as I recall, the problem that set the '29 depression into motion was too much concentration of capital in too few hands. So why are we letting BofA and other folks snatch up the failing firms? Maybe we ought to think reginally and locally with investments and focus on manufacturing in some parts of the US, irrespective of how "sexy" that does or does not look in DC or NYC.
Thoughts?
Not sure how you would allow them to fail in such a way as to pick them up so fast. By failure, are you implying that we wait until all these financial institutions seek bankruptcy protection? Because if that's the plan, then we may be in a far worse situation. I agree that if the plan put forth has a 50-50 chance, then let's do something better.
You know, the heart of the matter comes down to capital requirements because the derivatives contracts are technically in default. And by that, keep in mind what they define as default in regards to CDOs and swaps, is different than what you and I may think of as "default." Similar, but still different. They are in default because of certain mortgages. Why not simply concentrate on those mortgages first? As George Soros explained, we may be better off insuring that essentially "reset" the CDOs from default into good standing. You take care of the troubled homeowner and we're on the starting path to reform.
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