I made myself more or less read it. It’s an oppressive, pandering, and punitive piece of legislation. It does nothing to solve the problem of how the gov’t is going to buy this stuff except that it lays out all the bending over the company has to do to use the facility. It lays out nothing to solve the root of the problem (people not paying their bills) except that we are going to hand them money too. Apparently future CEO’s of banks are more culpable than people who are currently in some stage of default on their mortgages. If the Treasury Secretary wants to get this passed, perhaps he can lay out some details of how he plans to deal with the problem. Pompous prick thinks that’s none of our business, I guess. I think this plan is just silly and looks like it was cobbled together by college students reading their corporate finance books.
I’ve been reading it on and off today. So far I agree it seems rather hastily thrown together and adding to what Joey already stated, I’m feeling like it gives Paulson and the treasury too much authority over the management of the program. I’d like to see some other heads involved.
Joey, did you read the part about unjust enrichment of firms using the facility, basically stating firms have to sell their assets to the treasury at a loss, that’s such BS IMO. That’s not a sale that’s extortion.
I agree that’s a silly piece of the legislation. So the gov’t creates this huge facility to increase liquidity but if I buy something from someone else and it was a decent trade, I can’t sell it to the liquidity facility, Now if I wait until he goes into Chapter 11, and then buy it I can make money from the liquidity facility. Do arrangements like that increase liquidity?
I read about 10 pages yeah. May-be 20. Willy
Or how about if I have something that a free market would dictate you buying from me for 50 cents on the dollar but I paid 30 cents therefore you won’t buy it from me unless I drop the ask to 29 cents so technically I’m not profiting. Does it increase liquidity, I guess technically yes. I’m exchanging what the market perceives as crap for cash. Does it increase liquidity as much as it could if sales between the Treasury and firms were unobstructed, no. Are the terms fair, hell no.
Where can I find a copy of the bill, is there a link?
if it is anything like the ‘collateral’ pledge for aig for its bailout … under the box for collateral to be pledged ‘’’’ all personal assets’’’’ that was it!! I thought it was a joke … but I kid you not so they are good at cobbling things together and leave the real details out … this bailout is properly a sham and need lawyers to undo the damage or delay the action we need it for … a lot of the current problems arose from “low doc” and the same thing is happening now … NO doc.
http://www.huffingtonpost.com/2008/09/28/bailout-legislation-full_n_130063.html I read it too, sounds like a bunch of politically correct add-ons but I accept it. Its beyond me that one of the hang ups is that executive compensation is not disclosed. Yes they shouldnt be making millions off of a distressed economy but that should be a far far afterthought considering what else is at hand. It’s that kind of liberal media targeting that gives people like Michael Moore his wings. Has anybody read this? The ignorance of this guy http://www.michaelmoore.com/words/message/index.php?id=235
As Howard Marks said in his recent memo, “I’d rather entrust power to one wise man [Paulson] than to a committee or bureaucracy consisting of average people.”
the math for the bill doesn’t add up. Where did Paulson and Bernanke come up with the $700 billion figure? Here’s the math: 1) There are over 34 trillion of private debt outstanding in the United States. 15 trillion is residential and commercial mortgages. 2) To date, 350 billion has been written off and 300 billion in equity has been injected into the banking system. The 350 billion as been mainly residential MBS writedowns. 3) Looking at figures from pts 1) and 2) so far only 2.3% of residential and commercial mortgage assets has been written down. 4) Economists, strategists, and Hedge fund managers who saw this mortgage and debt crisis coming, say that debt losses are going to be in the 2.5 - 4 trillion range. These are the people Congress should listen to as they are the ones who have been right and Paulson and Bernanke have underestimated the credit crisis throughout the crisis. 5) Let’s be aggressive and say that the Treasury purchases troubled assets at 50 cents on the dollar with the 700 billion. They can thus buy 1.4 trillion of debt. But debt losses are estimated to be in the 2.5 - 4 trillion range? Hmmm. Using the 2.5 - 4 trillion in losses, we arrive at 7% to 11.5% in NPLs. Not at all unreasonable. 6) I’m not even including the 180 trillion in derivatives that commercial banks have on their books. Anybody who argues that these banks run a matched book on the entire notional of these derivatives needs to pass me his/her crackpipe or the elmer’s bottle. 7) Why are we in this debt crisis? Because debt service expanded at a faster pace than income. Game Over. Private debt/GDP is currently above those seen during the Great Depression. Households are swimming in debt and there are people arguing that the government needs to inject liquidity into the system in order for debt levels to increase more? So we can get in more debt and create an even bigger bubble (that I btw think is not probable)? This credit bubble was unsustainable and the math doesn’t add up for the government to be of much help. The 700 billion can be used for other things such as bailing out the FDIC next year.
Wall Street bailout plan: 10 reasons to just say no By J. BOYD PAGE Thursday, September 25, 2008 Reason No. 1: The $700 billion Wall Street bailout is merely a “drop in the bucket.” It will not correct Wall Street’s problems. The government’s suggestion that a $700 billion bailout of Wall Street and its bad investments will somehow solidify the markets is simply unfounded. The true facts show that there are more than $12 trillion worth of mortgages outstanding in the U.S. alone. Reason No. 2: The bailout plan smacks of cronyism. Treasury Secretary Henry Paulson and many of his chief advisors are Wall Street alumni. Paulson’s close relationship with the Wall Street community strongly suggests ulterior motives may impact his recommendations. Reason No. 3: Paulson and Federal Reserve Chairman Ben Bernanke do not understand the problems confronting the American economy and are not qualified “to be king.” Dean Baker, co-director of the Center for Economic and Policy Research in Washington, stated: “This administration is asking for a $700 billion blank check to be put in the hands of Henry Paulson, a guy who totally missed this, and has been wrong about almost everything.” Reason No. 4: The bailout plan proposes to give Paulson unfettered discretion to do as he sees fit with no accountability to anyone and no review of his actions by either courts or administrative agencies. To create a “get out of jail free” card for anyone associated with the proposed bailout offers unlimited possibilities of abuse. Reason No. 5: The Wall Street bailout plan is a “knee-jerk reaction” and there may well be better alternatives for spending $700 billion of taxpayer money. The $700 billion plan is aimed at a very small segment of American employees — generally the group of people who have earned excessive income over many years and who live in “ivory towers.” Alan Meltzer, a economic advisor to President Ronald Reagan, summarized the situation saying, “This is scare tactics to try to do something that is in the private but not the public interest.” Reason No. 6: President Bush and Paulson have proposed a bailout plan even though they have no idea of what to do. Prior to committing $700 billion of taxpayer funds, our government should at least have a plan on what is going to be done with the money. Reason No. 7: The bailout plan will undoubtedly result in a weaker dollar with many adverse consequences for the American economy. David Woo, the Global Head of Foreign Exchange at Barclay’s in London, stated that “the downdraft on the dollar from the hit to the balance sheet of the U.S. government will dwarf the short-term gains from solving the banking crisis.” Reason No. 8: The bailout plan is unlikely to avoid a recession. Even experts who suggest there are long-term benefits to a bailout plan note that it could take the better part of a decade before beginning to show any impact on the U.S. economy. Reason No. 9: There is no transparency to the bailout plan. Lack of transparency is one reason our economy is in the position it finds itself today. Reason No. 10: Under the bailout plan Paulson and Bernanke intend for the U.S. to pay above- market prices for the assets that the country buys. Bernanke is urging that any bailout plan buy illiquid assets at values above those for which they could be sold on the open market. In other words, Bernanke wants the American people to overpay for Wall Street’s illiquid assets. Sound like a good idea to you? It doesn’t to me
Yes I should really trust hedge fund managers who are trying to turn their busted shorts into profits with more negative rumors
I am not sure they are really rumors … as we are learning that more and more of these rumors are now facts.
These Banks can, more or less, pay the Government to avoid having to mark to market their securities
Hedge fund managers dont know anything more than we do about the depth of this. Just imagine what this day would be like if they could still short sell
they know who are still holding the bad debts … with the bad strategies and holding not enough capital … many of them sold it to them in the first place … hahaha.
You’re telling me that shorting Morgan Stanley to $11 made any sense? If you do, then I’ll end the discussion because its just not worth it at this point.
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Jscott24 Wrote: ------------------------------------------------------- > Hedge fund managers dont know anything more than > we do about the depth of this. Just imagine what > this day would be like if they could still short > sell WaMu and Wachovia would still be alive? Don’t be an idiot. Save that kind of crap for the Yahoo message boards. Bill Ackman and John Paulson have been right on almost every count (I don’t know the extent to which the latter even engages in short selling), why shouldn’t we listen to them?