Bailout Alternative???

[Andrew M.]

Economy is very complex science.
Very few individuals during one lifetime have enough time to make contribution to better the systems. Computers and Internet contributed in much better gathering of information thus improving the understanding of the mechanics of economy.

Some people though seems to know very well what to do.
So far the global economy is like the weather, we are better and better in predicting it few days ahead of time but we can't change it much but we can control the temperature and humidity in the buildings (corporations).

Should we thus compartmentalize economy in too sub disciplines, create specialists? Looks like science of micro economy made the big progress recently.

 

[Matt Gottshalk]

You're the one who posted a Marx poster... and now you're saying I need to learn to debate? Look in the mirror before you post crap like that. If you want a serious debate don't start by posting a picture of Marx.

Don't spout communist redistribution of wealth claptrap as economic policy and I won't post a pic of the man who invented it.

 

[GlennChan]

And this is where i think you're literally a child, both in body and in economic rationale.

Evolve, really... do you have to pollute this forum with personal attacks on other people? (And they don't even make sense.) There's no need to make personal attacks on other people.

 

[Matt Gottshalk]

$700 Billion won't save the whole banking system. That's the real problem. We are going to give away a bunch of money and still be in the same problem afterwords. Until we fix the problem and adjust the market were it needs to be, this is nothing but a bandage on an ax wound.

The moral hazard created by this bailout will induce financial institutions to keep doing what they were doing, but more of it... why not, because Uncle Sugar can be relied upon to come save the day! On top of that, confidence in our capital markets will be eviscerated... no longer will loses be handled in a predictable manner, but every investor will have to worry that the government will step in and hand him the shit sandwich, even if he's first in line to be made whole.

 

[Matt Gottshalk]

You want this mess fixed?
1. Force all off-balance sheet "assets" back onto the balance sheet, and force the valuation models and identification of individual assets out of Level 3
and into 10Qs and 10Ks. Do it now.

2. Force all OTC derivatives onto a regulated exchange similar to that used by listed options in the equity markets. This permanently defuses the derivatives
time bomb. Give market participants 90 days; any that are not listed in 90 days are declared void; let the participants sue each other if they can't prove
capital adequacy.

3. Force leverage by all institutions to no more than 12:1. The SEC intentionally dropped broker/dealer leverage limits in 2004; prior to that date 12:1 was
the limit. Every firm that has failed had double or more the leverage of that former 12:1 limit. Enact this with a six month time limit and require 1/6th of
the excess taken down monthly.

Once 1-3 are put in place then send in the OTS and OCC examiners and look at every financial institution in the United States. All who are insolvent and
unable to raise private capital immediately are forced through receivership where the debt is converted to equity and existing equity is wiped out. With the
CDS monster caged the systemic risk is removed, the bondholders provide the cushion for recapitalization (as it should be) and the restructured firm emerges
with no debt while the former bondholders are now the owners (of the equity) in the resulting firm.

With a clean balance sheet the restructured firms remain in business and open the next morning able to raise and attract capital.

For the few firms that have an insufficient debtholder capital cushion to successfully complete this process, they are liquidated instead. There will be few of
these and in fact each of those firms is a regulatory failure, as we should have never permitted a firm to become so far "underwater" that the bondholder's
capital is insufficient to capitalize a restructuring.

Finally, drop the silly shorting restrictions. Liquidity in the market right now stinks and this is a big part of why. Start prosecuting aggressively the rumors and
other manipulation that leads to stocks both rising and falling.

This plan will work, it will instantaneously stabilize the credit markets as balance sheets will be transparent, the CDS monster will be permanently de-fanged,
leverage will be returned to reasonable levels and the forcibly restructured firms will have no debt on their balance sheets and be able to immediately access
the capital markets.

Best of all, it will require exactly zero taxpayer dollars.

 

[Joel Kaye]

Best of all, it will require exactly zero taxpayer dollars.

More oversight, tightened regulations and no tax dollars? I'm in.

(and I'm a communist. :tongue: )

 

[Matt Gottshalk]

More oversight, tightened regulations and no tax dollars? I'm in.

(and I'm a communist. :tongue: )

Excellent! Peace!:w00t:

 

[Anthony Gratl]

Evolve, really... do you have to pollute this forum with personal attacks on other people? (And they don't even make sense.) There's no need to make personal attacks on other people.

What part didn't you get? The part about how your writing indicates that your fairly young, as your ideas lack depth, or the part about how your economic theories are like that as well?

If you are unwilling to do any serious research or reading on the current global economic system, and yet post opinions laden with blatant falsehoods and myopic dream-like economic theory on a situation that has a massive impact on peoples lives and wellbeing in general, and then further make comments to trivialize the devastation that happens to people when they lose everything, be prepared to have others fire on you.

The US is losing manufacturing jobs but it is gaining jobs in other sectors. And for the most part, the US is a lot richer because of this........In a capitalism system, hardworking people will become unemployed and that can suck.

Wake up Glenn.

 

[Priyesh P.]

Clint and some others speak like they were millionaires or billionaires. But ironically those who are at the lower part of the food chain defend the system most.

But most of us are middle class at best, and getting filthy rich is not my primary objective. I understand that the capitalist way is which humans seem to prefer - but the way capitalism now went is outright perverse. People like Paulson, owning 600 millions and keeping most of it locked up somewhere (let`s face it, most rich people don`t behave like Warren Buffet or Bill Gates) keep the money from floating in the system - that means less and less money for the same amount of people (that`s what the whole pareto distribution schemes of 80:20 ratios (80% of the dough is owned by 20%) mean) - do you really think this will go on forever?

 

[GlennChan]

Evolve, no offense intended but you're engaging in troll-like behaviour. If you wish to misinterpret what I say and continue to make ad hominem attacks then go right ahead. Regardless, I'll not feed troll behaviour by replying any further. That's all I'm going to say... no offense.

 

[Priyesh P.]

Just read a funny little story about Lehmann bankers whose last actions before leaving their sinking ship was to loot vending machines with mars and snickers bars...

yeah, that`s how much different those greedy upperclass assholes were from average joe and jane...

 

[Andrew M.]

Just read a funny little story about Lehmann bankers whose last actions before leaving their sinking ship was to loot vending machines with mars and snickers bars...

yeah, that`s how much different those greedy upperclass assholes were from average joe and jane...

I will not call upper-class a..holes. Most of upper class people are business people. If you were thinking about so called Wall Street fat cats, well even parasites are very useful in your intestines. Without them you will get indigestion.

The question is all about balance.

You take more taxes from the people, (as we nicely call it but actually it is nothing else but confiscation of the income) you will be mixing communism in to capitalism.
Call it economic system cocktail.

In Canada you pay 50% income tax and 14% sales tax. Well 64% of your income is confiscated there. Communism confiscates about 98% of all people income. So where is the balance? 30-40% like in USA?

 

[Michael Schrengohst]

New Senate Bail Out Bill even has something for Video Producers.
Take a look at Page 298
And look at all the other stuff in it.
http://www.cuial.com/Senate_BailOut_Bill.pdf

 

[PatrickW]

In Canada you pay 50% income tax and 14% sales tax. Well 64% of your income is confiscated there. Communism confiscates about 98% of all people income. So where is the balance? 30-40% like in USA?

In Canada your income tax is determined by brackets, make more money and pay more tax, make less pay less.

 

[Joel Kaye]

30-40% like in USA?

When you add State and all the different usage taxes we have most people are taxed over 50%. Rent a car in my state? 25% tax on the deal. Look at your phone bill. I have $20 tax on a $40 bill. Don't forget to add what we pay for health insurance vs. what we get in return. That's part of our tax too and most people don't factor it in. But here in America A LOT of people work simply to pay for their insurance. You add our insurance bill to our total tax bill and we pay a ton but we don't get near the social benefit because we spend our tax money on WAR and they spend their money on windmills.

We take more than enough tax from people - we just give it straight to very wasteful and corrupt defense contractors... and now banks.

How the Congress keep getting us to accept that state is mind boggling. But they do, because a few beneficiaries of the policies own the media. For instance, the Dept of Defense spent more money on advertising under Bush than ever before. Gee thanks.

 

[Priyesh P.]

I will not call upper-class a..holes.

Andrew, I`m just calling them assholes because it`s the way it feels being anything less then the "cream of the crop" over here in Germany. They`ve got the biggest tax cuts ever and still moan and whine via their organizations and keep telling their filthy lies about poverty and unemployment when the awfully poor bastards dare to ask for more money - even minimum wages are out of the question, instead they promote combi-wages where people get paid a few bucks and government has to shell out the difference between that and the minimum wage. This is getting more and more hilarious.

 

[Matthew Rogers]

When you add State and all the different usage taxes we have most people are taxed over 50%. Rent a car in my state? 25% tax on the deal. Look at your phone bill. I have $20 tax on a $40 bill. Don't forget to add what we pay for health insurance vs. what we get in return. That's part of our tax too and most people don't factor it in. But here in America A LOT of people work simply to pay for their insurance. You add our insurance bill to our total tax bill and we pay a ton but we don't get near the social benefit because we spend our tax money on WAR and they spend their money on windmills.

We take more than enough tax from people - we just give it straight to very wasteful and corrupt defense contractors... and now banks.

Why do many Americans believe that social programs are more important than defense? The preamble of the constitution (http://www.usconstitution.net/const.html#Preamble) says provide for the common defense before it says promote the general welfare (which had a different meaning than the word has now.) As much as I don't like wasteful spending, our defense is VERY important right now. There are crazy people out there that would love nothing more to bring us (the USA) down. The government should only provide defense, infrastructure (although, private companies are always the ones who build it), and court of justice. If your neighbor is in need, then go help them. Don't just expect the government to do it. That's the biggest change I've seen in America over the last 100 years. Instead of people helping people, they expect the government to fill the job.

Here's a really good idea instead of the current plan: http://www.daveramsey.com/media/pdf/the_common_sense_fix.pdf

Matthew

 

[Meryem Ersoz]

provide for the common defense"

which, like the general welfare, also had a very different meaning to this country before GWB got in office and crushed the entire legacy meaning both in the USA and around the world in just eight short years. With the once-respected concept and noble idea of a "common defense" transformed into a ludicrously expensive, failed crusade by a pack of wingnuts.

Just sayin'--

 

[Joel Kaye]

Why do many Americans believe that social programs are more important than defense?

I didn't say that.

We spend more than the rest of the world combined on defense. How much money is enough?

What I don't understand is why so many Americans are so scared of their own shadows that they think we need to spend so much to be reasonably defended.

The truth is the people who want your tax dollars have hoodwinked citizens into thinking we are much less safe than we are. There's a book called The Science of Fear you might consider checking out if you're open to understanding how societies are and have been maniplulated for ages.

 

[Todd Folts]

our country spends more money on defense than all the rest of the world combined... this IMHO goes beyond providing from the common defense, and since the development of the military industrial complex, common defense has morphed into common offense. if americans really believed that social spending was more important than defense spending, we would be spending more on social programs.

our defense is very important, but where has all this money got us? Those crazy people that 'want to bring us down' really just want us to leave them alone: politically, economically, and religiously. unless you include the individuals in business and in government that are bringing us down. we wont be able to "fight them over there" if we cant feed us over here, we wont be able to shock and awe them if we cant drive down our own roads much less afford the fuel to do so.

people don't expect the government to help people (raise the money going into social programs and watch folks freak)

common defense isn't about just bombs and tanks and guns... anyone can shoot a gun, march in line, launch a missile. common defense also means that we have an economic structure that provides for the common good as well as life, liberty and the pursuit of happiness. a structure that provides equal opportunity for everyone, not just the well funded....

ok off my soap box now....