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A sleight of hand to distract you from the imminent gift of $700 billion to Wall St. from Washington.
No way, no how, no bailout.
Some of these mortgages don't really have a house behind them. Say
Alice, Bob & Charles lent $50 each to David so he could buy a house
that cost $150. Everyone agreed that David would pay each one back $55,
but he'd pay Alice first, then Bob, then Charles.
The housing market tanks 30%. David walks away from the house. Alice,
Bob & Charles sell the house for $101 and split the money. How do
they split the money? Alice gets $50, Bob gets $50, Charles gets $1.
Guess what-- all those "toxic assets" with no market-- those are like
Charles' loan. There's no market because a lot of people think they are
worth $0.
Now imagine, if Charles doesn't get at least $20 for that loan, Sam
claims that the world economy will collapse. So Sam comes along and
says, hey, I'll pay $20 for them using this money I got from the
taxpayers. But the taxpayers are pissed about it, because they pay $20
for something with a market value of $1.
Hmmm... What to do. Hey, what if we let Charles decide what the real
value is. OK, Charles decides it's "worth" $21. That sure cleans up the
balance sheet, now we're out of the woods. Oh, but it sure would be
nice if Sam would buy this stuff from me for only $20... a discount!
Now the citizens should be ecstatic because they are getting a discount.
----------------------------
That's a cynical viewpoint. Mark-to-market may not be entirely
appropriate, but considering how poorly Wall St. did valuing this debt
the last 5 years, why should we expect them to do better now? It smells
rotten. A sleight of hand to distract you from the imminent gift of
$700 billion to Wall St. from Washington. Now that's a cynical
point-of-view, but I think it's more realistic than the rosy case being
made by Wall St., Congress, the media & the administration.
Be skeptical.
No way, no how, no bailout.
Comments (3)
Who, exactly, on Wall Street do you blame for this? And what's your solution for illiquid capital markets? Or do you think this problem will just go away? You Republicans are all the same: "The market will heal itself." Bullshit.
September 30, 2008 11:42 PM | Reply | Permalink
I certainly understand your frustration. I feel it every bit as much, although I suspect for different reasons. The problem is, if we don't fix this, we all lose. Yeah, a bunch of those people on Wall Street don't deserve to be helped. But if they go, we go with them. And therein lies the rub.
Up until the last few days, we considered ourselves fairly well off. Now we can see how the potential exists that all the saving and living beneath our means we've done for all these years, settling for health care and a safe pension, in lieu of a higher wage, deferring gratification and retiring with way more than we thought was going to be necessary to keep us living at our current standard of living for the rest of our retirement years, will not have been enough, and I'm beyond pissed.
We didn't refinance our house to buy cool toys or go on vacations we couldn't afford. We played by the rules and did everything just the way we were supposed to.
The idea that a bunch of greedy people on Wall Street, aided and abetted by a bunch of our fellow regular folks screaming bloody murder that they'd rather see it all burn down than have the people who caused it benefit is almost more than I can take. Somehow, attempting to set up a firebreak now, then addressing the underlying problems later, sounds more than reasonable to me.
Before you throw the match that sets the whole thing to flames, please consider me and my kids and grandkids. We have never so much as bounced a check our whole lives, never missed a mortgage payment, never let a month go by when we didn't save some money, and we're watching our security go further down the drain each day. They may deserve it, but we don't. Please try to think of me and the millions like me.
And while you're at it, think of yourself...what kind of job do you have that immune to what is going happen if this doesn't get fixed?
At this point, we may as well have been like those who lived above their means and made stupid financial decisions. We'll all be in the same soup lines.
The saddest part is, the super rich guys that caused this have more than enough money to weather the storm they created. But people like us are going to be the ones that get their butts kicked. Thanks for your efforts to make sure that happens.
October 1, 2008 12:58 AM | Reply | Permalink
Oh, for fucks sake. Open your eyes and learn how use your critical thinking skills. This is a bad bill, and even if something needs to be done, we don't need this bill to do it. Hopefully a better bill will rise from the ashes of the House, instead of the same old shit being resurrected and passed.
This bill is a giveaway, and despite protestations to the contrary, the taxpayer isn't assured of getting anything-- equity, financials tax to pay for it, or even a fair price-- in return.
So go ahead, capitulate and embrace the Bush bailout bill, and trust Henry Paulson to pretty much single-handedly spend $700 billion on trash. You people make me embarrassed to call myself a Democrat.
October 1, 2008 3:17 AM | Reply | Permalink
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