(no subject)
Sep. 23rd, 2008 11:05 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
which_chickYa'll know that I occasionally post news about the financial markets here. I've been on about the housing bubble, linked you folks to the Stick Figure Subprime Primer and told you about the Dread Pirate Inflation thing. I recall (but cannot locate) making Ben Bernanke talk in Lolcat: "We iz still better den Zimbobway!" (Fur nao, Ben, fur nao.) Of late, there's been a lot of financial news.
Bailout or no bailout? I'm agin the bailout, thanks.
It's inflationary to generate 700Bn out of thin air. (We are pretending that it will come from the pockets of the taxpayers but in reality we're going to fucking print it and put it on the debt and never pay it back to anyone. This is an inflationary behavior. It will not end well.)
A bailout would reward investment banks who have heretofore demonstrated a complete lack of regard for the realities of risk and who have invested in questionable paper with reckless abandon. I don't think that people deserve bailouts for being stupid. Bailing out the stupid encourages them to do more of the same.
A bailout socializes the risk while letting the rewards be private. Everybody's profits are theirs to keep, but if the losses pile up, let the taxpayers foot the bill. No. I don't think I want to play that game.
I don't like that the current bailout plan gives the money to Secretary Paulson. In his first draft of the bailout plan, Henry Paulson included the following statement on what sort of oversight the bailout would have: Sec. 8. Review. Decisions by the Secretary [that'd be him, btw] pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
That's it. That's what he put in for the oversight part. Yeah. Non-reviewable. Committed to agency discretion. May not be reviewed by any court or any administrative agency.
It doesn't sound like "Your Oversight Policy Goes Here", does it? It sounds to me (and I have a lot of experience reading for meaning) that Secretary Paulson is saying "Give me a line of credit to the tune of seven hundred billion dollars and then don't ask me any questions about what I do with it. Ever."
But Secretary Paulson is claiming that what he REALLY meant was "Your Oversight Policy Goes Here." At the hearings today, he said "We gave you a simple, three-page legislative outline and I thought it would have been presumptuous for us on that outline to come up with an oversight mechanism. That’s the role of Congress, that’s something we’re going to work on together. So if any of you felt that I didn’t believe that we needed oversight: I believe we need oversight. We need oversight."
Would it not have been better to write something like "Please put your ideas for oversight in this space." or possibly "This space intentionally left blank." That's not what Secretary Paulson did, though. What he DID was write thirty-two words obliterating any oversight at all... perhaps hoping that maybe nobody would bother reading the thing before passing it Real Soon Now. This was not a good attempt at a save, if you ask me. I call FAIL.
I am also not sure that Secretary Paulson is the guy to be bailing out the investment banks. He doesn't seem to be very on the ball, honestly.
Secretary Paulson, May 16: "In my judgment, we are closer to the end of the market turmoil than the beginning." "Market liquidity and investor confidence are gradually improving." (Source)
Secretary Paulson, on July 21: ""Of course the list is going to grow longer given the stresses we have in the marketplace, given the housing correction. But again, it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation." (Source)
Maybe that was just his public "brave" face. Maybe he *was* on the ball behind the scenes... "For at least a month, Mr. Paulson and Treasury officials had discussed the option of jump-starting markets by having the government absorb the rotten assets -- mainly financial instruments tied to subprime mortgages -- at the heart of the crisis. The concept, dubbed Balance Sheet Relief, was seen at Treasury as a blunt instrument, something to be used in only the direst of circumstances." (Source)
But wait. If, according to the WSJ, they'd been working on this wonderful plan, this bailout plan, for more than a month, why is the best that Secretary Paulson and his little helpers could come up with during that whole time no oversight and no questions and no accountability and like that?
Look, Secretary Paulson, either this is a three page quickie document that you cobbled together in the face of extreme need, like a night-before-its-due term paper or it's a carefully researched and plotted rescue plan that you've been working on for a month. You can't have it both ways.
And maybe he didn't tell the truth in May and in July because he's Treasury Secretary and he's not allowed to say things like "ZOMG, we are sooo fucked!"
No, wait, he did that this week, to persuade us to pass his bailout plan: In a private meeting with lawmakers, according to a person present, one asked what would happen if the bill failed. "If it doesn't pass, then heaven help us all," responded Mr. Paulson, according to several people familiar with the matter. (Source)
The good news is that if Congress passes this thing, we will be awash in liquidity. :) The liquidity crisis will be over. Everyone will have gobs and gobs of money, enough money to fill a fucking wheelbarrow. The bad news is that nobody will be able to buy anything with the money but at least they'll be able to set it on fire to heat their homes for the winter.
Also, one of the terms that the Dems are pushing for is to let bankruptcy folks rewrite the terms of mortgages. If that happens, liquidity for mortgages will dry right the hell up. This will not help the housing crisis. Let the mortgages stand as written and allow the system to process this crap normally. Don't fuck the lenders. Nobody held a damn gun to the heads of the gormless idiots who signed up for liar loans. They did that shit of their own free wills. Let 'em swing for it. They'll know better for next time, won't they?
One of the things the Reps are holding tight to is that the salaries of the execs need to be sancrosact because if they aren't, then some investment banks won't come for the free money. I don't see how this is a problem. Getting free money should be HARD and it should be SHAMEFUL. We don't want every Tom, Dick, and Harry to show up for the free money. We only want those who are truly pressed to the wall to line up for free money, right? So make 'em take some lumps to get the free money.
Despite sobering financial news, someone BESIDES me thinks LOLFED is a good idea. See here. I particularly like this one.
In entirely unrelated news...
Ex-tenant Paul: Even though we tore down the building that you rented, you are still on the hook for your unpaid rent that you accrued while renting the property last year. Also, you did NOT talk to my dad and he did NOT tell you it was OK to not pay the rent because of asbestos in the floor. Please try to make your lies a little harder to fact check, asshat.
Ex-tenant from 218: Please do not leave your bongs behind when you move. We would like to be able to pretend that we don't know anything about your drug use.
Tenant at 200: Congratulations on your new dryer and the electric cord (sold seperately) for it. Thank you for telling us that when you plugged the dryer cord into the outlet to check the fit, your apartment turned blue from all the sparks flying around. I'm sorry that we didn't sound more concerned about fixing the apartment's faulty wiring, but our concern evaporated when we discovered that the three leads from the dryer cord were dangling loose (and touching) when you plugged the cord in. (As near as we are able to tell, the tenant felt that if the other end of the cord wasn't attached to an appliance, the electrics would not go through it. She was wrong.)
Bailout or no bailout? I'm agin the bailout, thanks.
It's inflationary to generate 700Bn out of thin air. (We are pretending that it will come from the pockets of the taxpayers but in reality we're going to fucking print it and put it on the debt and never pay it back to anyone. This is an inflationary behavior. It will not end well.)
A bailout would reward investment banks who have heretofore demonstrated a complete lack of regard for the realities of risk and who have invested in questionable paper with reckless abandon. I don't think that people deserve bailouts for being stupid. Bailing out the stupid encourages them to do more of the same.
A bailout socializes the risk while letting the rewards be private. Everybody's profits are theirs to keep, but if the losses pile up, let the taxpayers foot the bill. No. I don't think I want to play that game.
I don't like that the current bailout plan gives the money to Secretary Paulson. In his first draft of the bailout plan, Henry Paulson included the following statement on what sort of oversight the bailout would have: Sec. 8. Review. Decisions by the Secretary [that'd be him, btw] pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
That's it. That's what he put in for the oversight part. Yeah. Non-reviewable. Committed to agency discretion. May not be reviewed by any court or any administrative agency.
It doesn't sound like "Your Oversight Policy Goes Here", does it? It sounds to me (and I have a lot of experience reading for meaning) that Secretary Paulson is saying "Give me a line of credit to the tune of seven hundred billion dollars and then don't ask me any questions about what I do with it. Ever."
But Secretary Paulson is claiming that what he REALLY meant was "Your Oversight Policy Goes Here." At the hearings today, he said "We gave you a simple, three-page legislative outline and I thought it would have been presumptuous for us on that outline to come up with an oversight mechanism. That’s the role of Congress, that’s something we’re going to work on together. So if any of you felt that I didn’t believe that we needed oversight: I believe we need oversight. We need oversight."
Would it not have been better to write something like "Please put your ideas for oversight in this space." or possibly "This space intentionally left blank." That's not what Secretary Paulson did, though. What he DID was write thirty-two words obliterating any oversight at all... perhaps hoping that maybe nobody would bother reading the thing before passing it Real Soon Now. This was not a good attempt at a save, if you ask me. I call FAIL.
I am also not sure that Secretary Paulson is the guy to be bailing out the investment banks. He doesn't seem to be very on the ball, honestly.
Secretary Paulson, May 16: "In my judgment, we are closer to the end of the market turmoil than the beginning." "Market liquidity and investor confidence are gradually improving." (Source)
Secretary Paulson, on July 21: ""Of course the list is going to grow longer given the stresses we have in the marketplace, given the housing correction. But again, it's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation." (Source)
Maybe that was just his public "brave" face. Maybe he *was* on the ball behind the scenes... "For at least a month, Mr. Paulson and Treasury officials had discussed the option of jump-starting markets by having the government absorb the rotten assets -- mainly financial instruments tied to subprime mortgages -- at the heart of the crisis. The concept, dubbed Balance Sheet Relief, was seen at Treasury as a blunt instrument, something to be used in only the direst of circumstances." (Source)
But wait. If, according to the WSJ, they'd been working on this wonderful plan, this bailout plan, for more than a month, why is the best that Secretary Paulson and his little helpers could come up with during that whole time no oversight and no questions and no accountability and like that?
Look, Secretary Paulson, either this is a three page quickie document that you cobbled together in the face of extreme need, like a night-before-its-due term paper or it's a carefully researched and plotted rescue plan that you've been working on for a month. You can't have it both ways.
And maybe he didn't tell the truth in May and in July because he's Treasury Secretary and he's not allowed to say things like "ZOMG, we are sooo fucked!"
No, wait, he did that this week, to persuade us to pass his bailout plan: In a private meeting with lawmakers, according to a person present, one asked what would happen if the bill failed. "If it doesn't pass, then heaven help us all," responded Mr. Paulson, according to several people familiar with the matter. (Source)
The good news is that if Congress passes this thing, we will be awash in liquidity. :) The liquidity crisis will be over. Everyone will have gobs and gobs of money, enough money to fill a fucking wheelbarrow. The bad news is that nobody will be able to buy anything with the money but at least they'll be able to set it on fire to heat their homes for the winter.
Also, one of the terms that the Dems are pushing for is to let bankruptcy folks rewrite the terms of mortgages. If that happens, liquidity for mortgages will dry right the hell up. This will not help the housing crisis. Let the mortgages stand as written and allow the system to process this crap normally. Don't fuck the lenders. Nobody held a damn gun to the heads of the gormless idiots who signed up for liar loans. They did that shit of their own free wills. Let 'em swing for it. They'll know better for next time, won't they?
One of the things the Reps are holding tight to is that the salaries of the execs need to be sancrosact because if they aren't, then some investment banks won't come for the free money. I don't see how this is a problem. Getting free money should be HARD and it should be SHAMEFUL. We don't want every Tom, Dick, and Harry to show up for the free money. We only want those who are truly pressed to the wall to line up for free money, right? So make 'em take some lumps to get the free money.
Despite sobering financial news, someone BESIDES me thinks LOLFED is a good idea. See here. I particularly like this one.
In entirely unrelated news...
Ex-tenant Paul: Even though we tore down the building that you rented, you are still on the hook for your unpaid rent that you accrued while renting the property last year. Also, you did NOT talk to my dad and he did NOT tell you it was OK to not pay the rent because of asbestos in the floor. Please try to make your lies a little harder to fact check, asshat.
Ex-tenant from 218: Please do not leave your bongs behind when you move. We would like to be able to pretend that we don't know anything about your drug use.
Tenant at 200: Congratulations on your new dryer and the electric cord (sold seperately) for it. Thank you for telling us that when you plugged the dryer cord into the outlet to check the fit, your apartment turned blue from all the sparks flying around. I'm sorry that we didn't sound more concerned about fixing the apartment's faulty wiring, but our concern evaporated when we discovered that the three leads from the dryer cord were dangling loose (and touching) when you plugged the cord in. (As near as we are able to tell, the tenant felt that if the other end of the cord wasn't attached to an appliance, the electrics would not go through it. She was wrong.)
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no subject
Date: 2008-09-24 11:53 am (UTC)Am I in favor of Paulson's personal checking account? Not really. The language sounds way too goddamn open. I *don't* want the mortgage-holders bailed out, either. But at the end of the day, I kind of would like there to be investment banks and a Wall Street on American soil. I don't think the "fuck 'em all, that's moral hazard for ya" approach will leave us with either. If the sovereign wealth funds get burned bad enough, your 'dollar not worth shit' scenario is a given. Financial services will go to London, and there goes one of our primary economic force-multipliers.
no subject
Date: 2008-09-24 08:13 pm (UTC)http://horning.blogspot.com/2008/09/economy-is-fundamentally-sound.html
(Can get all that by reading Galbraith, but the blogger condensed it neatly for the readership.)
no subject
Date: 2008-09-25 11:26 am (UTC)Last night I was told it was 700 trillion dollars, not 700 billion, to begin with.
And the "Congress can't over see this, they're not qualified". Well, SOMEone has to Watch this Watcher.
no subject
Date: 2008-09-25 11:30 am (UTC)I gotcher ovahsight right HERE, pal!
Date: 2008-09-25 08:02 pm (UTC)After he was appointed, the guy 'reorganized' the financials but always managed to put off reporting about the state of them to the CEO with the excuse that they were just too darn complex to explain quickly.
In the end, the auditors were able to prove that the chief financial officer had embezzled at least $40K, with another $20K-$40K never definitively accounted for but presumed stolen.
Protip: When people start hiding stuff without explaining clearly & exactly what they're doing with it, they're really just stealing it.