Bailout Plan

[BMT (RIP)]

Everyone is bitchin' about the Paulson Plan.

Paulson present a plan he knew the the DIM's would jump on and approve. Let the poeople pay for this mess!!

REP member's of the House found some backbone and said NO!!

Their idea is place these bank or what ever on the market and sell at a discounted rate and NO capital gain's taxes for 3 to 5 years.

The idea of not paying any capttal gain's taxes put the DIM's in a nutroll and lip stall.

Waiting on the sideline's to see how this play's out.




BMT

[Ret10Echo]

So I guess sub-prime loans for citizens are bad...but sub-prime loans for corporations are Ok...

As long as the CIO/CFOs lifestyles do not change (driving the Benz and living in a 7000 sq ft house) they should get two things and one of those is Jack...

Basically it is a declaration of bankrupcy. Those who do/have run these organizations into the place they are need to bleed a bit before the American taxpayer pays another dime.

My .02

[JJ_BPK]

Originally Posted by Ret10Echo

Basically it is a declaration of bankrupcy.

Maybe not..

I was wondering around RealClearPolitics.com,, wanted to see what the talking heads thought of the Friday Nite Funnies,, with the John & Barry Comedy Hour..

Glad I didn't watch,, probably would have shoot the TV when Obamassiah couldn't remember who's name was on his bracelet ^%(^%*(^%*^%*^%(^%(^%(^%(

I am sure that Sgt Ryan Jopek's mother was not happy, after she gave Barry the bracelet, so he would remember her son's name.

I know I'm know happy...

May Sgt Jopek rest in peace

Do any of you read or listen to Larry Kudlow?? Larry is a little right of Attila the Hun,, worked as Reagan's economic advisor,, I think I heard he was one of the top five candidates for Fed Chairman,, Larry knows money... Larry is also one of the few rays of light on CNBC.. He and Jim Creamer are the Ying & Yang of the market set..

Anyway,, I stumbled across Larry's post.. He is so much more eloquent,, does not stutter,, or drool,, not as handsome as I,, but like I said,, Larry knows money,, and he has friends in hi-places...

Have a read,, it's just a different opinion...

And reading this AM,, looks like most of what Larry suggested is happening..

My $00.00002

A Slimmer, Cleaner Paulson Plan is a Win-Win, By Lawrence Kudlow, Sept 27,
2008

http://www.realclearpolitics.com/art...is_a_winw.html


The single-biggest mistake in the Paulson bank-rescue-plan marketing effort
has been the failure to explain clearly how taxpayers are going to recoup
$700 billion used to buy toxic assets at auction in order to unfreeze the
banking system. In other words, folks don't understand how taxpayers will be
paid back, and may actually make profits, which will enable the new
government debt to be erased after the Treasury bank-rescue is completed.

Here's the key point: Any loan package bought by the Treasury will be 100
percent taxpayer owned. Period.

Let's walk through this hypothetical for a moment. Through a market-driven
auction, the Treasury will purchase some dollar amount -- say $100
billion -- of loans that banks will sell. The Treasury will then buy those
loans at the prices that fill the auction, starting with the lowest prices
and working up. Now, the Treasury will hold those bonds either to maturity
or for a sale in the open market if rising prices in the market make that
sale attractive. In other words, suppose the Treasury buys a bond package at
20 cents on the dollar. They hold it for a while, and if market conditions
improve, they sell it for 50 cents on the dollar to some buyer (e.g., an
investment fund, a private-equity fund, a hedgie). The Treasury will make
the sale at the higher price in order to gain a profit for taxpayers.

In the meantime, as the Treasury holds the loans, the government will get
monthly cash-flows coming in on the mortgages, or on any other loans that it
owns. So it is win-win for taxpayers. First, taxpayers get the cash flow
generated by the assets. (Something like a 10 percent interest rate.)
Second, if the loan is sold for profit, the taxpayers will own that profit.
And the new law must of course stipulate that all the cash flows and/or
profits go for debt-reduction to protect taxpayers.

I don't think a lot of folks understand this win-win scenario. Let me
repeat: The taxpayers own the bonds the Treasury buys; the taxpayers own the
cash flows generated by the bonds; the taxpayers own the profits when the
bonds are sold; and the taxpayers benefit when the profits and cash flows
are used to pay-down government debt.

Actually, for taxpayers, it's a win-win-win-win.

Think about this. The troubled assets purchased by the Treasury right now
are likely to be very under-priced because of the chaotic and frozen market
conditions. But over time, through monthly cash-flow payments or through
loan sales, taxpayers will get all their money back and in great likelihood
a handsome profit.

House Republicans understand these key points. Unfortunately, this
understanding did not materialize in their original meeting with Mr. Paulson
a few days ago. But now the actual reality is sinking in.

Another point: Republican leader Eric Cantor has an excellent idea for a
federal bond insurance guarantee for straight mortgage-backed paper,
financed by private-sector insurance premiums. That will improve investor
confidence in mortgage bonds and will make those bonds highly marketable.
Importantly, senior Treasury officials have told me that Mr. Paulson will
accept the insurance idea as an option in the final bill, alongside the
ability of the Treasury to purchase distressed assets.

Sources also tell me that other conditions will be necessary to bring the
House GOP along. First, the ACORN slush fund must be removed. Second, the
so-called union proxy to run a slate of corporate directors is a big
problem. Third, all profits from the Treasury rescue mission must be used to
reduce the national debt -- 100 percent. Fourth, Republican members are
opposed to bankruptcy judges setting mortgage terms and interest rates (Sen.
Obama also is opposed). Fifth, the so-called government equity ownership of
banks is distasteful because it effectively creates a corporate tax increase
on banks at a time when they are struggling. And last, the Treasury
secretary's request for $700 billion is regarded as way too high.

Essentially, House Republican leaders want a slimmer, cleaner Paulson plan
supplemented by Mr. Cantor's mortgage-bond insurance program. I think it's a
good package that would be great news for stock and bond markets that are
now ailing badly. It would set the stage for a gradual return to normalcy on
the part of bank lenders, including loans to small businesses, consumers,
and homeowners. It would be a pro-growth package at a time when the economy
desperately needs a prosperity tonic.

Lawrence Kudlow is a former Reagan economic advisor, a syndicated columnist,
and the host of CNBC's Kudlow & Company. Visit his blog, Kudlow's Money
Politics.

[Ret10Echo]

Thanks for the piece JJ.

Doesn't this make the assumption that the bottom has been reached and it is up from here?

This solution is an educated decicsion altered by partisan politics. I'm not a finance and business major so I am not looking at this through what I would consider an educated lens....just my perception.

Time will tell I suppose....but I wonder who is buying up all this U.S. debt...(loan sales)?

[JJ_BPK]

Originally Posted by Ret10Echo

Doesn't this make the assumption that the bottom has been reached and it is up from here?

This solution is an educated decicsion altered by partisan politics. I'm not a finance and business major so I am not looking at this through what I would consider an educated lens....just my perception.

Time will tell I suppose....but I wonder who is buying up all this U.S. debt...(loan sales)?

I'm as bad as most,, I though the 700 B was for stock that's worthless,, when Paulson wants to buy the Bonds,, and collect the payments..

It's also to easy to think that of the 700B EVERY ONE OF THE MORTGAGES is in default,, They arnt,, less than 10% are defaulting..

When the talking heads say the defaults have tripled, they don't tell you that's a jump of 3% to 9% default rate,, over 90% of the loans are being paid by people like you & me...

Here are a few quotes from wikipedia,, with prejudice,, they have been know to be wrong,, but in this instance it appears they have the correct gist..

The U.S. mortgage market is estimated at $12 trillion with approximately 9.2% of loans either delinquent or in foreclosure through August 2008.

Subprime ARMs only represent 6.8% of the loans outstanding in the US, yet they represent 43.0% of the foreclosures started during the third quarter of 2007.

During 2007, nearly 1.3 million properties were subject to 2.2 million foreclosure filings, up 79% and 75% respectively versus 2006.

Foreclosure filings including default notices, auction sale notices and bank repossessions can include multiple notices on the same property

http://en.wikipedia.org/wiki/Subprime_mortgage_crisis

[Richard]

A Political "Solution"?
Thomas Sowell

Who was it who said, "crack-brained meddling by the authorities" can "aggravate an existing crisis"? Ronald Reagan? Milton Friedman? Adam Smith? Not even close. It was Karl Marx. Unlike most leftists today, Marx studied economics.

Is the current financial crisis going to lead to crack-brained meddling or to some rational actions? Predicting what politicians are going to do is risky business.

http://townhall.com/columnists/Thoma...tical_solution

Richard

[Ret10Echo]

Originally Posted by Richard

A Political "Solution"?[

That is my primary concern. A dangerous mix of election year politics and rabid partisanship may make for a deadly mix.

Are Paulson, the Fed and others going to "settle" simply because they feel that something is better than nothing and the ignition system is a slow enough burn for most to be able to pass off blame sometime in the future?

[Richard]

Here's my opinion on the 'cause' and 'effect' of all this...and now I, too, will be punished because I live within my means, pay my bills, and obey the laws.

Richard's $.02

[Defender968]

As if it wasn't obvious I'm very against this bailout plan, if for no other reason that we don't even know what's in it yet, and that the initial draft allegedly had something like 20% of the money going to ACORN, not to mention the fact that this reemphasizes the lack of personal responsibility, i.e. oh you got a loan you couldn't afford, that's too bad let me take money from the taxpayer to help you out of your piss poor decision, and the idea that if large enough corporations act irresponsibly enough they'll just get bailed out, again reinforcing the no personal accountability, and I could go on and on.

With all that being said I couldn’t figure out why Bernanke was screaming that the sky was falling as by all accounts he is a very smart guy, now I think I understand, while he is very smart, I would theorize that he has studied the Great Depression to such an extent that that’s all he can see coming. It goes hand in hand with the theory that if the only tool in your tool bag is a hammer all problems look like nails.

I found out today that 400 economists including 3 Nobel laureates have called for delaying this bill and looking at all options to ensure the politicians get this right as the consequences are dire. So the experts besides Paulson are calling for discussion and restraint, yet they’re going to vote on this bill this week, and by most accounts we are going to get this poorly written, rushed bill, which socializes the entire finance industry. What's even worse is the auto industry already has their hands out, and you can bet the airline industry will be next in line. I might agree with Paulson that the sky is falling, but I would argue it’s not being fixed by this bill, but rather being caused by it, this bill is indeed history making, but not in a good sense, but in the sense that we may well be seeing the death of capitalism.

Just my .02

[echoes]

House vote: So far 227 nay / 206 yea....

Dow dropping 600.....pulling back though...

Oh man.

Holly

[Ret10Echo]

Originally Posted by echoes

So far 223 nay 199 yea....

Dow dropping 600.....

Oh man.

Holly

And they don't even know if this snake-oil is the right answer....they just want a few semi trucks full of cash emptied onto Wall Street and various other financial districts.


Link to text of House version: http://news.bbc.co.uk/2/shared/bsp/h...ss_bailout.pdf

[Pete]

A great number of D's voted against this bill also.

Nancy Girl didn't help by blasting R's and then walking off the floor.

Oh, well - "Evil Republicans at 6:00"

[echoes]

Originally Posted by Ret10Echo

And they don't even know if this snake-oil is the right answer....they just want a few semi trucks full of cash emptied onto Wall Street and various other financial districts.

Agree Sir.

(I updated my above post to reflect the current stats.)

My question is this: Well, what kind of shape was Our economy really in before this, "emergency bail-out" came front and center?
Fannie and Freddie's demise seemed to start this cascade, but in my limited knowledge, am thinking this whole debacle began much earlier.

Just my .000002, which is worth about zero anyway.

Holly

[Ret10Echo]

Originally Posted by echoes

Just my .000002, which is worth about zero anyway. Holly

Adjusted for inflation

[greenberetTFS]

Originally Posted by Richard

Here's my opinion on the 'cause' and 'effect' of all this...and now I, too, will be punished because I live within my means, pay my bills, and obey the laws.

Richard's $.02

I whole heartedly agree with Richard....This is what happens when you live within your means,pay your bills, and obey the laws. You end up getting screwed by the government.....
PS, Where do you get those cool thumbnails?

GB TFS