I'm from Washington and I'm here to help.
For example, I'm going to increase the taxpayers' exposure by $4 trillion in 24 hours, by insuring all of the money market mutual funds in the USofA. Then I'm going to buy all of these so-called toxic loans from Wall Street. And I'm going to do it all by fiat without a Congressional vote.
Paul
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13 comments:
an unprecedented remedy doesn't come without unprecedented sacrifice and pain.
Let me guess; your name is Hank PAULson.
This is all so intense.
I don't know about everyone else, but I am finding it incredibly difficult to concentrate on work with all this economic chaos.
It's like watching a soap opera.
Although, keeping my day job is probably more important than ever.
How does the government buy mortgages from banks in this situation? The banks can't even prove they own the morgage at foreclosure proceedings.
Plus the banks are leveraged 30 to 1 or worse. So they borrowed 30 miilion based on 1 million in assets, will the government start buying distressed assets at a premium of their full value?
Even if we did get a Congressional vote, it's a safe bet we'd get a (nearly) unanimous vote. Politicians being what they are, almost nobody would want to vote against such a thing in a time of "crisis", nevermind who started the crisis or what the long term effects of the legislation are.
Irony of the day: The clowns in Washington who are calling for an investigation are some of the same clowns who were responsible for monitoring Wall Street and/or voted for legislation overturning regulation.
Following up on my comment, I just came across a Marketwatch writer calling for re-instituting Glass-Steagall:
http://www.marketwatch.com/news/story/story.aspx?guid={4250CCCE-C00A-4A8C-A6B2-2466AB511469}&siteid=rss
This should make a lot of people in Congress feel very uncomfortable, but I'm sure the media would never put them in such a position.
I suspect the attitude in Washington is predominantly "Let's throw money at it and we will sort it out later."
Regrettably, these are the same folks who run the IRS and social security.
Now that I know my money market fund accounts are insured to infinity, I'm pulling all of my money out of my pitiful yielding bank accounts, and putting it into the highest yielding mmf I can find! And thanks to the Feds, I don't even have to concern myself with the financial health of the mmf! What a country!
Great idea Paul!
Under the same logic, may as well go ahead and jump into that 6% (or whatever) WAMU CD :)
It's been a wild and weird week. The thing that always bugs me is that the market seems so irrationally exuberant over perceived government interventions -- but really, if the consumer can't afford to consume any longer, then that doesn't bode well for business. We're still exactly where we have been: an overstretched consumer with little or no growth in their wages.
It seems to me that all this is going to do, sooner or later, is to devalue the dollar. How else is it that the US, with a massive debt, who has had to borrow to fight two wars, can afford to bail out Wall St? And yes, I'm aware that if we don't we're even more screwed with the foreigners who own us, and who might just decide to stop funding us.
But how we can turn on the presses without that devaluing the dollar is beyond me.
I've also heard it said that we need inflation in order to decrease the actual burden of our debt, both individually and as a country. That may be true on paper, but in action it would be catastrophic for most of the middle and working class who are already just barely treading water.
Yea inflation is great, except that wages are not going up. So what you get is everything you need to buy costs more and your wages stay flat, so your purchasing power is lowered.
Which means less money to spend on coffee and ipods...
Folks much smarter than me are of the opinion that corporate and personal (yes, personal) deleveraging can only be achieved by a lower standard of living or inflation. Regrettably, I don't think we will get to choose which, if not both.
buying time........... I agree with you completely!! I do not know what our govt has been thinking and what they are thinking now!! So crazy...
I see our grandchildren cursing us for leaving them with so much debt in the future.
I am going to go RELAX!!!!
I miswrote. I should have written "lower standard of living and deflation." The inflation may come later as the Feds attempt to inflate away the likely massive increase to the national debt.
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