I, for one, am investing in marshmallows.

phronesis on September 30, 2008 at 8:10 AM

Tks.

sven10077 on September 30, 2008 at 8:25 AM

ding ding ding….We have a winner…you got the point…
Satisfaction in having helped create and exacerbate a crisis…

http://corner.nationalreview.com/post/?q=OTBhYWJkYTg3OWM3NGMzODNiODZkNTkzOGNmZDdkYzk=

off topic: Has anybody ever seen the likeness of the ”O‘s” strut to John Travolta in Saturday Night Fever….
I laugh every time I see it. Just now again on F&F!!

jerrytbg on September 30, 2008 at 8:11 AM

we are enthralled with reliving ’70s energy and fiscal policy may as well bring back the affectations as well.

phronesis on September 30, 2008 at 8:10 AM

fallout that is.

JiangxiDad on September 30, 2008 at 7:56 AM

These measures would help, and there’s absolutely no reason the costless rule changes shouldn’t be implemented regardless of the proposed bailout. But I don’t think they would be sufficient at this point. I think that in order to work those measures would have to be accompanied by the Fed pumping massive amounts of money into the system to inflate asset prices. And I think the failout from this would be worse than the Paulson plan.

Given my dire assessment of the situation, I really hope I am wrong.

Let them clean it up……..with their own money, not mine!

http://ace.mu.nu/archives/274485.php#274485

CC

phronesis on September 30, 2008 at 7:43 AM

Do you believe there is a solution to this problem that would involve some (or more than some) rules changes,infusions of cash directly to targeted banks, and bank consolidations, but minus a taxpayer bailout of the type proposed?

phronesis on September 30, 2008 at 7:43 AM

I agree with both things you said.

JiangxiDad on September 30, 2008 at 7:33 AM

Sorry for the ambiguous post. The statements really don’t follow one another. I meant that we survived without mark to market for a long time. In past crises banks that would have become insolvent under mark to market avoided that fate only to thrive after the crisis abated.

The second statement refered to tighter lending and credit standards. These standards strike me as a good idea if implemented gradually after the crisis abates, but I fear that any immediate legislative action to tighten lending and credit standards will only serve to exacerbate the credit crunch.

My guess is that the bailout bill tries to preserve the existing system.

JiangxiDad on September 30, 2008 at 7:36 AM

Bingo! And those in financial power that are part of that system. I suspect we will come out with a system that is remarkably similar (if not identical) to the current system but with updated regulations and a very large pile of money moved from one wallet to another.

CC

But you are really talking about two different things. The security that is the bundle of mortgages has no real market value when no one wants to buy it. Obviously, I agree that the underlying collateral for the security (the homes) do have some value… but they aren’t trying to sell the homes.

You don’t have to sell the homes to recognize their “intrinsic” value. You just assigned some value to them yourself, and therefore the mortgage. But the banks record that value as zero. Don’t see how that’s realistic. And some realism is what mark to market was intended to provide. If it doesn’t, there must be some other way to assign value.

BAC, Wells, Citi, JP Morgan. These are the survivors– the big 4. The gov’t will not allow them to fail under any circumstances. That is the conventional thinking now.

Think of them as the new Fannie–GSE’s. Too big to fail.

That’s why they’re up!

JiangxiDad on September 30, 2008 at 7:38 AM

Yeah I may get on the phone with them and see if they’ll consolidate my liquid debt just to play it safe….

they were just handed a silent “go as risky as you want when the dust settles” card…

This is 1/2 the story, and accurate. The question I think now is what kind of system to we want to resurrect? Do we want to save most of what we had and try to return to the previous system, or do we want something different. My guess is that the bailout bill tries to preserve the existing system.

JiangxiDad on September 30, 2008 at 7:36 AM

If the press were Dutch and not in the marxist’s pocket I’d say let it fall and start over with the most sensible hybrid of Teddy and Frank Roosevelt regulation we could get, but things being what they are we are in for unless I miss my guess a series of 700 billion dollar “lifelines” to keep this frankenstein monster moving….

pity really.

Banks up big in premarket. Wb +13, BAC +5, C +5, MS +5

huckleberryfriend on September 30, 2008 at 7:33 AM

BAC, Wells, Citi, JP Morgan. These are the survivors– the big 4. The gov’t will not allow them to fail under any circumstances. That is the conventional thinking now.

Think of them as the new Fannie–GSE’s. Too big to fail.

That’s why they’re up!

Indeed it is what makes all this “DDDDDDDOOOOOOOOOOOOMMMMMMMMMMM!” ranting so funny. Look it’s like this Wall $treet allowed itself to get rolled on valuation of risk because of political pressure and now wants a handout for their trouble. I say “no” there are plenty of financial institutions that refused to play the CRA game as hard as the megas and they are the ones you can call on the phone and will say to you, “nah we have money to lend”.

They also don’t tend to have a lot of 60:1 leverages on the books.

sven10077 on September 30, 2008 at 7:32 AM

This is 1/2 the story, and accurate. The question I think now is what kind of system to we want to resurrect? Do we want to save most of what we had and try to return to the previous system, or do we want something different. My guess is that the bailout bill tries to preserve the existing system.

JiangxiDad on September 30, 2008 at 7:29 AM

But you are really talking about two different things. The security that is the bundle of mortgages has no real market value when no one wants to buy it. Obviously, I agree that the underlying collateral for the security (the homes) do have some value… but they aren’t trying to sell the homes.

There are already companies snapping these bundled mortgages up in the same manner a corporate raider grabs companies when their break-up value greatly exceeds their current market value. That process should be allowed to continue. I fish offshore and I’ve seen that sharks do a very good job of clearing the seas of the weak and wounded.

CC

Banks up big in premarket. Wb +13, BAC +5, C +5, MS +5

huckleberryfriend on September 30, 2008 at 7:33 AM

What?

Can’t be Chrissty Matthews and Shep Smith both swear the end is nigh….

//sarc

people refuse to grasp that in a turbulent market there will always be guerillas who bucked trends and profit when the market forces implode the wild eyed risk takers….

Banks are no different.