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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Katelew who wrote (85494)	9/19/2008 2:30:41 PM
From: TimF	Read Replies (1) \| Respond to of 541990

I agree. Broad prohibitions of short selling are foolish, and IMO to a certain extent just wrong. And I'm not happy about the bailouts. I'm not so sure they where necessary, and even if I could be convinced that they where, they are hardly happy events. At best we are smoothing things over in the short term, but creating a moral hazard for the long term.

To: Katelew who wrote (85494)	9/19/2008 2:44:46 PM
From: TimF	Read Replies (1) \| Respond to of 541990

Rumor: Government to Buy Bad Mortgage Securities Arnold Kling According to this story: One way the agency reportedly under discussion could work is by setting up bulk auctions to buy mortgage debt from financial institutions. The auctions would be for set dollar amount purchases. Companies that want to offload the hard-to-sell assets from their balance sheets bid to sell to the government at a huge discount. The company willing to take the biggest haircut wins. Let's see if I get this straight. There are a whole bunch of mortgage-backed securities, the value of which is not known, because nobody knows what the default rates on the underlying mortgages are likely to be. A government agency, Bailie Mae, is going to put up, say, a billion dollars. Companies will make offers. It might go like this: Shake-E Bancorp offers to sell securities with a face amount of $1.4 billion for $700 million. 50 cents on the dollar. Shift-E Investments offers to sell securities with a face amount of $1.2 billion for $720 million. 60 cents on the dollar. Slime-E Insurance offers to sell securities with a face amount of $1.0 billion for $900 million. 90 cents on the dollar. Bailie Mae then buys $700 million from Shake-E (the entire $1.4 billion face amount), $300 million from Shift-E, and leaves Slime-E to pound sand. It sounds to me as though Bailie Mae is going to be wearing a big sign around its neck saying, "Adversely Select Against Me." For all we know, Slime-E's offer was the best deal. Recall that we stipulated that we don't know what the securities are really worth. That's what makes "hard-to-sell assets," you know, hard to sell... econlog.econlib.org

To: Katelew who wrote (85494)	9/19/2008 2:58:46 PM
From: biotech_bull	Read Replies (1) \| Respond to of 541990

Actually I'm profoundly sad today at this weeks' events re the capital markets and the incredible cost the treasury is undertaking to perhaps fix things Hi Kate, I don't think they had a choice. This editorial from FT makes a good case for this being the time to think about survival not ideals ft.com Such action will increase US government debt substantially, perhaps even by as much as 10 per cent of gross domestic product. Nobody knows the scale at present. The US government can, fortunately, afford this. Indeed, it cannot afford not to create the means to act in this way. The follies of a generation of irresponsible financiers will fall on future generations of taxpayers. A price will have to be paid in fundamentally transformed and tightened financial regulation. But that is for another day. Today is about survival. Lenders of last resort must lend freely and they must do so right now.