I will be talking about the current economic crisis at some length because it is historic and because it will, eventually, touch us all.
I was against the Paulsen bailout plan because it seemed to me to be a knee-jerk reaction without enough non-political discussion by economists. Remember, this is “unprecedented” so there are no guidelines available.
The Paulsen plan proposed to buy “toxic” securities from financial institutions and thus allowing those institutions to have a clean slate and money to hopefully lend and thus restore stability to the financial markets.
This is a flawed plan because there is no right or correct way to value these sub-prime securities. The government would then, after buying these securities, would have to form a huge, expensive bureaucracy to unravel these securities and then try to renegotiate individual mortgages so they can be re-sold as stable (not sub-prime) mortgages or whatever is decided to do with them to get back the taxpayer dollars used to buy them. Sounds like a mess to me.
Since the bailout plan was passed by Congress, some are suggesting that the governmentl use the $700 Billion to buy “preferred shares” in troubled banks. In this way we give the bank funds to use in their operations, the taxpayer has real assets for their money and when the crisis is over, the assets are sold for a profit - sounds like a good idea to me.
Realize this is “nationalizing” banks, a socialist thing to do but hey, I didn’t vote for the plan. Use the ownership position in these banks to clean them up; fire management and put in people that are competent and while your at it, set up corporate policy that will prevent stupid practices that got the bank into trouble in the first place.
This plan is better than the original plan but may also not be enough to get the banks out of trouble but give it a try.
Write your Congressman to demand the Treasury Department “invests” in banks and does NOT purchase toxic securities.
Yes, I know I am bouncing between capitalism and socialism; I will try to explain later...
I was against the Paulsen bailout plan because it seemed to me to be a knee-jerk reaction without enough non-political discussion by economists. Remember, this is “unprecedented” so there are no guidelines available.
The Paulsen plan proposed to buy “toxic” securities from financial institutions and thus allowing those institutions to have a clean slate and money to hopefully lend and thus restore stability to the financial markets.
This is a flawed plan because there is no right or correct way to value these sub-prime securities. The government would then, after buying these securities, would have to form a huge, expensive bureaucracy to unravel these securities and then try to renegotiate individual mortgages so they can be re-sold as stable (not sub-prime) mortgages or whatever is decided to do with them to get back the taxpayer dollars used to buy them. Sounds like a mess to me.
Since the bailout plan was passed by Congress, some are suggesting that the governmentl use the $700 Billion to buy “preferred shares” in troubled banks. In this way we give the bank funds to use in their operations, the taxpayer has real assets for their money and when the crisis is over, the assets are sold for a profit - sounds like a good idea to me.
Realize this is “nationalizing” banks, a socialist thing to do but hey, I didn’t vote for the plan. Use the ownership position in these banks to clean them up; fire management and put in people that are competent and while your at it, set up corporate policy that will prevent stupid practices that got the bank into trouble in the first place.
This plan is better than the original plan but may also not be enough to get the banks out of trouble but give it a try.
Write your Congressman to demand the Treasury Department “invests” in banks and does NOT purchase toxic securities.
Yes, I know I am bouncing between capitalism and socialism; I will try to explain later...
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