Article

2008-09-30 Home Front Economy

Quotes from 5 Top Economists on the bailout plan.

Archived material is restricted to Rantburg regulars and members. If you need access email fred.pruitt=at=gmail.com with your nick to be added to the members list. There is no charge to join Rantburg as a member.

Posted by Besoeker 2008-09-30 15:38|| || Front Page|| [11 views ] Top

#1 I'd DYOR* on this. It's a complicated area.

Just remember you cannot get something for nothing. If it sounds like an under-pant gnome plan, then it probably is.

*Do Your Own Research.

Posted by Bright Pebbles 2008-09-30 16:41|| 2008-09-30 16:41|| Front Page Top

#2 Who's we, white man? The government would do almost all of us ordinary people a favor if it merely refrained from what it's been doing for the past few weeks, and simply let badly managed firms go bankrupt. Capitalism is supposed to be a profit-and-loss system. Too bad the so-called capitalists and their lackeys in the government don't believe in capitalism.

That's kinda what I thought.

Posted by tu3031 2008-09-30 16:54|| 2008-09-30 16:54|| Front Page Top

#3 I've suggested that we do a quick analysis of our corporations. Those that deal in real products and services should be protected. Those that deal mostly with leverage and derivatives should be on their own.

But like drug dealers, a priority of bad companies is to buy up good companies, both of them with the intent to launder and protect their assets.

Posted by Anonymoose 2008-09-30 16:59|| 2008-09-30 16:59|| Front Page Top

#4 Dave Ramsey has the key, and it's on the table in Congress.

1. Suspend the Mark-to-Market accounting rule.
2. Provide some FDIC type insurance to sellers.
3. DO NOT get into the mortgage business.

Posted by Besoeker 2008-09-30 17:06|| 2008-09-30 17:06|| Front Page Top

#5 Isn't one Great Depression in living memory enough? No more leverage. That includes no margin accounts, no 20:1 margined futures trading, no 30:1 margined derivatives trading. Operate in the market as one does with their IRA or 401K account. If you don't have the money then don't buy.

Posted by ed 2008-09-30 17:33|| 2008-09-30 17:33|| Front Page Top

#6 A libertarian webmagazine finds five random libertarian economists I've never heard of to endorse the hard-libertarian hate-on for the bailout.

I'm badly split on the subject, but this article is white noise.

Posted by Mitch H.">Mitch H. 2008-09-30 17:46|| http://blogfonte.blogspot.com/]">[http://blogfonte.blogspot.com/] 2008-09-30 17:46|| Front Page Top

#7 Suspend the Mark-to-Market accounting rule.

Doing so would allow financial institutions to assert whatever they damn well pleased, more or less, as their balance sheet values. You really trust those guys to give sober assessments of their portfolio values? When lending ratios are based on them?

If you want to slow down the positive feedback loops involved either in bubbles or in negative bubbles i.e. crashes, mandate that for derivatives book value be a rolling average over a couple days or so. But suspending MtoM would have some pretty perverse impacts over time.

Posted by lotp 2008-09-30 21:06|| 2008-09-30 21:06|| Front Page Top

#8 But suspending MtoM would have some pretty perverse impacts over time.

How did we live without it for so long?

If a security is to be held to maturity it should be carried at historical value. If it is to be traded M2M is fine. But banks should not be trading securities. That is the problem with repealing Glass-Steagal and adopting M2M for bank loans on bank books.

Posted by Nimble Spemble 2008-09-30 21:31|| 2008-09-30 21:31|| Front Page Top

#9 How did we live without it so long? We didn't have 24 hour markets with computerized trading of esoteric financial instruments 2 or 3 times removed from underlying assets.

Posted by lotp 2008-09-30 21:39|| 2008-09-30 21:39|| Front Page Top

#10 And yet, some of the earlier versions of those derivatives helped to fund major entrepreneurial-led economic growth that advanced prosperity across the board in the US and in many other places as well.

However, NS, there's no such thing as holding a derivative without intent to sell or at least without intent to be able to sell when advantageous.

Posted by lotp 2008-09-30 21:41|| 2008-09-30 21:41|| Front Page Top

#11 And yet, some of the earlier versions of those derivatives helped to fund major entrepreneurial-led economic growth that advanced prosperity across the board in the US and in many other places as well.

Enlighten me, please.

there's no such thing as holding a derivative without intent to sell or at least without intent to be able to sell when advantageous.

And that's why derivatives shouldn't be on bank balance sheets.

Posted by Nimble Spemble 2008-09-30 21:52|| 2008-09-30 21:52|| Front Page Top

#12 SEC begins to admit M2M is bogus:

The Securities and Exchange Commission and the Financial Accounting Standards Board have just made an announcement that, dry as it sounds, may mean a great deal: "When an active market for a security does not exist, the use of management estimates that incorporate current market participant expectations of future cash flows, and include appropriate risk premiums, is acceptable."

Posted by Nimble Spemble 2008-09-30 22:03|| 2008-09-30 22:03|| Front Page Top

#13 Senate to vote on bailout Wednesday
By J. Taylor Rushing
Posted: 09/30/08 07:55 PM [ET]
Senate leaders Tuesday night announced a Wednesday evening vote on the $700 billion Wall Street rescue plan rejected Monday in the House of Representatives.

Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) announced the agreement in a joint appearance on the Senate floor just after 7 p.m. Agreements are in place for a voting procedure and the vote itself is expected sometime after sundown, to respect the Jewish holiday, both leadersâ offices said.

Democratic presidential candidate Barack Obama (Ill.) will return to Washington for the vote.

The agreement came together after a daylong effort that involved as many as nine conversations between Reid and McConnell and their lieutenants, as well as calls back and forth from Capitol Hill to the White House.

Tax legislation will be attached to the Senate financial rescue package, which will be considered just two days after the House rejected a bill, causing markets to plunge.

The tax bill would create and extend incentives for renewable energy and will include a one-year patch of the Alternative Minimum Tax, which would otherwise hit about 20 million Americans next year.

Finance Committee Chairman Max Baucus the tax incentives would ensure that the bill focused more on "Main Street" and not just Wall Street.

"Adding this tax relief will ensure that regular working Americans get the financial help they need in this time of crisis," Baucus said in a statement.

The bill faces an uncertain path in the House, and Democratic leaders in that chamber gave the Senate news a cool reception.

House Speaker Nancy Pelosi (D-Calif.) and Majority Leader Steny Hoyer (D-Md.) both issued statements that pointedly omit any words of support for the plan, although they didn't state opposition either.

The stock market plunged 777 points after Monday's 205-228 vote in the House, sending leaders from both parties scrambling on Tuesday to head off any more political and financial fallout. The bill is believed to enjoy a wide margin of support in the Senate, usually the more difficult of Congress's two chambers for controversial legislation.

"It has been determined, in our judgment, this is the best thing to move forward," Reid said. "This is good for the country."

McConnell called the announcement "one of the finer moments in the Senate."

"We have come together on a bipartisan [basis] and structured a way forward on an important rescue package for our country," he said. "This is an important accomplishment and a way forward to get a result that we need to achieve for the American people."

Reid's office said the final agreement came together very quickly late Tuesday.

Usually, constitutional issues prevent the Senate from acting on legislation that involves tax issues â any such bill must originate in the House. However, the Senate can circumvent the the rules by taking up a pending House bill, stripping it and putting in place substitute language. Senate Banking Committee Chairman Chris Dodd (D-Conn.) had cast doubt on that scenario after Monday's failed House vote, saying it would only "compound" the situation, but others, such as senior Banking Committee member Robert Bennett (R-Utah), confirmed it was a leading idea.

"Anything that's within the realm of the rules is within the realm of possibility," Bennett said.

Some observers said a successful Senate vote could be an important tool in persuading wavering House members who may be considering changing their vote.

Posted by 3dc 2008-09-30 23:49|| 2008-09-30 23:49|| Front Page Top

23:53 3dc
23:49 3dc
23:47 Danielle
23:39 Danielle
23:36 Jolutch Mussolini7800
23:23 Jim Carroll
23:21 tipper
23:14 bigjim-ky
23:12 bigjim-ky
23:11 Dino Hupineting6136
23:09 ed
23:07 ryuge
23:03 Barbara Skolaut
23:03 ed
22:58 ed
22:46 Pappy
22:37 newc
22:33 Chuck Simmins
22:19 WTF
22:15 Tranquil Mechanical Yeti
22:11 Pappy
22:03 Pappy
22:03 Nimble Spemble
21:57 Pappy