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View Diary: Carnegie Mellon Professor: No bailout needed (305 comments)

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  •  Tocque (1+ / 0-)
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    Calamity Jean

    I have a similar comment below and am really disappointed in incuriousity and the lynch mob mentality I am reading all over the site.  You and I know that this was a bipartisan screw up of massive proportions that cannot look to the rapacious free market for anything other than the economic darwinism they espouse.

    "Those dunes are to the Midwest what the Grand Canyon is to Arizona and the Yosemite is to California." - Carl Sandburg

    by Critical Dune on Wed Sep 24, 2008 at 01:13:25 PM PDT

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    •  Butyou have to admit (4+ / 0-)

      the idea of lending treasury money to indebted institutions, charging them interest on the loans - no bonuses or dividends until the loans are paid - and taking over the institutions to sell off their assets if the loans are not repaid, is a much better idea than just shoveling taxpayer money into these institutions in order to, hopefully, keep them from failing, with no equity stake at all for us lenders.

      "In this world of sin and sorrow there is always something to be thankful for; as for me, I rejoice that I am not a Republican." - H. L. Mencken

      by SueDe on Wed Sep 24, 2008 at 02:32:15 PM PDT

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      •  Exactly! LEND instead of GIVE them the money. (1+ / 0-)
        Recommended by:
        mataliandy

        Somebody please explain the downside of that.

        Explain why this isn't an option.

        •  Because (0+ / 0-)

          realizing the long term value of the mortgages and structured securities currently on bank balance sheets is going to take years.  If you lend to the banks, which is exactly what the Fed's emergency lending facility did months ago (which didn't solve the problem), you continue focusing bank activity on managing the existing  risk, instead of freeing up capital  for normal lending activity.  This crappy paper is a rat in a snake's belly that ain't going anywhere. By purchasing these assets (at a huge discount), the institution, if still solvent is free to extend credit again.  They get capital inflow in exchange for taking a big hit on the asset sale price.  That gives them a painful opportunity to start fresh.  We, hopefully, buy the assets at the right level and realize returns over time (years).  So you see, we're not "giving them the money", we're buying stuff with it.

          "Those dunes are to the Midwest what the Grand Canyon is to Arizona and the Yosemite is to California." - Carl Sandburg

          by Critical Dune on Tue Sep 30, 2008 at 11:19:44 AM PDT

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