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View Diary: The Fate of the Union [Updated] (493 comments)

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  •  I Disagree (4+ / 0-)
    Recommended by:
    mediaprisoner, lotlizard, kurt, Snarcalita

    Everything I have learned about this issue and this 'bailout' screams to me that it not only will not solve the problem, but in fact will make it worse.

    The problem in a nutshell is too much debt, too much leverage, too much disconnected risk, and home values which have been inflated so as to fuel continued consumption.

    This 'bailout' addresses none of those issues, and whether the Treasury is allowed to purchase assets from perfectly solvent institutions for more than what they are worth or not, the issues above will remain.

    <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

    by superscalar on Mon Sep 29, 2008 at 08:38:18 AM PDT

    [ Parent ]

    •  But I think those problems you cite are long-term (1+ / 0-)
      Recommended by:
      JT88

      problems.  This is about solving a short-term situation.  It's not just about buying these assets, it's about getting them back into the market place by providing a floor to their value.  It's not the $700 billion, it's the restoring of confidence of investors.

      The readiness is all

      by mrchumchum on Mon Sep 29, 2008 at 08:42:43 AM PDT

      [ Parent ]

      •  Again, I Disagree (3+ / 0-)
        Recommended by:
        mediaprisoner, lotlizard, kurt

        It's not the $700 billion, it's the restoring of confidence of investors

        I believe it is entirely about keeping the asset bubble inflated just a little while longer.

        <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

        by superscalar on Mon Sep 29, 2008 at 08:47:50 AM PDT

        [ Parent ]

        •  So, are you saying that whatever price (1+ / 0-)
          Recommended by:
          JT88

          the government purchases them at will be over valued?  They have some value.

          The readiness is all

          by mrchumchum on Mon Sep 29, 2008 at 08:54:02 AM PDT

          [ Parent ]

          •  The Government HAS To Pay More (5+ / 0-)

            Than their current mark value, or there is no incentive for the institution to sell them. If all the government is going to pay for the asset is its current mark value, why would the institution sell the asset?

            That the government will pay more for the asset than its current mark value is a fundamental part of the plan.

            <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

            by superscalar on Mon Sep 29, 2008 at 08:59:14 AM PDT

            [ Parent ]

            •  Right, I'm sorry I'm fumbling a little here, (0+ / 0-)

              but I'm saying that they are not "actually" worth zero which is what they are close to now.  So I guess you're saying that they are "actually" worth zero?  Or whatever they are worth now?

              The readiness is all

              by mrchumchum on Mon Sep 29, 2008 at 09:03:41 AM PDT

              [ Parent ]

              •  No, I'm Saying That Treasury (1+ / 0-)
                Recommended by:
                mediaprisoner

                Will pay more for them then their marked value at the same time they are (in the case of MBS's) rapidly losing value and people are walking away from their mortgages.

                For the case of non-collateralized debt e.g. credit card debt, student loan debt, etc. there is in fact nothing with which to gauge their current value.

                <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

                by superscalar on Mon Sep 29, 2008 at 09:11:40 AM PDT

                [ Parent ]

                •  Aren't we talking about MBS's here? (0+ / 0-)

                  Yes people are foreclosing but there is some floor to the value of these securities.  I'm confused.  Just because their stock price is plummeting doesn't mean that there isn't real value there.  My understanding is the government is just trying to provide some stability to the market.

                  The readiness is all

                  by mrchumchum on Mon Sep 29, 2008 at 09:21:35 AM PDT

                  [ Parent ]

                  •  not "stock price" but market price - or whatever (0+ / 0-)

                    the term is.

                    The readiness is all

                    by mrchumchum on Mon Sep 29, 2008 at 09:28:10 AM PDT

                    [ Parent ]

                  •  The Current Value (1+ / 0-)
                    Recommended by:
                    mediaprisoner

                    doesn't mean that there isn't real value there

                    Is the mark to market value. With all respect I believe there are some holes in your understanding of what is going on here.

                    Aren't we talking about MBS's here

                    Not necessarily, we may be talking about 'other asset classes', which Paulson has already alluded to as being non-collateralized debt such as credit card debt.

                    <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

                    by superscalar on Mon Sep 29, 2008 at 09:47:15 AM PDT

                    [ Parent ]

                    •  Fair enough. I'm the first to admit (0+ / 0-)

                      that there are holes.  I'll just keep reading.  Thanks for the responses.

                      The readiness is all

                      by mrchumchum on Mon Sep 29, 2008 at 10:14:23 AM PDT

                      [ Parent ]

                      •  dbratl Has Given A Good Explanation (2+ / 0-)
                        Recommended by:
                        mediaprisoner, mrchumchum

                        For the case of an MBS (while I don't agree with dbratl there is clearly more than a basic understanding of the issue) here.

                        Thanks for the responses

                        Cheers

                        <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

                        by superscalar on Mon Sep 29, 2008 at 10:27:13 AM PDT

                        [ Parent ]

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