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I don't have time to write the full-boat diary I'd like to--gotta head out the door soon--but goshdarnit, this is urgent. The dems are getting railroaded by Paulson, and our plaintive complaints aren't helping much.

Why isn't anyone here talking about Chris Dodd's proposal for the bailout? He published the proposed bill this morning! Bloomberg. The bill.

In simplest form: if we buy $1 of distressed assets from a company, we get those assets, plus $1 in equity in that company. (Plus exec compensation limits [as kos says, bfd--but still, a good thing] plus a kickback for losses on the eventual sale of the asset [which seems a bit overboard to me; the equity stake does the job, at least in aggregate]).

More...

You can read comments from Krugman, DeLong, and Salmon.

Hunter did a post on the bailout with some economically half-baked ideas, but it barely even mentions the Dodd plan, and that dismissively. He's right that we need another solution, but he doesn't provide it. (Dodd does.) And Kos's post just pooh-poohed the CEO issue--appropriately, but that's not a solution.

The Dodd plan looks like a sweet deal for the taxpayers, and punitive to the Wall Street gamblers and grubbers--with punishment exactly where it hurts: their wealth.

Let's get some noise going behind this! It shows, once again, that it's the democrats who have the real economic savvy and solutions. (Though I have to say that dKos postings don't demonstrate that terribly often.)

And it shows which party actually understands the concept of Market Discipline.

Steve
http://trueconservative.typepad.com

Originally posted to sparrowsfall on Tue Sep 23, 2008 at 07:48 PM PDT.

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Comment Preferences

  •  is there actually a fire in the theater though?nt (6+ / 0-)

    Republicans are not a national party anymore. Read My Lips: One Spouse, One House.

    by jalapeno on Tue Sep 23, 2008 at 07:53:13 PM PDT

  •  Having an equity stake is non-negotiable (12+ / 0-)

    I've noticed today that folks like Howard Kurtz are poo-pooing the idea we need equity in the companies folks like Howard think we need to bail out.  And even Barney Frank, when interviewed today by Schuster on Countdown, did not mention this.

    Krugman's right:  no equity, no deal.

    Time to call your congress critters again.

    "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

    by mbayrob on Tue Sep 23, 2008 at 07:53:49 PM PDT

    •  Yes, Howard Fineman on Hardball seemed (1+ / 0-)
      Recommended by:
      mbayrob

      to think Dems would get everything except the equity demand.  We need to rally around and make sure they stand firm on that.  Krugman being out there stating the case will hopefully provide a lot of cred for them in facing down the Admin.  He and two other serious guests were pretty great on PBS tonight.

      McCain/Palin = Unstable/Unable

      by DrFitz on Tue Sep 23, 2008 at 08:24:45 PM PDT

      [ Parent ]

      •  Howard is the voice of Conventional Idiocy (0+ / 0-)

        We need to make sure that the Conventional Idiots are wrong about this.  Hence the reason to keep calling your senators and congress critter to make clear that w/o equity, there is no deal to be had.

        "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

        by mbayrob on Tue Sep 23, 2008 at 08:28:53 PM PDT

        [ Parent ]

  •  I like it! (6+ / 0-)

    Thanks for bringing it to my attention, I wasn't aware of this proposal.  I told a staffer at Senator Dodd's office that I wanted to see us getting an equity stake in any company that participates in the bailout when I spoke to them on Saturday, and this is a very nice development!  I said we shouldn't buy distressed assets - if they need cash, let them issue us preferred stock at par value.  But this seems to be better...

  •  I'm just browsing for bailout plans (13+ / 0-)

    right now. Not willing to buy one yet. In a week or two, I may be ready to commit. I'll get back to you.

    "You tall drink of water, Spencer... I'm going to spank you silly." -Ben Bernanke

    by NMDad on Tue Sep 23, 2008 at 07:55:24 PM PDT

  •  I'm coming to think that ANY plan that (12+ / 0-)

    involves any form of bailout, especially to entities being investigated for fraud by the FBI is a non-starter.

    Taking the Bush/Paulson plan as your starting point for any kind of economic 'rescue' is a bad move.

    Dems should simply pass their own plan that addresses the underlying mortgages directly, and say the hell with the nigerian princes of wall street and their CDS ponzi scheme.

    It was unregulated to start, so we're not on the hook for bailing them out unless Congress is dumb enough to allow us to be put on that hook.

    Got a problem with my posts? Quit reading them. They're usually opinions, and I don't come here to get in arguments.

    by drbloodaxe on Tue Sep 23, 2008 at 07:57:16 PM PDT

    •  it will be the Bush/Democrat plan (7+ / 0-)

      once it passes.

      it is a trap.

      Republicans are not a national party anymore. Read My Lips: One Spouse, One House.

      by jalapeno on Tue Sep 23, 2008 at 07:58:11 PM PDT

      [ Parent ]

      •  You need a graphic of (2+ / 0-)
        Recommended by:
        jalapeno, Joy Busey

        Admiral Ackbar for that 'It's a trap!'

        Got a problem with my posts? Quit reading them. They're usually opinions, and I don't come here to get in arguments.

        by drbloodaxe on Tue Sep 23, 2008 at 08:00:18 PM PDT

        [ Parent ]

      •  Odd comment at today's McCain presser (2+ / 0-)
        Recommended by:
        ctsteve, wayoutinthestix

        McCain, who decided after 40 days and 40 nights of raining a flood of crap on the country, finally had a presser today, apparently after he saw Obama's rather presidential performance at his press conference earlier.

        I saw an excerpt on Countdown, and noticed something odd:  McCain is complaining that some Democrats are refusing to take a stand on the bailout before McCain announces his own vote.

        I don't have the time today to find a video of the full presser, and I don't have the tools to excerpt a small piece like this.  But somebody should look into this.  My guess is that they are indeed trying to avoid taking responsibility for whatever passes, and that McCain is already to vote against, no matter what passes, so he can run on it.

        Which isn't leadership you can believe in, my friends.

        "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

        by mbayrob on Tue Sep 23, 2008 at 08:06:26 PM PDT

        [ Parent ]

        •  doesn't matter.... (0+ / 0-)

          they will use it over and over....it will be the one issue.

          Republicans are not a national party anymore. Read My Lips: One Spouse, One House.

          by jalapeno on Tue Sep 23, 2008 at 08:12:13 PM PDT

          [ Parent ]

        •   It was on ABC News. (4+ / 0-)

          Stephanopoulos: McCain Holds Key to Administration's Bailout Passage on Capitol Hill"

          Republican are waiting to see what McCains vote is. They want to embarrass Democrats who vote for a bill, in being pro-Wall Street. Also many Repug blogs are encourage Repugs to vote against this and let the Dems hold the bag.

          Looks like Dems are demanding to have McCain vote yea, before they will follow.

          Republicans : Socialism for the rich, capitalism for the poor

          by ctsteve on Tue Sep 23, 2008 at 08:13:04 PM PDT

          [ Parent ]

          •  Good on ABCNews (0+ / 0-)

            Even Shuffleupigas gets one right every so often.

            "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

            by mbayrob on Tue Sep 23, 2008 at 08:14:18 PM PDT

            [ Parent ]

            •  not just the Presidential race..... (0+ / 0-)

              every Republican running for house or senate will use this in an ad.  That will be their only ad.

              every day people and republicans against dems and corporate america.

              They will win.  bastards.

              Republicans are not a national party anymore. Read My Lips: One Spouse, One House.

              by jalapeno on Tue Sep 23, 2008 at 08:15:46 PM PDT

              [ Parent ]

              •  Not this time, don't think (2+ / 0-)
                Recommended by:
                wayoutinthestix, RadioGirl

                I think McCain just stepped in it.

                If ABC News already caught this (I was listening to the raw comment -- didn't know they were going to make a story out of it), then the feeding frenzy on this one has already started.

                He's going to have to take a stand.  A pity for him, to actually have to put Country First, for real this time.

                "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

                by mbayrob on Tue Sep 23, 2008 at 08:19:43 PM PDT

                [ Parent ]

                •  I can tell you right now.... (1+ / 0-)
                  Recommended by:
                  mbayrob

                  he won't show up.

                  he'll lie and say they shouldn't have.

                  Republicans are not a national party anymore. Read My Lips: One Spouse, One House.

                  by jalapeno on Tue Sep 23, 2008 at 08:22:52 PM PDT

                  [ Parent ]

                  •  He'd like to (0+ / 0-)

                    But seriously: if he doesn't show, there won't be a vote.

                    "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

                    by mbayrob on Tue Sep 23, 2008 at 08:40:54 PM PDT

                    [ Parent ]

                •  He was asked directly how he was going to (0+ / 0-)

                  vote and dodged the question.  I think the clip mentioned above is the part when he is defending the fact that he wouldn't give a straight answer.

                  McCain/Palin = Unstable/Unable

                  by DrFitz on Tue Sep 23, 2008 at 08:29:12 PM PDT

                  [ Parent ]

                  •  Not leadership you can believe in, my friends (0+ / 0-)

                    More to the point: not leadership you should believe in.

                    We need to make sure McCain has no out here.  In effect, his "yes" vote needs to be part of the package for the deal.

                    "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

                    by mbayrob on Tue Sep 23, 2008 at 08:33:15 PM PDT

                    [ Parent ]

          •  ummmm note to dems. (0+ / 0-)

            when was the last time McCain voted?  You already know what his vote will be.  Campaign stop in a battleground state instead of showing up.

            Republicans are not a national party anymore. Read My Lips: One Spouse, One House.

            by jalapeno on Tue Sep 23, 2008 at 08:14:20 PM PDT

            [ Parent ]

            •  To be fair, when Obama was asked he said (0+ / 0-)

              that if it looked like support was close to unanimous and would pass easily, he would be out campaigning "in states that have been hit hard."  But if it looked close and his vote would make a difference, then he would make it a priority and be there for the vote.  So Barack is not eager to be too closely associated with the exact package that ends up going through either.

              McCain/Palin = Unstable/Unable

              by DrFitz on Tue Sep 23, 2008 at 08:32:04 PM PDT

              [ Parent ]

              •  Situation isn't symetrical (0+ / 0-)

                Obama has already made clear that he favors more regulation, and that it's not going to be corporate welfare.

                McCain has said many thing, but taken no hard votes, and in the end of the day, has consistently opposed regulation.

                He'd like to not take that pro-regulation vote if he can avoid it.  And unless he's forced to take it, he won't.

                So McCain the liar has to go first.

                "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

                by mbayrob on Tue Sep 23, 2008 at 08:35:56 PM PDT

                [ Parent ]

    •  I think everything ought to go on 'Hold' (8+ / 0-)

      until the FBI is done. Otherwise, somebody will likely end up with lots of egg on their face.

    •  YES! (5+ / 0-)
      Recommended by:
      Joy Busey, AnnCetera, xaxado, drbloodaxe, kir

      Even the EXISTENCE of this FBI investigation should put the brakes on any bailout plan instantly!!

      Never give up! Never surrender!

      by oscarsmom on Tue Sep 23, 2008 at 08:08:12 PM PDT

      [ Parent ]

  •  i disagree about the CEO issue. (14+ / 0-)

    And I disagree with Markos on that one too.

    It's not petty of us to insist that those who caused this get penalized.

    It's petty and whiny and downright gross of them to insist that they not get penalized for their own actions.  

    Or maybe the stereotype about liberals being soft on crime is true?  

    Here's what I would do to the fatcats who caused this:

    "If you want us to buy your distressed assets, you have to agree to civil forfeiture of ALL of your personal assets down to $100,000, which is the FDIC limit for regular bank accounts.  That means you lose your expensive house, your expensive car, and most of your baubles, and you get to restart your life with exactly what most of the victims of your actions get: the FDIC limit on a personal savings account."

    That would be fair.  

    F--- these parasites.  

  •  Hunter's ideas were at least honest. (3+ / 0-)
    Recommended by:
    mattman, oldjohnbrown, Joy Busey

    Paulson's plan is bare-faced robbery to continue to support the thieves that caused the crisis.  If anything, given the 'success' of Paulson's previous moves, his ideas are better labeled 'half-baked' than Hunter's.

    Got a problem with my posts? Quit reading them. They're usually opinions, and I don't come here to get in arguments.

    by drbloodaxe on Tue Sep 23, 2008 at 07:59:32 PM PDT

    •  but the post is about Dodd's plan (3+ / 0-)
      Recommended by:
      decafdyke, Joy Busey, DrFitz

      not Paulson's. The diarist's point, as I read it, is that instead of complaining about lack of alternatives to Paulson's plan, we should support Dodd.

      •  Not even Dodd wants to be rushed (2+ / 0-)
        Recommended by:
        mattman, DrFitz

        Leadership needs to come from the Administration.  Dodd's job (and the job of all of the Democrats in Congress) is to force the financial services industry (for whom Bush and Paulson are negotiating) to pay as high a price as possible for a deal.

        The FS people are desperate for a settlement.  They need a deal.  They cannot do without a deal.  And they cannot wait as long for a deal as we can.

        So we wait them out, and we force them to bring McCain and their faux populist wing to the table, kicking and screaming.  If they don't, we just keep stringing them out.

        They want action immediately for clear reasons.  We have no reason to make it either quick or easy for them.

        "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

        by mbayrob on Tue Sep 23, 2008 at 08:27:19 PM PDT

        [ Parent ]

      •  Sorry, I wasn't clear. (0+ / 0-)

        The unspoken point there, was that Dodd's plan seems to be based on Paulson's as a starting point, rather than scrapping Paulson's ideas entirely and starting afresh with treating the disease rather than just the symptoms.

        Got a problem with my posts? Quit reading them. They're usually opinions, and I don't come here to get in arguments.

        by drbloodaxe on Wed Sep 24, 2008 at 06:41:28 AM PDT

        [ Parent ]

  •  If this plan is not approved by a majority (1+ / 0-)
    Recommended by:
    mattman

    of Republicans and McCain, then there should be no bailout bill, with money going to Wall Street.

    Republicans : Socialism for the rich, capitalism for the poor

    by ctsteve on Tue Sep 23, 2008 at 08:01:21 PM PDT

  •  I agree his plan hits the major points (4+ / 0-)
    Recommended by:
    mbayrob, lauramp, wayoutinthestix, DrFitz

    we have to eep the issue of equity as a deal breaker. how dare they say we should replenish their coffers and get nothing for it. Did you see the deal Buffett just got from goldmans for 5 billion? 700 billion should have a lot more leverage, but I'll take the same deal

    To sin by silence when they should protest makes cowards of men~~ Abraham Lincoln

    by Tanya on Tue Sep 23, 2008 at 08:01:24 PM PDT

  •  Personally I think (1+ / 0-)
    Recommended by:
    lauramp

    Dodd has been doing a great job this week.  Future treasury secretary ?

    Government for the people, by the people

    by axel000 on Tue Sep 23, 2008 at 08:05:24 PM PDT

  •  I like Bernie Sanders' plan: (12+ / 0-)

    http://www.sanders.senate.gov/...

    Make the people that benefited from the economic bubble pay for the bailout.  The middle class has only suffered under GWB whereas the rest of them are getting away with the goods.  Pay for the bailout with a tax on the rich.

    Never give up! Never surrender!

    by oscarsmom on Tue Sep 23, 2008 at 08:06:09 PM PDT

    •  Yeah, make 'em pay 10% on top (3+ / 0-)
      Recommended by:
      3goldens, Joy Busey, oscarsmom

      Bernie rocks.

      "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

      by mbayrob on Tue Sep 23, 2008 at 08:07:35 PM PDT

      [ Parent ]

    •  Sanders's plan is unfortunately unfair to those (1+ / 0-)
      Recommended by:
      DrFitz

      bajillionaires who haven't done anything wrong (in this crisis, at least).  Dodd's proposal targets specifically the wrongdoers, and is in most other respects Sanders's plan paraphrased.  I'd say Dodd's plan is an improvement here.

      •  They all benefitted from years of tax cuts (4+ / 0-)

        Don't cry for them too much.  It's their patriotic duty.

        Also: the ones who are aren't guilty won't see the inside of a jail either.

        "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

        by mbayrob on Tue Sep 23, 2008 at 08:13:11 PM PDT

        [ Parent ]

      •  Let me get my tiny violin... (4+ / 0-)

        all the rich benefited from Bush policies.  No one else did.  They're really just paying back the false profits they reaped over the last 5 years, which weren't real anyway.

        Never give up! Never surrender!

        by oscarsmom on Tue Sep 23, 2008 at 08:19:18 PM PDT

        [ Parent ]

        •  I agree with you, but I think you'll have a hard (0+ / 0-)

          time convincing Mr. Bush not to veto a bill that would serve as an admission that his economic policy was a complete failure.  Remember also, this has to be bipartisan.  Firstly because we have a Republican President and a Democratic (non-super)majority in Congress.  Secondly, because we have to quash any hopes of having this used as a campaign tool.  If it fails, we want everyone to be guilty rather than having finger-pointing, and if it succeeds then we want no one to have a larger claim to that victory than another.

          A Democrat-only proposal would likely be vetoed by Bush.  If it solved the crisis, it would be ignored as their Congressional duty.  If it worsened or did nothing to the crisis, then it would be the rallying cry of the Republican party whenever that failure becomes clear.  Use logic here.

          •  Let him veto it (1+ / 0-)
            Recommended by:
            oscarsmom

            Again, it's Bush's side that needs the deal.  If he wants to scuttle the deal, let him.

            My judgment here is that the financial services crowd is far too desperate to let Bush's pride get in the way of their bailout money.  Bush will sign, and he'll be pretty meek about it.

            He's not afraid of the voters.  And he's not afraid of Congressional Democrats.  But the FS people scare the hell out of him.  And they wants their precious bailout, they wants it.

            "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

            by mbayrob on Tue Sep 23, 2008 at 08:56:29 PM PDT

            [ Parent ]

            •  If the bailout was only for the rich, it wouldn't (0+ / 0-)

              even be in question because the Democrats wouldn't even be considering this.  The Great Depression was caused in part by the failure of America's lending houses, similar to this current issue, and the government's reluctance to act.  The Savings & Loan crisis was significantly less catastrophic because of the government's intervention (in a way that was similar to the current proposal, but also very different).  So you can rail against this all you want, but acting "maverick" doesn't really help anyone.

  •  No effin way (6+ / 0-)

    Dodd's bailout plan is only moderately better than the awful Paulson plan.

    "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

    by gjohnsit on Tue Sep 23, 2008 at 08:07:03 PM PDT

  •  No bailouts! (3+ / 0-)
    Recommended by:
    Joy Busey, xaxado, kir

    Live by the sword... die by the sword. Yes, people will be hurt. People will be hurt regardless. That is no excuse to empty the treasury to shovel more money into Wall Street.

    But don't forget that most men without property would rather protect the possibility of becoming rich, than face the reality of being poor. (1776)

    by banjolele on Tue Sep 23, 2008 at 08:07:57 PM PDT

  •  Throwing Money At Rich People.. (3+ / 0-)
    Recommended by:
    3goldens, Joy Busey, banjolele

    Sorry it sounds no better when it is a Democrat saying it.  

    "But in the unlikely story that is America, there has never been anything false about hope." Barack Obama

    by Sam James on Tue Sep 23, 2008 at 08:08:27 PM PDT

    •  Been there. Done that. (0+ / 0-)

      It was called "US politics since 1980".

      "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

      by mbayrob on Tue Sep 23, 2008 at 08:37:53 PM PDT

      [ Parent ]

  •  I agree (2+ / 0-)
    Recommended by:
    oscarsmom, DrFitz

    I am a bit baffled by some posts and comments I have seen acting like there is no alternative to the Paulson bailout. Dodd has an alternative plan - which sounds very similar to what Obama was talking about today. That economists like Brad DeLong and Paul Krugman support Dodd's plan is important to me because I don't know anything about this issue and I know I don't know anything so I look to those who do.

    Thanks for your diary!

  •  non equity. no bail-out. (1+ / 0-)
    Recommended by:
    oscarsmom

    Who do theu think they are to distribute $700B of tax payers money to fat cats ?

    The equity could be non-voting ...

  •  I don't buy the premise of the crisis (1+ / 0-)
    Recommended by:
    AnnCetera

    as articulated by Paulson, and so I don't really respond to Dodd's variation. I think a sober examination of what exactly we're up against is in order.

    I like, for instance, the idea of the government buying mortgages instead of mortgaged backed paper. If we stabilize mortgages and credit cards we help ordinary people out and sturdily undergird a certain amount of this dubious paper.

    I have a strong feeling that a lot of these so-called losses are simply the banks not getting their expected, and wildly large, profits from buying this crap. If that's what they're complaining about, to hell with it and to hell with them. I'm not paying to cover hilariously overleveraged profit. To the extent that it is a real problem it's a Main Street problem, and our focus should be there.

    No laws but Liberty. No king but Conscience.

    by oldjohnbrown on Tue Sep 23, 2008 at 08:34:48 PM PDT

  •  People, get judicious here (2+ / 0-)
    Recommended by:
    mbayrob, AnnCetera

    It's what we love about Obama, and it's opposite is what we hate about the opposition.

    I don't know if you guys follow the econoblogosphere, but I do--kind of embarrasingly obsessively.

    There's not a single economist out there who doesn't think we are on the brink of a meltdown. This includes all the lefty economists like Krugman and Delong.

    A meltdown as in: you go to your bank next week and you can't withdraw funds.

    That kind of meltdown.

    Worldwide.

    Maybe they're all wrong. But they all agree, which means there's a not insignificant risk that it will happen.

    Now, to the kneejerk, unthinking "no bailout" crowd:

    Dodd's plan makes the hurt. We give them $1, and they give us $2 in assets. Take it or leave it.

    But because one of those dollars is equity stake, it doesn't hurt their immediate liquidity (which is what we're really really worried about--whatever caused it).

    They get the funds they need to avoid meltdown. We get a potentially excellent upside.

    Nothing's guaranteed in this life, but Dodd plan is far and away the best thing we've seen. And there's definitely no guarantee that our representatives won't simply cave, without even getting equity.

    NO EQUITY, NO DEAL!

    And the political upside of negotiating a good, tough deal is potentially huge for the dems.

    Call your representatives. Send letters to the editor. Right now.

    •  Even though I agree a deal needs to happen (1+ / 0-)
      Recommended by:
      AnnCetera

      I still understand the "no bailout, no how" sentiment. And I think we ignore it at our peril.

      Were it not for these folks, the Democratic leadership in Congress may well have caved already.  It's up to whoever comes up with the deal to prove its bona fides to the skeptics on our side than it's either necessary or desirable to appease the financial industry hacks and their cut outs in the Bush Administration.

      "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

      by mbayrob on Tue Sep 23, 2008 at 08:52:53 PM PDT

      [ Parent ]

    •  how can we focus support for dodd? (1+ / 0-)
      Recommended by:
      AnnCetera

      I wrote to Dodd, a couple of LTEs and both my senators in support of Dodd's bill this morning.  Also to the Obama campaign. Phones were busy, busy busy at Senate offices.

      My husband is a Wall Street bond analyst and he thinks that this is a good plan.

      It would be great if there were a central place to express support.

    •  Humpty's Broke (0+ / 0-)

      Problem:  financial meltdown risk
      solution: Debt based funding?  Equity based funding?  Wrong either way.

      Why?  Because the problem cannot be solved with money.  The root problem is a fraudulent method of managing risk through fake insurance -- derivatives in general and Credit Default Swaps specifically.  This insurance con takes premiums but retains no reserves to pay claims.  When the downside happens nobody is insured, which is the current situation.

      Why does it matter?  Because the financial system used the potential coverage from insurance in lieu of reserves!  Nobody in the banking system has adequate reserves, including the Fed, because things are going down and reserve requirements are going up and the downside hedge insurance was fake.

      This was systemic fraud, worked out by Phil Gramm (R) and Robert Rubin (D) in truly bipartisan style.  No amount of cash will put Humpty back together again  -- Humpty's broke!

      Save your cash for canned food and matches -- you'll be needing them!

      The Shock Doctrine by Naomi Klein -- best book ever, I nominate for a Nobel Prize!

      by xaxado on Tue Sep 23, 2008 at 09:05:54 PM PDT

      [ Parent ]

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