Flutterby™! : More economic bitching

Next unread comment / Catchup all unread comments User Account Info | Logout | XML/Pilot/etc versions | Long version (with comments) | Weblog archives | Site Map | | Browse Topics

More economic bitching

2008-09-26 14:02:49.739281+00 by Dan Lyke 17 comments

Many of you have probably seen this astonishing admission of incompetence:

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

Nonelvis points out that this is coming from a representative of a government department tasked with:

...managing the U.S. Government's finances effectively, promoting economic growth and stability, and ensuring the safety, soundness, and security of the U.S. and international financial systems.

and yet they're admitting that they're pulling numbers out of their collective asses and are throwing oatmeal against the wall to see if it sticks. Luckily, there are people paying attention, Martin Wolf points out that Paulson's plan is not a solution to the crisis.

Meanwhile, "The best-performing hedge fund manager of the past two years has closed down his funds and is returning money to investors after concluding that the danger of losing money from a bank collapse is too high." If you're a good money manager, this is what you do.

[ related topics: Politics moron Economics ]

comments in ascending chronological order (reverse):

#Comment Re: made: 2008-09-26 14:25:08.969694+00 by: Dan Lyke

And former Treasury Secretary Paul O'Neill gets it:

"It is possible to re-liquefy the credit system without 'We the People' owning $700 billion worth of homes," he said.

Instead, O'Neill would like for the government to calculate the present value of the mortgage-backed investments and then insure, rather than own, those assets.

#Comment Re: "We just wanted to choose a really large number." made: 2008-09-26 15:17:21.651357+00 by: jeff

If this wasn't so laughable, I'd simply cry. It's truly astonishing the incompetence and sheer magnitude of the greed and arrogance that this group has.

#Comment Re: made: 2008-09-26 15:50:43.26025+00 by: ziffle

Ron Paul

#Comment Re: made: 2008-09-26 16:48:21.583975+00 by: Diane Reese

Ron Paul has endorsed Chuck Baldwin for President. Baldwin is a radio talk-show host,Baptist minister from FL, and a former officer in Jerry Falwell's (so-called) Moral Majority. I've read his wikipedia entry and it's appalling on almost every front. Oh yeah, that's the sort of leadership we need right now. Right on Ron Paul, good judgement.

#Comment Re: made: 2008-09-26 16:56:51.555264+00 by: JT

Nancy Pelosi

#Comment Re: made: 2008-09-26 16:57:45.607517+00 by: JT

Wait, why are we just listing names with no description to their relevance to the article?

#Comment Re: made: 2008-09-26 17:55:59.444439+00 by: Dan Lyke

Harpo Marx.

#Comment Re: made: 2008-09-26 18:04:16.314331+00 by: JT

Oh very nice, Dan.

Buster Keaton

#Comment Re: made: 2008-09-26 18:04:34.793907+00 by: Dan Lyke

I'm also fairly sure that leaving this situation untreated and completely to the market would lead to violence pretty fast. People will insist on more government, running away from that reality won't help us, proactively managing it might.

And, yeah, if my opinion of Ron Paul has changed over the past year or two, it's that my impression he's not a Libertarian, he's the worst sort of "states rights" ranter, has been reinforced.

#Comment Re: made: 2008-09-26 18:27:11.734021+00 by: jeff

Is it time for us to actively promote the idea that the generals in Washington should start running our government instead of those who falsely represent us? Have we reached that abysmal level of mistrust in Washington?

#Comment Re: made: 2008-09-26 18:29:59.017324+00 by: JT

It seems the public outcry is usually "less government" however the general consensus also seems to be that this needs regulation. Leaving an industry, or market in this place, to regulate itself is asking for trouble, however a blank-check bailout allowing practices to continue the way they have is hardly a solution.

I heard a story on npr in passing this morning about how some people are uncomfortable letting tax dollars fund predatory lending practices as part of the bailout. Reminds me of the IRS running the infamous (or is that world-famous?) Chicken Ranch in Nevada. For a while, hookers were under government employ. Is it going to be just an oversight in the case of Chicken Ranch, or will it be a change in policy and regulation to prevent this from happening again?

There seem to be a lot of questions with this particular process where I haven't seen answers that directly address my concerns. Usually I've just read side-speak and fluff about what the government and media wants us to think is happening.

#Comment Re: made: 2008-09-26 19:14:40.58899+00 by: Dan Lyke

Yeah, I used to be about as "less government" as they come, but in this case I see this as a huge failure of regulation (and a consequence of lack thereof). Among other things, this is very much a case of the private regulators, the credit rating agencies, failing hard, and the public regulators doing jack all.

I think the solution for this involves insuring most of those mortgages at a relatively low rate, probably 35-55% of their face values. This gives an immediate valuation to unstick the credit markets, but any organization that falls back on that is going to take it in the teeth, hard. Which will be most of them.

That may not cost any less than Paulson's plan, but it makes sure that many of those who took the risks feel pain, and doesn't simply keep propping up the bubble. Because if we pretend that everything's worth what the banks are claiming, the only thing we're doing is postponing the big crash to another administration.

#Comment Re: made: 2008-09-26 19:27:56.42148+00 by: topspin

This situation needs to be managed. Bring in the pros. Get Warren Buffett and his responsible friends in the money management business (not the guys with the big golden parachutes and bonuses at the wheel of failing companies) in a room and pool their skills and friggin' listen to what these people say.

A bunch of Congresscritters who overspend our money to keep their jobs and feather their nests will not "bail us out" of anything. They will do what they always do.... take care of their own.

To be sure, guys like Buffett want to stay rich and successful for the rest of their lives. These guys understand, however, that if "lunch pail Joe" isn't going to work and/or loses his home, they don't get richer. The economic forecasts and predictions are their passion, their livelihood, and their talents. They might not be altruistic about all this, but they ARE talented at watching and manipulating the economy.

Trusting this situation to Congress is like asking me to code your critical system application while Dan sits in the corner and waits to see what happens.

#Comment Re: made: 2008-09-26 19:42:25.665034+00 by: Dan Lyke

While I respect Buffett, I am a little concerned that he once famously said "look around the table, if you don't see the sucker, you're the sucker", and from where I sit with the current plans so far as I can see, I'm the sucker.

#Comment Re: made: 2008-09-27 00:48:09.407418+00 by: meuon [edit history]

Yes, we are the suckers, the payers.. the mule carrying the load.

#Comment Re: made: 2008-09-27 04:37:12.806276+00 by: spc476

Here are some interesting articles [PDF] about changes in Fed policy around 1995 might have lead to our current problems (and maybe explains how Alan "I <3 Ayn" Greenspan got his reputation as a financial genius).

#Comment Re: made: 2008-09-28 22:18:18.388678+00 by: ziffle [edit history]

Here is the Big Picture

Empires fall because of debasement of the currency. (Ron Paul)