Berkeley CSUA MOTD:Entry 51246
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2024/11/27 [General] UID:1000 Activity:popular
11/27   

2008/9/20-23 [Reference/Law/Court] UID:51246 Activity:low
9/20    Paulson is trying to pull off some kind of coup:
        Sec. 8. Review.
        Decisions by the Secretary pursuant to the authority of this Act are
        non-reviewable and committed to agency discretion, and may not be
        reviewed by any court of law or any administrative agency.
        \_ The Paulson Plan is a crock of shit.  It must be stopped.
           http://krugman.blogs.nytimes.com/2008/09/20/no-deal
           http://talkingpointsmemo.com/archives/218444.php
           \_ ugh.  are we totally fucked then?  I would hope that faced
              with GLOBAL FINANCIAL RUIN AND ANARCHY, the finance firms
              would shut the hell up and take their medicine.
           \_ Now he is talking about usuing taxpayers dollars to bail out
              foriegn banks? What kind of nonesense is this?
2024/11/27 [General] UID:1000 Activity:popular
11/27   

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krugman.blogs.nytimes.com/2008/09/20/no-deal
krugman&posall=TopAd,Position1,Top5,SponLink,SFMiddle,Box1,Box3,Bo ttom3,Right5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9 ,Inv1,Inv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Top5&query=qstring&keywo rds=? And there's nothing at all in the draft that says what happens next; although I do notice that there's nothing in the plan requiring Treasury to pay a fair market price. So is the plan to pay premium prices to the most troubled institutions? Or is the hope that restoring liquidity will magically make the problem go away? Here's the thing: historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions. The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system -- that is, convince creditors of troubled institutions that everything's OK -- simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem -- which seems doubtful -- or if Treasury is going to be paying a huge premium, in effect throwing taxpayers' money at the financial world. And there's no quid pro quo here -- nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving. But let me say it again: Treasury needs to explain why this is supposed to work -- not try to panic Congress into giving it a blank check. Name Required E-mail Required (will not be published) Comment Submit Comment Comments are moderated and generally will be posted if they are on-topic and not abusive. krugman&posall=TopAd,Position1,Top5,SponLink,SFMiddle,Box1,Box3,B ottom3,Right5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom 9,Inv1,Inv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Position1&query=qstring &keywords=? krugman&posall=TopAd,Position1,Top5,SponLink,SFMiddle,Box1,Box3,B ottom3,Right5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom 9,Inv1,Inv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=SFMiddle&query=qstring& keywords=? dealbook&posall=Top5,Box3,SponLink,SFMiddle,Right,Bottom3,Right5A ,Right6A,Right7A,Right8A,Middle1B,Bottom7,Bottom8,Bottom9,Inv1,Inv2,In v3&pos=Box3&query=qstring&keywords=? Authorization for the use of financial force Brad DeLong beat me to it. Even if you have full faith in Henry Paulson, Intrade currently gives John McCain a 48 percent chance of being president. No deal I hate to say this, but looking at the plan as leaked, I have to say no deal. Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets. Doubts about the rescue There's something I don't quite understand about how the big rescue plan is supposed to work. So, here's my problem: what we have now are a bunch of financial institutions in trouble, because they're highly leveraged, and have mortgage-related assets on their books. Follow the money Round and round Where will the money for the big bailout come from? In the long run, of course, it will come from you -- the taxpayer. The answer, if you think it through, is that it doesn't have to come from anywhere. krugman&posall=TopAd,Position1,Top5,SponLink,SFMiddle,Box1,Box3,B ottom3,Right5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom 9,Inv1,Inv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Box1&query=qstring&keyw ords=? krugman&posall=Top5,TopAd,Position1,SFMiddle,SponLink,Box1,Box3,B ottom3,Right5A,Right6A,Right7A,Right8A,Middle1C,tacoda,SOS,Bottom7,Bot tom8,Bottom9,Inv1,Inv2,Inv3&pos=SponLink&query=qstring&keywords=? krugman&posall=TopAd,Position1,Top5,SFMiddle,Box1,Box3,Bottom3,R ight5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,I nv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Bottom7&query=qstring&keywords= ? krugman&posall=TopAd,Position1,Top5,SFMiddle,Box1,Box3,Bottom3,R ight5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,I nv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Bottom8&query=qstring&keywords= ? krugman&posall=TopAd,Position1,Top5,SFMiddle,Box1,Box3,Bottom3,R ight5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,I nv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Bottom9&query=qstring&keywords= ? krugman&posall=TopAd,Position1,Top5,SFMiddle,Box1,Box3,Bottom3,R ight5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,I nv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Inv1&query=qstring&keywords=? krugman&posall=TopAd,Position1,Top5,SFMiddle,Box1,Box3,Bottom3,R ight5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,I nv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Inv2&query=qstring&keywords=? krugman&posall=TopAd,Position1,Top5,SFMiddle,Box1,Box3,Bottom3,R ight5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,I nv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=Inv3&query=qstring&keywords=? krugman&posall=TopAd,Position1,Top5,SFMiddle,Box1,Box3,Bottom3,R ight5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,I nv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=tacoda&query=qstring&keywords=? krugman&posall=TopAd,Position1,Top5,SFMiddle,Box1,Box3,Bottom3,R ight5A,Right6A,Right7A,Right8A,Middle1C,Bottom7,Bottom8,Bottom9,Inv1,I nv2,Inv3,tacoda,SOS,ADX_CLIENTSIDE&pos=SOS&query=qstring&keywords=?
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talkingpointsmemo.com/archives/218444.php
Josh Marshall As noted in the previous post, I'm quite convinced that some drastic action needs to be taken to avoid a cascading and debilitating series of crises. But the more I look at this plan, the more wrongheaded it seems. But if I'm understanding this deal, the taxpayers are going to pony up close to a trillion dollars to take bad debts off the hands of financial institutions who were foolish enough to make the deals in the first place. makes the good point that this is radically different than the S&L Crisis RTC which was liquidating the assets of thrifts that had already gone belly up -- paid the ultimate price, as it were. And as the insurer on the accounts, the government inherited the assets anyway. But here the point is to take these bad debts off these companies' hands so they can go back to being profitable businesses. This is moral hazard on steroids if I'm understanding this right. Journal, finance industry lobbyists are already giving orders to Republican hill staffers not to allow any meaningful reforms or protections for taxpayers. House Republican staffers met with roughly 15 lobbyists Friday afternoon, whose message to lawmakers was clear: Don't load the legislation up with provisions not directly related to the crisis, or regulatory measures the industry has long opposed. undermine the deal substantively," said Scott Talbott, senior vice president of government affairs at the Financial Services Roundtable, whose members include the nation's largest banks, securities firms and insurers. A deal killer for the group: a proposal that would grant bankruptcy judges new powers to lower the principal, interest rate or both on a mortgage as part of a bankruptcy proceeding. Late Update: Mulling this more and listening to the insights in your emails, the key clearly is how much the government pays for these distressed assets. Bought at the right prices and given time on the books -- which the government is uniquely in a position to allow them to do -- the government could even turn a profit on some of them. But the key is at what price they're bought and whose get bought. That seems like precisely the kind of process that requires oversight and accountability to make sure the taxpayer doesn't get fleeced. Dancing on the Edge of the Abyss Update: Paul Krugman has a post up that I think tracks basically along the lines I've raised -- only from the viewpoint of someone who has a profound understanding of these things rather than no understanding at all.