My solution to this mess

Discussion in 'Economics' started by Kicking, Mar 2, 2009.

  1. I am just sick and tired of this market that keeps going down, this is big scam just as $140 crude oil was. Market is very near being most oversold ever . According to Dick Bove, the default rate on subprime is only 3% and 1% or so for the rest.

    What's going on is a wholesale liquidation of the financial system that is benefiting to a few winners picked by the government, all the while the taxpayer is paying through the nose .

    The bleeding has to stop and radical measures have to be taken.
    We need to suspend M2M accounting indefinitely, it's nonsense to value fixed income instruments which haven't defaulted yet at pennies on the dollar.

    Why haven't we taken some very simple steps that would cost a lot less:

    Suspend mark to market

    Guarantee all home owners mortgages by Govt

    Defaulting (going into foreclosure) is outlawed ,
    homeowners get new (longer) payment terms under government rulings. Subsidized jobs and govt jobs are offered to jobless
    homeowners so they can keep making payments.

    Other defaulting homeowners are sent to jail.

    No more foreclosures, no more bailouts, people pay until they are finished. And done with mark to market accounting.
  2. Daal


    Thats because dick bove is a nut who doesnt seem to understand markets are forward looking
  3. nkhoi

    nkhoi Moderator

    too logical, it won't fly.
  4. Bring back fractions , uptick rule.....
  5. BSAM


    Let markets decide.
  6. sjfan


    Your solution is stupid. You are an idiot for suggesting it. Here's why.

    -- Suspect MTM
    ... okay... sure... nevermind that fixed income assets are marked down to reflect their higher default cost.... nevermind that these assets can't possibly fetch par or any thing close to it on the open market... mark them at par... you do know that instruments that are long term can be marked as "cost" according to GAAP right? these assets are marked down because they are trading assets and thus must reflect their market value. How about we'll have your broker mark your account on cash basis?

    -- Outlaw foreclosure/default...

    So... the guys who lend the money still won't get paid... or, why don't we just all stop mortgage payments? Afterall, we can't be foreclosed on and there's no such thing as default? Are you (the government) going to check my personal savings account? and make me pay? Yes? So I'm being punished for being financially prudent and anyone who spends every dime they've got can get away with living for free?

    -- Government job for....

    Sure... and when the easy jobs run out, send them to hard labor...
  7. I think it is called transferring wealth my friend. That is what really happens in crises.

  8. And it was optimistic models on "fixed income instruments which haven't defaulted yet" which created this problem in the first place. If these "pennies on the dollar" instruments are so undervalued, why isn't anyone buying them? Although I agree that mark-to-market has dangers, it seems the lesser of two evils.

    Longer payment terms don't help underwater mortgages, they don't help NINJA loans, they don't help many of the option-ARMs, they don't help home speculators, and they don't help solve the long-term oversupply of houses (and under-supply of credit-worthy consumers). And none of it helps the EU's situation with loans to Eastern Europe.
  9. Are u suggesting a mere 3% default rate means we are being misled? Do yourself a favor and research the rates of leverage that were applied to these structures and you will see why we are hemorrhaging.

    A good timely book title for now would be something like "Learning to Survive in a De-Leveraging World"
  10. Certainly there were problems and excesses that needed to be worked out. But the real reasons for the cascading drop are on this site:

    Some people ridicule the site, but no one has offered a cogent counter-argument, complete with data. They've called many people out, and no one has dared to sue them or get in a lengthy public debate.

    There's no way all the shorting on Lehmen and Bear was legitimate. It's laughable to think so. And without the raid on those two, it's very doubtful things would've been so severe since then. Sure, a temporary bear followed by a 1966-1982 prolonged sideways market were in order, but not what we've seen recently.

    #10     Mar 2, 2009