Paulson, Bernanke and Blair before Congress this morning

[Mango]

Anybody watch? I don't usually watch television during the day, but this was must see TV.

Some observations..................
Sheila Blair is brilliant of the FDIC. Her plan with Indy Mac Bank, where modifications are offered based on 31 % debt ratios is getting 70% response rate from defaulted Borrowers and has the potential for being a winner. Based on the less than stellar progress of the HOPE program, it's a wonder why Bernanke and Paulson haven't sat down with her and tried to work out using her plan, which also offers financial incentive of splitting the risk (net present value of the home) with the Banks in the event of a second default. I understand Bernanke's issue with it since if a Borrower moves and can't pay the outstanding under water balance, the gov't is stuck with paying the piper, except -- if the real estate market stabilizes, then the remaining balance may not be as much at a later point? If I was sitting on the panel asking questions, I would have asked if any there were any statistics available as to the length of time these people have been in homes that were underwater. Statistics show the average homeowner stays in their home for 7 years. No one asked this question.

What the hail was Ron Paul asking of Paulson? What is this new world currency deal, fiat dollar, and gold hoarding and WTH does it have to do with the bailout? I'm not sure if he is too smart for his britches or just outright crazy.

Forgot which member of Congress asked about bailing out the hedgies, but she was brilliant. Can not understand why the Feds can't require they be siphoned out or a deal cut to pay them a smaller percentage of the insurance. Insurance companies fail or fail to pay what was expected. if a house burns down, which they were betting on in essence, if the replacement value is lower, you get less. Same principle should apply, IMHO. But, Paulson said it couldn't be done and would cause liquidity issues. I am not buying.

 

[SHELLY]

Anybody watch? I don't usually watch television during the day, but this was must see TV.

What the hail was Ron Paul asking of Paulson? What is this new world currency deal, fiat dollar, and gold hoarding and WTH does it have to do with the bailout? I'm not sure if he is too smart for his britches or just outright crazy.

Ron Paul isn't crazy...everyone else is. His remarks were essentially directed at Bernanke telling him that this "bailout," using fiat dollars, is pure folly.

http://www.foxbusiness.com/video/in...stId=1292d14d0e3afdcf0b31500afefb92724c08f046

 

[Mango]

Ron Paul isn't crazy...everyone else is. His remarks were essentially directed at Bernanke telling him that this "bailout," using fiat dollars, is pure folly.

http://www.foxbusiness.com/video/in...stId=1292d14d0e3afdcf0b31500afefb92724c08f046

Apparently, Fox news had the same question I had.

But, assuming we took Ron Paul's laissez-faire approach to economics a decade ago, had no Federal Reserve-- as it appears he has no use for them altogether-- where would be now? This would have allowed lack of oversight regarding the free market. You would still have your hedgies, CDO's and toxic paper floating around the market.

 

[30ashopper]

Apparently, Fox news had the same question I had.

But, assuming we took Ron Paul's laissez-faire approach to economics a decade ago, had no Federal Reserve-- as it appears he has no use for them altogether-- where would be now? This would have allowed lack of oversight regarding the free market. You would still have your hedgies, CDO's and toxic paper floating around the market.

Good question Mango. I've been scouring the pages of Reason looking for a definitive defense of laissez-faire capitalism in light of recent events... so far I haven't found anything convincing.

 

[Mango]

Good question Mango. I've been scouring the pages of Reason looking for a definitive defense of laissez-faire capitalism in light of recent events... so far I haven't found anything convincing.

Thank you. In defense of Paul, though, he did get Bernanke to go on the record that the dollar's status as reserve currency has not come up in meetings with G20 countries. But, other than that, blah, blah, blah.....

Then we had our own Eva Peron-like Nydia Velazquez (NY- Rep- Brooklyn and NYC) asking why do we have so many foreclosures? and Paulson explaining it to her like a first grader. Then she asked Bernanke why we have lent 1 trillion dollars.

If you wanted to watch your state legislators in action, or inaction, this was the hearing to watch. It was painful to say the least. Halfway through, half of them disappeared. Couldn't imagine that they all had to go potty at the same time.

The one Congressman who stood out was Steven C. LaTourette -R- Ohio.
He pointed out that some Banks may be being cherry picked for bailout funds even though they meet the liquidity requirements. Here's his testimony on PNC's acquisition of National City at a fire sale price, even though National City's capital ratio was higher than PNC's.
http://latourette.house.gov/NewsRoom.aspx?FormMode=Detail&ID=121

I wonder who is getting a plum job at PNC after the new administration comes in?

 

[lerxst]

Good question Mango. I've been scouring the pages of Reason looking for a definitive defense of laissez-faire capitalism in light of recent events... so far I haven't found anything convincing.

have a look at this article..

While you're there, look for the article with Greenspan's name on it..

http://www.aynrand.org/site/News2?page=NewsArticle&id=21923&news_iv_ctrl=1021

 

[30A Skunkape]

Paulson opposes giving TARP money to the automotive industry. Good for him.

I was thinking about it this morning driving in while listening to a fellow who owns a number of GM dealerships explain why GM needs the moolah (or else)....imagine yourself in the salesman's cubicle at the Chevy dealership and you fill out a GMAC loan application to borrow $25,000 and you list on the application that you have poor cash flow, you earn money by selling a product that is shunned by consumers, you are indebted for the foreseeable future and you demonstrate a history of financial mismanagement. Do you think GMAC would even consider making this loan?! Heck no. Yet, GM demonstrates every single quality listed above on their 'application' to the taxpayers and we are supposed to go along with it? What a farce.

 

[scooterbug44]

Paulson opposes giving TARP money to the automotive industry. Good for him.

I was thinking about it this morning driving in while listening to a fellow who owns a number of GM dealerships explain why GM needs the moolah (or else)....imagine yourself in the salesman's cubicle at the Chevy dealership and you fill out a GMAC loan application to borrow $25,000 and you list on the application that you have poor cash flow, you earn money by selling a product that is shunned by consumers, you are indebted for the foreseeable future and you demonstrate a history of financial mismanagement. Do you think GMAC would even consider making this loan?! Heck no. Yet, GM demonstrates every single quality listed above on their 'application' to the taxpayers and we are supposed to go along with it? What a farce.

I don't think we should bail out GM, but the bold part also applies to the banks and Wall Street companies we ARE bailing out.

 

[30ashopper]

have a look at this article..

While you're there, look for the article with Greenspan's name on it..

http://www.aynrand.org/site/News2?page=NewsArticle&id=21923&news_iv_ctrl=1021

Why then should capitalism take the blame today--when capitalism doesn?t even exist? Consider the current crisis. The causes are complex, but the driving force is clearly government intervention: the Fed keeping interest rates below the rate of inflation, thus encouraging people to borrow and providing the impetus for a housing bubble; the Community Reinvestment Act, which forces banks to lend money to low-income and poor-credit households; the creation of Fannie Mae and Freddie Mac with government-guaranteed debt leading to artificially low mortgage rates and the illusion that the financial instruments created by bundling them are low risk; government-licensed rating agencies, which gave AAA ratings to mortgage-backed securities, creating a false sense of confidence; deposit insurance and the ?too big to fail? doctrine, whose bailout promises have created huge distortions in incentives and risk-taking throughout the financial system; and so on. In the face of this long list, who can say with a straight face that the housing and financial markets were frontiers of ?cowboy capitalism??

While I agree with this, idealist libertarians seem incapable of also mentioning where capitalism went wrong - 40 to 1 leveraging, CDSs, the creation of mortgage backed securities, ratings agencies that were in the tank with the companies whose securities they rate, etc.. Clearly some regulation is warranted. We'll see a knee jerk reaction unfortunately which future politicians will have to undo, but clearly you can't step completely away from the system and let it regulate itself. We wouldn't be in such a mess if better controls were in place.

 

[traderx]

Paulson opposes giving TARP money to the automotive industry. Good for him.

I was thinking about it this morning driving in while listening to a fellow who owns a number of GM dealerships explain why GM needs the moolah (or else)....imagine yourself in the salesman's cubicle at the Chevy dealership and you fill out a GMAC loan application to borrow $25,000 and you list on the application that you have poor cash flow, you earn money by selling a product that is shunned by consumers, you are indebted for the foreseeable future and you demonstrate a history of financial mismanagement. Do you think GMAC would even consider making this loan?! Heck no. Yet, GM demonstrates every single quality listed above on their 'application' to the taxpayers and we are supposed to go along with it? What a farce.

And that you pay unskilled workers $73 per hour to turn bolts using a pneumatic drill...

The Big Three are broken. If the new Congress bailsout the automakers, I hope they do so based on several factors. I outlined these in a previous post but it must include lowering everybody's wages. Also, GM takes several hours more on the assembly line to make a car than does Toyota. Something wrong there as well.