Democracy for Vancouver

4 Comments so far (Add 1 more)

1. Just a few of my thoughts of why doing the restructuring as you have stated is unacceptable to the big banks and investment houses.

   1. The banks and investment houses want to unload the “bad paper”. They do not want to do the work of renegotiating the loans. It is a hassle because it takes time requiring many employee hours, it is complicated, many disputes are bound to arise, etc.

   2. As I understand things today, the mortgage loans over the past few years were broken up into little pieces and repackaged as securities so renegotiating the loans causes a major accounting headache. If you ever had to compute the basis for a 30 year old mutual fund with automatic monthly investments, prior divestitures and automatic dividend reinvestments you would understand.

   3. It appears quite likely we are entering a period of high (if not runaway) inflation due to massive fiscal irresponsibility on the part of our government and the unregulated oligopolies that have come into existence since regulation became a dirty word and the selfish bastards in charge started messing everything up. In an inflationary environment, no one wants to hold fixed income investments because as inflation increases, the value of the investment decreases. So even if the mortgage paper could be renegotiated, unless it was done with floating interest rates (which would be detrimental to the borrowers), no one wants to own such investments in a spiraling inflation environment.

   4. The huge, bloated financial entities involved want to shift the interest rate risk off their books so that they can go find another way to make some short term profits at the long term expense of others.

   5. The bailout imo is not so much about the mortgage paper that is declining in value as it is the effect the current environment has on the equity value of the firms involved. If you are holding a bunch of investments that look like they will be declining in value well into the future, that has a major depressing effect on the stock value of the enterprise. This is because the stock market is always discounting the future, meaning the stock values of the banks today already reflect the decline in value of the bank’s assets that is going to happen over the course of the next 5 years or so.

   6. Since it is the decline in stock value that is the real “emergency”, and the only way to fix this without waiting many years with stagnant stock values is to have a major infusion of cash in exchange for the problem mortgage paper. Another way of saying this is the banks and investment houses are trying to turn a long term problem into a short term problem and thereby quickly regain the equity values of their firms.

   7. One of the things that differentiates this boom and bust from the boom and bust of the tech stocks is the government guarantees depositor accounts to $100,000. So if the banks actually default, the taxpayers are going to be on the hook for these monies. In addition if the investment houses start defaulting on their uninsured money market accounts, this will undoubtedly cause a liquidity crisis so severe that most people would not get most of their money and the ensuing panic could be catastrophic.

   So the real emergency is that the banks and investment houses have become very poor prospects for equity investors. And with stock options, stock bonus plans, 401k plans, golden parachutes and what not, that makes for a very unhappy upper management group.

   Like a parent with a problem child, I think the only way out of this is for the government to step in and bailout these misbehaving children to the extent it is necessary to prevent a panic. The government should then stop enabling the misbehavior, ground the children for a very long time and make sure reforms are instituted that prevents this from ever happening again. Rather than buy up their bad assets, they should oversee the bank or investment house operations (much like a temporary regulatory takeover) and do what is necessary to prevent any financial panic. In other words do exactly what you are suggesting in your post above.

   But when the people in charge of our government are “unfit parents” and act in ways no better than the children they are supposed to be “regulating”, the outcome is bound to be one where everyone suffers.

   And the voters of America should fire ALL the politicians that allowed the disaster to happen and institute reforms that will prevent ever having a system again whereby the foxes guard the henhouses like we have today.

   [Reply]

   1. By John on September 24th, 2008 at 5:30 pm (replies, if any, are attributed separately above).
   

2. Unfit is too mild, our “parents” are on crack!

   They want the $$ so fast yet it took 10 long years to raise the minimum wage $1.00.

   [Reply]

   2. By me on September 24th, 2008 at 7:31 pm (replies, if any, are attributed separately above).
   

3. Alhough your ideas are sensible, logical and resonable, they do not get to the reason for this financial crisis.

   1st. Let me begin by saying that the stage already reached in this crisis was not on the needed NECON schedule. This stage was not supposed to happen until just after the Nov 4 election and after the return of the 3rd Infantry’s 1st BCT from the Persian Gulf Wars.
   http://www.dailykos.com/story/2008/9/23/185525/697
   http://www.armytimes.com/news/2008/09/army_homeland_090708w/

   2nd. This economic crisis is the newest Pearl Harbor event needed for GW Bush to call off the election results if McCain looses by executing PDD 51 and declaring Marshall Law.

   3rd. the current Financial Crisis/Pearl Harbor/Economic Disaster
   is happening approx 60-90 days too soon. Owing to reasons not known to me, the Bush Crime family could not keep the Shock & Awe on the best schedule. That schedule would have this crisis
   happening after the election and before Inaugration Day

   Recall NATIONAL SECURITY PRESIDENTIAL DIRECTIVE/NSPD 51.
   http://www.whitehouse.gov/news/releases/2007/05/20070509-12.html

   Now GW is stuck trying to get his way on the financial 750B - 1T bail out without judicial oversight and/or congressional control by claiming that Congress must pass his plan ASAP and without too many unneeded changes. In his speech tonight he talked about Congressional and Judicial Oversight, but his plan still has none of that.

   Here are a few more links to read all about this.

   http://www.whitehouse.gov/news/releases/2007/05/20070509-12.html

   http://www.dailykos.com/story/2008/9/23/185525/697

   http://forums.plentyoffish.com/datingPosts9713698.aspx

   With all the above provided, now let me explain why your ideas won’t work.
   The Bush Crime Family and the Crime Sindicate that runs/rules/controls everything, likes the way the world is rolling right now and they are making lots of Money and building greater power. The do not want to give up any money or power. The stage has been set for a fully capitalist fachism state and even with this schedule mistake, they are confident they will prevail.

   Frank

   [Reply]

   3. By Frank Mazurkiewicz on September 25th, 2008 at 1:19 am (replies, if any, are attributed separately above).
   

4. I provided a rather lengthy and descriptive comment last night with links and today it is gone???

   Looks to me that the Government Censors are at work. My comment was too much on target and well sourced.

   Frank

   [Reply]

   admin posted a reply on September 26th, 2008 at 6:42 am:

   Frank,

   Akismet, the spam software in use on d4v, will automatically flag a comment that has lots of links as spam since most spam has this pattern.

   That is what happened to your comment. I have despammed your comment and it should now be showing up above.

   Like you did, just let us know if this happens again and we will correct the problem.

   Thanks very much for your comment.

   admin
   d4v@democracyforvancouver.org

   [Reply]

   Frank Mazurkiewicz posted a reply on September 26th, 2008 at 10:29 am:

   Thank You admin
   d4v@democracyforvancouver.org

   My faith in democracyforvancouver has
   been re-established.

   Frank

   p.s. I also had hoped to insert a audio file
   when first making the above post but could
   not determine how to paste the small audio
   file into my comment. It was a song written
   and sung by Pretzel Weasel titled
   “Welcome to the New American Century”
   a very appropriate and satirical political
   diddi

   [Reply]

   admin posted a reply on September 26th, 2008 at 11:27 am:

   If the file has an mp3 url on the net, you should be able to just put the url in the comment and a player will appear when you save the comment.

   If you just have the file on your hard drive, you’d have to email me the file so that I could upload it and post it into your comment. In the latter case, I would need proof that the song posting is not violating copyright law.

   This site was already once shut down briefly because a commenter put an mp3 of Frank Sinatra singing “Happy Birthday” in a comment.

   I don’t want anymore trouble with the music police.

   admin
   d4v@democracyforvancouver.org

   [Reply]

   4. By Frank Mazurkiewicz on September 25th, 2008 at 11:10 pm (replies, if any, are attributed separately above).