The Red Menace

It’s a short article talking about the dangers posed by the lack of regulation and transparency in the Chinese markets. Interesting that topics that were thought too nerdy and arcane for even the financial press 6 months ago are now making their way into the political arena…

Most analysis of the stimulus program seem to miss the point. The business tax incentives and tax payer rebate checks are a diversion.

Lets mail the working stiff a one time $300 check, while we give $150K and a hall pass to the buyers and banks that got us into the mess.

Where’s the beef? The pea is under the pod called the GSE loan limit increase from $417K to $729K.

The more stringent FNMA, FHLMC limits are raised for one year, while the less stringent FHA limits are raised, permanently.

This stimulus package is despicable, digusting, a disaster and a disgrace. Should it pass and be signed into law as currently drafted, its constitutional legality needs to be tested.

At a minimum, it is a violation of the GSE charters infringing into the “primary” mortgage markets.

I urge you to contact your House & Senate reps to have the loan limit increase provision stricken from the bill.

http://naybob.blogspot.com/2008/01/economic-stimulus-package-redux.html

Your blog frequently reminds me of Robert Conquest’s first law of politics: “Everyone is reactionary on the subjects he understands.”

Unfortunately, the exact opposite appears to be true for Larry Summers…

True, but never under-estimate our ability/willingness to take on more debt. Isn’t Japan’s debt about 150% of gdp? We truly are living pay-check to pay-check on the kindness of strangers.

Keep up the great work!

http://money.cnn.com/magazines/fortune/fortune_archive/2008/02/04/103006904/index.htm?postversion=2008012805

The concept of investing in munis now just seems to me like a bad idea. Assuming that the bond insurers are downgraded by S&P and Moody’s, won’t a large proportion of mutual, institutional & pension funds have to liquidate those munis that are downgraded synchroniously? It is my understanding that such funds generally only need to purge holdings of lower-rated securities if it is stated in their investment guidelines. As such, this article is suggesting munis as a good investment despite the fact that there is a potential fire-sale in the near future.

I won’t even start on state and municipal budgetary concerns, however I’d like to encourage Naked Capitalism to comment on the matter/article. Thanks and keep up the good work.

Value at risk, the measure banks use to calculate the maximum their trades can lose each day, failed to detect the scope of the U.S. subprime mortgage market’s collapse as it triggered more than $130 billion of losses since June for the biggest securities firms led by Citigroup Inc., Merrill, Morgan Stanley and UBS AG.

The past six months have exposed the flaws of a financial measure based on historical prices that securities firms use idiosyncratically …