Comments on: "A Bailout We Don’t Need" http://www.nakedcapitalism.com/2008/09/bailout-we-dont-need.html Mon, 23 Nov 2009 03:10:07 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2008/09/bailout-we-dont-need.html#comment-17523 Anonymous Fri, 26 Sep 2008 09:43:00 +0000 http://www.nakedcapitalism.com/2008/09/a-bailout-we-dont-need/#comment-17523 "Buffett is getting paid 10% to hold what is essentially an option to buy $5 billion worth of Goldman with essentially little to no equity risk given the terms of the deal. That's not an "investment." That's just an endorsement deal."<br/><br/>http://www.minyanville.com/articles/GS-buffett-BRK-X-congress-goldman/index/a/19154/p/1 “Buffett is getting paid 10% to hold what is essentially an option to buy $5 billion worth of Goldman with essentially little to no equity risk given the terms of the deal. That’s not an “investment.” That’s just an endorsement deal.”

http://www.minyanville.com/articles/GS-buffett-BRK-X-congress-goldman/index/a/19154/p/1

]]> By: wintermute http://www.nakedcapitalism.com/2008/09/bailout-we-dont-need.html#comment-17503 wintermute Fri, 26 Sep 2008 06:43:00 +0000 http://www.nakedcapitalism.com/2008/09/a-bailout-we-dont-need/#comment-17503 I am massively impressed with James Galbraith. He should be obeyed by every person in congress.<br/><br/>The WSJ article should be compulsory reading for all of them. I am massively impressed with James Galbraith. He should be obeyed by every person in congress.

The WSJ article should be compulsory reading for all of them.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/09/bailout-we-dont-need.html#comment-17475 Anonymous Fri, 26 Sep 2008 04:38:00 +0000 http://www.nakedcapitalism.com/2008/09/a-bailout-we-dont-need/#comment-17475 The Japanese Dude that said Paulson was thinking like a GS CEO and not like the head of the US Treasury was completely correct. The Japanese Dude that said Paulson was thinking like a GS CEO and not like the head of the US Treasury was completely correct.

]]> By: Richard Kline http://www.nakedcapitalism.com/2008/09/bailout-we-dont-need.html#comment-17471 Richard Kline Fri, 26 Sep 2008 04:20:00 +0000 http://www.nakedcapitalism.com/2008/09/a-bailout-we-dont-need/#comment-17471 Galbraith's plan is far, far better as well as simpler than the Paulson Sellout, and would leave the government in the driver's seat. ---Of course that's why the financial industry can't come up with this kind of thing to stovepipe to Paulson and Frank. <br/><br/>I would completely support Galbraith's plan. Galbraith’s plan is far, far better as well as simpler than the Paulson Sellout, and would leave the government in the driver’s seat. —Of course that’s why the financial industry can’t come up with this kind of thing to stovepipe to Paulson and Frank.

I would completely support Galbraith’s plan.

]]> By: Jesse http://www.nakedcapitalism.com/2008/09/bailout-we-dont-need.html#comment-17461 Jesse Fri, 26 Sep 2008 03:47:00 +0000 http://www.nakedcapitalism.com/2008/09/a-bailout-we-dont-need/#comment-17461 did you seen that the banks banged the discount window for a record 262 billion this week and a significant portion was 'investment banks?'<br/><br/>I know of only two remaining at least as of this week while they are in the waiting period.<br/><br/>FDIC wouldn't do these two much good at this point.<br/><br/>http://tinyurl.com/3zhelw did you seen that the banks banged the discount window for a record 262 billion this week and a significant portion was ‘investment banks?’

I know of only two remaining at least as of this week while they are in the waiting period.

FDIC wouldn’t do these two much good at this point.

http://tinyurl.com/3zhelw

]]> By: Anonymous http://www.nakedcapitalism.com/2008/09/bailout-we-dont-need.html#comment-17375 Anonymous Fri, 26 Sep 2008 00:27:00 +0000 http://www.nakedcapitalism.com/2008/09/a-bailout-we-dont-need/#comment-17375 My take: this is the biggest heist in history and based on a charade. Bush blames the average guy who borrowed too much for a house and can't pay. But estimated values of mortgages in arrears is only $150 billion. The real reason for this "bailout" is to save the banks from their credit derivative nightmare -- of which there is $400 trillion on their books all based on a Ponzi scheme and the American taxpayer is at the bottom. Face it, our political class -- Republicans and Democrats -- is lying to us. We've been had. My take: this is the biggest heist in history and based on a charade. Bush blames the average guy who borrowed too much for a house and can’t pay. But estimated values of mortgages in arrears is only $150 billion. The real reason for this “bailout” is to save the banks from their credit derivative nightmare — of which there is $400 trillion on their books all based on a Ponzi scheme and the American taxpayer is at the bottom. Face it, our political class — Republicans and Democrats — is lying to us. We’ve been had.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/09/bailout-we-dont-need.html#comment-17366 Anonymous Fri, 26 Sep 2008 00:08:00 +0000 http://www.nakedcapitalism.com/2008/09/a-bailout-we-dont-need/#comment-17366 >> the FBI as is needed for examiners, auditors and investigators.<br/><br/>I'm not sure, because The G-Men have been no where to be found for 8 years...ever since Enron! >> the FBI as is needed for examiners, auditors and investigators.

I'm not sure, because The G-Men have been no where to be found for 8 years…ever since Enron!

]]> By: Anonymous http://www.nakedcapitalism.com/2008/09/bailout-we-dont-need.html#comment-17355 Anonymous Thu, 25 Sep 2008 23:04:00 +0000 http://www.nakedcapitalism.com/2008/09/a-bailout-we-dont-need/#comment-17355 Another good idea. Amazing how many different approaches have surfaced on blogs this week that are succinct and involve a lot less risk to the taxpayer. They are not being entertained because Paulson has a one track mind. <br/><br/>During the hearings this week when Shelby asked him what other solutions have been considered, he didn't have an answer!! Unbelievably, couldn't even make one up!<br/><br/>Since he was head of Goldman from 1999-2006, he was in charge while a lot of this crap was created. He is not capable of thinking in simple straightforward terms that gets to the heart of the problem without a gazillion dollars that he is in control of. He is by nature going to make things complex (to help his buddies on the street) so they can't be understood and he can't be pinned down<br/><br/>He is the wrong leader at the wrong time. This week would have been better utilized had he brought a distinquished group of bankers, economist, hedgies to camp david for the week and hammered out something that was less infuriating to everyone (instead of wiggling in front of committee's). Of course would have been better if they'd done it 18 months ago. Another good idea. Amazing how many different approaches have surfaced on blogs this week that are succinct and involve a lot less risk to the taxpayer. They are not being entertained because Paulson has a one track mind.

During the hearings this week when Shelby asked him what other solutions have been considered, he didn’t have an answer!! Unbelievably, couldn’t even make one up!

Since he was head of Goldman from 1999-2006, he was in charge while a lot of this crap was created. He is not capable of thinking in simple straightforward terms that gets to the heart of the problem without a gazillion dollars that he is in control of. He is by nature going to make things complex (to help his buddies on the street) so they can’t be understood and he can’t be pinned down

He is the wrong leader at the wrong time. This week would have been better utilized had he brought a distinquished group of bankers, economist, hedgies to camp david for the week and hammered out something that was less infuriating to everyone (instead of wiggling in front of committee’s). Of course would have been better if they’d done it 18 months ago.

]]> By: dearieme http://www.nakedcapitalism.com/2008/09/bailout-we-dont-need.html#comment-17347 dearieme Thu, 25 Sep 2008 22:25:00 +0000 http://www.nakedcapitalism.com/2008/09/a-bailout-we-dont-need/#comment-17347 @ Juan, the British deposit insurance system used to have "a deductible or haircut" and that was abandoned after the run on Northern Rock last year. Mind you, I think much of the problem in Britain was that most savers were pretty ignorant about deposit insurance because we hadn't had a bank run since 1866. @ Juan, the British deposit insurance system used to have “a deductible or haircut” and that was abandoned after the run on Northern Rock last year. Mind you, I think much of the problem in Britain was that most savers were pretty ignorant about deposit insurance because we hadn’t had a bank run since 1866.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/09/bailout-we-dont-need.html#comment-17344 Anonymous Thu, 25 Sep 2008 22:13:00 +0000 http://www.nakedcapitalism.com/2008/09/a-bailout-we-dont-need/#comment-17344 'The point of the bailout is to buy assets that are illiquid but not worthless. But regular banks hold assets like that all the time. They're called "loans."'<br/><br/>PRECISELY!<br/><br/>* claps palm to forehead *<br/><br/>Why didn't I think of that?<br/><br/>Galbraith's plan makes a lot more sense than Paulson's, with one caveat. Unlimited 100% deposit insurance produces huge moral hazard.<br/><br/>There's this misconception that deposit insurance means "no one should lose a penny." Nonsense. Your homeowner's insurance has a deductible. So does your auto insurance. And probably your health insurance as well.<br/><br/>Deductible, percentage haircut, whatever. These measures restore the incentive for prudence, without risking systemic collapse. 100% insurance up to a too-small ceiling is badly designed, and needs to be changed. Unlimited insurance, but with a deductible or haircut, is the ticket. Hell, allow private underwriters (AIG) to compete with FDIC. Result: caveat depositor (como siempre), but the system survives ... and thrives.<br/><br/>-- Juan Falcone ‘The point of the bailout is to buy assets that are illiquid but not worthless. But regular banks hold assets like that all the time. They’re called “loans.”‘

PRECISELY!

* claps palm to forehead *

Why didn’t I think of that?

Galbraith’s plan makes a lot more sense than Paulson’s, with one caveat. Unlimited 100% deposit insurance produces huge moral hazard.

There’s this misconception that deposit insurance means “no one should lose a penny.” Nonsense. Your homeowner’s insurance has a deductible. So does your auto insurance. And probably your health insurance as well.

Deductible, percentage haircut, whatever. These measures restore the incentive for prudence, without risking systemic collapse. 100% insurance up to a too-small ceiling is badly designed, and needs to be changed. Unlimited insurance, but with a deductible or haircut, is the ticket. Hell, allow private underwriters (AIG) to compete with FDIC. Result: caveat depositor (como siempre), but the system survives … and thrives.

– Juan Falcone

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