The Brits you quote could not care less about the cost to US citizens of Paulson’s plan, because it is not their money. Meanwhile, why don’t they bitch at their own government for not offering any similar solution? Because they do care about how their own money is spent.

Housing is necessary but owning will not be the panacea it once was thought to be.

Taxing Corporation (they are an extension of government by law) should be in vogue but hands off the mom and pop store small businesses (any non-incorporated entity).

These private and localized businesses will help the most in hard times. Gouging will be prevented by competition if we have any free markets left at all.

IMHO

imo, the two most important(by far) points of the tarp plan that hsbc doesn’t mention are:

a. Maximize and coordinate efforts to modify mortgages for homeowners at risk of foreclosure

b. Requires loan modifications for mortgages owned or controlled by the Federal Government

I’m sure CR has covered this ad nauseum, but consider that a bank’s/investor’s willingness to work out a bad mortgage is a cost/benefit matter — if there is a robust loss mitigation dept. at a bank that holds bad paper, it can be beneficial for them to work out (cure) a mortgage…thus keeping the borrower in their home (and keeping that house out of the bloated supply that is causing this rapid price depreciation).

Now, that said, I know someone that works for NACA – they are a non-profit that basically re-analyzes a struggling homeowner’s ability to pay vs. their current mortgage terms and then workout an affordible solution that would allow them to stay in their home. NACA has a proprietary network set up that was basically set up by ex-loan officers, and effectively draw up the terms of the mortgage as they should’ve been done in the first place.

Now, NACA does all the front end work, but the problem is, they have to get the approval of the debt/paper owner to accept the new, worked out terms of the mortgage. Aside, he said, specifically, GMAC never works out mortgages, mainly b/c they just don’t have a loss mitigation dept and for that reason deem foreclosure to be more beneficial than modification. Indymac was supposedly the same way (until FDIC seizure).

So, this is where it makes sense for the gov’t, via the tarp plan, to take these rotting mortgages off the books of GMAC or any other lender that has no loss-miti dept. Merely recapitalizing these institutions will not solve the fundamental problem of falling house prices, because, while the banks are recapitalized, they will still not funnel resources towards a loss miti. dept — they won’t do this b/c its a prisoners dillemma…a workout is only good if housing prices stop going down…housing prices only stop going down if enough people stay in their homes…every bank needs to devote resources to this effort, otherwise it fails — but it takes just a handful of banks to cause this effort to fail — and that is where the tarp comes in. The tarp assumes the responsibility and actually has incentive to work out all of the loans (as the gov’t wants to stop house price depreciation). They source the workout duties to the naca’s of the US and get people to stay in their homes on a sweeping basis…thus halting price depriciation.

If there is any silver bullet to this mess, its halting the depreciation process, as foreclosures will surely cause prices to overshoot on the downside. Merely recapitalizing banks does not address this problem…but the TARP plan will.

Yes it will.
No it won’t.

Help me out here.
Is the problem that there is too much debt out there that can not be repaid?

Or, is the problem that there is too much debt out there that can not be repaid?

I am having a hard time figuring this out.

Because if there is TOO MUCH DEBT out there that can’t be repaid, regardless of its innovative, creative, non-traditional format, then……. ummmmm…..
how does creating $700 BILLION in more new DEBT, ostensibly to pass along liquidity to the “invisible-hand” of the free market, actually help the situation??

I want to be clear on this.
BORROWING $700 BILLION results in debt obligations for repayment of about $2 TRILLION by the American taxpayer.

And, even if this outlandish banker handout were successful, and these IB’s leveraged that paltry $700 BILLION at a paltry 10 to 1 ratio, then THEY will create $7 TRILLION in additional debt.

And, again, that $7 TRILLIION would create repayment obligations – this is what I call debts – of about $20 TRILLION.

Soooooo, do I have this right?
I mean, please folks, help me out here.
If the stupid Dems and Repubs buy into Phase I of the Goldman-Sachs bailout, will we all owe another $20 TRILLION to somebody?

And, phase II ??

You wanted to see what happens when you let banks go under, now maybe you are getting the idea what happens when the first domino falls in a row of dominoes. It’s happening so fast it is like dancing while Rome burns around you.

Debt will have to carried and paid off in a time frame of decades starting with inflation. You’ll either have inflation or liquidation and be skipping the deflation this time around.

You can screw the little people but the likes of China, Middle East, etc. will want to be paid in full, principle and interest or else….

It’s obvious that the ‘insurance’ proposal is a way to give the banksters what they want (a write off of all the bad debts) without the negative headlines associated with government give-aways. Their constituents must’ve given ‘em an earful, but the only lesson they’re taking away from the angry phone calls is that they must be more discreet in their thievery.

Excellent points. There’s a good reason most Americans think this primarily an FOH bailout. Because it is. The banks get made whole but remain unwilling to lend. CEO’s get their bonuses but the average American only gets the bill.

When a building has half burnt to the ground it’s often wiser to let fire finish the job.

Any reporter who quotes their pithy whisperings but doesn’t ask them why they aren’t investing in this grand plan themselves is an accomplice in defrauding the american government.

I do believe that’s a crime. Or was back when the law applied to Republicans

It’s going to be an interesting time, indeed.