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Thread: The Crisis Con Game

  1. #1
    Banned Eric Stoner's Avatar
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    Default The Crisis Con Game

    I just got finished reading the Senate bail-out bill and it still has the same fundamental flaw as the just defeated House bill. Both versions will have the Government buy up mortgages and mortgage backed securities.

    Why do we want to have a bunch of Washington bureaucrats trying to handle hundreds of thousands of mortgages ? Supposedly, Paulson is organizing a staff of thirty to "manage" the assets. ARE THEY ON GLUE ???????????
    30 people managing hundreds of thousands of mortgages from all over the country ? Something STINKS.

    This tells me that one of two things are REALLY going to happen: A- A lot of Paulson's buddies are going to get fat contracts to manage the assets. You need a live body to set up a sale; to decide whether or not to sell; to keep the property in a saleable condition or B- The Federal government is going to be the largest real estate company in the country. What is all that going to cost ? Somebody has to pay the basic upkeep.

    I haven't even touched on all the "sweeteners" in the Senate Bill including raising the FDIC limit to $250,000. Remember what happened when they raised it to $100,000 ?

    Why don't we emulate the most successful investor we've seen in recent times ? Warren Buffet. He just bought $5 billion in PREFERRED stock from Goldman Sachs in return for 1. A good look at their books 2. Management reforms and 3. Compensation limits. Why doesn' t the Treasury do the same thing with the banks ? Buy and hold preferred stock for the taxpayers and LET THE BANKS CLEAN UP THE MESS THEY MADE ! Let them go crazy trying to unwrap some of those wild and crazy derivatives that some PhD's in Mathematics can't figure out. I am serious. Chase hired a group of physicists and math whizzes to try and decipher some of the securities held by some of the banks it took over.

    History has shown us what to do and what NOT to do. When the RTC was set up to clean up the S & L mess it hired the Account Managers from the failed banks to handle the properties and after they were sold off the taxpayers saw a "profit". The FDIC paid off the depositers in the billions and billions after issuing bonds to cover the costs but the RTC was able to hold and then sell the underlying properties and return the proceeds to the Treasury.

    We should be doing the same thing. Inject liquidity by buying stock and let the MARKET set the prices for the foreclosed homes instead of a bunch of bureaucrats or government paid contractors.

  2. #2
    Banned Eric Stoner's Avatar
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    Default Re: The Crisis Con Game

    Quote Originally Posted by Optimist View Post
    Sounds like a plan. Eric Stoner for Treasury Secratary!!!
    Oh shit ! I'd have to take a pay cut.

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    Banned Melonie's Avatar
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    Default Re: The Crisis Con Game

    all of the original problems still exist, and the 2nd bailout bill does nothing to rectify that situation ...



    ... of course, it is arguable that in order to really rectify the situation, two of Obama's campaign advisors would need to be prosecuted along the same lines as Ken Lay of Enron or Dennis Kozlowski of Tyco - since they played exactly the same sort of accounting games.

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    Banned Eric Stoner's Avatar
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    Default Re: The Crisis Con Game

    Quote Originally Posted by Melonie View Post
    all of the original problems still exist, and the 2nd bailout bill does nothing to rectify that situation ...

    http://www.reason.com/news/show/129158.html

    ... of course, it is arguable that in order to really rectify the situation, two of Obama's campaign advisors would need to be prosecuted along the same lines as Ken Lay of Enron or Dennis Kozlowski of Tyco - since they played exactly the same sort of accounting games.
    I can't wait for Johnson, Raines and GORELICK to be "perp walked". While they're at it, I hope they look at the sweetheart mortgages that Dodd and others got from Countrywide.

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    Banned Melonie's Avatar
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    Default Re: The Crisis Con Game

    ^^^ Johnson and Raines will probably wind up in President Obama's cabinet instead of federal prison !

  6. #6
    Banned Eric Stoner's Avatar
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    Default Re: The Crisis Con Game

    Quote Originally Posted by Melonie View Post
    ^^^ Johnson and Raines will probably wind up in President Obama's cabinet instead of federal prison !
    They'd never survive the press scrutiny and confirmation hearings.

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    Default Re: The Crisis Con Game

    I told you so ; I TOLD YOU SO !!!!

    Not content with effectively taking over the banking system, under the bail-out plan just passed, the Federal Government has taken over the real estate industry.

    Tucked into the legislation just approved is Section 110 which provides that "Federal Property Managers" ( I TOLD YOU there'd be a LOT of job openings) shall implement a plan to maximize help to homeowners to minimize foreclosures i.e reduce the principal of the loan and/or reduce the interest rate. AND

    Bankruptcy Judges are now empowered to do likewise.

    Any sane bank is already busy dumping as many properties in or close to foreclosure.
    Last edited by Eric Stoner; 10-04-2008 at 12:18 PM.

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