Laugh Du Jour

If this whole Presidential thing doesn't work out Obama has a future in stand-up.  Here he is on the Treasury rescue plan:

"This is a global crisis and the United States must insist that other nations join us in helping secure the financial markets," Obama said.

Hmm.  How about if they help by not dumping the Treasury securities they currently hold? 

For heaven's sake - there are plenty of reservations in Washington about whether the US taxpayer ought to be saddled with these losses while bailing out Wall Street's fat cats.  Does Obama seriously think a plan that drags in the French, German and Japanese taxpayers will be passed in this decade, or ever?  Does he think that going to Europe and Asia hat in hand is the way to restore America's standing in the world?

The Fed and Treasury have been coordinating with foreign central banks and will no doubt continue to do so, but Congressional action on this Treasury rescue plan cannot be made contingent upon the open checkbooks of our allies.

He'll be here all week. Don't forget to tip your waitress.

Comments

[Barry Dauphin]

Maybe he figures that since Euros pay so much in taxes already, they won't notice.

[Jane]

Aw come on...I have no doubt all those nice folks who went to see Obama in Germany are passing the hat as we speak!

[Barry Dauphin]

Maybe the Berlin rally was just practice.

[Neo]

Even wind power has it's problems LOL

[JB]

I guess we'll have to pass a global test economically as well as militarily.

[ben]

Yes, what a brilliant idea, nobody ever thought of it before.

Obama is going to play softball with Ahmadinejad and Chavez and hardball with the Europeans.

Btw, Sarah Palin drew 60,000 in Florida....

[baked alaska]

Mike Tucker, a local fire marshal, estimated 60,000. But reporters on the ground, including AP's Brendan Farrington and my colleague Ken Vogel, would only say "tens of thousands," suggesting the marshal's estimate was on the high side. The St. Pete Times's Adam Smith had another fire official in the crowd say it was about 25,000.

crowd size

[baked alaska]

The American bailout plan, which originally excluded foreign banks with U.S. units, may expand, a move that could raise its cost and intensify scrutiny by Congress and critics.

Foreign Banks Hope Bailout Will Be Global

[Perfect Sense]

Wow! A global crisis - really?
Who knew until the Enlighten One spoke?

[ben]

Hehheh...a local fire marshall estimates 60k, but an AP reporter says "tens of thousands"...I would go with the unbiased opinion of AP anyday, wouldn't anybody?

"Adam Smith had another official say 25K"...what did he do, slip him a 20?

[Jane]

Poor baked Alaska. You really are threatened by just about everything, aren't you?

[Charlie (Colorado)]

Okay, baked, you've mastered the link. Now, what did you think about that?

God, this is like teaching fourth grade.

[Waldorf Salad]

"including AP...and St. Petes..."

Ah yes, devote members of the "We Hate Palin Fan Club". Ha, ha, Barry is old news!!!

By the way Obama-like mathematical genius, I think you can say 60,000 would be included under tens of thousands.

P.S. In Berlin, Barry drew closer to 20k than 200k. Now that is some poor crowd estimating.

[baked alaska]

John McCain's top economics advisor, who is widely believed to be his choice for Treasury Secretary, should he win in November, is former Sen. Phil Gramm.

Gramm is both vice chairman of UBS's US division and a lobbyist for UBS.

If UBS successfully lobbied over the weekend to get in on the bailout, what was Gramm's role in the lobbying?

mccain/ubs lobbyist

[Captain Hate]

Btw, Sarah Palin drew 60,000 in Florida....

Without a rock group to fluff up the crowd, right?

[ben]

Hey half baked, everyone here knows who Phil Gramm is. But thanks for sharing.

[ben]

"Poor baked Alaska. You really are threatened by just about everything, aren't you?"

I can just see poor half baked's miserable existence. He reads something positive about McCain or Palin and then scurries around desperately to try to undermine it with some quote by a moonbat at Kos or from AP or the NYT. And after some hard work, he is able to cut down Sarah Palin's rally attendance from 60k to "tens of thousands". I don't know if he one of Obama's shills working for 7 bucks an hour or not, but if he is Obama better up the ante and invest in better shills.

[baked alaska]

Financial firms were lobbying to have all manner of troubled investments covered, not just those related to mortgages.

Nobody wants to be left out of Treasury’s proposal to buy up bad assets of financial institutions.

“The definition of Financial Institution should be as broad as possible,” the Financial Services Roundtable, which represents big financial services companies, wrote in an e-mail message to members on Sunday.

commence treasury fluffing

[Captain Hate]

I don't know if he one of Obama's shills working for 7 bucks an hour or not, but if he is Obama better up the ante and invest in better shills.

That moron still "soldiers" on as if he's changed anybody's mind. Hey baked: We're laughing at you, not with you.

[ben]

Larry Johnson has an interesting article Obama's Wall Street problem...

http://noquarterusa.net/blog/2008/09/21/baracks-wall-street-problem-is-now-americas/#comment-759096

Here is an excerpt:

"Barack Obama has a major Wall Street and Washington problem that the media so far is refusing to acknowledge or explore. He is in the pocket of the Wall Street firms and mortgage security companies that are at the center of the collapse of the real estate bubble. He is closely tied to at least two of the Fannie Mae principals. As Ricky Ricardo would say, “Barack, you got some splaining to do.”

Let’s start with the numbers. Why is a first term Senator pulling down almost $300,000 a year from Goldman Sachs, Lehman Brothers, Bear Stearns, Fannie Mae, Freddie Mac, AIG, Countrywide Financial, and Washington Mutual? He has not even completed his fourth year in the Senate and received a total of $1,093,329.00 from these eight companies and their employees. (all data from OpenSecrets.org). John McCain’s numbers, according to OpenSecrets.org for the period 1990-2008 (i.e., 18 years worth of data) only collected $549,584.00. In other words, Barack is receiving $273,582.25 (and 2008 is not over) per year while McCain raised a paltry $30,532.44.

Want another shocker? Barack Obama has received more from one source–Goldman Sachs $542,252.00–than McCain has from all of the companies combined. Who the hell is more beholden to lobbyists? And why does a junior Senator from Illinois rate this kind of dough?

Why are these firms and their employees showering Barack with their cash? Although the conventional wisdom wants to pin the Wall Street debacle on Republican greed, the reality is that the real estate market and the big players on Wall Street have been a Democratic game. McCain’s hands are clean when it comes to this mess. That is not spin, that is a fact. He proposed legislation back in 2006 to start addressing the abuses of Fannie Mae and Freddie Mac but the Democrats would have none of it."

[sake]

I live in the villages and will tell you that whatever the crowd size was, no more people could fit in the space. Most of us did not go near the area as we knew there would be so many and it is really hot. However, we have our own TV channel and I know everyone who stayed away because of the crowds watched her on TV.

[Charlie (Colorado)]

Who the hell is more beholden to lobbyists?

Chris Dodd?

It does worry me a little that Scary Larry has been sounding like he makes sense recently.

[saki]

OOPS "The Villages" - America's friendliest hometown!!"

[baked alaska]

2008 contributions from OpenSecrets.org:

Finance, Insurance & Real Estate
Dems $59,847,674
Reps $54,548,348

[baked alaska]

Candidate Comparison from OpenSecrets.org:

Finance, Insurance & Real Estate

Barack Obama $24,860,257
John McCain $22,108,926
Ralph Nader $46,696
Bob Barr $19,396
Cynthia McKinney $3,450

[SteveMG]

Hey Baked:
Love the improvement but the idea is to post on something that is novel and interesting.

Not every single item that you fancy.

Otherwise, why not get your own blog?

[Bill in AZ]

It does worry me a little that Scary Larry has been sounding like he makes sense recently.

Scary Larry is just doing whatever it takes to give Hillary (and Scary Larry - oh, and Valerie whatsername and her idiot husband Joe somethingorother) a chance in 2012. I wouldn't believe him if he said the sun comes up in the east.

halfbaked - err... zzzzz....

[Charlie (Colorado)]

Still no attempt at an argument, eh?

Okay, now divide $24,860,257 by 3.

Divide $22,108,926 by 22.

Tell us which one is bigger.

[baked alaska]

opensecrets.org

NOTE: All the numbers on this page are for the 2008 election cycle and based on Federal Election Commission data released electronically on Tuesday, September 02, 2008.

Finance, Insurance & Real Estate
Barack Obama $24,860,257
John McCain $22,108,926
Ralph Nader $46,696
Bob Barr $19,396
Cynthia McKinney $3,450
Health

[Perfect Sense]

Baked Alaska,
Why is Obama, the possessor of vastly superior judgment, taking any money from either the finance of real estate industries? Obama knows that $24 million could have been used to prevent many, many foreclosures. Today, throughout America, there are many homeless people because Obama took diverted this money to pay for his luxury jet.

[baked alaska]

Today Newsweek reported that John McCain owns 13 cars - and that contrary to what McCain said in a recent TV interview, the fleet includes three foreign cars. The report shows that McCain wasn't being honest with voters during a recent interview with WXYZ TV in Detroit when he said: "I've bought American literally all my life, and I'm proud."

link

As heiress to her father's stake in Hensley & Co. of Phoenix, Cindy McCain is an executive whose worth may exceed $100 million. Her beer earnings have afforded the GOP presidential nominee a wealthy lifestyle with a private jet and vacation homes at his disposal, and her connections helped him launch his political career

link

[baked alaska]

Senator John McCain’s campaign manager was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations, current and former officials say.

link

[ben]

Hey half-baked, show me where you objected when millionaire John Kerry ran for President with his billionaire wife.

Have you seen Al Gore's houseboat? Enough hypocrisy. Americans don't hate wealthy people, they want to be wealthy too. Class warfare won't get Obama elected, try something else.

[baked alaska]

Americans don't hate wealthy people

Today, throughout America, there are many homeless people because Obama took diverted this money to pay for his luxury jet.

[cathyf]

I just posted a comment explaining the function of short positions in options hedging, and defending legitimate value-creating reasons for both naked shorts and selling on the downtick.

(I posted it there because it was more apropos to that thread. I'm linking it here because that is almost a dead thread, and it's relevant here, too.)

[baked alaska]

cathyf

[cathyf]

According to the WSJ headliner, the key to the MS/GS makeover is freeing them from mark-to-market accounting.

Becoming a bank holding company can help both Morgan Stanley and Goldman organize their assets, and puts both in a much better position to be acquired, to merge or to acquire smaller companies with insured deposits. It also may allow Goldman and Morgan Stanley to avoid using of mark-to-market accounting -- which forces companies to value their assets based on the current market price. Instead, these firm may be able to classify assets as "held for investment," as many banks do.

This is outside my area of expertise, but I'm thinking more and more that when accountants say "mark to market" they mean something radically different than what risk managers mean. In the risk management world, "mark to market is fundamentally 2 things:

1) Every parameter that goes into a model is, to the furthest extent possible and available, implied, inferred or estimated from interpolating and extrapolating with market prices of instruments which have robust markets; and

2) Every parameter must pass basic sanity checks. No imaginary forward volatilities, correlations above one, etc.

I'm getting the distinct impression that the accountant version is more like running around in circles clucking hysterically, "the SKY is falling the SKY is falling the SKY is falling!!!"

[ben]

"Today, throughout America, there are many homeless people because Obama took diverted this money to pay for his luxury jet."

Bad, bad, Obama...I think the 60k Palin rally pushed half baked off the edge in to troll lalaland....

[Charlie (Colorado)]

I'm getting the distinct impression that the accountant version is more like running around in circles clucking hysterically, "the SKY is falling the SKY is falling the SKY is falling!!!"

It's my brother who's the CPA, but as I understand it, you're pretty much right: looking at Wikipedia, it's driven by FAS Rule 157, which basically says that you have to revalue your assets to their current market value, even if you bought then a while ago and expect to hold them for a while. I'm not clear when you are forced to revalue them, but the effect of a panicky period like we just had would be to force a company to restate assets vigorously downwards.

Sort of like having a house that's under water: if you don't mean to move, it's a sort of academic thing --- unless you need to borrow more money, at which point it impacts your current net worth.

[kim]

Baked Alaska, at 11:58 and 12:30 sure looks like a machine which has slipped a cog.
============

[JM Hanes]

Laugh du jour is right!

Obama:

""This is a global crisis and the United States must insist that other nations join us in helping secure the financial markets," Obama said.

baked alaska quotes the NY Times, as though to confirm Obama's judgment:

The American bailout plan, which originally excluded foreign banks with U.S. units, may expand, a move that could raise its cost and intensify scrutiny by Congress and critics

Could there be a reason baked only pasted a single sentence this time around? Why, yes there could:

Foreign banks, which were initially excluded from the plan, lobbied successfully over the weekend to be able to sell the toxic American mortgage debt owned by their American units to the Treasury, getting the same treatment as United States banks.

I'm not sure that's exactly what Obama was contemplating in the way of stepping up to bat, as opposed to, say, horning in on the handout. Better luck next time, baked. Obama's Coalition of the Financial Willing never even made it to the starting gate.

[scoopa]

Would it be helpful if Mac announced he would pick Mitt as his Sec of Treasury? Rudy for AG, Fred for Sec State, Patraeus for Sec of Defense, Peter King for Homeland Security, who else?? He certainly got an A+++++ on his VP pick!!

[scoopa]

People are going crazy over at Ace. Seems Axelrod may have done some big no-no. Hope so!

[JM Hanes]

ben:

"Obama is going to play softball with Ahmadinejad and Chavez and hardball with the Europeans."

Not to mention "hammering" Canada on NAFTA, and thumbing his nose at our best friend in Colombia.

[PeterUK]

"The St. Pete Times's Adam Smith had another fire official in the crowd say it was about 25,000."

Which is 25,000 more than you could pull if you were dancing naked and farting diamonds.

[PeterUK]

"P.S. In Berlin, Barry drew closer to 20k than 200k. Now that is some poor crowd estimating."

And that is only because they billed him as Der Fuhrer.

[Bob]

More here on what Ace's is reporting!

Jawa Report on ewinner

[PeterUK]

"Today, throughout America, there are many homeless people because Obama took diverted this money to pay for his luxury jet."

The Mighty Caliph Obama has his boot on the necks of the poor.

[Pofarmer]

I'm not clear when you are forced to revalue them, but the effect of a panicky period like we just had would be to force a company to restate assets vigorously downwards.

Sort of like having a house that's under water: if you don't mean to move, it's a sort of academic thing --- unless you need to borrow more money, at which point it impacts your current net worth.

Yeah, but it gets even better than that. Let's say you have an asset that is increasing in value and you run a highly leveraged business. As you go along that asset being "marked to market" ie UP, will allow you to increase your leverage. Now, if that asset FALLS you will be way overleveraged and undercapatilized. I think this is a lot of what is going on. Mark to market is one of those things that seems like a good idea but is really pernicious as it may actually exacerbate bubbles.

[narciso]

"Kind of like saying Arianna Huffington, beneficiary of the divorce settlement with Humble Oil heir Michael Huffington, whose fortune was made in Venezuelan and Indonesia oil; allows her a comfortable lifestyle and
a radical journal, where she inveighs against
the need for fossil fuels"

You see, baked, it goes both ways, but I bet no one has ever written a fact based lead quite like that.

[bio mom]

I really doubt that the American electorate is going to base their vote on who has what lobbyists. These countering ads etc. seem silly. Americans know that there are lobbyists an are not naive about that. They want to hear about what people will do for them and to solve their problems. Let's "move on".

[ben]

"I really doubt that the American electorate is going to base their vote on who has what lobbyists."

Well, this is of course a main Democratic line of attack. Hypocritical, but you can't let it "define you" as they say. Democrats love to tar Republicans with lobbyists and "special interests", in their view trial lawyers, the AFL-CIO, NARAL, etc. are not special interests.

[Pofarmer]

Heard another Obama ad this morning by some ex-NFL player saying that McCain is just the third Bush term. They better hope this plan works, cause it's brilliance is not readily apparent.

[GMax]

Well yeah except if you take a donation from the wife of a lobbyist is that any different? I have seen a report documenting lots of donations to Obama done just this way.

Its one of the those, how stupid do you think we are? questions that sadly sometimes gets answered "pretty stupid" when talking about the overall voting public.

[Pofarmer]

Hmmm. I found this comment at an Ag forum that I frequent pretty intersting. The guy is a retired trader and I think up and up.

LUN

It seems to me, in trying to make sense of any of this, and I do consider myself pretty decent at accounting and thus far we are only seeing generalities versus actual specifics, which of course we are all considered too stupid to be privy to the real details, if loans are purchased at deep discounts--how does that recapitalize the banks? It appears more likely, to me, and only speculation on my part, it is more likely the loans must be either bought a par or at premium prices==tax payer potential loss.

Additionally, while I have not purchased any residential real estate for a few years, I wish to share a personal story. A few months ago, a couple in a marital split...intending to file divorce..were referred to me as a possible person to purchase their property on a short sale. I am familiar with the neighborhood..it is a good property but has a second mortgage....this is a potential ugly divorce situation & both also own huge suv's & all the toys and have not made a mortgage payment for months. I gathered all of the information & proceeded to investigate. I left several messages with the loan servicer & was finally called back & the loan servicer (much to my surprise) is located in the Phillipines. They could provide me with no details on the mortgage, meaning they had no idea of the location of the documents. There was also some language difficulty between me and the Phillipine person. I was assured I would shortly receive all the information to enable me to come up with some type of offer. I have heard nothing. A couple of weeks ago, I ran into an attorney friend, a top notch real estate lawyer, & mentioned this to him....he laughed....said his office has run into the same thing, except the loan servicers were located in India. As he described this deal....and we all know accuracy is preferred in getting some kind of title opinion...he said some of these mortgage packages have been traded between various parties a dozen or more times and he is convinced the document situation is going to be a major black hole requiring a great deal of time. Therefore, when I see this bail out plan, I can visualize a real windfall for attorneys and Certified Public Accountants....Good real estate attorneys are not cheap.

I was torn between (not really) watching a couple of Simpson videos or to watch the big boys try not to show panic on camera....decided the big boys are now funnier than the Simpsons, except this is real....it is not good.

Makes me wonder if the boys at the top actually know or understand what sort of real administrative mess this thing involves?

[matt]

did you ever hear of schadenfreude? That's what we'll get from the Europeans. Their governments will help us in to the extent that it is in their interests. In fact, they probably see this as their chance to make the Euro supreme. So Obama is smoking something when he things they'll do more. It will be the Chinese and Japanese who do something, as they will be protecting their investments and own economies.

And watch out for the Russians, Venezuelans, and Iranians making mischief.

[GMax]

Pofarmer

See my comment above. If an institution needs to increase their capital ratio, they can do so simply by shrinking their balance sheet. When you have cash ( a liquidity event like this will be ) you just drop your rates. The folks looking for the very highest yields will go away and as quick as they are allowed. Once your assets shrink and your capital stays the same or shrinks at a lower rate due to all the write downs you have already taken, you end up with a stronger balance sheet. The term being banded about is "deleveraging" but they rarely explain it, but that is what they mean.

Not everyone needs to deleverage, they all need to see some counterparty confidence though.

[Neo]

So now Drudge is reporting that there is a $2.5 billion bonus fund at Lehman

[Pofarmer]

Hey GMax

All I was pointing out is that Mark to Market can be a two edged sword.

I asked this in another thread and I don't think anybody took a stab at it. How many levels of this mortgage stuff was trading? You've got the MBS's, which seem legit. Then you get into the CDO's, and CDS's and other derivative instruments. Is there more? It seems these companies had found a way to trade on the value of a mortgage multiple times, or maybe I'm just not seeing it right.

[Swanson TV Dinner]

"counterparty confidence"

In Republican, that means 'sucker'.

[Pofarmer]

So now Drudge is reporting that there is a $2.5 billion bonus fund at Lehman

Sieze it. If these clowns get bonuses, there should be folks in the streets with torches and pitchforks.

[Pofarmer]

I've got a couple pitchforks I can loan if you need one. ;0)

[Neo]

So why is that Congress seems to be acting like a junkie with this insistence on adding more money for more loans into the market of the subprimes ?

Are these people serious ?

Obviously no. They act like this is one more chance to get a payoff. Pelosi must go !!

[GMax]

Mark to market can be a two edged sword.

Well as I pointed out a day or so ago, there are two choices here. For most of FASB history, the standard was historical cost with the exception of obvious permanent impairment ( which would be like an uninsured loss of a building in a Hurricane where all you got left is land and rubble).

Having been thru the S & L crisis, up close and personal, I urged everyone that had a voice to address this flaw that allowed obviously insolvent institutions to avoid reckoning for several years beyond when the event had occurred.

Mark to market gives a much earlier warning system, and that will lead to lower losses. What happens when the institution knows they are insolvent but is not reporting it, they turn to much riskier activities trying to earn their way out of it.

So this may be painful, but we found out about it pretty damn quick.

I tend to think the losses have all been absorbed on the books of the institutions and the FED will show an ultimate profit on this stuff, but that does not mean that there is no some entity somewhere which had the lowest of the low traunches in abundance and still has some further losses.

Lets see as I cant prove that, I just know from years of a being an auditor how an auditor would act in this environment. There is not a lot of pollyannas in the profession so thin market items get thin market prices, no bid items probably get a zero unless someone can prove up a residual value through the cashflows of the underlying pools and allocations with pretty conservative assumptions.

Arent Calif markets see an uptick in buying activity? That is how the real estate recoveries worked the last three I watched.

[Raoul Duke]

"Mark to market gives a much earlier warning system,"

As a warning system, how would calling it "Market to 'MARK' work"?

That way, the buyer would have a chance to sense his pocket was being picked.

[Raoul Duke]

'Cause you just can't place enough trust in Bankers and Bean Counters...............

[Captain Hate]

Heard another Obama ad this morning by some ex-NFL player saying that McCain is just the third Bush term. They better hope this plan works, cause it's brilliance is not readily apparent.

They've been banging this one hard on the sports talk stations; ex-NFL (a former Redskins player whom, as a Skins' fan, I can't even remember), NRA member, blah blah some donk tool blah. Sounds really stoopid to me too. More evidence of Axelrod not understanding squat outside Chicago.

[Pofarmer]

Just looked at some charts. Volatility in the $ and oil charts is pretty breathtaking.

[RichatUF]

matt-

did you ever hear of schadenfreude? That's what we'll get from the Europeans. Their governments will help us in to the extent that it is in their interests.

Sure they will, as they quietly do everything the US Treasury and US Federal Reserve ask them to do. The AIG bailout has more to do with European financials than it does with the US.

[Pofarmer]

O.K. I don't know how accurate this is, consider the source(Glenn Beck) but he contends the problems last week were serious enough to lock up the market for commercial paper. If that's true, then it's serious. This country doesn't run on oil, it runs on credit. You think you got inflation? An acre of corn cost about $80 an acre to put out in 2003. Today it's gonna cost about $400 an acre. If agriculture can't get credit, operators are going to have to decide which acres get planted and which don't, it's that big a deal. We've got to have credit for critical industries.

[Fun-loving CRIP]

"If agriculture can't get credit, operators are going to have to decide which acres get planted and which don't..."

Food Riots......sounds like fun.

[Captain Hate]

O.K. I don't know how accurate this is, consider the source(Glenn Beck) but he contends the problems last week were serious enough to lock up the market for commercial paper.

That sounds bogus to me; lots of places couldn't produce a payroll without commercial paper.

[Pofarmer]

That sounds bogus to me; lots of places couldn't produce a payroll without commercial paper.

That's kinda the point.

[M. Simon]

Today, throughout America, there are many homeless people because Obama took diverted this money to pay for his luxury jet.

Now Baal is repeating our talking points. Is he ever confused.

[Captain Hate]

That's kinda the point.

Then it's lost on me because I haven't heard about a jump in companies not making a payroll because of this or the fear of that happening. Unless the point was Glenn Beck is woefully uninformed. In fact the Saturday WSJ reported that the government's actions helped unclog short-term debt markets.

[PeterUK]

"Today, throughout America, there are many homeless people because Obama took diverted this money to pay for his luxury jet."

The mighty Caliph Hussein Obama will also take your first born as his slaves.

[Nenicho]

What would actually happen if we didn't have a bail out? I'm serious. I don't trust the government to do the right thing. Republicans have shown no leadership and Democrats are in for power and control. So how bad could it get? Would we really have a "great depression" and how long would it last?

[Barney Frank]

Mark to market gives a much earlier warning system, and that will lead to lower losses.

Well at this point this is a moot subject I would think.
The feds have no incentive now to force a change in accounting practices until they've bought up the assets at the cheapest price possible. Moving from mark to market when there is no market will only raise the asset values.

So how bad could it get?

Well on a different thread TCO wants to make a $30,000 bet on it.
Jim Pethikoukis says it would be closer to a $30,000,000,000,000 one. Pick your poison.

[Pofarmer]

In fact the Saturday WSJ reported that the government's actions helped unclog short-term debt markets.

Also the point.

[GMax]

Just removing mark to market will have no current impact. If they write the assets back up you think the folks who were uneasy even when written down will suddenly feel better? No, it will be considered a sham, and at best would be considered a nonevent. More likely, in my opinion, it would be considered a sign that the government cant fix this so they are papering over it, and that would cause mattresses to bulge and lines to form all the way around the corner at many financial institutions.

Like it or not, at this point playing ostrich seems to have no benefit to anyone including the ostrich.

[Charlie (Colorado)]

What would actually happen if we didn't have a bail out? I'm serious. I don't trust the government to do the right thing. Republicans have shown no leadership and Democrats are in for power and control. So how bad could it get? Would we really have a "great depression" and how long would it last?

Think about whatever strikes you as the worst plausible thing.

Then think of something worse.

Think food riots and frank hunger in the US, and Russia and China reduced to warlordism.

Mexico complaining about their illegal immigration problem, as starving Americans from the cities try to find work, or food.

Or maybe just China, and Russia an expansionist, imperialist fascism.

[Ponzi Paulson]

"and that would cause mattresses to bulge and lines to form all the way around the corner at many financial institutions."

I'm recommending junk silver, rather than stuffin' the ol' mattress.

Along with commercial paper, the paper dollar will be worthless.

[Ponzi Paulson]

"Think about whatever strikes you as the worst plausible thing.'

The die has been cast. The time to think about these things is long gone.............

as a preventative measure that is.

[Captain Hate]

Also the point.

Ok, I finally see your point. I thought you were saying that Glenn Beck was projecting commercial paper problems going forward rather than being dealt with. Yes, not having short-term credit would hammer small businesses badly and screw us all.

[Jane]

I heard from the beginning that what precipitated the ashen faces and the immediate action was the complete credit lock-up.

I assumed that it unlocked when Paulson made his announcement.

Since I am woefully ignorant about this stuff, I would not take that to the bank. I'm just posting because I heard it too.

[bgates]

I would not take that to the bank.
I'm pretty sure that doesn't mean what it used to mean.

[Pofarmer]

Ok, I finally see your point.

Sorry about being so opaque. I'm not a preefesshonal at theese here ritin stuff.

Jane, I think what you heard is correct.

Honestly, I handn't thought that this could cause a complete lockup of the credit system. The U.S. runs on credit, lots and lots of credit. There's a real chance, if we hit a hard core inflationary period over this, we could see some spot shortages of some commodities. Getting credit is already a problem for some operations. Banks don't like to keep upping credit lines year over year. I've managed to keep my credit line constant, but I've done it by cannabalising previous year "profits".

[Jaycephus]

Commercial paper:
From a John Mauldin newsletter:
"Want to see in graph form how bad it got and what spooked Paulson, Bernanke and company to act so quickly? Look at these graphs from my friends at Casey Research. 30 day commercial paper went to 5% from 3% a week ago. The market was literally freezing. And the amount of paper issued is in free fall. Commercial paper is the life blood of the financial and business world. Without it commerce will soon grind to a halt."

http://www.frontlinethoughts.com/gateway.asp?ref=reprint>subscribe to see graphs