Hillary, Greenspan and Volcker

There are many things I don’t like about Hillary Clinton. Throwing lamps is one of them.

But you have to give credit where credit is due, and her proposal yesterday to have a blue-ribbon committee, including Paul Volcker and Alan Greenspan, look at the advisability of governmental assistance to troubled residential mortgage holders is truly outstanding.

Writing on March 17, 2008 in the Financial Times, Alan Greenspan said:

The current financial crisis in the US is likely to be judged… as the most wrenching since World War II. It will end eventually when home prices stabilize.

The collapse in home prices, together with the hangover associated with extreme overleveraging in the financial markets, is a critical variable in the current crisis. Remedy this issue and the entire situation begins to stabilize, although margin requirements will still need to be raised in the bond and derivatives markets. (Recall that both Carlyle Capital and Bear Stearns were only putting up 3% of the capital to control hundreds of billions in securities. Then, when the markets moved against them, they lost more than their initial outlay very quickly, just like so many “investors” in the futures markets.)

Paul Volcker is precisely the type of individual we need to crack heads and get the warring attorneys and accountants make the painful compromises necessary to fix this fiasco. Towering over everyone else at 6’7” and smoking his central bank frugal cigars costing 50 cents, Volcker was the fellow who straightened out the Arthur Andersen accounting scandal several years ago, as well as the “BAM” debt crisis of Brazil, Argentina and Mexico in 1982. Although Ben Bernanke is a brilliant and courageous Princeton academic, he simply doesn’t have the brute force persona necessary to manage the herds of warring suits in these complex and critical negotiations.

Several days after the Hurricane Katrina catastrophe, President Bush was still proclaiming that “Brownie’s doing a heckuva job”, referring to his FEMA chief at the time. Some of his top aides finally decided to compel him to sit down and watch a DVD they had assembled of video clips depicting the scope of the spectacle, and this managed to finally awaken him.

I highly recommend that Bush’s aides assemble a DVD for him to watch on the issues posed by this crisis. Inform him what a primary dealer in government securities is and how we lost a major one last week in Bear Stearns. Tell him that the average foreclosure only occurs eighteen months after the first missed mortgage payment, meaning that the plunge in house prices is likely to continue well into 2009, unless we act now. Tell him that the probabilities predicted in the 45 trillion dollar credit swap markets still predict a high likelihood of widespread defaults on corporate and municipal bonds. Make it entertaining. But do try to wake him. It’s 3:00 am and the red phone is ringing. The nation is calling.

But in the meantime, Hillary’s got a great idea here, and we need to jump on it. I’m still not likely to vote for her and this could well be Bill’s idea (kind of sounds like it, doesn’t it?), but the time to act is now.

Comments

[jim in pennsylvania]

her suggestions yesterday would not even come up for vote in the senate let alone pass the house.
this lady is evil and will do and say anything to get elected.
case in point--- she greatly exaggerated her foreign policy. by lying about being fired at in bosinia airport.
pennsylvania needs to get a copy of movie out in the blogs
hilaryclintonmovie or hilary clinton unsensored
the country needs real change and barack obama is the one to elect

[nukldrager]

Not voting for her, but like the idea no matter whose it is.

[User 108022]

Greenspan? Alan Greenspan?? I bet he would like to be named to a commission to allay blame for the condition he, more than anyone else created. Stupid idea of the day.

[the final horseman]

god i would love to see big al slow-roasted alive...not given the prestige of blue ribbon-ness.

yes hillary should follow a similar fate....i wish we could go at least 4 years without a president. maybe THEN all the mess would end.

silly thinking...of course...but who is there??????????? great set of possiblities...a war monger, a nazi, and a guy who relies on a campaign song.

the soap has green crystals AS WELL AS blue crystals....WOW!!!

if t. jefferson were alive, i would vote for him as many times as possible, with ben franklin as vp.

[flyoverman]

Agree with User 108022. Greenspan, maybe more than anybody, helped produced the sub-prime mess. He's also quick to blame everyone else and has lost his credibility. He's no statesman. We don't need him.

[VintonCounty]

I don't like for money the government takes from me at gunpoint to be used to subsidize other people's mortgage payments. That is what Hillary is describing, and I would not call it outstanding.