James Wood

Paulson's Plan Fails to Understand the Problem; Madoff Is a Perfect Example

I am opposed to throwing money down a rat hole, which I believe will happen with much of the Paulson plans. I am in favor of plans to get money to our needy workers and businesses where that money can be beneficially employed. As you focus on the auto business, I suggest you might want to look a what I consider to be a good plan to realistically save the autmotive industry. You can see this article at "A Solution for General Motors"
seekingalpha.com/artic...

Thanks. Jim Wood
.



On Dec 16 03:45 AM Nothing from nothing wrote:

> Your argument is very similar to one I have been listening to lately
> with the exception of your political footnote.
>
> How is borrowing money to build roads fundamentally different than
> borrowing money to build houses was in the first place? According
> to your argument, the empty houses of the real estate bubble should
> have saved our sorry butts. Afterall, building them created jobs
> plus we got rows and rows of them sitting around. In a very real
> sense, we-the-people, are owning them since we now own the banks
> that own the houses that nobody lives in or takes care of.
>
> Tell me what good the roads are gonna do us if nobody has a car,
> gasoline or the means to obtain either??? Is that why Obama is supporting
> the Big-3-Bailout ya think? Or perhaps the campaign funding he received
> from their lobbyists or the UAW had something to do with influencing
> his perspective on that one?
>
> What about this idea... What if we all started to work on figuring
> out how to save money rather than spend it? What if we began promoting
> some goodwill and cooperation instead of greed and competition starting
> right here at home?
>
> If Wall Street wants to join Main Street in this endeavor, then step
> up. If not, then they should back up
>
>
>

Paulson's Plan Fails to Understand the Problem; Madoff Is a Perfect Example

Your view that the Fed "should know how much money exists in the economy" would probably be supported by most people. But there are two very practical aspects to this: Does the Fed really want to know and will they implement the needed controls, which we may find that many people oppose. First, does the government want to know. Alan Greenspan philosophically seemed to feel that the private sector would do a good job of looking out for their own interests and in that sense he did not have an interest in seeing in detail about many new instruments. I personally find it shocking that he apparently was not interested in tracking Credit Default Swaps which to my mind have an atom bomb potential for destruction in the economy. Public attitude is changing quickly on these issues, but historically there seems not to have been the interest. Secondly, it will require legislation or at least new administrative regulations to get information on many of these areas. Credit default swaps are really not reported in bank or non bank reporting and the slim references are below the line as contingent assets and liabilities for 10K reports. Likewise, Special Purpose Vehicles have been a way for banks to take much of the transactions off the balance sheet. Thanks for your comments. Jim Wood


On Dec 16 09:43 AM Malkiel wrote:

> It seems clear that the Treasury and Fed should know how much "money"
> exists in the economy; and since the organs of government have the
> capability of raking in W-2 forms from every worker and matching
> them up with the paperwork, or chasing down every villain who dares
> to withdraw $10k from their bank accounts by using small amounts,
> it should in principle be possible for them to maintain a database
> into which all loans or other products created by public entities
> such as banks or brokerages could be entered. Electronic reporting
> could be facilitated by standardizing loan forms for various transactions
> (they can vary by jurisdiction so long as essentials such as principal,
> interest format, and down payment are included). Hedge funds of course
> should be regulated just like brokerages and should be reporting
> their activity. The object is not to prevent players in the economy
> from doing what they do, the object is for the essential public players
> like Treasury to have the data needed to manage what they do. The
> argument that hedgies should be allowed to do their dirty business
> in secret or banks would be burdened by extra paperwork rings pretty
> hollow at this point--if actors in the economy can "create" money
> outside the banking system, then the agencies of government which
> protect the value of the currency the rest of us use are entitled
> to the particulars of that process, even if some of the information
> (just like tax info) is kept non-public...

Paulson's Plan Fails to Understand the Problem; Madoff Is a Perfect Example

It was not my intent to say that Obama had a good plan or that I am defending Obama. It was my intent to say that much of the money that Paulson is spending will be wasted. It was also my intent to say that Obama seems to offer the prospect of not following in Paulson's in tracks, which I view to be a good thing. It is my belief that Obama is much more compentent than most, but he has not really presented his plans. While you are correct to say that he was "in the room" when TARP was done, I think he is only now thinking seriously about what he plans to do. I expect we will see some pretty well thought out plans starting Jan 20th. But as I suggest in the article, I wonder if anyone has all the answers at this moment in time. Thanks for your comments. Jim Wood


On Dec 15 08:09 AM geoc wrote:

> Hello Mr Wood,
>
> I disagree with you on two points
>
> Obama was for this plan. He was in the room when it was presented.
>
> He's stated what he wants is increase Govt spending on roads (but
> we all know that will drive up taxes).
>
> Question:
> You mention needy workers building roads - how do you know the workers
> where the roads are going to be built are needy? Are we going to
> have some poverty test before deciding to build a road in an area,
> or are we going to ship poor workers to where roads are best built?
>
>
> Sounds like a glorious start... a "Great Leap Forward" if you will
> :)
>