HARM

Rescuing Frannie

Still shilling for the pro-Bailout crowd, eh, Felix? Got lots of GSE preffered stock, or are you holding PIMCO paper?

"In times like these, bailouts are often, sadly, necessary."

Says who? In a *real* capitalist econoomy, badly run companies would be allowed to fail, shareholders would be allowed lose money, and the rest of the world could move on. It's called "creative destruction" --you know, the section they don't teach at B-school anymore (along with that quaint relic of yesteryear, "risk").

If Phony & Fraudie were to cease to exist tomorrow (in my dreams!), private-sector mortgage lending would continue to occur --just at a much more cautious and sane level. NINJAs, option-ARMs and $0-dows would probably cease to exist, prices would come down to levels in line with actual incomes (*gasp* --the horror!), and mortgage rates would reflect actual risk --all a damned GOOD thing from my perspective.

"...and the credit crisis will continue: this is no panacea. But at least the last vestige of a possibility of a trillion-dollar agency debt implosion will have been taken off the table."

God forbid Phony & Fraudie implode! Without them --and their now *explicit* taxpayer backstop-- lending would cease to exist (even though it amazingly existed *before* GSEs were invented), the world would cease to revolve around the sun, and we'd all die poor, unloved and lonely!

Why not just come right out and admit the truth, Felix?:

"I, Felix Salmon, am all in favor of making other people pay for the reckless financial decisions of myself and my well connected Wall Street buddies. I love the idea of privatized profits and socialized losses."

A little blunt honesty would be a lot more refreshing than the usual "the world will end if reckless lenders & derivative peddlers go out of business" FUD crap.