poet1

The Bailout: Why I Like the Idea But Not the Sales Pitch

The mechanics of Wall Street went too long without fixing. Christopher Cox should be fired.

Credit swaps for $62 trillion need to be unwound--paired off. Treasury is going to buy the CDOs. The CDOs have been "marked" or valued at 20 to 50% of face value. No one knows if the underlying
mortgages will be paid or not. If the whole economy goes to hell, more
won't be paid than otherwise will be the case. If Treasury buys them now at 50 cents on the dollar & the situation stabilizes, Treasure will be able to sell them in 2-3 years at 70 to 90 cents on the dollar & make a killing, ie. the taxpayers will win.

Most of the other credit Treasury is extending now is replacement money borrowed by banks & companies for 30 to 90 days
that they have used to buy other securities with higher yields (interest
income) just from greed & because they could. Lack of oversight by the SEC.
Treasury's money will be paid back, 100% on the dollar with fees & again Treasury will get it back. Same with money market funds---some held Lehman paper. People with millions
in money market funds are panicked, the managers can't sell their holdings fast enough to make redemptions---$3 trillion. Treasury can facilitate these refunds, without effective risk but prudent to keep the system going.


Having he & Bernicke testify in front of idiots from both sides of the aisle is like taking fireman away from the hoses that are pouring, spraying, water on a burning house to explain how the fight is going.

Time is of the essensce to put Paulson's bailout plan in place. If congress does not act to put this stabilizing plan in place then there is a very good chance the fiancial markets will just freeze up and come to a screaching halt.
Commercial paper allows all the major corporations to handle payroll and deal with employees. if this plan isn't put into place , then
we're looking at layoffs and possibly even the inability to access cash from your ATM. The way i understand it, the govt will own
alot of illiquid assets that major corporations had on their balance sheets BUT at HUGE discounts. so the american taxpayer will not be hurt by this.
JUST SAW PAULSON PUTTING THE BLAME OF FUTURE ADMINISTRATIONS. HAH. DOES ANYONE OUT THERE REALLY THINK THAT THESE BIG WS GUYS DON'T DO 50 YR PROJECTIONS? THEY KNEW IT WOULD FALL, THEY DO PERCENTAGE STUDIES ON HOW MANY /WHO WILL DEFAULT ETC.