DegreeNodal

No Wonder the $700 Billion Bailout 'Deal' Failed

Re: equity participation. Dodd proposed equity participation
by the following formula:

VESTING OF SHARES.—If, after the pur
chase of troubled assets from a financial institution,
the amount the Secretary receives in disposing of
such assets is less than the amount that the Sec retary paid for such assets, the contingent shares re-
ceived by the Secretary under paragraph (1) shall
automatically vest to the Secretary on behalf of the
United States Treasury in an amount equal to
(A) 125 percent of the dollar amount of
the difference between the amount that the Sec11
retary paid for the troubled assets and the disposition price of such assets; divided by (B) the amount of the average share price of the financial institution from which such assets were purchased during the business
14 days prior to the date of such purchase.

In other words, equity participation is security for purchase of the troubled asset, and only kicks in if the asset produces a loss for the Treasury. Why would that
deter participation? A seller receives capital and reduces
overhang on it's balance sheet. Right now, banks are
scrambling to raise capital through the sale of equity, preferred shares, warrants, without disposing of the toxic paper.

The banks don't have to participate. They can take or leave the deal. The screwed themselves. Why screw the taxpayers while unscrewing the banks?

The Time To Buy Is When Blood's In the Streets

Great Stephen, so go buy those mortgage backed securities
and report back next year.

The Inevitable Derivative Meltdown

This isn't the first writer to predict a collapse of the fiat money system, nor will he be the last. How they reasonably expect bullion to trade for the entirety of 21st century human economic activity has never been explained to me.

This is the old scare tactic, speak in apocalyptic terms but yield no specifics.

Ruggiero runs a private equity firm specializing in the raising of capital. I was thinking of commissioning a boat, but now I think I need an ark. Do you think he can help me get financing and investors interested in a nice ark?
Ruggiero's alleged profession is the raising of capital, which is money based.

Tax vs. Interest Rate Cuts

Have politicians cut property taxes? Good luck. Property taxes are local. You'd have to have 15000 jurisdictions enact tax cuts. In addition, 80% of property taxes typically go toward school budgets.

Try cutting at the Federal level, match by equal cuts in Federal outlays. Exit Iraq. Save 250 billion a year right there