CT Programmer

More on TARP and the Insurance Industry

Remember how California was saying they didn't need bond insurance and how they were going to start their own line? That was before their Gubernator went begging for cash from the Treasury. By almost all estimates I've seen put out there (except for the shorts), MBIA is highly capitalized. And they've got a CEO who has proven that he's actually WORTH the money they pay him. He is savvy and quick on his feet. Sure they've been downgraded and that triggered some losses, but they've calculated all that in. They have been very conservative. I don't want to take any blame away from their increase in riskier practices, or from the rating agencies for not properly analyzing their (or anyone's) risk, but people started acting like these bond insurers were worthless business models and needed to go under, and that their struggling was indicative of that, yet we now know that they were the first red flag of a systemic financial crisis. Yet, given all that, I don't think MBIA should take any money from the Feds. I don't think they really need to. Sure, it would boost them to AAA overnight, but I think damage has been done to the credibility of bond insurance as a whole, and what it will take to cure that is time, not a quick cash infusion. If MBIA surfaces from all this without Fed money, they gain back more credibility than if they take the money. I agree with appro that an FDR approach of an increase in government spending (especially at the state or local level) could help us dig out of a recession, but I also doubt that will happen. Towns and municipalities are now starting to tighten their belts as their tax bases erode. That means less projects, not more. I don't think lowering the costs of bond insurance (and thus the cost of projects) will cause more projects to come about. I think the projects are being shelved at any cost. You would have to have targeted Federal injections at the local or state level to change that, and I haven't heard any kind of talk along those lines.

Hyperinflation, Here We Come

OMG! They just let anyone ramble on and on on Seeking Alpha now, don't they? This baby analysis needs to be thrown out with the bathwater. What the fill-up cost (which doesn't take into account MPG or the size of the fuel tank) has to do with inflation is beyond me. The author thinks he's making a point, with a nice colorful chart, but this is all just the rantings of a lunatic. Inflation always exists. Yes, in the future the average wage will eventually hit $100,000. Whether that's 5 years down the road or 15 makes a big difference, and this article does nothing to inform anyone of anything. No real figures other than "10 cents on the dollar" hypotheticals. Utterly useless article!