words from waldon

Today's Market: Irrationality at Its Best

I would NOT agree that we are better off in 2009 than in 2008. Did anyone seriously believe--even in October--that today all 3 auto makers, our 2 largest banks, and our largest insurance company would effectively be kept alive by the gov't? And this is just the tip of the iceberg--which is sailing toward us from Japan, the U.K., Eastern Europe and a host of other countries that are well below the "recession" line. The world's banking system is effectively insolvent. When George Soros and Paul Volker say that the decline is steeper and quicker than in the Great Depression, and the PM of the U.K. says his country is in a depression (and his aid says it's worse than the Great Depression) shouldn't we be concerned? Are they so out of touch? Obama is just doing his job: managing expectations. (And apparently most agree with his approach, as today's NY Times poll says even Republicans overwhelmingly agree with his approach.)

Why The Paulson Plan Won’t Work

this is an excellent article, and I pretty much agree with its main points. But I don't think it's a fair comparison between tainted baby milk and these mortgages. No one would/should buy a million cases of baby milk knowing that even one bottle could cause a death. Yet, bankers righly make loans knowing that a certain percentage will fail. That's the risk and part of what goes into interest rates. Now, if there was absolutely no other maker of baby milk, and no other way to feed babies (ahem), then folks would have to take at least weigh the risk, allowing the consumer to know and play the odds. These mortgages have already been struck, and now there's really no other way short of a complete global credit freeze (which almost happened last Wednesday) than for someone to assume all this bad debt. Mr. Bailey author knows this and it's just a question of how best the gov't (and its people) can be protected.