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Al Cook
Byrne Robotics Member
Joined: 21 December 2004
Posts: 12735
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| Posted: 26 September 2008 at 8:15am | IP Logged | 1
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http://www.geekculture.com/joyoftech/joyarchives/1155.html
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Michael Myers
Byrne Robotics Member
Joined: 28 December 2004
Posts: 831
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| Posted: 26 September 2008 at 8:25am | IP Logged | 2
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QUOTE:
| I certainly hope this Paulson bailout of the banks doesn't pass. |
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Michael, we agree. Probably, for different reasons.
BTW, with this bailout still on the table, what is Bernanke doing *already* talking about a 2% cut in the overnight rate for October or December? I don't have any big problem with the proposed, but its effectiveness will be next to nil. I still remember thinking, "Oh boy!" when Bush nominated Bernanke by stating that he was the right person to pick up where Greenspan left off. This couldn't be more ironic, given Bernanke's famous area of study.
QUOTE:
Italian Senators Introduce Motion Calling For Larouche's New Bretton Woods
Tremonti: Paulson Wants the Innocent to Pay for the Criminal
Tentative agreement on bailout falls apart |
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Pass.
QUOTE:
| You've no doubt read international press and the reactions. You also know what the counterparty risk is (not just Lehman's stuff either). |
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As Italy takes the chair, we'll continue to have the 378,890 or so annual international economic conferences we've always had; not counting untold non-governmental conferences. I do know there is no interest by any of the major economic powers to adopt a Bretton-Woods style agreement. Even Sarkozy's "preferred community" plan is concerned only with tariffs. Any new conferences will deal with our same 'ol system, via new regulation and oversight.
Michael, I know the notional value of the approximate counterparty risk. I also know their current, approximate market value and what deals like that between Merril and XL back in August have shown us. In that example, the market valuation came out to a very generous 13¢ on the dollar; I'm not being sarcastic, as the deal *was* generous. The very highest estimates I last read put the notional value at $62 Trillion (Aug.), but the corresponding market value stood at about $2 Trillion and, now, is falling. No low sum that, but all it means is a restructuring of the CDS market to meet reality. The irony is that as events, in the economic sense, increase in frequency, the market value actually gets lower while the notional value remains. In other words, these deals are *only* as good as the party on the other side, which results in *actual* market value.
Counterparty risk used to be called default risk. What you're suggesting, to my mind, is little different than some of the accounting measures that created this situation. The difference is that you want to mark down the default exposure as concrete, when it can't be reasonably viewed in that light. If company B has paid $1 million dollars and is holding one end guaranteeing $20 million in exposure and facing a loss; that loss is still just $1 million on top, not the *potential* $20 million it *looked* to gain.
The only variable here, really, is the inevitability of foreign governments looking to scapegoat the issue for their own downturn (predating ours).
QUOTE:
| You know and I know if we don't get a deal (an international one) that will work what is going to happen (you may not agree on the extent of the disaster but I think you perhaps don't let on what we both know = what's at risk). |
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Michael, we have to disagree on the extent of the crisis. What's at risk is a recession, not a new world system. It can be either shallow or steep, but it is a recession. At one end, the bad end, we're looking at the L-curve of the Asian crisis--which you first mentioned--eased by our very population and general affluence. At the other end? Two to three quarters. Somewhere in the middle, you get either my 24 month prediction or the more common 18 month prediction. You disagree, I know.
Paulson and his plan may delay the recession, may even offset it; but I'd rather have the markets bottom, now, while the initial ripple is still Wall Street contained and let it spread *from* Wall Street. People have been talking about the subprime "crisis" for at least two years and the credit crunch has been contracting since at least the last quarter of last year, yet now, Paulson wants to play Joshua by blowing the horn and further precipitating a crisis in confidence and asking for his initial outline...in hopes of averting the squeeze of the other two? Poorly handled.
Edited by Michael Myers on 26 September 2008 at 8:38am
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Michael Myers
Byrne Robotics Member
Joined: 28 December 2004
Posts: 831
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| Posted: 26 September 2008 at 8:30am | IP Logged | 3
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Michael, something in my post or yours reminded me of these. If you remember the minor fracas over Bernanke being chosen over Hubbard, you might get a small chuckle out of the following:
Bernanke takes my pay!
What CBS geeks do for fun
For anyone else interested, as far back as last year, people were already making jokes about the credit crunch and subprime crisis. Even the above dates to April, and make fun of the idea of Bernanke being nominated over Hubbard.
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Bruce Buchanan
Byrne Robotics Member
Joined: 14 June 2006
Location: United States
Posts: 4797
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| Posted: 26 September 2008 at 8:34am | IP Logged | 4
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I'm no economist. I'll readily admit that a lot of this stuff goes over my head. But this whole $700 billion bailout plan has my spider-sense tingling, if you will.
It seems as though we are rewarding irresponsible behavior by bailing out these companies. Plus, the $700 billion price tag is both staggering and scary. That's a huge burden to place on the taxpayers. I dunno - it seems like the cure may be worse than the disease in this case.
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Joe Zhang
Byrne Robotics Member
Joined: 16 April 2004
Location: United States
Posts: 12843
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| Posted: 26 September 2008 at 8:44am | IP Logged | 5
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Oh well, $750 billion here, $1.5 trillion there. Who's keeping track anymore? Now excuse me while I go pick out a nice, quiet bridge to sleep under tonight.
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Jesus Garcia
Byrne Robotics Member
Joined: 10 April 2007
Location: Canada
Posts: 2414
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| Posted: 26 September 2008 at 8:51am | IP Logged | 6
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Doesn't $700,000,000,000 amount to about $2,200 per American?
I hope this is spread out over time.
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Kevin Hagerman
Byrne Robotics Member
Joined: 15 April 2005
Location: United States
Posts: 18282
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| Posted: 26 September 2008 at 8:57am | IP Logged | 7
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$2,200? Fork it over! I'll pour it into tulip bulbs and be set for life.
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Michael Myers
Byrne Robotics Member
Joined: 28 December 2004
Posts: 831
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| Posted: 26 September 2008 at 9:00am | IP Logged | 8
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It's all deficit spending, Jesus. Any RTC-like proposal along Secretary Paulson's line would involve spending the funds in tranches, over time, with recoup (theoretically) coming in on a steady basis as first and second class assets are sold off. I have no idea who is supposed to buy the third class mortgage assets.
It affects taxes only to the extent that Senator Obama won't be able to hit his target increases quite as heavily (you don't contract on the down side of a recession curve); while neither will be able to realistically tout increased cuts in the lower rates.
Edited by Michael Myers on 26 September 2008 at 9:01am
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Tom French
Byrne Robotics Member
Joined: 07 January 2005
Location: United States
Posts: 4154
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| Posted: 26 September 2008 at 9:15am | IP Logged | 9
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McCain will be the White Knight that pulled it all together.
Well, at least he's lived through the Middle Ages.
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Scott Richards
Byrne Robotics Member
Joined: 22 September 2005
Posts: 1258
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| Posted: 26 September 2008 at 9:17am | IP Logged | 10
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A little long but very informative about our current economic crisis.
http://www.youtube.com/watch?v=H5tZc8oH--o
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Geoff Gibson
Byrne Robotics Member
Joined: 21 April 2004
Location: United States
Posts: 5744
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| Posted: 26 September 2008 at 9:38am | IP Logged | 11
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McCain will be at the debate tonight. A nation waits to be bored.
Edited by Geoff Gibson on 26 September 2008 at 9:43am
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Michael Penn
Byrne Robotics Member
Joined: 12 April 2006
Location: United States
Posts: 13056
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| Posted: 26 September 2008 at 10:05am | IP Logged | 12
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Jim Lehrer not exciting enough for you, Geoff?!
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