<a href=http://agonist.org/stirling_newberry/20080928/hell_no_we_wont_blow_it_all_on_paulsons_panic>TED</a>
Most people I know don't think there's any sort of crisis. Business seems to be going on as usual. Checks are being cashed and credit cards processed. Consumer and mortgage loans are being made. I get at least one new credit offer in the mail every day. Only elites who worry about esoterica like TED are freaked out.
Which makes one wonder, just how hard it would be to rig the LIBOR or TED spread. I'm sure there are sharks already smelling that bailout money. I'm not the only one wondering about this:
<a href=http://www.correntewire.com/bankers_turn_the_knobs_up_to_11_give_us_another_shock>Shock</a>
MBS are not entirely worthless, and it doesn't help to say so. They are worth something, and probably more than the 22 cents Lehman sold them for a few months ago in desperation. But now, 22 cents had become the official mark to market price, forcing every financial institution to raise capital at the same time. Thus, mark-to-market rules force a systemic banking collapse, not the way regulation ought to work. These are new regulations (Sarbanes-Oxley, with FSB 157 from last November) and they don't seem to be working right. The "No BAILOUTS" bill would ammend this and a few other regulations. (Mark-to-market changes were in the horrible Paulson-Dodd also.)
Anyway, regulators stepped in on Tuesday and issued new guidelines which might fix the whole situation without new law.
But somehow, our fearful leaders would rather throw a trillion dollars at the problem than tweak the regulations a little. Which fits the pattern of the usual amount of respect they give our money.
Sure, I know, changing mark to market reduces transparency a bit. That hurts investors. But regulation is a balancing act, and the one thing you don't want is regulations which cause deflationary spirals.
There's going to some deflation, especially in house prices, we just want it proceding relatively slowly and without panic.
The idea with removing the FDIC cap was not that it would help securities firms, but that it would cause money market funds to flow into banks and recapitalize them, then THEY could do required lending w/o heavyweight securities firms. It would make it easier to park large amounts of money safely, make payrolls more secure, etc.
I'm disappointed with the lack of backbone being showed by DeLong, Krugman, and now even Galbraith. You can tell these guys are economists and not negotiators. And it's ironic that Krugman is constantly preaching to Democrats that they need to show more backbone.
For once, it has been looking like we have a bit of democracy: lawmakers in less-safe seats not wanting to piss off their constituents. But of course pundits immediately step in and blame it all on politics. Krugman has been doing the worst bit of this, praising the undemocratic crooks as "adults".
And why is everyone saying the stock market recovered because the bailout train is back on track? The stock market was going down on Monday before the vote. Maybe the stock market recovered because the bailout failed. It may not be true, but wouldn't it be a more obvious interpretation?
This is the very kind of issue leftists need to get out in front of, and not let the Republicans get the most mileage out of. While it lasts.
This is the second populist uprising this year. The first was over gas prices. But it was no good to get out in front of that one though with more drilling, tax cuts, etc. We need to electrify transportation instead.
Charles Peterson San Antonio, TX