** Private ** wrote: > 1.) You're just restating the problem over and over: falling asset > prices. We agree
I do not consider falling asset prices the problem. Prices go up, prices go down. C'est la vie. > but what about the solution? Convert all the money that has been inserted into the financial sector to equity so the government gets a simple majority of voting shares. Use that to take all those institutions of the market, do a mark to market, liquidate every institution that doesn't meet minimum capital requirements. Use the money of TARP that remains plus whatever tax cuts are planned in the stimulus to form a bunch of good banks. Judging by the 9 banks that have been closed by the FDIC this year a mark to market operation is going to wipe out shareholder equity and then requires an additional 25% of liabilities from the FDIC for insured deposits (but so far only smaller banks have failed, maybe for the big ones the ratio that is insured by the FDIC is lower). In short, sort out the financial paralysis by forcing the issue, then let the rest of the economy recover by itself. The government should wake up to the fact that the financial sector is too big to safe, people should wake up to the fact that just because they bought a $200K house for $500K doesn't make it a $500K house. > At the end of the day you either think we need to stop falling asset > prices incurring downstream problems, or you think the downstream > problems are more worrisome than the effects of falling asset prices. > > I fall into the first camp. And I would offer that it might be a tad > bit easier to be in camp #2 when you're in another country. I don't think it has to do with the country you are in because most countries face the same problem. And in some countries the problem is quite a bit bigger then in the US. The biggest US financial institutions (BoA, Citigroup) have liabilities (~2 trillion) to the size of 15% of GDP (14.8 trillion). The biggest financial institution in the Netherlands (ING) has liabilities (~1.3 trillion) about twice as large as GDP (700 billion). What does make much more of a difference is age. Forcing a cleanup of the financial mess is going to wipe out savings and pensions. I may not like that, but I am young enough to fix that over the next few decades. If you are older and don't have the time to fix a pension gap anymore, you will naturally want to maintain the current inflated pension value. Jochem ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Adobe® ColdFusion® 8 software 8 is the most important and dramatic release to date Get the Free Trial http://ad.doubleclick.net/clk;207172674;29440083;f Archive: http://www.houseoffusion.com/groups/cf-community/message.cfm/messageid:287706 Subscription: http://www.houseoffusion.com/groups/cf-community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=11502.10531.5
