As I see it, this goes way beyond reorganizing financial doings… rather a thoughtful consideration and re-organization of our society is a more or less do-or-die necessity.

Lo & behold, via The Big Picture, an upcoming Moyer’s interview w/Andrew J. Bacevich is posted, w/video & transcript, on this very subject.

The title & leadin:

Bacevich: The Limits of Power
Tuesday, September 30, 2008 | 12:30 AM

Is an imperial presidency destroying what America stands for?

Highly recommended.

The US has become, effectively, a debtor nation. If Chinese/Russian (etc.) bonds/treasuries (etc.) were to be called in, we’d be completely, totally broke… Argentina on a massive scale.

The “smoke & mirrors” character of current Wall Street mess permeates almost every facet of US economy now. Offshore production, marketed through US biz masquerading as US productivity is overwhelming. Investment here at home is a trickle of USD investment flow.

In Bush’s short tenure, the entire global economy has morphed… largely out of the consciousness of avg. US Joe. 3rd world economies have become world class ones, many of them surpassing US in real production. And as a result of mis-trust of Bush (a gross understatement), the re-alignment of these economic powerhouses to the exclusion of US participation beyond consumerism… geez, US leadership is just a memory AFAIC.

The breadth and width to which these guys have fucked things up is mind boggling, and an accurate model defining it all is entirely absent from our population.

As I see it, this goes way beyond reorganizing financial doings… rather a thoughtful consideration and re-organization of our society is a more or less do-or-die necessity. More than WS’s meltdown, given the “everything’s ok” malaise enduced slumber w/ensuing dumbing down of the US public during these neo-con years, the capacity of US to actually execute what’s needed is, in my mind, very much in question.

“Senator Obama and dems injected unnecessary partisanship into the process” — McCain

I think it shows poor judgment to show animosity by injecting even more partisanship when you’ve been telling people you are a leader.

Obama said we need to remain calm and see if we can still get through this.

McCain seems to be just throwing in the dice, er towel while Obama is trying to lead us to victory.

McSame just attacked Obama for killing the deal by failing to “lead” when it was the rethugs who failed to come up with their promised 75 votes????? WTF?????

Please John McCain, for God’s sake suspend your campaign, pretend to try and save the economy and go away so America can be saved.

Buy the assets from the banks (both good and bad assets) and, instead of funding those asset purchases with taxpayer funds, do so with assumption of liabilities — good depositor liabilities. Transfer these assets (after retiring some of the worst assets into special purpose vehicles for tender-loving-care, so to speak) to resolution trustcos which could be shored up by the treasury on an interim basis, subject to future capitalizations and Ian’s otehr measures. Eventually these trustcos can be re-privatized, but not for a long while.. meanwhile, we can hire unemployed bankers at GS7 pay grades to chaperone the funds.

The failed banks just get smaller, retaining primarily risky liabilities (not tied to depositors) and risky assets.

Meanwhile, in further consideration of any valuation gap between the Transferred Assets – Transferred Liabilities (assuming that value is positive), the government will issue to the banks a novel form of security.. I came up with this in the shower last night: TOILETS – Transitional Obligation-Impaired-Loan-Elimination Treasury Securities. TOILETS are designed to be worse-than-worseless securities specifically structured to be jammed down the throats of the worst and most corrupt failed banks. TOILETS are callable on the treasury, at steep discounts for the failed assets they will replace, up to a fixed-percentage of future Federal budget surpluses (in other words, not one red cent until the national deficit is cleared, and then only in pieces, subordinated to every conceivable current Federal budget). In other words, until they help to fix the economy, they get nothing. This’ll defer the drain of the bailout on the treasury until a future when we can afford to pay it.

TOILETS are a triple entendre – they’re worth about as much as toilet paper (like the assets they will replace), they will likely cause the organizations we force to accept them to go down the toilet, and they ironically reflect the national opinion that those organizations flushed us all down the proverbial toilet. They also incentivize responsibility behavior, in that they will only be worth SOMETHING in the future if the economy drastically improves. And, by the way, we should mandate the CEOs of these cancerco’s get paid in TOILETS.

This is amazingly close to what I just wrote…as a last-ditch effort. Your idea of handing the firms some TOILET paper in exchange for the assets is somehow appropriate and tragic.

Still, as I wrote, the question of how firms maintain liquidity, remains.

I like the buying up mortgages idea–it goes to the question of the underlying value of the instruments in the Big Shitpile. If the underlying assets are sound, then buying up the securitized asssets is a no brainer, either for uncle sam or for anybody else.

Tell congress. That’s what they just killed.

The American people don’t want to foot the bill, even if it’s just taking out a loan, when they think it’s Wall Street who is to blame and who should pay to fix it. The American people might also not realize just what a big bet they just made — that the economy won’t dry up, blow away and take them with it.

Problem is, it costs money to buy up all those mortgages and somebody has to pay if you do buy them. If the people won’t, then I guess Wall Street has to. Can Wall Street afford much these days?

Maybe I’m not well enough informed, maybe I’m naive and have bad judgment, but it would seem to me we might just leave the toxic assets where they are and help those firms fix them. It’s new territory and we might botch it, but do even those who read this blog who are happily considering ‘nationalizing’ those firms (and there are many), really think America is ready for something like that?

There is one other idea I can imagine which *might* have a chance of working. Again, it involves using existing assets.

We could simply take those assets (nationalizing the assets, I suppose) from firms and place them with FDIC and/or Treasury and pay the firms for them as we can afford to. It takes them off the market and off their balance sheets. It gives government a chance and time to rehabilitate them by various means. It leaves those firms smaller and with no recourse to recouping their losses in any orderly way. It’s forceful and decisive, but entirely uncouth and not according to the rules of Capitalism or Democracy. It might not work, but if it does it would satisfy the beasties among us who like to be brutal. If we want we could take some set percentage of all the assets we appropriate as our ‘commission’.

One big problem, as I understand it, is in these CDOs there are both mortgages and other asses mixed together. If you want to take the mortgages out it might not be easy without ruining the package. Only people expert on these things could explain how it might work or why it can’t.

Another problem is that if it was hard for these firms to borrow money on shaky assets (as collateral), then how are they going to borrow on NO assets as collateral?

I see no reason to move the assets around this way. I say, leave ‘em where they are and fix/renegotiate them quick as possible.

II) No loan can be sold more than two steps beyond origination.

would go a long way toward setting some kind of financial sanity back in place.

Helping people with good credit by offering rebates or down payments would put money into the market, keep prices higher, and help get things going again. Why are the only proposals designed to help the people who got us into this mess?

But I am pretty sure they hold them through repurchase agreements, so the value should not go up and down with value on stock market. Some one has agreed to buy them back at a future date.

http://en.wikipedia.org/wiki/M…..rket_funds

Money market funds

Money market funds hold 26% of mutual fund assets in the United States. [12] Money market funds entail the least risk, as well as lower rates of return. Unlike certificates of deposit (CDs), money market shares are liquid and redeemable at any time.