Posted on 03/31/2008 6:12:11 PM PDT by shrinkermd
...The weak dollar is pummeling equities, disrupting the economy, distorting global trade and giving hundreds of billions of dollars in windfall revenues--through skyrocketing commodity prices--to our adversaries such as Iran and Venezuela. Not since Jimmy Carter has the U.S. had a President so oblivious to the damage done by an increasingly feeble greenback.
...The U.S. Treasury Department could buy dollars in the currency exchange markets. Our allies would gladly cooperate with such an operation; their exports are being hurt more and more. The Fed could mop up some of the excess liquidity it has created since 2004, even as it makes targeted loans to beleaguered banks and financial houses...
...The other measure: The Treasury Department and the Fed should get together with the SEC, the Comptroller of the Currency and other bank regulators and announce that financial institutions for the next 12 months will no longer write down the value of exotic financial instruments (primarily packages of subprime mortgages). Instead, writedowns will occur only when there have been actual losses on those assets. If a mortgage defaults, a bank will then--and only then--recognize the l
(Excerpt) Read more at forbes.com ...
It is a tragedy of the first order that we are not running Steve Forbes for either President or VP. He knows what can be done now rather than years in the future. Just what is needed in a panic.
Good post.
I like Teve Torbes. And Dob Bole does too. ;)
He’d get my vote!
Bump for later. Thanks.
Ditto
Maybe not for prez, but Secretary of the Treasury might be a great post if he’s willing to serve.
I like Forbes but he could never win the presidency. Sorry, I know it’s not fair but you have to be at least a little bit telegenic.
Oh, really, could you give me the links to his statements about this happening eight are ten years ago, are even five years ago. Are is this just more closing the barn door after the fact.
“...The other measure: The Treasury Department and the Fed should get together with the SEC, the Comptroller of the Currency and other bank regulators and announce that financial institutions for the next 12 months will no longer write down the value of exotic financial instruments (primarily packages of subprime mortgages). Instead, writedowns will occur only when there have been actual losses on those assets. If a mortgage defaults, a bank will then—and only then—recognize the l [oss]
All righty then, Mr. Banker, I have roughly $2 trillion in Alt-A mortgage tranches available. They remain rated triple A by Moody’s. Their yield is 7%, but just for you, I’ll discount the face values so that they yield 9%. You, Mr. Banker, can borrow at the Fed window for about 3%, so it seems to me you have a risk-free 6% ROI opportunity here with substantial upside if the implied internal defaults can be cured. Can I interest you in a few hundred million?
[crickets]
Non-starter. Unless you can get the banks’ employees to mot cash their paychecks but agree that they are being paid, and the local electic company to agree that the banks’ electric bills are being paid.
The solution to this problem does NOT lie along a road paved with further fictions and non-transparency. A loan that is not being serviced isn’t worth its face value, nor is a tranche of loans wherein 137 of 500 total are not being serviced worth its face value.
You mean like Hillary and Obama? I missed the tingle running up my leg when Obama was running on the beach with his shirt off. Me and Chris Matthews just have different tastes I guess. McCain might get the Grey Panthers warmed up though.
You mean like Hillary and Obama? I missed the tingle running up my leg when Obama was running on the beach with his shirt off. Me and Chris Matthews just have different tastes I guess. McCain might get the Grey Panthers warmed up though.
The alternative is to find ourselves in the position of the Japanese a decade ago: the stakeholders in overvalued assets keep hoping that things will somehow turn around, and in the meantime investment grinds to a halt as everyone waits for some combination of events to force their holders to realistically (re)value assets.
Gosh...not so long ago a statement like that would get you run off this forum.
But now we have a guy like Forbes saying it.
Times do change, don't they?
I honestly disagree with Mr.Forbes about this. He says that “...The weak dollar is ... disrupting the economy, distorting global trade...”
I believe that the bigger problem during the last fifteen years is that the dollar has been too strong, and that this situation is merely correcting a distortion. Of course, the correction will involve some pain, but in the end, American exports will become more competitive, Americans will gain more jobs, and more American energy and other products will be produced at home.
What do you buy our own currency back with?
There was another supposedly authoritative story of similar nature on the net today. The idea was that the EU currency zone is suffering 4%+ inflation which is why they are holding to high discount rates ~ the consequence of this is the Euro is skyrocketing in value against every other currency.
Both of these storys follow a pattern ~ they correlate two well-known paths, but one portrayal of one path is the opposite of the usual conclusion.
People fall for this stuff like crazy.
What is most amazing is that if you listen closely to top level economists they provide explanations remarkably similar to these stories ~ then stuff just happens anyway.
Steve Forbes is a scofflaw. He believes there is nothing wrong with foreign nationals here illegally, that illegal aliens flooding into this country in violation of our sovereignty is OK. In fact, he thinks it is a great idea!
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