Statement by McCain Campaign on Negotiations

Blogs for John McCain ^ | 9/26/2008 | McCain Campaign

[Left2Right]

Fortunately, these days we have the internet and conservative talk radio. Unfortunately, there are a lot of misguided leftists who want to weaken and destroy this country, and a lot of them seem to be in the MSM.

I don't have TV in my home right now. Someday I may get one, but I find I am so much more relaxed and not bent out of shape like some of the people I know who spend too much time watching CNN!

[bcsco]

purists are never satisfied...

I couldn't live like that... :)

[JasonC]

If the hit is big enough, the laws of economics already see to that, no regulation or legislation or special practice of any kind is required. If you set up a small business in a town full of people who wake up broke the next day, your small business will fail, and it won't have anything to do with whether you are a nice person or ate your wheaties.

Those who made bad decisions in this mess already lost their assets. Are you paying any attention? After someone loses their assets, what happens to those assets? Do they disappear? No. They go to the creditors of whoever just failed. Well, these non-performing mortgage assets have entirely banrupted not just their original bad deciders, but 5 tiers of other people who got stuck with the collateral after each previous tier defaulted.

And guess what? Now the creditor stuck with them as everyone ahead defaults, is all of us, in our capacity as bank depositors.

You see, you are a reckless lender. You put money in an FDIC insured bank account. Ha ha ha, how stupid a financier are you?

The same thing is happening to you, that happened to the banks now failing. They inherited the mess as everyone ahead of them blew out and defaulted.

The original buyers couldn't pay, and lost their homes.

The mortgage originators couldn't pay, New Century Financial has been bankrupt and liquidated for 2 1/2 years already. Countrywide limped into the arms of Bank of America for pennies.

The issuers of private mortgage insurance were to all intents and purposes seized by their regulators and put into run-off, with their remaining capital segregated to pay what claims they can.

The original owners of the mortgage securities blew over over a year ago, all of them, bankrupt. Before they went bankrupt, they drew down their bank credit lines hoping for a turn in the market that never came. As a result, when they went bankrupt their creditors were - the banks.

The ones you see failing all around you.

Guess who *their* creditors are, in turn.

Us. Of course. The hit keeps on going until it hits a pocket deep enough to take it.

The original borrower is most at fault. Fine, rail against him, so the heck what. He hasn't got it, or the loan would be good. He doesn't, it isn't, face it already and move on. Same for the next three tiers.

Now the banks are all failing, 2 1/2 years after the originators. You are their creditor, as am I - all of us. What shall we do with them? We can bankrupt them all, and we still get left with the loss.

Or we can take the loss we are going to take anyway, and spare them.

Why would be do that? Well, it is kinda useful having a banking system. I don't know about you, but I'd find it a little difficult to get through the day paying for everything using barter with blueberry scones.

Or paying for anything, come to that, after the effective money supply shrinks be a factor of 10.

Net mortgage issuance in the 2nd quarter of 2008 for the entire country, was $80 billion. That is down 93% from the 2005 figure. We can safely assume that over borrowing is not going to be the problem going forward. What houses are worth without mortgages - well, just guess.

You can't save money by bankrupting half of your neighbors. Economics is not a zero sum game.

[freeandfreezing]

I don’t have time to respond to all of your contentions, but I think it is important to note that:

a)There are plenty of banks with limited exposure to the mortgage mess. They aren’t about to fail.

b)Strong banks buy weak and failing banks. Look what just happened to Wamu. Big hit for their shareholders, but that’s why investing in stocks is risky, and equities have a large upside compared to investments with no real risk of loss of principal. No real hit for the taxpayer or depositors.

c)There will be plenty of banks left when the dust settles to keep the economy going. No harm in thinning out the ranks of the poorly managed banks.

d)The unwinding of credit bubbles is never pretty.

d)I still haven’t seen any argument put forward as to why the taxpayers, as investors, should buy junk assets. What rational investing theory for any market suggests that anyone should intentionally buy impaired assets? Why not just use the money to buy good assets?

[publius1]

Sure — I thought I did — the Dem’s won’t move on a bill or a vote without Rep cover. In negotiations, that means the Republicans have something the Democrats need. The Dems also believe that they must do a bill. That sets up the mechanism. Think of it this way: If I have to drive my car from here to Waterloo, and you have all the gas, I am dependent on you. I must abide by your terms, meet your price, or walk.

[don-o]

Beating Obama like a rented mule.