[RightOnTheLeftCoast]

"Yes, exactly and it's why I demand that not one dime goes to buy those paper assets. And while they're at it, please stop telling lies about how these assets are not valued at zero and that someday we can recoup much of this money once the market stablizes. That's all BS and every thinking person who can read and bothers to do so knows it."

Capital gains tax holidays and the like would be absolutely wonderful, and I'd love to see them happen, but they are akin to prescribing gourmet meals to a patient who's exsanguinating.

The root cause of this mess is Federal intervention in the mortgage markets. Let us count the ways: Fannie & Freddie were created by Acts of Congress, the CRA was a Carter-era Act of Congress and got turbocharged by the Clinton Administration; asset ratios were cut by Congress, freeing more cash to be thrown at bad mortgages; and against it all those who wrote those mortgages were busy bundling and reselling them; meanwhile insurance firms like AIG got into the business of insuring the holders of these securities against loss; finally the Sarbanes-Oxley mark-to-market requirement triggered an avalanche of institutional failures as instantaneous writedowns necessitated by a soft market cascaded through the balance sheets, bringing institution after institution below the statutory floors also established by Congress. All along, the Princes of Armani on Wall Street and K Street would tweak their spreadsheets, pushing risk-profiles down and asset-valuations up, cashing in on seven-figure bonuses until the music stopped.

The problem is now so big and so deeply entwined with all aspects of finance (including, yes, outside the U.S.) that the whole edifice is teetering. And I say again: it's a $62 trillion issue. That's the size of the credit-derivatives market. That's bigger than the global economy. Its collapse would be an unimaginable calamity. And it doesn't need to happen. But it's a government-made problem, so it stands to reason that a government-centric solution may be necessary. And it must involve not only mortgages but the bundles based on them, because they are what's threatening to vapor-lock the markets.

I cannot say if the bill currently being constructed is the correct answer. That is why we have representatives in Washington. (Alas, mine are horrible, of course-- they sure as hell don't represent me! Fortunately we have Blount et fils leading the charge for our side.) As McCain has said, doing nothing is not an option. And doing very good but long-term-oriented things like taking a holiday from the capital-gains tax and considering eventual changes to Sarbox would be wonderful but would not solve the more immediate problem that the patient is bleeding out all over the floor and getting wobbly in the knees.

The rest of your rant is just ad-hominem shouting and makes me embarrassed for you.

[trisham]

The root cause of this mess is Federal intervention in the mortgage markets.

********************

Exactly right. Although I fear that further government intervention will lead us in the wrong direction, I also fear that no intervention at all would be a disaster. Few who lived through the great depression are around today to warn us of how really dreadful it was. Ironically, it is the opinion of some that it was socialism (in the form of public works projects, for one) that turned the economy around. There are others who believe it was World War II. Perhaps it was a combination of the two, but I am no history student.

[ScaniaBoy]

re post #301: THANKS!

[Lloyd227]

"The problem is now so big and so deeply entwined with all aspects of finance (including, yes, outside the U.S.) that the whole edifice is teetering. And I say again: it's a $62 trillion issue"

You and I both know this 700 Billion is not going to stablize the "vapor locked" derivatives market and it's not going to stop what's coming, the best we can hope for is to delay it a few days or weeks.

From the very first time you understood the monetization of debt (and I suspect you do) from that day forward, you and I have both known what the end would be.

Now that the end might be staring us in the face, you're clinging to hope and letting the politicians lie to you and stall the inevitable until after the election.

This bill, as it's been presented to us so far will not salvage the US Economy.

[MHGinTN]

Your post is so packed with wisdom and clear insight, I felt I was listening to Neal Cavuto in a private conversation!

[Recovering Ex-hippie]

excellant post.

[Petronski]

No entity is large enough to have caused this mess except the U.S. Government. Similarly, tragically, no single entity is large enough to rescue us. I personally don’t think $700bn is enough, but it’s sure as hell more effective than $250bn. Now we have the dems larding it up with this 20% ACORN provision, which is STILL in the bill and all I can do is throw up my hands. It’s a crying-ass shame.