bills_fan

But, the plan will be passed. Congress wants to appear to be negotiating a tough bill and not capitulating to White House demands. Another body and you will see the bill passed within 24 hours. And there will be another body...

What are the odds he got her upstairs and was so bombed he just passed out. She figured she would help herself.

Wow! I have known some shady broekrs/bankers/traders in my time...but Wow! I really am speechless.

Absolutely right. But the Dems have had less time to mess it up than the Reps had. I expect that to change if Obama is elected.

And to make it even worse.... Brokerage firms had to mark the assets to market. When there was no market, the asset was worth "zero", even though in most cases the assets were paying what they were supposed to pay and on time. Why was there no market...everyone is afraid of doing a trade, because they don't know what the other guy has. They barely know what they have themselves. These assets are so complex and codependent on one anotehr, that a default at an asset held by a hedge fund, could trigger the value of your asset to fall to zero, even though you did nothing and the payments are made on time. Which is why "credit crisis" is a misnomer..."confidence crisis" is more accurate. Mark-to-market accounting was the SEC's response to Enron. The theory was that if you had to mark your assets to the market value, you could not overstate your position like Enron did. Problem is that no one figured the entire market would freeze up. Now, lets contrast mark-to-market accounting (promulgated by the SEC in a post-Enron world) with commercial banks. Commercial banks (or Bank Holding Companies) are exempt from mark-to-market in long term held assets. They are permitted to mark at historical cost or market. Now you get why Goldman Sachs and Morgan Stanley converted immediately to Bank Holding Companies? This was one of the chief reasons, that and they figured they would embrace the regulation/regulator they knew (the New York Fed) rather than some ambigous, regulatory scheme cooked up by Congress in response to this disaster.

I certainly would not raise taxes into the teeth of a recession. This rescue package puts a floor under the problem and will save the system. It is not a panacea curing all that ails the system. I would extend the Bush cuts indefinately, proportionally cutting spending (unlike the abhorrant Bush administration and Republican Congress). But then, I am a tax cutter and spending reducer.

This is absolutely the entire point of the rescue package. Anyone disagreeing with it or not understanding it should read and re-read these two paragraphs until they get it.

You are, of course, wrong on this. I want you to read this article about NYS raising taxes, then exacerabte the problem to the rest of the country. If we do raise the taxes, we will have a depression. I don't think that is even open for much debate. Article on Taxes

Yeah, but if we have to face Dallas again, I'm going radio/TV/internet silent for the two weeks leading up to the game.

So she's saying he had game? 50 years later and she still remembers Johnny? Go Johnny go, go Johnny go, go, go...

But would any trading floor mark the asset to zero if there was no liquid market for it? Doubtful. Mark-to-market forced firms to either mark securities to zero with no liquid market (and the SEC was watching for accomodation quotes, so that didn't work) or use a formula. But, if you used a formula, you had to be prepared to defend the formula, with support from your public accountants. Since the Big 8 accounting firms has dwindled to, I believe 3, nobody wanted to defend any formulas in any possible litigation. Hence zero valuations. Now, the securities themselves were far from worthless, with many paying decent cash flows and on time. But since they had no liquid market, they were worth "zero."

There is a lot of blame to go around here. Fannie and Freddie deserve their share, but many other do as well.

We'll have to disagree on the "match" analogy. GS/MS had that ready to go for a few weeks, no way they could continue in present form. True investment banks no longer existed in the bulge bracket form, although they exist (and IMHO, the model works) in the botique and middle market. There will be a place for the Lazard/Fox Pitt/Sandler ONeal/Thomas Weisels of the world.

I read that draft on Saturday. It has been changed since Saturday. Many details are still being worked out. Folks like Dodd are not helping.

But for the magic that is mark-to-market accounting, this mess would have been mitigated. Mark-to-market accounting was the match that lit the powder keg of bad mortgages.

The Fed has a balance sheet of about $880 billion. It is not infinite. Treasury on the other hand...

I hope they can.

No, buying the toxic debt that banks, brokerages and insurance companies have that caused this mess. The gov't will not buy any company, just the loans they have on the books. AIG is a loan, will will be repaid via sale of AIG's assets, at 11.56% interest. The gov't will make money there too, but far less than via the new facility.

It is. Although the government will end up making hundreds of millions on this facility. So, for the taxpayers, it will end up being a very good deal. Want to know how to fund infrastructure?

I don't think so. Of course we will still have crisis du jour, but this was different due to the lack of a floor. Many buyer walked into AIG last week, they had no way to measure the downside risk...due to mark-to-market accounting, the risk was almost infinite. This allows the banks to offload the bad debt, thereby enabling them to begin lending again, restoring credit and liquidity (after the stupid short selling order expires). This will actually put a floor under home prices. Combined with all the capital injected into the market, I think we will be in good shape.

Add on to my "buy financials" tip, keeping buying Mon and Tues, put sells in pre-open on Wed. Lock in your gains and wait for normalization.

They always go one step too far...buy index funds over the next days. Short covering rallies will take the market far higher in the next 2.5 days. This is not a rally. Legitimate shorting is a very valid strategy. Hell, many hedge funds invest 3 to 1, For every 3 bucks they put into a stock, 1 goes on shorting it, just as a hedge. Fools. I really hope this is just a temporary solution. The other SEC orders handed down regarding price disclosure and issuer repurchase of securities are good and ought to be permanent. Talk about reactive bull...I thought McCain was an ass to say that about Cox, now I think Cox is even more of an ass than McCain said he was.

Bastard!! I have far too much inside information to trade the way I want to!!

Here's a tip... Buy financials as soon as the market opens tomorrow. As many as you can get. Buy SSB, GS, MS, C, GE...buy as much as possible. Tomorrow should be a big up day for the market. If you want the whole story, see my thread on PPP. And that 10% down may turn to 10% in the other direction within the next 30 days.

Exactly correct. You have to be able to value it correctly now, to make the real profit in the future. If anyone has this formula, I'll quit my job and we're starting a hedge fund to buy this stuff. The government will make a good chunk of cash on this, with very little downside.