I love how when they were in complete control for six years, they had no problem spending like drunken sailors AND giving tax cuts at the same time. Seems to me I recall Bush entering office with the US having an unprecedented surplus. How’d that work out?

ray :: feb 09 2009 :: 3:01 pm

Give myself 1 of the billion. Put the rest in 6 month CD and hope for the best. Flee to Mexico.

Seriously, though? The lines of credit have to get opened up between the banks again; as long as they are no loaning to each other, we are royally jacked. Thus far, it sounds like not a single plan to get that money flowing again has worked.

If I had the right answer, I would have a different line of work. So I am going to say: guaranteeing, in some fashion, inter-bank loans using the 770 billion might be a start. Clearly subsidizing the commercial paper market didn’t help. I would imagine injecting capital by acting as a sort of escrow between the banks will be the next step.

It sounds like some form of this is about to happen — the fed is going to offer up 550 billion in loans*; if this fails as an effort, we are in deep deep trouble.

* This actually frightens me, because it does seem similar but appears the fed is going to back the loans rather than get the banks talking to each other again. This might be nec as a shock to get the system up and running again, but it is not a long-term solution. It’s a solution until that 550 billion dries up. And if the commercial paper market hasn’t thawed by then we are so totally jacked, I can’t even begin to imagine it.

tripp :: oct 23 2008 :: 11:27 am

I think I’d buy controlling share in the biggest in-trouble bank. Then start providing credit via that institution. Using that tool, other banks would have to unfreeze their lines of credit, too, or face loss of marketshare.

I’d also create a public works project that would build multiple solar and wind farms across the country, eliminating our dependence on oil for electricity. Then I’d tuck in a huge research push to solidify electric-only cars in the market place, advancing that technology to feasibility, so that not only would we be able to start exporting our autos (Hello, manufacturing sector! Hi there, reduced trade deficit/national debt), we’d also eliminate the Middle East as a point of geopolitical contention. Congratulations, OPEC. Now you’re just sitting on a bunch of sand again.

ray :: oct 30 2008 :: 9:07 am

Ok, now you’re just running for president. I’m gonna skip para 2, just cause it’s long-term policy decisions as opposed to bailout funding.

Here is one of the issues that has come up recently: the gov 1. bailout every bank, which means some will fail and even better — the gov can’t say which ones they are propping up yet to prevent ones on the ones that arent getting help and 2. it turns out that buying non-controlling shares means that the gov has little say in how the funds get used in reality (or at least through this plan thus far). So some of the banks getting funding are already talking about buying other banks or assets to protect themselves as opposed to using it to prop themselves up in the short-term.

It sounds like you are favoring a national bank. True/false? Cause that’s a whole new ball of wax that I haven’t heard, but would give new meaning to Bank of America.

(Does sound like the paper market has thawed quite a bit in the last week or so; just to keep it interesting, credit cards and hedge funds are now on the radar. Looks like a cahs injection as opposed to escrow might be good enough, which is encouraging.)

tripp :: oct 30 2008 :: 10:54 am

Well, there are economic realities which make individual mortgage bailouts impractical at best. So, my thought is that by buying one of the big fish outright and using that as a tool for liquidity in the credit market, you ‘incentivize’ other banks to stop sitting on their cash. At the heart of it, true socialism doesn’t work because it involves people. But I’m not opposed to the occasional big government ‘nudge’ when necessary. And, hey, letting the total free market hacks have at it the last 20 years hasn’t worked out so great. There was an opportunity to put regulations on credit default swaps in the 90s and it got shot down because ‘we don’t need to regulate that; the market will self regulate.’ Riiiiight.

Anyhoo, the thought with buying a single big bank is to use it like a lead fish in a school. Show the way and encourage a drafting effect. You eliminate the problem of banks just taking government cash and just sitting on it, because with a controlling share you can lean on the board/exec. The idea is not sustained ownership of banking institutions, rather, to right the ship and then sell off the shares slowly once the waters calm.

As for para 2, yes, those are long term goals with, I think, short term consequences. FDR had a New Deal, and I think we need a way to get out of this that isn’t just about doing the same stupid things. We’re not going to get out of this by cutting interest rates or blindly throwing cash into the coffers of the same people who got us into this mess. A massive project like that would increase employment in the near term and set up two long term strategies: reduced oil dependancy and the possibility of once again providing the world with the products it wants. Smart manufacturing and technology leadership. That’s how we get stuff done.

And, yes, as this crap gets worse, I agree with your last comment. We’re going to see the shit hit the fan in the credit card market. Maybe not CapOne, but can you imagine when lots of people just stop paying their credit cards because they have to choose between that and losing their homes? I’d start selling those stocks now.

ray :: oct 30 2008 :: 11:07 am

Ooops. Looks like that just started happening…

ray :: oct 30 2008 :: 11:12 am

Ray, I like you. Here is a bonus link to piss you off/frighten you, but it has to do with McCain instead of Bush. http://www.amptoons.com/blog/archives/2008/09/22/factcheck-gets-it-wrong-on-mccains-health-care-plan/
the article linked to from Health Affairs is pretty excellent.

rachael :: sep 24 2008 :: 9:55 am

Well, thanks rachael. I like you, too. Thanks for the link. Personally, I’m wondering (on another topic) why McCain hasn’t been labeled as a (shudder) flip-flopper in the recent economic crisis. He’s been for nothing but deregulation his entire career, but now he’s all about “making them pay” and oversight? I mean, if you can ride Kerry into the ground with the flip-flopper ‘argument’, why not McCain? C’mon, Obama. It’s easy. Just assume a texas drawl, squint real hard, use your hands in an ineffective manner and say “He’s a flip-flopper, see? Ya can’t just flip … then flop back again. That’s just un-amurican. Heh heh.”

ray :: sep 25 2008 :: 4:23 pm

Update:
I will never sleep again.

http://money.cnn.com/2008/09/15/markets/markets_newyork2/?postversion=2008091516

Seriously, when you toss around quotes like: “But it’s not the end of capitalism,” you know its some serious shit.

“Art Hogan, chief market strategist for Jefferies & Co., said the magnitude of the financial industry fallout is unprecedented, and could only be compared to the Great Depression of the 1930s or the railroad bankruptcies of the 1800s.”

“But it’s not the end of capitalism,” he said. “This may usher in something worse than what we’ve seen in terms of the economy, but the companies left standing at the end of this will be OK.”

tripp :: sep 15 2008 :: 5:13 pm

I had no idea that you were sick on Tuesday. Well, it was good to see you guys anyway — and definitely to see Rachael before she leaves.

Have fun next week and see you soon!

hima :: aug 08 2008 :: 5:24 pm

I’d cleared it by dinner actually. Monday was awful, but was fine by midday on Tuesday.

Thanks for having dinner with us!

tripp :: aug 08 2008 :: 5:34 pm

And just for fun, try plugging in the web site addys of places you’ve worked. I think some people–say, those that are more Costanza-like than others–would blow a gasket to know there’s only $100 difference. And that this site gets more page views…

ray :: may 18 2008 :: 9:04 pm

this is what i came up with plugging in my petunia-the-teacher webpage:

My site is worth $251594.5.How much is yours worth?

too bad that’s only because it figures in all the k12.va.us webpages.

i was duped for a moment, with outrageous, magnificent delusions of grandeur.

petunia :: may 18 2008 :: 9:15 pm