Posted by Larry Miller on March 7, 2009 under How | 
The initial Paulson/Bernanke/Bush, bailout plan was to get the toxic “assets” off lenders books so they could begin lending again. They came to the conclusion that accounting rules and lack of liquid assets had caused the credit market to “seize up” as they described it… much like your car’s engine would do if deprived of sufficient lubrication. That was the original plan, but it quickly changed to infusing billions of dollars into ailing financial institutions, trusting the management to use it in ways to actually help the economy. We’ve all seen how well that worked.
The accounting rule most reviled by the banks was the “mark to market” rule which required them to carry assets on their books at values they could reasonably expect to sell them for on the open market. That never seemed to be too unreasonable a procedure. That alternative would be keeping values on the books that were greatly inflated beyond any thing they could actually be sold for. For example, why should a five million dollar building be shown on the books for ten million dollars when no one could realistically be expected to buy it at that price? In most other contexts, that would come pretty close to something called fraud. Of course write downs like had a negative impact on the corporate statements. It was, however, a more accurate picture than retaining the higher value and hoping it would, one day, return.
The other rule hurting banks involved reserve requirements for non-performing loans. When a loan, whether a car payment or mortgage is paid on time every one is happy. When the borrower stops paying in timely manner and slips further and further in arrears, the loan is listed as non-performing and the bank needs to keep reserves to cover the situation. This is why lenders will sometimes give substantial discounts to buyers who will take such properties off their books. Considering the costs involved in foreclosures and the release of reserves for other uses, these transactions often turn out to be a win for every one involved. The bank gets a toxic “asset” off the books, the buyer gets a good deal and the borrower is relieved of a debt he can’t pay. Read more of this article »
Posted by Larry Miller on March 5, 2009 under Why |
This morning I watched the news as three urban mayors sat grinning and licking their chops at the thought of even more federal dollars coming their way. The more I listen to the explanations of the various bundles of cash flowing out of Washington, the more I understand that another direction of the income redistribution is from rural to urban areas, from primarily red areas to primarily blue areas.
This should come as no surprise as the Democrats have a long and proud history of favoring their constituents. Their schemes may not lift the poor out of poverty, but they give them occasional goodies and the occasional satisfaction that those who are better off would now be less better off and experiencing some pain as well. It’s payoff time in the cities. Besides, if they ever did resolve the problem of poverty, they understand that people no longer looking for a handout gravitate to the other party.
The inequity of distribution is aggravated by the fact that these cities tend to be the least efficient and most corrupt governments in the country. There is even talk about the cities getting the funds directly from Washington and not having to submit to the adult supervision of state governments.
Where is this money going? Part of it is going to maintain bloated city budgets and retention of the overpopulation of municipal workers. Union workers, I might add… dare we say more of the money flowing to Obama supporters. Another part of it is going to build infrastructure and amenities for city dwellers. Read more of this article »
Posted by Larry Miller on March 3, 2009 under Why |
AIG, we are told is too big to fail. Same with General Motors and a host of other corporations run by, at best, semi-competent but connected executives. They employ many but control boatloads of assets. Unfortunately not enough assets as they found themselves owing more than they could pay. The courts have a way to deal with these situations. It’s called bankruptcy. For you and me this is the way to resolve these negative situations.
These rules are for the little people. If you are big enough, rich enough or contribute enough, they somehow don’t apply. Your friends in government will be happy to take taxpayer money and give it to you. This has happened before and will happen again, and again, and again!
To keep up with this high end charity, our government goes deeper and deeper in debt. Our government is running up debts that are getting very close to exceeding it’s ability to pay. What happens when our government finds itself in this position? Is it too big to fail? Who will bail it out? Will they turn to us, the taxpayers as an unlimited source of funding once the rest of the world, which is running out of money itself at a breakneck pace, stops buying our paper? Read more of this article »
Posted by Larry Miller on February 27, 2009 under Why |
Many of our problems today come, not from any particular event or situation, but from a lack of confidence to move forward. The stock market is basically in a downward spiral because investors don’t believe problems are being fixed… in fact they believe just the opposite. Banks aren’t lending money… maybe because they don’t have confidence in the economy the borrowers will operate in, or perhaps they feel they’ve been burned and lost confidence in their own ability to make good decisions and they’ve become overly cautious.
It appears that we don’t really have an economic problem… but a confidence problem. It’s not that we lack cash… the Fed is printing paper just as fast as the presses will run. We have a president with no lack of confidence in his ability to do everything short of walking on water. As we haven’t discussed the matter, it may be that he believes it possible to be an aquatic pedestrian. At this point thought, his extreme confidence in himself is not shared by Wall St. or Main St. People have begun saving what money they have and stopped buying much that they really don’t need. The economy is slowly grinding to a halt.
One would think that all the people who voted for the O-man would have the confidence to move the economy forward, yet even they… the bankers who received bailout money… and gave some to his campaign… don’t have the confidence to start the credit flowing again. For the bankers, it’s not a cash shortage, they just received billions of our money from the government, but an unwillingness to lend it out. It’s hard blame them too much as they’ve made a couple too many bad choices with their own money… some because of government rules and intimidation. Read more of this article »
Posted by Lisa Miller on January 23, 2009 under How |
We Christians have an uphill battle for Life. We need to cut the legs out from Government Spending that has usurped commerce, charity and the individuals rights and responsabilities.
As such Pro-Life candidates have to go after the subsidies, grants and tax credits that make life uncompetitive.
Government growth fuels donations to encumbents and makes pro-life candidates David to their Goliath. I suggest candidates aggressively go against the Land Bill, Stimulus, 2nd part of TARP, SCHIP expansion, additional educational funding and propose free markets. When government is both providor and overseer the student, patient, consumer and taxpayer are of secondary importance.
We need government to be an honest “broker” that provides and competitive environment for life, liberty and the pursuit of happiness. Hence we must look to way to remove uncompetitive advantage.
We should go after government abortion funding AND other health services. These should be regulated by government but engaged only by the private sectors of business and charity and individuals who manage their own risks in the market. Read more of this article »
