Comments on: On the Bailout

By: Dan Grigas

Dan Grigas — Tue, 08 Sep 2009 22:38:07 +0000

It’s a shame your just now seeing what I saw in Obama before he was elected. This man is clueless to economics 101.
Dan

By: WS Vet

WS Vet — Mon, 18 May 2009 12:46:55 +0000

Read the new book, “House of Cards” about the collapse of Bear Sterns and you will know how bad Wall Street can really be, and how lies are dolled out regularly. I would like to say this was an isolated moral issue but unfortunately, all thru history the Wall Street bankers have tried to rip people off.

By: VJ

VJ — Fri, 08 May 2009 15:23:07 +0000

The central role in this mess is OTC (over the counter) derivatives. If this was a normal creditor/debtor problem it could be worked out in the way you suggest but with OTC derivatives there are other (Investment) banks that own calls/puts exotics on these mortages. To un-wind them would mean a collapse of their balance sheet. This is the paradox, the damage is huge but the collateral damage will be huge.

If you look at AIG, whats really happening is that the govt is giving them money to pay of MTM (marked to margin) for their derivatives products, which in turn supports their (highly leveraged) balance sheet. They cannot un-wind these coz the liquidity is dead. I think this is why this mess is becoming a little tricky to solve.

But as of this time, people are sounding optimistic, so lets see.

ps. one of the most entertaining books i’ve ever read and your postings on another forum are gems. thanks for everything.

By: James Fowlkes

James Fowlkes — Mon, 13 Apr 2009 20:34:16 +0000

Great stuff, Curtis. Welcome back, Sir!!
Cheers,
eD

By: Curtis Faith

Curtis Faith — Sat, 11 Apr 2009 01:26:46 +0000

I hope you like the rest. If you do, and you have time, I’d appreciate a review on Amazon.

- Curtis

By: Pyewacket

Pyewacket — Sat, 11 Apr 2009 01:06:46 +0000

“They have too much money and too much political influence” C.F.

Such a tangled web…

…

I’m about 1/3 into the risk book. Very interesting. I have always noted similarities between front line professionals. Its interesting that those Ive encountered at least, have had a hard time explaining their success. It wasn’t something they were taught in school. But just a part of who they were inside; perhaps from lifes own experiences they were dealt growing up.

By: Isaiah

Isaiah — Fri, 10 Apr 2009 16:12:30 +0000

No argument with any of your post, that’s pretty much my opinion as well. However, I was a bit surprised that you didn’t discuss the change from mark to market accounting rules. I thought this was one of the more important developments, so I’m curious to hear your thoughts on its significance.

By: Curtis Faith

Curtis Faith — Fri, 10 Apr 2009 04:53:30 +0000

Unbridled capitalism is not very good at creative destruction of large companies. They have too much money and too much political influence. So they get bailouts and handouts.

We have a lot of corporate socialism here.

- Curtis

By: Pyewacket

Pyewacket — Wed, 08 Apr 2009 06:24:34 +0000

Its good to know you support the capitalistic model for dealing with failed business. Jim Rogers has been a strong critic of the bailout plan and foresees dire consequences down the road. Ive come to respect his opinions after reading his books. He keeps a distant perspective on society and its position in larger historic terms. He compares the bailouts, and the resultant “zombie banks” to what Japan did in the past and sees similar ill affect.; Prolonging what should be a shorter painful process into a long period of stagnation. The bailouts and the coming higher taxes are akin to taking from the competent and giving to the incompetent. If the banks were allowed to fail, the strong competent survivors could take over the assets as you mention. That said, I’m comfortable to follow what trends develop and keep an optimistic attitude. I hope the inflationary predictions are overstated. I hope the dollar isn’t doomed and that excess regulation doesn’t spell the end of free markets. But mostly, I hope I’m quick enough to get out of the way if things do fall completely apart. We do live in interesting times…