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Some quick points.. September 30, 2008

Posted by The Armchair Economist in Commentary, Economics, Politics.
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I’ve been studying for my board exams so haven’t been able to post.. but some quick points:

I’m glad to see the bailout fail in the house yesterday.  Unfortunately rather than scratching the current plan, they are merely adding more clauses to it to gain more votes.  While the stock market reaction was expected, I am also disgusted that politicians are using the market losses to justify passing the bailout.  In case people weren’t aware, investing in the stock market means inherent risk.  Using the bailout to prop up stock prices seems a tad short sighted, doesn’t it?  Perhaps our problem has nothing to do with decreasing housing prices.. and the root lies in our systemic aversion to accountability?

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1. Sarah & Tim - September 30, 2008

Amen! Glad to hear someone who has some sense about what is going on. I was also relieved that the bailout failed. Nice comment about the inherent risk involved in the stock market in the first place. I subscribe to an independent financial magazine you may enjoy called Monetary Intelligence Magazine. They give it to you straight. You can actually request a complimentary issue at http://monetaryintel.com. Enjoy.

2. DT - October 1, 2008

I would like to see the bailout plan pass (without the tax cuts/extra cluases). Perhaps I would feel differently if I had more details about the plan. I figure it comes with a cost of $100-200 billion which I find tolerable. I think the govt can get 40-60c on the dollar for the bad assets assuming Paulson actually does a reverse auction rather than buying at the “mark to model/maturity” price (if there’s collusion among the banks to prop up asset prices then it’d perhaps be time to look into criminalizing things and going after the execs). That plus $100 to $200 bill in equity if they take (at least) majority stakes in the banks that are bailed out make the cost huge… but not _that_ huge.

good luck on your boards (though luck doesn’t have that much to do with it :-P)


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