1. whiteknight said...

.. of the black variety.

3. handle_it said...

“We’ve also dealt, effectively I think, with the issue of effective oversight, with home ownership preservation, as well as executive compensation."

Ahhh as well as the suits are being looked after eh :o)

5. plato said...

'Mr Paulson wants to create a federal-backed fund into which troubled bank can dump distressed assets. The banks are to sell these mortgage-backed bonds at a discount to the fund. Mr Paulson hopes that once the market recovers, the Treasury will be able to sell the bonds back into the market and recoup taxpayer funds. He is also hoping that once the banks are able to rid themselves of such assets, they will begin lending to one another again and America's capital markets will return to normal.'
Fat Chance!!!!!

Let's wait and see the details of this deal. I expect as long as they include the clause : (You may not get back the whole of your investment.) It will be ok to do the deal.

7. dohousescrashinthewoods said...

I'm in for the gold club.

I'm due a spot of capital soon, so whilst everyone is getting high on the market bounce and (hopefully) gold is languishing, I'll be looking to increase my holding in preparation for the decline when it starts to go mainstream that 700Bil is but a sniff of what's needed.

9. gardeniadotnet said...

@bellweather said... >What doesn't emerge from comments is any sense of alternative solutions to the crisis...

That's because there aren't any solutions at the moment (there are too may unknown variables), and believe me, I'm looking.

However, when the post-capitulation dust settles, this site looks like being a primary source of information for advice on the way forward.

11. sold 2 rent 1 said...

Bellweather,

The solutions can only be viewed once you have starred into the abyss.
Accept fiat money is finished
Accept capitalism is finished
Accept materialism is finished
The future is then very bright indeed.

13. gardeniadotnet said...

@s2r1...

Accept fiat money is finished Probably
Accept capitalism is finished Possibly
Accept materialism is finished Unlikely
The future is then very bright indeed. Don't know

15. gardeniadotnet said...

>Bobby Fischer, former world champion chess player, was once asked to find a way out of a chess situation that was presented to him. He looked at the board and said "I would never have gotten into that mess in the first place" and didn't attempt the task.

Reminds me of the old joke:

Visitor: Can you direct me to Newtown?
Local: Well, I wouldn't start from here.

17. drewster said...

Also for another tried and tested alternative, see this article:

NY Times: How Sweden Solved Its Bank Crisis

A banking system in crisis after the collapse of a housing bubble. An economy hemorrhaging jobs. A market-oriented government struggling to stem the panic. Sound familiar?

It does to Sweden. The country was so far in the hole in 1992 — after years of imprudent regulation, short-sighted economic policy and the end of its property boom — that its banking system was, for all practical purposes, insolvent.

But Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing.

Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.

That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.

“If I go into a bank,” said Bo Lundgren, who was Sweden’s finance minister at the time, “I’d rather get equity so that there is some upside for the taxpayer.”

Sweden spent 4 percent of its gross domestic product, or 65 billion kronor, the equivalent of $11.7 billion at the time, or $18.3 billion in today’s dollars, to rescue ailing banks. That is slightly less, proportionate to the national economy, than the $700 billion, or roughly 5 percent of gross domestic product, that the Bush administration estimates its own move will cost in the United States.


But the final cost to Sweden ended up being less than 2 percent of its G.D.P. Some officials say they believe it was closer to zero, depending on how certain rates of return are calculated.

The tumultuous events of the last few weeks have produced a lot of tight-lipped nods in Stockholm. Mr. Lundgren even made the rounds in New York in early September, explaining what the country did in the early 1990s.

A few American commentators have proposed that the United States government extract equity from banks as a price for their rescue. But it does not seem to be under serious consideration yet in the Bush administration or Congress.

The reason is not quite clear. The government has already swapped its sovereign guarantee for equity in Fannie Mae and Freddie Mac, the mortgage finance institutions, and the American International Group, the global insurance giant.

Putting taxpayers on the hook without anything in return could be a mistake, said Urban Backstrom, a senior Swedish finance ministry official at the time. “The public will not support a plan if you leave the former shareholders with anything,” he said.

19. bystander said...

"Hopes rise as Americans agree to rescue the banks"

..........I think you'll find that most Americans vehemently object to the plan to bail out the rich financial whizzkids, to the detriment of each and every taxpayer. The Times is fast becoming a VI joke. Is there a single broadsheet, tabloid who tells it like it is?