Saturday, Sep 27, 2008
Open letter by John Mauldin to a Republican Congressman
Market Oracle: End of the Financial World- LIBOR TED Spread Flashes Trouble
Best thing you will read on this, for the exceptional info alone, even if you disagree. But call it a Stabilization Plan not a Bailout. He explains how paniced the credit markets are (excellent charts) and the consequences of inaction (a depression). "There is no reason for the taxpayer to lose money. Warren Buffett, Bill Gross of PIMCO, and my friend Andy Kessler have all said this could be done without the taxpayer losing money, and perhaps could even make a profit. As noted above, these bonds could be bought at market prices that would actually make a long-term buyer a profit. Put someone like Bill Gross in charge and let him make sure the taxpayers are buying value. This would re-liquefy the banks and help get their capital ratios back in line." Hold your nose and vote yes he says.
2 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. stillthinking said...
MarketOracle is always a good read. So the banks can't even sell bargain assets, because the price adjustment from the risk of financial armaggedon makes them look expensive. The risk of financial armaggedon is the risk of the bail out not going through i.e. a real risk. Fair enough.
So actually, society cannot let any of these privately owned financial companies fail after all, and the bonuses paid from these companies are made in part from not having to pay for external risk carried by the taxpayer. Bah!
2. Bellwether said...
Similar to what Ambrose Evans Pritchard is saying in the Telegraph. I think a fair amount of this is close to the mark. If the market is going to correct itself it will be via a complete breakdown in the first instance, with disastrous consequences for us all. This is not the time to be idealogical or political, the situation is too desperate for that. Incidentally there will be a brutal recession whatever happens. The notion that we will have Zimbabwe style inflation is fanciful, we are effetively seeing a contraction in supply with no way to reverse it ie everyone is suddenly risk adverse there is not way to change that.
Banks are going bust because we have an accounting system that we apply, hyper inflation tends when there are no rules at all.