>From what I have read, there is a lot of skepticism in the market that an insurance guarantee alone will unfreeze the credit markets. The Jim Jubak article on MSN addresses the issue to some extent. Changing the accounting rules? I don't know.
The reason I like the buyout idea is that it doesn't change any rules of the game. It uses the same market rules that are in place now, and one thing I am definitely wary of is changing the rules of the game for business because of a crisis. Having the government participate in the market as a player is one thing, changing the market rules is quite another. We're in a gigantic mess, and no one really has a solid answer for what to do. I suspect that there are lots of different things we could do that would get us to a decent outcome eventually. So do we trust the very bold but risky plan of Hank Paulson's to buy out distressed assets? Do we merely insure the mortgages, as House Republicans suggest? Should we support a hybrid package of both plans as was hinted at this morning on the news? What about this plan to both insure the mortgages and change the mark to market rules? They might all work, to varying degrees, in limiting the fallout from the banking crisis. What matters most in the short term is that the market believes the plan will be effective, whichever plan is chosen. What will the market believe? On Sat, Sep 27, 2008 at 9:29 PM, Beth wrote: > Why don't we just take the FHA > insurance program and extend it across these sub-primes? What that means is > that you and I are guaranteeing the lender that they're not going to lose > as > much or any money on those mortgages. Now I don't like guaranteeing them, > but I like it better than buying them. In other words, instead of $700 > billion in tax-payer debt going out there to bail out these companies, just > extend the insurance out. You could probably do that for less than $40 > billion. It's like a 95% savings! > ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Adobe® ColdFusion® 8 software 8 is the most important and dramatic release to date Get the Free Trial http://ad.doubleclick.net/clk;207172674;29440083;f Archive: http://www.houseoffusion.com/groups/cf-community/message.cfm/messageid:271157 Subscription: http://www.houseoffusion.com/groups/cf-community/subscribe.cfm Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=11502.10531.5
