Can you believe there is still talk on what to call this stupid bailout package? Is it a bailout? Or an asset transfer? Invest in America Plan? I am seething with the latter, Invest in America? Reminds me of Operation Iraqi Freedom, or the Dept of "Homeland Security," which was just another bureaucratic layer to do the job the CIA and FBI didn't.
Moving along....
The text of the "I took out a stupid mortgage and my real-estate agent ripped me off and my government mortgage company stopped working with prudence and my investment banker capitalized...'PLAN,' known to the uninitiated as the Invest in America plan, is now readily available and we can all vote tomorrow on whether we, the American Citizen, want to fund it. Oh, strike that. We really don't have a say.
Is it that much to ask that in 2008 we can somehow capture the consensus of the American people and if there is something like 2/3 against the largest bailout in history, maybe we reconsider?
Back to the text:
1.) We are establishing yet another layer of crap in Washington. This time, its called "Office of Financial Stability." Listen closely....financial stability is GREAT, but its not the goal of a free market economy. So like I have said before, you can't have a capitalist system in the the context of a socialist government. No commingling, they don't work.
2.) "Designating Financial Institutions as Agents of the Government." These banks might as well go private. No shareholder in their right mind would invest in a business that has a government agency pulling the strings. The government is not good at making money, and no, I highly doubt the packaging of this package, with the "we can actually make money from this plan," will play out. And even if the government does make money from this plan, are you expecting a check in the mail? Let me know when it comes.
3.) "Prevent unjust enrichment of financial institutions." This statement alone is going to make it harder for people to get rich in America, which takes away from the American Dream. Because, and quote me on this, at some point over the next 10-years we are going to see some guy who comes up with a great way to make money on Wall Street in court debating how to define "unjust." I recently saw a 15 page court document with a summary ruling discussing the meaning of pollutant with respect to a power plant proposal. And, do you all remember in 2002 when we sat there waiting for the SarBox CEO sign-off deadline? "Oh no, how many CEO's will be unwilling to certify their financials?" (Actually, that last point has nothing to do with anything in point 3, but I wanted to throw it in there. It does highlight, however, that government intervention has never done anything but create more government jobs and cost you and me more money...)
My only question is whether I should go buy a home today and not make the payments? That's what this bill incetivizes the innocent to to do because its our only way to cash in on the "I took out a stupid mortgage and my real-estate agent ripped me off and my government mortgage company stopped working with prudence and my investment banker capitalized...'PLAN.'
Why are we all so distracted from recognizing one very important truth that no plan could possibly attack; until home prices stop going down, banks are going to keep shrinking their balance sheets. And when balance sheets shrink, less capital is created and less consumption and investment take place.
So, short of California sinking (start with Berekely please), I don't expect any near-term event that is going to stop the unwind of irrational exuberance in home valuations. Sorry. By the way (and don't get annoyed, I am a big ITS NEVER DIFFERENT GUY), this is no different than what plagued Motorola. They needed a new phone. Not a new CEO. Not a new acquisition. And not a divestiture. A new phone to follow up on the RAZR saves MOT. Anything short is just, to quote Barack Obama, lipstick on a pick.
Moving along....
The text of the "I took out a stupid mortgage and my real-estate agent ripped me off and my government mortgage company stopped working with prudence and my investment banker capitalized...'PLAN,' known to the uninitiated as the Invest in America plan, is now readily available and we can all vote tomorrow on whether we, the American Citizen, want to fund it. Oh, strike that. We really don't have a say.
Is it that much to ask that in 2008 we can somehow capture the consensus of the American people and if there is something like 2/3 against the largest bailout in history, maybe we reconsider?
Back to the text:
1.) We are establishing yet another layer of crap in Washington. This time, its called "Office of Financial Stability." Listen closely....financial stability is GREAT, but its not the goal of a free market economy. So like I have said before, you can't have a capitalist system in the the context of a socialist government. No commingling, they don't work.
2.) "Designating Financial Institutions as Agents of the Government." These banks might as well go private. No shareholder in their right mind would invest in a business that has a government agency pulling the strings. The government is not good at making money, and no, I highly doubt the packaging of this package, with the "we can actually make money from this plan," will play out. And even if the government does make money from this plan, are you expecting a check in the mail? Let me know when it comes.
3.) "Prevent unjust enrichment of financial institutions." This statement alone is going to make it harder for people to get rich in America, which takes away from the American Dream. Because, and quote me on this, at some point over the next 10-years we are going to see some guy who comes up with a great way to make money on Wall Street in court debating how to define "unjust." I recently saw a 15 page court document with a summary ruling discussing the meaning of pollutant with respect to a power plant proposal. And, do you all remember in 2002 when we sat there waiting for the SarBox CEO sign-off deadline? "Oh no, how many CEO's will be unwilling to certify their financials?" (Actually, that last point has nothing to do with anything in point 3, but I wanted to throw it in there. It does highlight, however, that government intervention has never done anything but create more government jobs and cost you and me more money...)
My only question is whether I should go buy a home today and not make the payments? That's what this bill incetivizes the innocent to to do because its our only way to cash in on the "I took out a stupid mortgage and my real-estate agent ripped me off and my government mortgage company stopped working with prudence and my investment banker capitalized...'PLAN.'
Why are we all so distracted from recognizing one very important truth that no plan could possibly attack; until home prices stop going down, banks are going to keep shrinking their balance sheets. And when balance sheets shrink, less capital is created and less consumption and investment take place.
So, short of California sinking (start with Berekely please), I don't expect any near-term event that is going to stop the unwind of irrational exuberance in home valuations. Sorry. By the way (and don't get annoyed, I am a big ITS NEVER DIFFERENT GUY), this is no different than what plagued Motorola. They needed a new phone. Not a new CEO. Not a new acquisition. And not a divestiture. A new phone to follow up on the RAZR saves MOT. Anything short is just, to quote Barack Obama, lipstick on a pick.
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