Frank hits it on the head

Posted on 12/9/2008 by Al Swearengen

Bailout:

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6 Responses to Frank hits it on the head

  1. caveat bettor says:
    12/9/2008 at 5:55 pm

    Good thing Frank’s comments on “rolling the dice” with Fannie and Freddie subsidies to unqualified borrowers came before the YouTube Age.

  2. Al Swearengen says:
    12/9/2008 at 10:07 pm

    Was the TARP a success? No…but Fannie and Freddie didn’t enter this problem until the end. The CEOs of both had the law (debt/capital ratio raised legislatively) and their contracts (larger portfolio = more stock options/higher bonus…Should this be legal?) pushing to exactly where they left off before the feds followed through with decapitation.

    Economics has been incorrectly understood and implemented for a generation. That’s where we’re at…in the institutional arena, this bottom line analysis of what took place between 1986 (I place the mark at when Volker was fired and Greenspan took the helm) and today is becoming a dead issue. The data tells me that 2009 will be a year of corporate defaults and rotten existence for many.

  3. John Rove says:
    12/9/2008 at 10:34 pm

    You might be right. I see a lot of corporate failures which may not be a completely bad thing in a few years but it is going to be painful for the next few years.

  4. Al Swearengen says:
    12/9/2008 at 10:38 pm

    Fallout from the bubble is a slow wave…it will keep on moving.

  5. John Rove says:
    12/10/2008 at 1:40 am

    I was reading an article about how unrealistic it is to always expect twenty percent returns on investment and how that leads to bad business decisions. I think we are living through that right now.

  6. caveat bettor says:
    12/10/2008 at 4:32 pm

    The TARP may or may not be a success, but that is hard to measure. The fact that bank failures, employment, and depositor solvency compare favorably to the 1930s may be a clue.

    But yeah, Schumpeter was right, and the longer we bailout and subsidize, the longer it takes to touch bottom, which means the more jobs will be destroyed.

    Peeling the bandaid off quickly has its benefits, too. Just not political ones.

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