Thursday, September 25, 2008

Comment by Ed giobbe on the Financial Crisis

President Bush's speech to the nation on Wednesday was an excellent summary of the current financial crisis and what needs to be done.  The President, as well as the Secretary of the Treasury and the Chairman of the Federal Reserve have told us that immediate, decisive action, on a massive scale must be undertaken to prevent further financial panic and economic collapse. They have put forth a plan which will restore liquidity and confidence to the financial markets.  This plan is not a $700 billion expenditure by the Federal government.  It is a purchase of illiquid mortgage assets from financial institutions by the government which will sell these assets in an auction process.  This will allow these assets to be sold in a more orderly way to establish a price point and avoid fire sale prices or no prices. The taxpayers will very likely suffer very little or no loss and may even make money. 
 
The consequences of no action or delay are monumental. Prolonged severe recession, much higher unemployment and a deflationary spiral leading to a further drop in house prices will almost surely occur. We face the greatest national crisis since the Second World War and the Great Depression.  It is no time for partisan politics, political posturing or economic philosophical debate.  Warren Buffett, one of the most astute financial managers of our time said if the proposed bill by the Secretary of the Treasury does not pass, "We will fall over a precipice". 
 
We are at this sorry state for the following reasons:
  - overly lax lending practices by financial  institutions encouraged by Congress in order to make
    home ownership more affordable
  - a massive regulatory failure
  - the creation of enormously complex mortgage products which no one really understood or 
    correctly valued

If your house was on fire, you want the firemen to put the fire out and save your house, not to be debating who was to blame or why better equipment is needed.  So it is in the current situation.  Let's take immediate action to restore confidence and liquidity to our financial markets.
We can then make the necessary changes to assign responsibility for the current situation and make sure it doesn't happen again. 

Call or e-mail your Senators and Representatives and demand that they act on the proposals made
by the Secretary of the Treasury and the President.  It is a matter of the utmost urgency.
 
Sen. Lindsey Graham (202) 224 5972
Sen.Jim DeMint         (202) 224 6121
Rep.J. Gresham Barrett (202) 225 5301
 
Posted by at 10:17 PM
Labels:

6 comments:

  1. Dick,

    My experience tells me there is ALWAYS more than one solution to a problem. The rub lies in the ability to evaluate more than one plan, and to have some element of trust in what is being submitted.

    This entire problem revolves around the lack of faith in our government as a whole, and the past performance of our congress that has put themselves first and the country second.

    I am sending you a copy of a 15 point plan that offers another way, and makes sense to me. There are some conditions to Paulson's plan that scare me, and contain avenues that add to the problem.

    Yes, the system is broken. Our greed, concern only for one's self, the lack of understanding by the people in general, and virtually no involvement by the voters, except to cry for change, leads to a path none of us want to experience. We need full disclosure on all levels to truly start in a better direction.

    Your letter is a beginning, and try to get as much participation as possible.

    Respectfully,

    Walter Lamb
    PS The 15 point plan coming by another email WWL
    ReplyDelete
  2. Here is the link to the 15 point plan referred to by Walter Lamb in the previous comment.

    http://www.investmentu.com/IUEL/2008/September/Plan-to-End-the-Credit-Crisis.html
    ReplyDelete
  3. Here is Peach's plan:

    Give each American $1 million dollars. They will pay off their loans, invest in the market, and shop.

    The cost of my proposal is $300 billion vs the $700 billion bailout.

    Each of those individuals will pay taxes on this windfall. Nearly half the $300 billion will go directly back to the government in taxes.

    Use that $150 billion and give that to Wall Street with the requirement that investment firms and banks capitalize 100% of their assets.

    I'm only half kidding with this proposal. Hah!
    ReplyDelete
  4. Not every economist thinks the sky is falling. Walter Williams (professor of economics at George Mason University) covered the situation quite well in his article "The truth about the economy" Augusta Chronicle, Sept. 24.

    As former New Englanders, who buy everything for cash, except for our four houses at 20% down and 15 years to pay, we have no sympathy for the foolish . Social Darwinism is alive and well.
    Dick B.
    PS: Quoting Warren Buffet is like interviewing the fox "guarding" the chicken coup.
    ReplyDelete
  5. THE IDEA IS GREAT.........ANOTHER BUSH PLAN......NO PLANS FOR THE FUTURE OR ANY "HOW DO WE MAKE IT WORK"

    HANK FORD
    ReplyDelete
  6. Mr. Giobbe needs to run for Congress, because one Congressman that represents Aiken voted against it and the other one Mr. Wilson voted for it, thank you Mr. Giobbe and we should thank Congressman Wilson as well for atleast making a positive effort.
    ReplyDelete

Subscribe to: Post Comments (Atom)