On Mon, 17 Mar 2008 16:27:04 -0400, "Eisboch" wrote:


"hk" wrote in message
...


More than a year ago, the financial sector was issuing very serious
warnings about the problems of these sorts of loans, along with the
problems of the sales of subprime mortgage instruments. A more engaged
administration might have expressed enough interest and concern to see
if something needed to be done. Being "cheerleader in chief" isn't
enough when the economy is heading into the crapper.

Eisboch wrote:

The POTUS isn't a babysitter for our personal lives and investments. Or
at least he/she shouldn't be. In a free society, adults are
responsible to research risks, weigh the advice of experts and be
responsible for their choices.

If those collective choices lead to a significant risk to the *US*
financial structure as a whole, then the POTUS should act, as Bush did
this weekend, supporting the sale of Bear Stearns.

I see. Help the rich retain what they have, screw the little guy.

This is the core of conservative versus liberal philosophy differences.

Liberals tend to put the responsibility for their personal welfare on the
government.
Conservatives tend to assume responsibility for their own personal welfare.

The role of the government is to ensure those choices continue to exist.

Absolutely. And, to their credit, that's what the FOMC did today.

For all his reluctance to recognize the base problem, Bernacke finally
got it right. You protect the market because that's the economic
engine for the world. If you don't believe it, check what happened in
overseas trading yesterday and what's happening right now.

The one area I think they are making a mistake is not taking the
current non-performing ARMs off the market and establishing a value
floor. Part of the problem is that nobody can make a market for the
mortgage securities because nobody knows how to value them - the good
is mixed with the bad because of the structured nature of the
underlying securities. To my way of thinking (which oddly is in total
agreement with Senator Dodd and Representative Frank), the best way is
to go to the servicers and value the non performing and performing
mortgages. Take the performing mortgages out of the loop and sell
them to other investors and the under performing or non-performing
mortgages and junk bond them. The taxpayer will win because the
government will be making money.

You know, the odd thing about this Stearns bailout is that the
government is actually in the position of making money off the 30
billion security - about 2 billion in return.

That's how government should work I think in managing markets.