Friday, September 19, 2008

Sellling us all short

What to expect when you're NOT expecting...(anything)

Tell me, Mommy, what was capitalism anyway? Did it really exist?


Breathe a sigh of relief if you will. TWO huge up-days in row for stocks. One snatches a huge gain from the jaws of a massive downturn.

The government has a PLAN...is it Plan "A" or Plan "B? Nevermind... It has a PLAN. It will back formerly not insured money market funds... Ride to the rescue of beleaguering bank assets! CHARGE (IT)!!

So are ALL banks deposit now insured too? Or is this this just uninsured nonbank deposits that are insured?

What about folks who lost money in any of the TEN banks that were bankrupt already this year?

As to the short-selling prohibition and its consequences...

How do the folks at AIG and Lehman feel?

How about Merrill Lynch, that jumped into the arms of a suitor because barbarians were at the gate? Or were those the GOOD speculators/short sellers?

Was AIG a rogue insurance company run by irresponsible management using too much leverage, or was it attacked by unscrupulous short sellers...

and, hey, what about Lehman?

If the short sellers are unscrupulous today what were they yesterday and the day before the 'government/SEC' came to its senses??

OOHHMahGod!! Where is the shovel? Is it time to bury capitalism?

Has the 'government' saved the economy or buried capitalism?

I'm confused?

I am not unaware of the danger that the economy is in, but are YOU aware of the danger the economy has just become hostage to?



If the government is going to acquire 'bad assets' who will set the acquisition price?

Is the Fed doing this to avoid the debt ceiling?

Is 1930 really knocking on the door?

Isn't there a better less intrusive way?

YES!!

Let's USE capitalism to dig ourselves out instead of BURYING capitalism
I still think replacing the mark to market rule fore securities with a a rule of discretion would work better since it would take the automatic writes-offs out of the system and allow firms to begin to lick their own wounds. It would let them decide about how to and when to and at what price to dispose of assets when it came to that. Using discretionary pricing ultimately means you open the time horizon for evaluating them. Current rules use today's price as the only one allowable. And in making that a rule the rule itself undermines the asset's value. By opening or unlocking the time horizon you open the way to more possibilities.

Capitalism is often about the difference between the short run and the long run run. Current accounting compresses everything into the short run and that has proved to be de-stabilizing.

An accounting rule change would be FAR SUPERIOR to taking a wrecking ball to capitalism.

For those who think that the government plan is a good idea, just remember it opens the way for government to change the rules of any game in midstream.

I am not unaware of the danger the economy is in. But are YOU AWARE of the danger the economy has just become hostage to?

Ronald Reagan used to make the following a laugh line. " Hi, I'm from the government, and I'm here to help you."

Republican or Democrat you have to be suspicious of such an intrusive plan (is it really a plan or is it a plan to formulate a plan?) by the government sector. Oh yeah everyone wants to be saved, everyone wants a life preserver...including those who already have drowned.

it's become complicated. very complicated.

...and before you buy stocks up the Kazoo, remember that the economy is still weakening.

Where do you/did you/ will you/ draw the line?


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