Come on now, Republicans!

So "rescuing" states is a bad thing? I realize that, blogging from San Diego, I am not exactly a disinterested third party. The California budget is FUBAR. In any case, please humor me as I proceed.

Many States, not just California, are cutting back on EXISTING projects and services due to waining revenues. Isn't it simply "common" sense that Federal assistance would DIRECTLY save these jobs? The revenue is not going to materialize from the ether!

Now, I understand there may be some debate about the readiness for new projects and the contracting red tape that may be in the way of a quick start. However, in the case of existing projects, I don't see the logic in not providing Federal funds to the states!

Come on now, Republicans!

The US Consumer Market is the Most Coveted

The US consumer may currently be down.....but certainly not OUT! It's frustrating to hear "conservatives' talk about the advantages of McCain's plan to cut corporate taxes to rates that are more consistent with the European average. As if that is the key to bringing business to the United States.

This is laughable.

Just as parents will pay more to live in the best school district, corporations will pay more to do business in the US. Why do the conservatives insist on putting our markets on par with the rest of the world? Isn't it bad enough that our blue collar work force is competing directly with the lowest payed workers in the rest of the world.

We need to begin to leverage the immense strength of our market or it WILL atrophy.

Bail Out Concerns

A basic concept underpinning the current bail out proposals seems to be the government purchase of these distressed mortgage-related assets. This seems reasonable on the surface. My concern is how these distressed assets will be priced. In the case of Collateralized Debt Obligations (CDOs), I don't believe an accurate valuation is even possible right now. (IMHO) My recommendation would be to provide "rescue" funds to these banks based on an initial guestimate of value, and then do a future "true-up" of payments once the housing market stabilizes and a better valuation of these assets is possible. We simply should not (can not afford to) overpay these bankers for these assets. This is their mess.

UPDATE: Like most ideas, mine turns out not to be original: IMF Proposal

Bernanke or Greenspan?

My lioness asked me in interesting question this evening: "Who do you like better, Bernanke or Greenspan?" This stopped me cold because the question never occured to me. After a moment I answered; "Actually, I don't really care for either of the bumbs." I told her that I don't like Bernanke because he believes in setting "inflation targets". I told her that (IMHO) this is akin to giving a blind man a target pistol and telling him to hit the bulls eye! The assumption behind inflation targets is that we understand our financial system, it's causes and effects, it's dependent and indepent variables. I think the current crisis is evidence that we really don't understand these things. If you want a sobering read, do some research on Collateralized Debt Obligations!!!

I told her I don't like Greenspan because he rejected the Fed's role in anything but the money supply. Basically he said (and I paraphrase): It's not the Fed's responsibility to react to asset prices. Meaning he didn't give a damn if there was an asset bubble and nobody could present him convincing evidence that there really was an asset bubble. To this I say: YO, GREENSPAN! Get it now?