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

China, 100 years behind!

Based on the Melamine scandal, it seems China and its bourgining capitalism is about 100 years behind us in learning the importance of consumer protections in the market place. I suppose Upton Sinclair's The Jungle is not required reading in China.

Globalization, Multinationals, and Sovereign Wealth Funds

Just sharing some concerns about the path the world is on relative to Multinational Corporations and Sovereign Wealth Funds. For those of you don't know about Multinationals, there is a growing number of large corporations that describe themselves as "without nationality" (for more information just Google it!). They are global corporations that leverage their ability to source goods and services from the most efficient places on the planet. They are a significant component of the globalization of the economy. We are also seeing the the growing prominence of Sovereign Wealth Funds (Google them too, if needed). In the possible "fire sale" of assets that could be coming as a result of the current economic crisis, SWFs could end up with a very significant share. Has anyone thought about the possible ramifications of this? So far, SWFs have not imposed their wills on the companies in which they invest, however, this could change. Multinationals effectively blur the economic borders of physical countries. SWF currently have little transparency. Could a situation arise where all the wealth we're transferring to the middle east could come to haunt us through "globalization"? Could anti-American-backed SWFs put America at an economic disadvantage through accelerated outsourcing or other means? On the other hand, could concerns such as those expressed here spark protectionism here (and in other countries) that could also impact the global economy? I don't pretend to have the answers, but I hope someone other than me is asking these questions!

The Trifecta of Horror!

Sean Hannity interviewing Sarah Palin followed by Karl Rove commentary! Thank you Fox News!!!! :-)

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?

Strange Beliefs for a potential VP! - Assembly of God

Please read carefully the beliefs of the Assembly of God denomination. I have reservations about a vice president who believes in literal translations of the Book of Revelation. Do we want this person to be a heart beat away from control of our nuclear weapons? I for one, do not.

While the Assembly of God is not Palin's current church, she was raised in this chuch and only recently switched to a non-denominational church.

The Pickens Plan