Thursday, September 25, 2008

And Pigs Will Fly



I have deliberately restrained myself from commenting too much on the historic happenings taking place now in Washington, and, by hands-out extension, NYC.

Suffice to say that in my opinion, the U.S. taxpayer is going to take a beating in this. And I'm furious — not surprised, but furious — that we're in this position at all.

One of the things which sets me off: The current spin from supposed "experts" who state that this bailout will actually be profitable for the taxpayer. Barry Ritholtz explains it far better than I:

Big Picture: Latest Bailout Plan Spin: It's a Money-Maker!

The spin reminds me of the classic retail stock jockey. The guy has buried his clients in a series of bad trades, bad judgment, poor risk management -- all motivated by his self-interested, commission-generating trades. The only way out of the money losing mess, pitches the broker, is a big, Hail Mary trade.


Hail Mary, indeed. Let's all buy the "worst of the worst" mortgage securities in existence (we will), pay above-market prices for them (we will), borrow and/or print scads of money to do it (we will), and hope that the housing market recovers and loss rates don't worsen and values magically stabilize and then rise at a rate greater than inflation (they won't).

After listening to a fair amount of local talk radio (OKC-based) the last couple of days, I'm staggered by the amount of misconception that's out there regarding the (latest) bailout. Given what's happened, I suppose I shouldn't be surprised. Some choice snippets I recollect:

"It's just a loan. We're gonna get all our money back anyways."

"Why are we doing anything? Even if Wall Street collapses, eighty-five percent of the folks around here won't notice a thing."

"They're making a big deal out of mostly nothing, is what I think. What happens to Wall Street makes no difference to me."

"If Buffett is buying, then that's good enough for me."

Folks who think they're going to be somehow immune to all this are nuts. Folks who think that Buffett and Gross aren't "talking their book" are naïve.

Yeah, keep believing it: The U.S. taxpayer is gonna make money on this government-run Hail Mary.

Right.

And pigs will fly.

— Posted by Michael @ 8:55 AM








4 Comments:
 

Are those pigs wearing lipstick?

 

Of course. All of today's most fashionable and in-the-news pigs are wearing lipstick.

 

Lets take a trip in the not-so-wayback machine...

"Itís a new paradigm, and everybody who doesnít buy, now, will be priced out forever. Anybody who does buy will be rewarded with a lifetime of riches, as their property will continue its 30% yearly price increase.

Renters, and anybody born in a future generation, will not be able to afford a $10,000,000 starter home in 15 years. They will live in tent cities, and Hondas.

This asset bubble is different than all of the others - it will never slow down, or pop. The gains are permanent." - RE_Agent

It's a brilliant scheme really. Enable lending companies to lend obscene amounts of money on over-valued "assets" with ridiculous financing terms, then when the bill comes due and the wanna-be flippers can't pay it, they'll file bankruptcy. Then the lending companies go cry to Uncle Sam about how they aren't getting the money back and ask Uncle Sam to take up a collection from the American taxpayers. So we pay for the irresponsibility of both the lending companies and those they lended to under the guise of "promoting economic stability".

The sky is falling! No really.

 

This was a great post! There is so much turbulence in the market today, and people need peace of mind more than ever. Which is NOT what Washington is giving us!

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