............."$700 Billion Is Not Enough"
"$700 Billion Is Not Enough," see http://www.forbes.com/personalfinance/investingideas/2008/09/22/paulson-merrill-bailout-pf-ii-in_ml_0922soapbox_inl.html. Part of the article is below.
"$700 billion is not enough. It also doesn't include the hundreds of billions of dollars that the government has already committed in earlier actions to stem the tsunami flooding the markets. The bill for American International Group (nyse: AIG - news - people ) could consume a significant amount of the new request, and the balance sheets of other financial institutions are sitting on trillions of dollars of mortgage detritus.
The Bush administration's request that the Treasury's actions be immune from judicial oversight is unconstitutional. Unless Marbury v. Madison has been overruled while HCM's attention was diverted elsewhere, all actions of the executive branch in this country are subject to judicial review. This request rings with the same troubling echoes of the most abusive aspects of the Patriot Act.
It is another attempt by this administration to use a crisis as an excuse to discard the U.S. Constitution. But the safeguards provided by that precious document are most important in times of crisis, a truth that the Bush administration has failed to learn even after the lessons of Guantanamo Bay and Abu Ghraib that have so severely damaged America's moral authority in the world.
Fears that litigation could delay the purchase of mortgage paper by the Treasury could be handled by the establishment of accelerated court procedures to handle legal challenges. Congress will be abdicating its Constitutional responsibility if it passes legislation with this provision included.
Taxpayers are not going to make a profit on the bailout of AIG, as some prominent commentators have stated in the media. AIG is party to some $450 billion of credit default swaps on all types of financial instruments and holds tens, if not hundreds, of billions of dollars of collateralized debt obligations that were priced at spreads that are now significantly below market.
These assets are highly complex, illiquid and currently worth far less than face amount. They are worth less today than they were last week. Merrill Lynch (nyse: MER - news - people ) sold off similar assets at 22 cents on the dollar.
Unfortunately they were held on Mother Merrill's books at approximately 40 cents on the dollar, and Merrill--now Bank of America (nyse: BAC - news - people )--still retains significant risk of loss with respect to them by financing their sale.
It will require many years to liquidate these assets, and their ultimate value is highly questionable. For prominent commentators to come on television and state that the lion's share of these assets are worth 60 cents on the dollar and represent a bargain to U.S. taxpayers is grossly misleading. "
.......http://www.JoeFRocks.com/
NEM XAU HUI
"$700 billion is not enough. It also doesn't include the hundreds of billions of dollars that the government has already committed in earlier actions to stem the tsunami flooding the markets. The bill for American International Group (nyse: AIG - news - people ) could consume a significant amount of the new request, and the balance sheets of other financial institutions are sitting on trillions of dollars of mortgage detritus.
The Bush administration's request that the Treasury's actions be immune from judicial oversight is unconstitutional. Unless Marbury v. Madison has been overruled while HCM's attention was diverted elsewhere, all actions of the executive branch in this country are subject to judicial review. This request rings with the same troubling echoes of the most abusive aspects of the Patriot Act.
It is another attempt by this administration to use a crisis as an excuse to discard the U.S. Constitution. But the safeguards provided by that precious document are most important in times of crisis, a truth that the Bush administration has failed to learn even after the lessons of Guantanamo Bay and Abu Ghraib that have so severely damaged America's moral authority in the world.
Fears that litigation could delay the purchase of mortgage paper by the Treasury could be handled by the establishment of accelerated court procedures to handle legal challenges. Congress will be abdicating its Constitutional responsibility if it passes legislation with this provision included.
Taxpayers are not going to make a profit on the bailout of AIG, as some prominent commentators have stated in the media. AIG is party to some $450 billion of credit default swaps on all types of financial instruments and holds tens, if not hundreds, of billions of dollars of collateralized debt obligations that were priced at spreads that are now significantly below market.
These assets are highly complex, illiquid and currently worth far less than face amount. They are worth less today than they were last week. Merrill Lynch (nyse: MER - news - people ) sold off similar assets at 22 cents on the dollar.
Unfortunately they were held on Mother Merrill's books at approximately 40 cents on the dollar, and Merrill--now Bank of America (nyse: BAC - news - people )--still retains significant risk of loss with respect to them by financing their sale.
It will require many years to liquidate these assets, and their ultimate value is highly questionable. For prominent commentators to come on television and state that the lion's share of these assets are worth 60 cents on the dollar and represent a bargain to U.S. taxpayers is grossly misleading. "
.......http://www.JoeFRocks.com/
NEM XAU HUI
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