Investors are cautiously waiting for the word on the potential bailout for the banking system that is currently scheduled for tomorrow morning.
I have previously stated that what ever is announced, how potentially ground breaking it is, how it may make bank balance sheets look better, how will it make the banks start lending again? The economy needs to liquefy, meaning credit has got to start flowing to ever day people. Currently the LIBOR to OIS Spread is still suggesting that large investors and institutions are not willing to borrow.
Once they get the details of the bailout, what makes people so sure it can then be pushed through Congress? From looking at the fighting over the Stimulus Bill, this is going to be an up hill battle for Obama and Geithner. Even after getting it through Congress, it will then have the same problems that TARP had...mainly:
1-Implementation
2-Proper Due Diligence
3-Oversight
4-Accurate Pricing of Securities.
What makes investors more nervous, is this particular bailout only deals with mortgage assets on financial balance sheets...We have not even begun to investigate the potential meltdown of the following instruments:
1-Commercial Real Estate
2-Home Equity Loans
3-Credit Card Receivables
4-Auto Loans
5-Student Loans to some certain extent.
Commercial Real Estate is just becoming a problem as Moody's is already investigating the possible downgrade of tens of billions of bonds secured by real estate.
All major financial institutions have already started to factor in double the losses thus are taking double the reserves for credit card losses.
The main idea that has not been discussed or not at the fore front, is a modified mortgage plan for Home Owners, that would enable them to sty in their homes. The government is working on some sort of plan, but its not aggressive enough.
Ok, first, I believe as well that this "stimulus" plan is going to be as useless as tits on a bull.
ReplyDeleteLet's be honest here, over 800 billion dollars of pure crap, is not going to help the economy, banks, jobless/homeless people. I would venture a guess that around 5% of this entire bill/money will actually DO anything. Do you want proof? Watch the video or read the transcript of Nancy Pelosi trying to defend parts of the bill. Granted, the parts she was asked about was immediately taken out by Obama shortly after the press conference but I mean c'mon..seriously.
There is no bipartisanship in this bill, which is why I highly doubt it will be passed, and if it does, I have less faith it will be effective. Most democrats arguements are baseless and fall under the "we gave you money and you messed up, now let us try" category. The problem with this, is that they are not learning from the mistakes made under republican control. Rather, it seems they just want to repeat them, but this time with more money!
I honestly believe we should take some advice from China and invest in a lot more infrastructure. This is the greatest way to create jobs. Will some people laid off have to swallow their pride and learn how to pour cement? Absolutely, but it's better then sitting on a couch doing nothing.
The idea of modifying mortgages to have people stay in their homes is a great, given these people still have jobs. Most people in mortgage trouble are in lower income areas, and those are the people being laid off. Awesome, their mortgage is now $500 less a month...but they have no income anymore so it doesn't really matter..does it?
Ahhh.....YoungApprentice...alas you are preaching to the choir. Too many people your age are too overally idealistic towards our government. As soon as people realize that Congress and the Government are our worst enemy, we all can move ahead and go on with life.
ReplyDeleteAhhh.....YoungApprentice...alas you are preaching to the choir. Too many people your age are too overally idealistic towards our government. As soon as people realize that Congress and the Government are our worst enemy, we all can move ahead and go on with life.
ReplyDeleteOk, first, I believe as well that this "stimulus" plan is going to be as useless as tits on a bull.
ReplyDeleteLet's be honest here, over 800 billion dollars of pure crap, is not going to help the economy, banks, jobless/homeless people. I would venture a guess that around 5% of this entire bill/money will actually DO anything. Do you want proof? Watch the video or read the transcript of Nancy Pelosi trying to defend parts of the bill. Granted, the parts she was asked about was immediately taken out by Obama shortly after the press conference but I mean c'mon..seriously.
There is no bipartisanship in this bill, which is why I highly doubt it will be passed, and if it does, I have less faith it will be effective. Most democrats arguements are baseless and fall under the "we gave you money and you messed up, now let us try" category. The problem with this, is that they are not learning from the mistakes made under republican control. Rather, it seems they just want to repeat them, but this time with more money!
I honestly believe we should take some advice from China and invest in a lot more infrastructure. This is the greatest way to create jobs. Will some people laid off have to swallow their pride and learn how to pour cement? Absolutely, but it's better then sitting on a couch doing nothing.
The idea of modifying mortgages to have people stay in their homes is a great, given these people still have jobs. Most people in mortgage trouble are in lower income areas, and those are the people being laid off. Awesome, their mortgage is now $500 less a month...but they have no income anymore so it doesn't really matter..does it?