

The Audacity of Doing Nothing - peter123
http://blogs.law.harvard.edu/philg/2009/02/11/the-audacity-of-doing-nothing/

======
TomOfTTB
Dear Libertarian Types (of which I consider myself one)

Please stop arguing against the Obama strategy. There’s nothing you can do to
stop it and its failure (if it does fail) will make your point better than if
you wrote a billion blog posts. Beyond that if he does succeed you could write
a billion blog posts saying he was wrong and they aren’t going to convince
people.

One way or the other it’s out of your hands.

 _More importantly_...you have a bigger problem. Right now there are a lot of
people out there arguing that libertarian principles got us into this mess.
That is simply not the case and arguing against that is where you should be
putting your effort. Because assuming President Obama does fail you’ll want
people to be open to libertarian principles in the future.

Fiscal policy is like a game of chess right now and you should be looking
three moves down and not at the very next encounter (which you already lost
almost 3 months ago)

Sincerely,

Tom

~~~
david927
After '89, there were some who said, "Communism didn't fail because this
wasn't /really/ Communism." I answered, sorry, but that's how Communism is
rendered.

There are those now who are saying, "Laissez Faire Capitalism didn't fail
because it wasn't /really/ Laissez Faire Capitalism." I'm answering, sorry,
you had your chance. You can argue on blogs all you want. The experiment has
failed miserably.

Europe is going to come out of this smelling ok, and with it, Third-way
Socialism, where there's a balance between the market and the public interest.

~~~
jamesbritt
After '89, there were some who said, "Communism didn't fail because this
wasn't /really/ Communism." I answered, sorry, but that's how Communism is
rendered.

There are those now who are saying, "American Socialism didn't fail because it
wasn't /really/ Socialism." I'm answering, sorry, you had your chance. You can
argue on blogs all you want. The experiment has failed miserably.

Point being, simply asserting a preferred definition is not a compelling
argument. Whatever it was that was going on, it hasn't been working. Making
one or another particular economic philosophy the bogeyman isn't going to
help, however good it makes people feel to be able to say, "I told you so."

~~~
dominik
Anyone else find it curious (almost) no one argues that "National Socialism
didn't fail because the Third Reich wasn't /really/ National Socialism"?

It's interesting to contrast the utter repudiation of National Socialism after
its defeat in 1945 compared to the ongoing romance with Communism after its
collapse in 1989...

E.g. On a university campus today, it's acceptable to call oneself a
socialist, but utterly unacceptable to call oneself a National Socialist (a
Nazi). Considering the horrors of both, the difference in their treatment in
American academia today is somewhat surprising.

~~~
ahoyhere
> Considering the horrors of both...

The horrors of _both_?

The Netherlands, Switzerland, Finland, Austria, Germany, etc., are all
_horror-ible_ places to live?

------
danbmil99
What the GOP needs to do is punt the social conservatives out of their party
and take the middle to form a coalition. Bring back truly 'conservative'
values such as self reliance, personal accountability etc., but also
acknowledge that society has to function smoothly to avoid market chaos. That
means leavening libertarian ideals with some realpolitik. Pure ideology almost
always fails, no matter which one you choose. What works is starting with some
core principles, but accepting that pragmatic decisions sometimes have to
stray from those ideals.

------
cia_plant
Haven't we just rediscovered that "money management" is basically
pseudoscience? These are the kinds of people who promise to beat the market
using their special models or skills. On average they fail. When they seem to
be doing well for a while, it is because they are playing the Martingale.

When someone says "These people manage $2 trillion", it seems like we should
take it in the same light as "These people are among the most successful
peddlers of perpetual motion machines in the world". Your reaction should be
to trust them less, not more, about economic and financial matters.

~~~
ryanwaggoner
_Haven't we just rediscovered that "money management" is basically
pseudoscience? These are the kinds of people who promise to beat the market
using their special models or skills. On average they fail._

No. While they may fail on average, they certainly don't all fail. There are
some money managers who are truly brilliant and have consistently had great
returns. Granted, these people are few and far between, but that doesn't
negate the value of the entire field.

Using your logic, you could easily make the case that entrepreneurship is
pseudoscience, since almost all entrepreneurs fail, therefore no one should
invest with them or trust them.

~~~
nradov
Are they brilliant or just lucky? And how do you tell the difference?

~~~
ryanwaggoner
That's an entire discussion of its own. My point was that they're not _all_
just lucky.

~~~
mattmaroon
You can't prove that, and even if you could, you couldn't prove which ones
weren't just lucky so the statement is useless.

~~~
ryanwaggoner
Isn't the argument the same for any field? Can't we argue that successful
practitioners in every field may have just gotten lucky, from entrepreneurship
to science to anything else?

Not being able to prove something empirically doesn't mean that it's
automatically invalid, or that we should dismiss it as being unworthy of .
People don't start companies because they can _prove_ that they'll be
successful, and people don't invest in companies because they can _prove_ that
they're going to succeed. They invest because they believe the odds of success
are sufficiently high to justify the risk.

In the same way, I don't think we've _rediscovered_ that money management is
pseudoscience just because most money managers fail to beat the market. That
market is itself made up of people who are trying to beat each other, and
statistically, most will fail and disappear. That doesn't mean that the market
is a failure or that it's "pseudoscience".

~~~
jimbokun
'That market is itself made up of people who are trying to beat each other,
and statistically, most will fail and disappear. That doesn't mean that the
market is a failure or that it's "pseudoscience".'

The trouble is, you can come up with a pretty good approximation of a
portfolio that reflects the "wisdom" of the broad market on your own. Pick one
or a few diversified index funds, follow some guidelines to split up your
portfolio between fixed income and equities (maybe add some real estate or
commodities if you want to get fancy), and you're done. You might get some
suggestions on the particulars of which index fund, or exact allocation
percentages, from a money manager but that's not really adding much value.
Maybe just a one time consultation.

But what if you want to beat the market? Is there someone you can go to and be
confident he or she has a good chance to succeed?

Well, if such a person exists, you probably will not be able to identify him
or her, except maybe if you know as much about money management as they do.
Bernie Madoff is the perfect example here. The people who invested with him
were not able to distinguish his pyramid scheme scam from a good investing
scheme until it was too late. Some of his investors were supposedly pretty
sophisticated in financial matters, too.

So, you can get the average market return on your own, and you probably can't
tell a good money manager from a bad one. That eliminates most of the reasons
for employing a money manager, even if good ones exist.

~~~
ryanwaggoner
I'm firmly in the camp of index fund investing over picking individual stocks
or money managers. Statistics will tell you that you're far better off just
picking an index fund. But that doesn't make money management an invalid field
or a pseudoscience. It just means that it's hard to differentiate between
those with true skill and those who just got lucky.

It seems like the same can be said for venture investing. How do you know
which entrepreneurs will be successful? You don't, so you go off of their past
performance, the market environment, the strength of their idea and their
team, etc, etc. But you also go one step further and try to spread the risk
across a portfolio of investments. Perhaps you should do the same with money
managers? Pick the 10-20 at the top of the field and let them all manage a
piece of your portfolio? Obvious problems here as well.

On a related note, does this mean that venture funding is fundamentally
flawed? That venture funds would be better off just putting their money in
index funds? I have a hard time seeing that.

~~~
mattmaroon
It's not hard to differentiate between those who have true skill and those who
got lucky, it's impossible. The variance is just too high. Hard implies that
if you worked at it enough, you could somehow do it. You can't.

And yes, venture funding is fundamentally flawed and the average VC firm
underperforms the market. LPs as a whole would be better off with index funds.

However, unlike with equities, you can get an edge in VC investing because
results tend to perpetuate themselves. Remember, equities of non-public
companies aren't priced by the market, so they aren't as efficient, and it's
the efficiency of the market that makes beating it untenable. Also there's a
tremendous deal of collusion in private equity that doesn't exist in public
due to regulation. It's actually a mystery to me how they get away with much
of what they do.

The two types of investing aren't really comparable due to that. You could
simply invest every year in the top few VC firms from the previous year and
outperform the market for a long time that way. You cannot do this with hedge
funds or mutual funds, or if you could, you and I would both not support the
notion of just sticking it in ETFs.

------
calambrac
Wait, the people who figured out how to capture all the money out of the
existing system don't want to see that system changed? I'm confused... it's
almost as if they were speaking in their self-interest.

~~~
dmix
If the government did nothing companies such as JPMorgan would nearly go
bankrupt. The investors at the top would be responsible for bringing down 100+
year old companies. On top of destroy legacies, they would personally lose a
serious amount of money.

The difference is that there will be consequences to their actions; they and
the majority of the country will suffer. With that precedent, would it be
likely that it would happen again?

From my impression, the main goal tends not to be whether they can come out of
this with a much better system instead its how the they can reduce the amount
of damage that will be done.

~~~
calambrac
Anyone who's saying "let it all fall down" either thinks that they're outside
of the drop zone, or has a serious martyr complex. Their argument is that
making (other) people just bend over and take it is better for the overall
economy (i.e., them).

I don't think these people should care about destroying legacies (a company
shouldn't be sacred just because it's old, that's pointless sentimentalism),
but it seems that they would care about losing a serious amount of money, so
the obvious conclusion is that they see themselves losing more in the bailout
(the article says as much).

The important question is: do we believe them (they are pretty good with
money, after all), or do we try it another way? I personally think we should
try it another way, but (from my current relatively comfortable observation
post) that's probably more out of curiosity than any reasoned belief.

~~~
dmix
He may not just be outside the "drop zone". You could argue his motivation for
taking that position is because he trusts his ability to rebuild himself in an
free market recovering from the ground up, instead of an economy that is
stabilized by government intervention but has limited growth potential.

Both approaches involved regular people "bending over", either through a bad
economy or through taxes/inflation.

~~~
calambrac
i.e., serious martyr complex.

~~~
dmix
Martyr assumes an ultimate sacrifice. His argument seemed to be out of self-
interest, where he'll ultimately benefit from a different approach compared to
losing everything because he's idealistic.

(I'm trying to avoid a free market vs government debate and provide a
contrarian perspective to the article.)

~~~
calambrac
Martyrs kill themselves because they think they're getting a boatload of
virgins in the afterlife.

Arguing for an action that will bankrupt you because you think you'll rise out
of the ashes like a Phoenix? Seems pretty close to me.

~~~
eds
Uh, no. Martyrs don't often kill themselves, and virgins in the afterlife have
nothing to do with martyrs. But I do (really) applaud your acrobatic
linguistic effort to battle out this point.

~~~
calambrac
[http://www.straightdope.com/columns/read/2329/does-the-
koran...](http://www.straightdope.com/columns/read/2329/does-the-koran-really-
promise-islamic-martyrs-72-virgins)

But you're right, that was a bit lame of me to reach for.

A martyr complex is simply a psychological need to suffer for a cause. If I'm
wrong about that, let me know why, seriously.

------
dilanj
Comparing rudimentary 19th century financial system to present is quite absurd
and misleading. Back then it was a very self contained economy fueled by
production and agriculture. There were no billions of foreign bonds, volatile
currency affairs or even electronic debt transfer, which can practically run
the country bankrupt in a few hours if unsupervised.

I don't think I've seen a more mundanely written and ill-supported essay on
financial crisis at top of HN before.

------
JesseAldridge
'We, the Economists Without Answers, are sick and tired of being asked about
what caused the current global economic crisis and when it might end. The
short answer is: we don’t know. We had nothing to do with its onset and we
don’t know how to end it, either. If we knew anything, we’d be rich and
wouldn’t share the information freely. But we’re not rich. Our asset
portfolios have taken the same hit as those of everyone else. One thing we DO
know is that the economists who claim to know something about the current
economic situation don’t have a clue. In the immortal words of William Goldman
(writing about why certain movies become blockbusters and others bombs):
"Nobody Knows Anything".'

[http://www.facebook.com/group.php?gid=50432051369&ref=mf](http://www.facebook.com/group.php?gid=50432051369&ref=mf)

------
imichael
Fine, do nothing to the guys Greenspun was talking to. A deal is a deal. But
there were also guys selling insurance on those mortgages (in the form of
CDOs). Let's think about them for a minute.

Suppose you start a small company to sell earthquake insurance to people in
California. You make a lot of money, more and more as the years go by with no
earthquake. When the earthquake comes, you can't pay the policy holders.
Should the government bail you out? Is it just too bad for the policy holders?
Or did you commit fraud?

I don't like regulation but fraudulent activity should be illegal. You
certainly can't get away with this with earthquake insurance because the
insurance industry is "regulated". The financial industry needs the same kind
of regulation. Right now there are huge holes.

------
pj
Nothing is exactly the right thing to do.

~~~
kubrick
Isn't that saying "let them eat cake?"

~~~
laut
Please explain how you think it is like the french expression you are
referring to.

~~~
kubrick
French revolution, a certain Marie A. is said to have responded to the
question of the fate of the masses with "let them eat cake". It's paralleled
here by this guy's suggestion that we should just let the market do its work,
human consequences be damned.

------
mwerty
I don't get the first point: Were the banks forced by law to be bailed out in
terms attractive to the government? Or did the CEOs of these banks take
government money because they were the only lenders available.

If it's the latter (which is what I thought it was), these guys should look
for better investments. The only way I see government using force here is by
taxation and devaluing currency by printing more of it. But that's not what
these guys are whining about.

------
mattmaroon
Does anyone else see the irony here? Big corporations, the very pinnacle of
capitalism, are lobbying the government to take control away from the market
that spawned them.

~~~
calambrac
I don't think big corporations are the pinnacle of capitalism; the phrase
"corporate bullshit" exists for good reason. They can be bloated with
bureaucracy, have pockets of people that are paid do essentially nothing, be
wrung through the hands of executives who make a personal killing while the
company goes down in flames. They have a tendency of morphing away from
providing real value and into preserving their own existence by any means
necessary (see: lobbying the government to take control away from the market
that spawned them).

~~~
mattmaroon
I wouldn't claim they're perfect by any means, just as humans are the pinnacle
of evolution yet are still far from it. But they're the final result. They're
the biggest and best (from a survival standpoint) of the ecosystem.

~~~
calambrac
Again, interesting analogy. Big lumbering dinosaurs were the peak of their
evolutionary line, too, but the small rodents are who survived and thrived
after the asteroid hit.

~~~
mattmaroon
In this case the dinosaurs are their own asteroid.

------
darose
Stupidest thing I've ever heard. Man, people just get so focused on their own
narrow ideological view that they can't see the big picture.

He downplays the most important phrase in the whole essay: "investors are
afraid of a prolonged depression". And damn well they should be. As should the
rest of us - very afraid!

He (and the investors he refers to) toss off that prospect like, oh, yeah, boo
hoo hoo - we should all just let the market play itself out, if a depression
comes so be it, and we'll all be better off for it on the other side. But a) I
doubt very highly that we'd come out of it on the other side anywhere near to
as good as we are now, and b) they never give any thought to the actual social
consequences of that kind of policy.

Let me tell you, if the government does nothing, lets foreclosures just run
their course, and lets the banking system collapse it will destroy this
country. Tens of millions of jobs will disappear, tens of millions of people
will be homeless and/or in poverty. Crime will skyrocket. And the risks of the
country descending into either anarchy, revolution, or embracing right-wing
totalitarianism in a misguided effort to restore "safety" will be tremendous.

Duh. Use your head, people! God I'm so tired of jaded rich people dishing out
their out-of-touch laissez faire B.S. It's primarily the fault of laissez
faire government policies that we're in this situation in the first place!

~~~
DanielBMarkham
I guess there goes the "end of the politics of fear"

------
profgubler
I have heard and thought the same thing. Who wants to deal with a market right
now, knowing that any second the government might quickly change the game on
you.

It is like in school, when the kid who started loosing started changing the
rules, everyone else didn't want to play any more.

------
catfish
As a middle class American who paid for my home for 24 years month after
month, who did not speculate, nor took any risk, this guy pisses me off. They
stole my equity. Period. Plain and simple.

It was their fancy methods of making money that stole the money for my
retirement, my children's education, and home improvements. I wish they would
take their 2 trillion dollars and fly to the moon.

These people are scum. Harvard is just a fancy school for thieves. You can
dress up a pig, and its still a pig.

When these folks wanted to make money they changed the bankruptcy laws, freed
up credit, and started charging 30-40 percent interest on credit card loans.

They freed up credit in the home loan markets and allowed speculators to drive
up the price of homes 3-4 times their value. And then when the bust comes,
they cry their eyes out because they are afraid to invest.

They are fear based because the days of thievery are at an end. It sickens me
to see someone post this stuff as if they are our only answer to the future.

The real answer has several components:

1\. Tie our money to a real standard. Gold.

2\. Loan money to middle America from Banks ran by our country and limit
interest earnings to 1 percent. This means housing, student loans, car loans
with a cap of 1% payback for fiat money borrowed to pay for it.

3\. Get rid of income tax. Sales tax only.

4\. Eliminate sales of stocks which do not provide a minimum dividend payment
monthly. You can't pay your dividends, you go bankrupt. Period.

5\. No more funny money games with derivatives, credit swaps, bundling, blah
bu blah. To hell with free wheeling economics. It does not work and it only
helps the greedy bastards that continue to screw us middle Americans that only
seek stability in our futures.

6\. Money = Greed. Control how much any one entity is allowed to own based on
productivity. Cap it based on ability to produce goods, services, or IP. No
CEO should be paid more than 50 times the lowest level employee in the
company. Think we would be talking about minimum wage if this were the law?

7\. Force people to save by taking 1% of all sales tax paid every year and
allocating it to a privatized social security account.

8\. Eliminate Unemployment. If you can print money the way we do, then spend
it on creating government jobs meant to help people. If money is not tied to a
gold standard, then its really just perception anyway. Print it and give it
directly to folks that will use it to live better than poverty levels.

9\. Free Health Care for everyone. Pay doctors the same level you pay a money
manager and the doctor shortage is gone in 6 years. HMO's? Private medicine?
How do you justify this in the worlds richest country with 42 million men,
women, and children, not able to afford it?

It is only a matter of time before we eliminate money entirely. 500 years? A
thousand? One day nano tech and robotics are going to completely eliminate
labor required to fulfill our basic necessities. Star Trek Communism will
replace this greed driven economy.

Live long and prosper...

------
josefresco
Easy to say "let them wiped out and reset" when you have lots of money to
invest and want to get back to making even more.

------
earl
Oh please. Contracts get modified in bankruptcy all the time -- in fact, the
inability to modify mortgages is the exception. In a standard business
reorganization all contracts are capable of being modified by the judge or by
consensus of the creditors. There's really no good reason for homes to be an
exception and it's one of the more direct ways to keep people in homes.
Frankly, this is probably better for all of us considering the massive
overallocation of resources to housing investment and the current existence of
too much housing stock. Either we help people stay in them and they cover a
percent of the mortgage or we kick them out and sell the house to... oh wait.
Yeah. I'm more scared of the knockon effects of allowing a massive devaluation
in housing than the potential knockon effects of judges modifying mortgages in
bankruptcy just like they modify all other obligations in bankruptcy.

Further, Phil was talking to people with $2 TRILLION to invest? Um, maybe, but
that's 15 percent of US GDP. Pretty rare air there, and the idea that all
these people (and perhaps Phil, too) weren't simply talking their book is
nonsense.

~~~
newt0311
"Oh please. Contracts get modified in bankruptcy all the time -- in fact, the
inability to modify mortgages is the exception. In a standard business
reorganization all contracts are capable of being modified by the judge or by
consensus of the creditors."

Way to go on comparing apples and oranges. Bankruptcy does lead to modified
contracts but the process of these modifications has been known for decades.
It is well known and bankruptcy law has been relatively stable. If Obama et
al. decided to change bankruptcy law every month in ill-defined ways then you
will see the same cry for the same well-justified reason: the government
induced uncertainty is far more harmful as compared to the benefits.

"There's really no good reason for homes to be an exception and it's one of
the more direct ways to keep people in homes."

Pure bullshit. There is an excellent reason to have special rules regarding
housing when it comes to bankruptcy and mortgages. Namely, if lenders are
assured that their claim to the property will not be removed during a
bankruptcy, the loan is a lower risk loan and will therefore result in lower
interest payments. Historically, this has been correct. The current housing
glut is partly due to the over-exuberance of bankers (for which they should be
allowed to go bankrupt) and partly due to government action like Fannie Mae
and Freddy Mac which subsidized housing for years, excessively loose monetary
policy which reduced the price of debt in general (and since housing is
already is nice market for debt due to bankruptcy law, this hit housing very
hard), community-reinvestment act and friends, etc...

"Frankly, this is probably better for all of us considering the massive
overallocation of resources to housing investment and the current existence of
too much housing stock."

So houses are overvalued. Yeah, but the problem lies with the other
congressional regulation which indeed needs to go down the drain but now we
are dreaming.

"Either we help people stay in them and they cover a percent of the mortgage
or we kick them out and sell the house to... oh wait. Yeah. I'm more scared of
the knockon effects of allowing a massive devaluation in housing than the
potential knockon effects of judges modifying mortgages in bankruptcy just
like they modify all other obligations in bankruptcy."

Um... either way, the value of houses decline. Just that one way, home owners
are still stuck under what is possibly crushing debt and we have just
established a precedent that Irresponsible debt = GOOD and by implication
Responsibility and financial planning = BAD and in a society which already has
too much debt, do you really want to do that? In contrast, with the other
path, we allow the banks to do what they do best: deal with mortgages.

"Further, Phil was talking to people with $2 TRILLION to invest? Um, maybe,
but that's 15 percent of US GDP. Pretty rare air there, and the idea that all
these people (and perhaps Phil, too) weren't simply talking their book is
nonsense."

Um... the US economy has ~$150 trillion of capital (by some reliable counts.
This is a difficult variable to determine). GDP is how much that increases.
You do realize that $2 Trillion is nowhere close to what these people will
_earn_. Furthermore, the second part is ad hominem (which is not complete
unjustified as these people rely heavily on their reputation in the article).
Still their basic point that investors are scared shitless of an overly active
(and in this case, confused) government. This has actually been demonstrated
in the past. In particular, it is very interesting to look at investor
confidence surveys during ~1938 (when FDR was Mr. Anti-Business) and ~1942-3
(when FDR was Mr. Win-The-War). Investment and gdp numbers also closely
follow.

Lastly, this is not the first time that I have heard this sentiment.

Look here: [http://www.smartmoney.com/investing/stocks/government-
interv...](http://www.smartmoney.com/investing/stocks/government-intervention-
instills-chaos-not-calm/) . Whats really interesting about this article is
that it was written in September 2008. The article predicts that as long as
government keeps meddling in the markets, prices will remain low and
uncertain. Lo-and-behold, a forward looking prediction that came to be true.
Admittedly, this could be coincidence but then again this is the most
plausible thing that I have seen in the last 6 months of this entire affair.

~~~
earl
Don't be histrionic -- Obama isn't discussing changing bankruptcy law every
month. This is a single change. Further, it resolves some nasty agency issues
where securitized mortgages that can't be reasonably modified -- the servicing
agencies lack the rights -- or won't be modified, because the servicing
agencies don't get paid for modifications, which is an extremely expensive
process.

And yes, lenders blah blah bah lower risk blah. How's that working out for
them? The fact is (and nobody is disputing this) homes are overpriced. Home
prices will fall. How far and how fast is a matter of direct interest to most
people in the nation, particularly other homeowners. Measures we can create to
prevent overshooting on the downside are probably worthwhile. If we can get
people to cover a large portion of their mortgage debt, the nation as a whole
is probably better off -- fewer bank defaults (and those are your retirement
and insurance funds at risk), fewer fund collapses (again, your retirement and
insurance and etc were invested into those CDOs), fewer foreclosures, fewer
disrupted communities, higher home prices for non-foreclosed households, etc.

The whole idea that we could just foreclose and the bank could get their money
out hasn't been tested with a crisis like this. In some communities in socal
and Florida, 50% of home sales are foreclosure sales! The bank is going to
recover what -- probably well under 50 cents on the dollar in this case.
Finally, the whole bit about a judge changing the terms of the mortgage does
prevent people from being stuck under crushing debt -- that's the point!

Finally, the author of your link is, well... stupid. Very briefly: Bear
Stearns was rescued because if they failed, they'd take all the other banks
with them via intertwined obligations. We need banks to act as financial
intermediaries in all sorts of transactions... no banks, no credit markets, no
ability for people and business to borrow, no economy. Fannie and Freddie got
bailed out because, well, amongst other reasons China told us to. And when
somebody owns more than a trillion dollars of your debt, you need foreign
central banks to buy another trillion or two in 2009, when they say jump we
get to say how high sir.

Now look -- you appear to think that I'm happy with this situation; like other
people, particularly those of us that don't own homes, I'm pretty pissed off
about the whole thing. But the time for preventing this was in 2000- maybe
2005, and now what's done is done and the best we can do is ameliorate this
for as many people as possible. That pretty directly implies the government
should do their best to stop the rapid home price falls... the prices will
fall no matter what, but the more they fall in real instead of nominal terms
probably the better off the nation will be.

Finally, prices in the markets aren't low and uncertain because of government
meddling -- prices are low and uncertain because most banks are probably
bankrupt, we as a country are sitting on enormous piles of bad debt and nobody
can figure out whom and how bad, and btw, the entire world is entering a
severe recession. Simultaneously. From China's imports that plunged this
month, to the US, to Korea, to England and W Europe, it's hard to find any
bright spots in this economy.

~~~
cturner

        The fact is (and nobody is disputing this) homes are
        overpriced. Home prices will fall. How far and how fast
        is a matter of direct interest to most people in the
        nation, particularly other homeowners. Measures we can
        create to prevent overshooting on the downside are
        probably worthwhile.
    

You're doing that trick of naming some facts everyone agrees with (houses are
overpriced) and then zooming into a strange conclusion as though it's a
logical flow (intervention into a market correction).

------
Allocator2008
I have an idea. A public - private (government - investor) fund to buy toxic
assets from banks was proposed as a way to get banks stable again. Why not
have something like that but entirely private? No tax dollars involved. In a
sense the investors buying into that would sort of be "taking one for the
team". But it is like with high-risk jobs like fixing a telephone wire or
something one can get hazard pay, incentives should be structured for those
investors willing to take one for the team. Like FDIC insured "coupons" or
something. So if I am an investor buying into the "toxic asset rescue fund" I
can buy say a 1 million dollar "coupon", redeemable after some reasonable
number of years at some reasonable but attractive interest rate (say 3%). And
it is FDIC insured. So I am others like me buy a bunch of "coupons" in this
toxic asset rescue fund. The money goes into the banks to help them stabilize.
The assets bought are worthless and may not even be tangible, but the fund
managers for this rescue fund can try and sell off or profit from the assets
as best they can, but even so, they will probably be in the red still, but
that doesn't matter so much. In 10 years when the coupons are redeemable, the
banks will have money again, and the FDIC can insure the redeeming of the
coupons. The fund can be managed basically by bank managers for the banks who
are benefiting from it. All the government has to do is insure the coupons
being bought to get enough investors to be confident enough to join the fund.
But in 10 years hopefully the banks can pay back the coupons and the Feds
won't have to pay any insurance out anyway. The toxic assets are the cancer
eating the banks, which is eating the economy so it is imperative this be
taken care of, in order to increase liquidity. The rescue fund proposed is a
good idea. I'm saying why not make it all private. Keeps the burden off the
tax payers, and still provides a way for banks to cover their asses.

------
Allocator2008
I have an idea. A public - private (government - investor) fund to buy toxic
assets from banks was proposed as a way to get banks stable again. Why not
have something like that but entirely private? No tax dollars involved. In a
sense the investors buying into that would sort of be "taking one for the
team". But it is like with high-risk jobs like fixing a telephone wire or
something one can get hazard pay, incentives should be structured for those
investors willing to take one for the team. Like FDIC insured "coupons" or
something. So if I am an investor buying into the "toxic asset rescue fund" I
can buy say a 1 million dollar "coupon", redeemable after some reasonable
number of years at some reasonable but attractive interest rate (say 3%). And
it is FDIC insured. So I am others like me buy a bunch of "coupons" in this
toxic asset rescue fund. The money goes into the banks to help them stabilize.
The assets bought are worthless and may not even be tangible, but the fund
managers for this rescue fund can try and sell off or profit from the assets
as best they can, but even so, they will probably be in the red still, but
that doesn't matter so much. In 10 years when the coupons are redeemable, the
banks will have money again, and the FDIC can insure the redeeming of the
coupons. The fund can be managed basically by bank managers for the banks who
are benefiting from it. All the government has to do is insure the coupons
being bought to get enough investors to be confident enough to join the fund.
But in 10 years hopefully the banks can pay back the coupons and the Feds
won't have to pay any insurance out anyway. The toxic assets are the cancer
eating the banks, which is eating the economy so it is imperative this be
taken care of, in order to increase liquidity. The rescue fund proposed is a
good idea. I'm saying why not make it all private. Keeps the burden off the
tax payers, and still provides a way for banks to cover their asses.

------
kubrick
It must be nice to be so rich that you can afford to think this way.

------
dublinclontarf
Who is John Galt?

~~~
Allocator2008
Here is to whatever retards down voted this comment. If you do not happen to
get a literary reference do not cause others to suffer from your ignorance.
You parasites are not worthy to be on the same f*in planet as John Galt.

------
donniefitz2
We are going to learn, one way or another, that government can't fix our
problems. Government causes problems, they don't fix anything.

~~~
calambrac
Anarchy, dawg. Right on.

Anyways, I'm reminded of the time in kindergarten when I brought my piggy bank
to school for show-and-tell, and dropped it like a stupid fucking clumsy five-
year-old. My teacher, a government employee, glued that shit back together
good as new. So, anytime you find yourself glum about the ineffectiveness of
government, about their chronic inability to fix anything, please remember my
piggy bank and take heart. They fixed that good.

