Charlie Self wrote in
:

On Sep 26, 4:54*am, Gunner wrote:
On Thu, 25 Sep 2008 15:13:38 -0500, Ignoramus23784



wrote:
On 2008-09-25, F *George McDuffee
w
rote:
One of the reasons for accounting is the establishment of the
financial "health" of an organization, one very significant
factor of which is their solvency, or "net worth." *Net worth is
defined as "assets" less "liabilities," and one of the basic
reasons for outside auditors is to obtain an independent and
unbiased opinion as to the accuracy and legitimacy of the assets
[overstated?] and liabilities [understated?].

George, my impression from this bailout story is as follows:

1) There is a lot of hysterical screaming about impending economic
collapse

2) There is not a lot of details about this impending collapse

3) There is no data whatsoever and no listings of various players
and instruments under mortal danger.

The whole story seems fishy to a huge extent, due to extreme lack of
details.

Just who would fail?

By how much would credit contract?

How inflationary would be the effect of flooding the financial world
with more money?

The fact that these details are either not available, or are hidden
from us, suggests that there is a lot more to the story that is not
being told.

I totally do not buy what is going on and cannot support a secret
plan that is being adopted due to secret reasons.

I think that this is another republican ploy, akin to their lying
about "mortal danger from Iraqi nuclear mushrooms". The objective is
to appear saviors right before elections, but let us suffer from
increased debt, more recklessness, etc, for years to come.

i

In other words..."Its all Bush's fault!!!"

Would that be a correct assessment of your position?

Gunner

Probably in large part, though far from totally. As we argue this,
Washington Mutual, the largest bank to fail, has gone belly-up. Odd.
Last week I got three credit card solicitations from those people, a
repetition of three weeks out of four over the past couple of years.

I don't know what could have been done to stop it, but my wife and I
started predicting some five or six years ago that this 15-20% annual
gain in housing prices was out of hand and would soon start to slither
down the chart. For people as fiscally unaware as us to realize this,
it makes one wonder WTF the experts were thinking, and doing, besides
grabbing the loot and stuffing it in their pockets.

The upturn didn't show many in good light, but the downturn is
pointing a spotlight at the worst offenders, a process that is
probably going to take longer than I expect to live to complete.
Unfortunately, few, if any, perpetrators will go to jail.


Well, Charlie, maybe we all should have seen it coming. However, home
prices going up and down is only a part of the problem, I think.
Borrowing more money than your assets are worth is a more direct problem
in this context. The other problem is banks pushing this type of loan
on (stupid) people. But the real problem is selling the mortgages as
securities mixing "good" mortgages with "bad" mortgages and getting
rating agencies (for a fee) to give these (un)securities high ratings.
On top of this there was trading in insurance betting that the mortgages
would or would not be defaulted upon. In essence the whole thing was a
huge Ponzi scheme where future earnings would pay for the current
yields.

Indeed it could be all roses forever, and now it is badly smelling
garbage. WaMu was real good at selling bad stuff, and now is under.
The result will likely be that the personnel in the branch on the NW
corner of First Ave and 23rd Str in Manhattan will have to look for
another job, since there is already a Chase on the SE corner, and
another bank on the SW corner. Other banks are within a couple or three
blocks.

Main problem now is how to get credit flowing again to worthwhile
customers ...

--
Best regards
Han
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