September 26, 2008
The House Republicans and their STUPID plan
You know, House Republicans are half-wits at the best of times. These AREN'T the best of times. Below is a summary of their principles and my comments. I can't tell you how mindnumbingly stupid this little plan is. This is so poorly thought out and it's so obvious that the players involved are completely out of their depth that here's no way to sufficiently ridicule this.
HR : Rather than providing taxpayer funded purchases of frozen mortgage assets, we should adopt a mortgage insurance approach to solve the problem.
McB : Well, that's a bit like fixing the barn door after the horses are already out. Further, all the private insurance has failed and now you want to activate a government insurance plan that doesn't give taxpayers an asset but instead an open ended liability? At least with Paulson's plan, we weren't on the hook for anything more than what we paid for the asset. And those assets are, at their base, mortgages and behind them is real property.
HR : Currently the federal government insures approximately half of all mortgage backed securities. (MBS) We can insure the rest of current outstanding MBS; however, rather than taxpayers funding insurance, the holders of these assets should pay for it. Treasury Department can design a system to charge premiums to the holders of MBS to fully finance this insurance.
McB : Only Freddie and Fannie insure MBS. So you want to now EXPAND the Agencies? As for the people in financial services paying for this, there isn't any equity left, you idiots. DO YOU GET THAT?! THIS IS A BREAK DOWN IN THE MARKET.
All this does is put us on the hook for another $5 TRILLION. As we step in to 'insure' loans that weren't written to the Agencies tough guidelines. It's a bit like insuring someone who drives a car. Without looking at their driving record or claim history. Which is a prescription for open ended risk.
HR : Have Private Capital Injection to the Financial Markets, Not Tax Dollars. Instead of injecting taxpayer capital into the market to produce liquidity, private capital can be drawn into the market by removing regulatory and tax barriers that are currently blocking private capital formation. Too much private capital is sitting on the sidelines during this crisis.
McB : Well, first off you have $2.5-3 trillion in private capital that has simply ceased to exist. There isn't enough out there. The market is functionally UNREGULATED as is and the tax barriers are, for the most part, non-existent. You guys took care of that in 2001 and 2003. There's nothing more you can do to juice and cutting the tax rates that remain won't do anything to achieve your goals in even a marginal way (the taxes are minimal now as is). Just look at a goddamn Laffer Curve, you morons, and plot it out. You're on the left hand side. You can't achieve marginal gains from here by cutting taxes. They're so low that it doesn't change the risk/reward ratio substantively.
HR : Temporary tax relief provisions can help companies free up capital to maintain operations, create jobs, and lend to one another. In addition, we should allow for a temporary suspension of dividend payments by financial institutions and other regulatory measures to address the problems surrounding private capital liquidity.
McB : Uhm. Most companies are running at a loss. We discussed this. As for the dividends, keep in mind that those dividends go mostly to people who are retired. Are you really so nasty, House Republicans, that you'd force a little old lady to eat cat food just to make a goddamn point?
Quit with the taxes. You've already functionally bankrupted us and we can't handle more of your fiscal irresponsibility. Which is why Republicans are now the MINORITY.
HR : Immediate Transparency, Oversight, and Market Reform. Require participating firms to disclose to Treasury the value of their mortgage assets on their books, the value of any private bids within the last year for such assets, and their last audit report.
McB : Smells like the beginning of REGULATION. Well, even a broken clock is right twice a day so it's no surprise you'd stumble across something. HOWEVER, there's not enough here to make a decision on the cost of insuring. Even here you folks are miserable failures. I'd love it if one of you could be given the reins of a public insurance company. So I could short the hell out of the stock. I LOVE profiting from other's stupidity.
HR : Wall Street Executives should not benefit from taxpayer funding. Call on the SEC to review the performance of the Credit Rating Agencies and their ability to accurately reflect the risks of these failed investment securities.
McB : Sounds like you too have a problem with CEO pay but the meat's not there. So this really IS nothing more than a political ploy?
HR : Create a blue ribbon panel with representatives of Treasury, SEC, and the Fed to make recommendations to Congress for reforms of the financial sector by January 1, 2009.
McB : Really? Hey, morons. The panel already exists. It's been meeting with Congress all week. And it thinks your plan sucks balls.
This 'PACKAGE' was put together by people who are intellectually inadequate. WOEFULLY inadequate.
(thanks to Politico)
Posted by mcblogger at September 26, 2008 10:20 AM
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