All financial crisis have one of three issues: Liquidity, Solvency & Capital. The current crisis has all 3. Any plan to help resolve the emergency should be tailored to address all three.

The main problem with most of the proffered solutions is they fail to address all three. Here are some of the better ideas floating around that do exactly that:

• WSJ Heard on the Street column, and NYT Economic Scene both ask: "Why don’t we have a Buffett-like GS deal?"

• Floyd Norris writes: "It is unsettling to see Wall Street firms that only a week ago feared
for their survival hoping to get rich off this program. It needs to be
carefully monitored to keep it from becoming a scandal of its own."

• Barron’s Mike Santoli points out that current banking regulations forbid Private Equity (and SWFs) from buying more than 20% of a bank w/o submitting the whole firm to regulation as a bank holding company. That should be waived to allow more private capital to flow into the system.

 Merrill Lynch’s David Rosenberg suggests that "the Federal Reserve step in as the repo clearinghouse for all term repo trades. For a counterparty-risk based fee the Fed would guarantee that, only in the event of counterparty failure, the surviving counterparty would receive your cash, not the collateral that was posted for the funds, back from the Federal Reserve. The Federal Reserve would own the collateral."

Martin Wolf has 3 suggestions:

  1. Force banks to write down assets to market value, stop paying dividends, and raise new equity. 
  2. Force banks to write down assets and then recapitalize them by converting debt to equity. 
  3. Force banks to write down assets and have the government take equity stakes via preferred stock.

 Joshua Rosner, managing director of Graham Fisher, says price the paper in terms of defaults: "In structured securities, there is no coming back . . . once the underlying collateral defaults, you’ll never have recovery."

• Our own humble 30/20/10 program for private equity funds to get involved in Home Mortgage workouts.

• Miller Tabak’s Peter Boockvar points out that the $40 Billion per year in dividends the 20 largest banks pay should be suspended, and redirected towards recapitalization.

• More Floyd Norris: "The prices paid for assets should be transparent to the public, and
some way should be found to allow others to bid for them, in at least
some cases. That would help to assure that the price being paid was a
fair one."

Arnold Kling says: We don’t need to bail out Wall Street to protect Main Street. All we
have to do is make sure that sound borrowers, especially small
businesses, have access to credit. Banks can do the job, although
regulators may have to reduce capital requirements.

• Jeff Matthews asks: "How is it that Warren Buffett can cut a better
deal with the best-run financial company in America than the U.S.
Treasury can ask from the worst-run financial companies in America?

The Public seems to be very very unhappy with all of this: "Around the country, Republican and Democratic voters are rising up in
outright opposition to the White House plan or, at the very least, to
express concern that it is being pushed through Congress in haste."


Any other good ideas out there?

Category: Bailouts, Credit, Derivatives, Real Estate, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

75 Responses to “Alternative Ideas for Rescue Plans”

  1. leftback says:

    Progressive taxation.

    Add liquidity to the system by reducing taxes at the low end (including the smaller businesses), while increasing revenue by increasing taxes steeply at the high end and outlawing offshore tax havens, thereby reversing the transfer of wealth that has occurred during the rule of the Bush Junta.

    Now that’s what you call socialism…

  2. cptrader says:

    My Plan:

    1. Mandate a 12-1 leverage cap for all financial institutions to take effect within 180 – 270 days

    2. Temporary ban on capital raising by banks – water can’t dilute poison. You eliminate the poison first then add more water.

    3. Force banks, etc to reach this 12-1 leverage cap by selling their toxic assets within 180 – 270 days via a US Govt Auction. The US Govt will be the Auctioneer but will NOT bid for assets.

    4. Any bank that is unable to sell sufficient assets to bring it under the 12-1 leverage cap will automatically be nationalized by the US Govt at a price of $1. All shareholders and bond holders forfeit their assets. This will provide an incentive to the banks/financial institutions to sell these assets.

    5. The US Govt will now hold all the toxic assets to maturity – this will prevent private market bidders from low-bidding in (3) above. Private market bidders in essence are being told, you buy the assets during the auction or you will not have another opportunity to buy the assets, as the US Govt will sieze them at an effective rate of ZERO and then hold them to maturity.

    6. Any bank that falls under nationalization will also have its CEO, Board of Directors and members of the Management committee and all employees directly involved in structuring, trading, purchasing these assets for the past 5-10 years disgorge all compensation earned during the past 5-10 years.

    7. Create standardized CDS products that traded on an electronic exchange. All non-standard CDS products should be liquidated in the OTC market or swapped into standardized CDS products prior to the commencement of the new CDS exchange. The exchange will commence within 180 – 270 days.

    8. New Mortgage Financing Rules: 20-30% minimum govt mandated down payments. Strict Debt to Income limits, etc. These rules must be codified into federal law.

    9. New Credit Card/Auto Finance rules: strict rules on the amount of credit card/Auto finance debt available to consumers.

    This is the plan to address all issues of this mess. Yes there will be pain all around, but it will flush out the poison and set America on strong footing for the future. Most importantly it avoids the inflationary and weak dollar crisis that America will be faced with if the 700B plan goes through and it gets America of the drug called “easy credit”. We need to return to a “Good Cash’ society that lives within its means.

  3. DL says:

    My plan:

    Make taxpayer money available ONLY for those financial firms that are facing bankruptcy, AND which are willing to wipe out stockholders. Also, the bondholders of the financial company in question should take a hit.

    In other words, this option should be somewhat better than bankruptcy for a given company, but only somewhat better.

    Once the government purchases the mortgage-backed assets of such a financial company, that company can then try to raise capital on its own, or else be taken over by another company.

    The result? (a) no moral hazard, (b) those who took too much risk will pay a price, and (c) the taxpayers are not left holding the bag (except to a very small extent).

    Of course, it will mean 2 or 3 quarters of negative GDP. But we will survive.

  4. Isaac says:

    Soros discusses the bailout with some of his own ideas here;

    http://www.ft.com/cms/s/0/ecd19642-8a9a-11dd-a76a-0000779fd18c.html

  5. Justin Dangel says:

    Summary

    The Treasury is concerned that a lack of balance sheet capacity in the banking industry will cause liquidity to dry up for good credit consumer and corporate borrowers. Their solution is to relieve this pressure by helping to recapitalize money center banks by purchasing dodgy, hard-to-value assets. Instead, the fed should intervene directly in the consumer and corporate credit markets that they are concerned about. This could be accomplished either directly, through secondary markets or in conjunction with healthy, well-established retail providers. This plan would be more likely to work, is likely to be profitable and avoids many of the moral hazard concerns with the current Treasury plan.

    Proposal

    The Treasury and the Fed are right to be concerned that a lack of balance sheet capacity at banks could cause serious problems in important end user credit markets. However, they have the solution completely backward. If we are concerned that certain credit markets for creditworthy individuals and firms are in trouble then the solution is to inject capital directly into those markets. This is the obvious solution and has several advantages over what has been proposed by the Treasury Department. While the Treasury has presented a proposal which bails out money center banks, it should instead be focused on primary credit markets that effect consumer and business borrowers.

    Proposal

    1. The Treasury Secretary should specify which primary credit markets are essential to the functioning of the economy. Inter-bank lending and markets not directly associated with consumers are excluded.
    2. The Treasury Department should intervene in these markets either by (a) setting up entities to directly lend to borrowers or (more likely) (b) purchasing securities in the secondary market based on market prices or (c) injecting equity capital into entities administered by financial institutions with distribution capacity that are active in important primary credit markets. There are plenty of retail institutions in the private sector with the ability to facilitate such action; the difficulty in implementing this proposal is no worse than implementing the current treasury proposal
    3. The Treasury should hold these positions until markets begins to function normally.

    Advantages over Treasury Proposal
    (1) The Treasury’s proposal is sensitive to further declines in asset prices; this proposal is not. $700 BN should be enough to clear any market we care about.
    (2) This proposal keeps credit markets open to future worthy borrowers without rewarding those who caused the problem.
    (3) The Treasury’s plan will likely lose a few hundred billion dollars. If liquidity is indeed the primary problem in important credit markets, then the government should make money under our proposal.
    (4) It should be easy to exit – once markets begin to function normally, the debt should be easy to sell.

  6. pmorrisonfl says:

    Ripped straight from Karl Denninger, Market Ticker:

    The problems:

    1) There is no way to value any financially-related firm in the United States as their balance sheets are nearly 100% opaque; until you force Level 3 assets and “off balance sheet” exposures out in the open (this does not require “mark to market”, but it DOES require that you force firms to expose both the claimed assets and their valuation models) investors cannot have an informed opinion of a firm’s true value, or even whether that firm is solvent.
    2) Without caging the derivatives monster you cannot stop a disorderly unwind, thereby making it impossible to know whether you will suddenly get hit with a Cat 5 hurricane of cross-defaults.
    3) Without taking down irresponsible leverage, which the firms have refused to do voluntarily, you cannot prevent failures that result from very small losses in these firm’s portfolios.

    His suggestions:

    1) {Agrees with] U.S. Securities and Exchange Commission Chairman Christopher Cox said Congress should “immediately” grant authority to regulate credit-default swaps amid concern the bets are fueling the global financial crisis.

    2) Rescind the 2004 order that permitted leverage to exceed 12:1. It took only an administrative action to drop the regulation, so you can put it back in force the same way.
    3) Implement the requirement to disclose all Level 3 assets in specificity along with their marking model (in total) every quarter in the corporate 10Qs and 10Ks. This should be able to be done administratively as well, but if it is not, a one-paragraph bill will fix that problem.

  7. K. Keppel says:

    If you REALLY want to stimulate the economy, I recommend the following:

    “THE BIRK ECONOMIC RECOVERY PLAN”

    I’m against the $85,000,000,000.00 bailout of AIG. Instead, I’m in favor of giving $85,000,000,000 to America in a We Deserve It Dividend.

    To make the math simple, let’s assume there are 200,000,000 bonafide U.S. Citizens 18+. Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up.
    So divide 200 million adults 18+ into $85 billion that equals $425,000.00.

    My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend. Of course, it would NOT be tax free.

    So let’s assume a tax rate of 30%. Every individual 18+ has to pay $127,500.00 in taxes. That sends $25,500,000,000 right back to Uncle Sam. But it means that every adult 18+ has $297,500.00 in their pocket. A husband and wife has $595,000.00.

    What would you do with $297,500.00 to $595,000.00 in your family?

    Pay off your mortgage – housing crisis solved.

    Repay college loans – what a great boost to new grads.

    Put away money for college – it’ll be there.

    Save in a bank – create money to loan to entrepreneurs.

    Buy a new car – create jobs.

    Invest in the market – capital drives growth.

    Pay for your parent’s medical insurance – health care improves.

    Enable Deadbeat Dads to come clean – or else!

    How do you spell Economic Boom?

    Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back. And of course, for those serving in our Armed Forces.

    If we’re going to re-distribute wealth let’s really do it…instead of trickling out a puny $1000.00 ( “vote buy” ) economic incentive that is being proposed by one of our candidates for President. If we’re going to do an $85 billion bailout, let’s bail out every adult U S Citizen 18+!

    As for AIG – liquidate it. Sell off its parts. Let American General go back to being American General. Sell off the real estate. Let the private sector bargain hunters cut it up and clean it up.

    Here’s my rationale: We deserve it and AIG doesn’t.

    And remember, The Birk plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam.

    Kindest personal regards,
    Birk
    T. J. Birkenmeier, A Creative Guy & Citizen of the Republic

    P.S. To the above, I would add that the money should be given to U.S. Citizens who actually pay taxes.

  8. DL says:

    What I find totally shocking is that the Congress has not heard from even ONE expert witness with an alternative plan.

    When it came to the question of whether to raise margin requirements on futures traders, the House and Senate held at least a half dozen hearings. Ditto for the Sirius/XM merger.

    But when $700B is at stake, how many expert witnesses do they have? ZERO.

  9. catman says:

    cptrader – That is one big axe! Bravo!

  10. Mark says:

    Barry, c’mon — get serious!

    Throwing money at a problem that is based on lack of transparency? Nonsense.

    We all know what happened, and the fallout is banks won’t lend to each other, or anybody else, increasingly. It has to do with trust. Nobody knows what’s on anybody else’s balance sheets, and they’ve all proven to be deceptive.

    There’s plenty of capital available. The fed window has been open to everyone except drug dealers. There needs to be total openness about asset quality, income quality and credit history — just like in retail lending.

    Everybody knows that — it’s the dirty little secret. Bush/Paulson would rather create fear so they can grab power and enrich their friends. And there’s nothing anybody can do about it. Let’s not kid ourselves.

  11. That Guy says:

    The Emergency Banking Relief Act of 1933 allowed a plan that would close down insolvent banks and reorganize and reopen those banks strong enough to survive. This would restore confidence in the banking system as well as credit availability as solvent banks reopen with the governments “seal of approval” and avoids having to tax the citizens to bail out bad actors on Wall Street as well as avoiding the devaluation of the US dollar. Additionally, insolvent entities can be identified and dealt with.
    http://en.wikipedia.org/wiki/Emergency_Banking_Act

  12. Patrick Neid says:

    Suspend the mark to market rule immediately.

  13. DL says:

    From the CNBC website today:

    THE BANKING SYSTEM NEEDS ANOTHER $500 BILLION to survive beyond the $700 billion rescue plan being contemplated by Congress, said Pimco founder Bill Gross.

  14. Mattie says:

    THE IRS should obtain BONUS FIGURES from the last 10 years from all FINANCIAL FIRMS (and all companies listed on the restricted non short-sale list) and tax all employees, CEOs and executives at 100% retroactivity. Bankruptcy rules should be amended so that these financial folks would be on the hook for these payment indefinitely.

    The funds recouped should be redirected to purchase preferred shares of financial firms and would be called the BONUS RECAPITALIZATION PLAN… all future dividends could then be used to pay for social security in the future.

    Funds could also be loaned to foreclosure victims to get caught up interest free, with the guarantee that this money would be repayed within 25 or at the time of sale of the home.

  15. asearon says:

    American Rescue Bank (ARB)

    If Washington really wants to solve the problems associated with lending not happening, then a new bank backed by $700B of equity is the right solution. Even with a conservative amount of leverage (from the Chinese, Korea’s and Middle Easterns) your talking about $4.2T of new liquidity for new credit/loans. The liquidity would go unfiltered and not watered down directly into homeowners, automobile lending, commercial lending, small business loans, etc. This would ensure that no liquidity from the government would go to fund past problems, executive compensation, pension funds that invested poorly, Bill Gross, Warren Buffet, etc.

    Part of the ARB plan would be a target to privatize the bank (through IPO) within 3 years but at the latest 5 years ensuring real returns for the Government (real way to reduce the national debt rather than adding to it). With the current proposal on the table, in addition to the problem with executive compensation and rewarding people for past mistakes, I see the banks just hording the cash and deleveraging their balance sheets like the experience in Japan (e.g. instead of 20X leverage just moving down to 15X leverage with no additional liquidity for “Main Street”). Ultimately a deep recession will come without a way to keep liquidity flowing.

  16. ftm says:

    I’m close to Cptrader above:

    An RFC for failing firms worth saving.

    Bankruptcy for everyone else.

    Treasury holds auctions for solvent firms wanting to liquidate assets and private bidders wanting to speculate. (no government bid)

  17. Bubbles says:

    How about Mish’s Open Letter To Congress On The $700 Billion Paulson Bailout Plan

    http://globaleconomicanalysis.blogspot.com/2008/09/open-letter-to-congress-on-700-billion.html

    And John Hussman’s An Open Letter to the U.S. Congress Regarding the Current Financial Crisis

    http://www.hussmanfunds.com/wmc/wmc080922.htm

  18. LooksLikeItIsTooLateToWakeUpAmerica says:

    my opinion is:

    There is no alternative to a very deep recession in the USA, Europe and (perhaps not as deep) Asia.

    Long term the most important thing for the USA is to learn to live within its means, spend much less, drive savings rates up, try to get as much of its industrial base back.

    Reform the Federal Reserve along the lines of the European Central Bank: a central bank should care about inflation and nothing else, no growth and employment mandates because this growth mandate is used by the Wall Street mafia to justify excessive money creation.

    Also, reenact a sort of Glass-Steagall and forbid high leverage from anybody with access to the Federal Reserve window.

  19. Adam says:

    Birk, I have some very bad news pertaining to your Plan. Check your math, you dolt. Kind of ruins your plan that every taxpayer only receives $425!!!

  20. Andreas says:

    Art De Vanny (Professor Emeritus of Economics at the University of California, Irvine and member of the Institute for Mathematical Behavioral Sciences) posted the following on his blog http://www.arthurdevany.com/?p=1239 :

    “Everyone will admit that nobody really knows what the mortgages or the securities derived from them are worth. The market is illiquid to an extreme. The proposed bail out makes it rational to wait to unload them to see what the seller can get later. So, the plans being discussed to reinject liquidity to the market are having the opposite effect. It is making the market go away until mortgage holders can see what the Treasury will pay for them later.

    As William Goldman famously said of movies, nobody knows anything when it comes to predicting what a movie will earn when it finally reaches the market. I showed in my book, Hollywood Economics, that the way to solve the problem of unpredictable results is to set the price later when you do know. How is that done? Well, to use the movies as an example, you make contingent contracts that pay based on the revenues a movie earns after it is released. Virtually all the industry’s contracts follow this principle, which I call the Option Principle. Designing option-like contracts lets you pay when you do know.

    It is easy to apply the Pay When You Know option principle to these distressed mortages and their derivatives. Let every holder of these instruments sell call options on their value. Make the options at least 5 years (preferably 10 years) before they expire so that they do not expire before there is time for a return of liquidity to the market. This would give time for the housing market to recover as well. The option would contain several strike points so that investors with different expectations, risk preferences, and current asset positions can choose to cash in at lower strike points for a quick return while others choose to wait for higher returns. At each strike point, the option would pay a percentage of the value of the asset.

    The option would be designed so that the buyer earns a share of the future value of the mortgage security if it rises. The option would be of no value and would not be exercised if the value of the mortgage security fails to exceed the first, lower strike price. The homeowner also should receive a share of the future appreciation. This would give all the parties to the mortgage a share in the future appreciation. Had options of this sort been issued at the initial purchase of the home, the speculative aspect would have been properly separated from the homeowner aspect and this whole mess would not have happened. The homeowner/speculator would have sold all or some of the risk of future appreciation to the market.”

  21. Steve Bowles says:

    I have sent this through to you as an email (not sure if the address on the page actually gets to you but:

    September 25th 2008
    Dear Sirs

    In order to alleviate the current financial market problems, it is important to understand and address the root causes – not just the symptoms and peripheral issues. Topics such as executive pay, bonus schemes, mortgage application fraud, regulatory fraud, credit derivatives and investment mis-selling all need addressing in time, however the primary concern for now must be to stabilise the global financial system and have it reopen for business.

    Key Problem: The unwinding of a leverage based liquidity bubble, leading to a situation where we have “Too many assets – not enough end holders”.

    The fundamental problem we currently face stems from too much credit being advanced that was being financed by ever increasing leverage.

    In order to fully appreciate this problem it is important to understand how the problem developed.

    The Virtual Money Machine

    Banks, Investment Banks, Hedge Funds and others dramatically increased their level of leverage over a number of years – the same equity base was being used to support more and more financial assets.

    The recycling of deposits between institutions created a virtual money machine

    • Entity A would raise $100 and buy a MBS or ABS from Lender B
    • Lender B would lend $100 to the public via mortgages, credit cards etc
    • The proceeds of sales would be deposited back into the Banking Industry
    • The Banking Industry would lend the $100 to Entity A via a money market transaction
    • Bank A would use the $100 to buy a MBS or ABS from Lender B

    This recycling went on relentlessly as long as Entity A kept buying the securities and increasing its leverage.

    As long as Entity A kept buying the bonds, Lender B was under pressure to lend as much money as possible via mortgages, credit cards etc because it was ‘selling’ the loans to Entity A at a profit. The current crisis was driven by the Lenders NOT the borrowers.

    With excessive leverage and a timing mismatch between long term mortgage backed bonds and short term funding, the moment the music stopped Entity A was out of business: read Northern Rock, Bear Stearns, Lehman Brothers et al.

    Secondary Implications

    Entity B stopped performing the ‘gatekeeper’ roll of assessing the ability of the borrower to repay, as the risk was being passed onto the buyer of the bonds.

    The unquenchable demand to buy securities and increase the degree to which equity was leveraged resulted in a credit boom. Borrowers were offered enormous amounts of money (this also fuelled the private equity and leveraged buyout frenzy) as the money machine turned, leading to significant asset price inflation. The ease of borrowing enabled people to pay higher and higher prices for houses and other assets.

    3rd Quarter 2007

    The virtual money machine stopped turning. Many institutions woke up and found they had excessive gearing, loans supported by assets of questionable value and an excessive reliance on short term funding.

    Once write-downs began and the focus became de-leveraging, the virtual money machine began to operate in reverse:

    • Entity A turns from buyer to seller
    • The mortgages and loans cannot be ‘undone’ and the prices of the securities keep falling as Entity A is forced to liquidate.
    • Without Entity A, Lender B can no longer make new loans to the public as these cannot be funded via securitisation.
    • The banking industry is awash with Mortgage and Loan backed securities it is struggling to fund.
    • Confidence has been lost in lending between financial institutions due to risk of losses on these securities.
    • This is the liquidity squeeze.
    Current Situation and Solutions

    Two Distinct Problems

    Problem 1: Many home owners paid too much for their houses. Time, inflation and economic growth will eventually solve this problem as long as markets are stabilised and we prevent massive forced foreclosures and liquidations.

    Problem 2: Lack of liquidity in financial markets as too many assets (bonds) are looking for long term homes. There is no single solution to this problem however a number of different processes can aid in freeing up markets.

    Proposed Solutions

    Solution 1 : Accounting

    Key Problem for Banks: Asset backed securities valuation

    Valuations are not reflecting expected losses on the underlying mortgages. Banks are being forced to write down security values at a greater pace than the expected losses are increasing – These additional capital charges are putting further pressure on de-leveraging and also adding to a sense of fear in the public and loss of confidence.

    Solution: Allow banks to create very tightly regulated Special Purpose Vehicles to enable holdings of specified securities to be accounted for using standard credit techniques – not securities market valuations. These SPV’s remain on balance sheet and securities transferred into them stay there. Valuation is linked to default rates and expected losses given default of the actual mortgage pool.

    Role of Government/Industry
    An independent body needs to be established to provide valuations of these securities and mandated loss provision requirements to the holders.

    Advantage
    Banks would be able to write back significant amounts of their loss provisions from these securities.

    Overriding Criteria
    The owner of an asset must reflect actual losses that have occurred from foreclosure and liquidation and make provisions for expected loans currently in default.

    Solution 2: Liquidity in Markets

    Flight to quality and loss of confidence has left banks struggling to raise short term funds and stopped banks recycling funds between themselves.

    Solution: Enable the Central Banks to massively expand their intermediary role. In the case of the USA for example, issue $500 billion (or other significant amount) in 1, 3 and 6 month Treasury Notes and offer the funds raised to the banks using repurchase transactions via tender. This is the same process as existing facilities, just on a much larger scale. Such a significant increase in available funding will ease pressure on banks and LIBOR and generate a significant profit to the central banks. The borrowing will also disappear over time as the crisis eases and equity is raised to invest in MBS’s

    Solution 3: Unwind Tranching

    The tranching of a securitisation sounds appealing in concept, however the reality is that the different tranches simply cannot be priced in the real world. Yes it is possible to say that a senior tranch carries less risk than a junior or equity tranch, however converting this into a pricing method/formula/system is impossible without making assumptions that are unrealistic. This failure is one of the root causes of the current crisis – “Too Many Quants – Not Enough Common Sense.”

    Government Role
    A useful role of a government vehicle would be to facilitate the unwinding of these tranched securities.

    Solution 4: Facilitate a Reduction in Foreclosures

    In order to halt the spiralling lower in property prices and social disruption from foreclosures the process needs adapting. A form of the 30/20/10 proposal by Barry Ritholtz of Fusion IQ should be adapted.

    In essence distressed homeowners are given the capacity to convert a portion of their mortgage into a 10 year zero interest 2nd mortgage. Please see the proposal at http://bigpicture.typepad.com for further details.

    Solution 5: Funding Vehicles to buy MBS’s

    In order to ease liquidity problems we need to create ‘homes’ for the pool of securities currently clogging up financial markets.

    Allow the creation of tax exempt, retail and institutional closed end Exchange Traded Funds to purchase these securities with maximum allowable gearing of 3 to 1. The funds purchase these securities in the secondary market. Income and capital gains are tax free, however investors will wear the burden of any losses, which will be tax deductible.

    Key Advantage: Those that have behaved prudently and saved can benefit from these investments, rather than just footing the bill from tax payer bailouts.

    These will be ‘one-off’ closed end funds.

    Conclusions

    Losses must be taken

    At the end of the day trillions of dollars worth of loans were made to people without adequate assessments being made regarding their ability to repay. Total losses from bad debts will run into hundreds of billions of dollars, however the global financial industry can absorb this if given the time to digest.

    Many people that paid inflated prices for houses will live in those houses and repay the mortgage. These potentially trillions in current mark-to-market losses need never be realised if the system and economy are given the breathing space to function.

    There is no single solution to this problem, however the proposals I have sketched out here will help alleviate the pressures.

    Yours Sincerely

    Steven A Bowles

  22. C. Fischer says:

    Barry,

    Did you miss this too? That we’re going to hand $25 billion to Ford, GM, and Chrysler? They’re using this current crisis to fly way under the Radar.

    http://biz.yahoo.com/zacks/080925/14895.html?.v=1

    Is there anything we won’t bail out? Who bails us out when the government is insolvent?

  23. Grant Case says:

    K. Keppel, the T. J. Birkenmeier plan is off by a factor of 100.

    85 Billion divided by 200 Million is 425 not 425,000.

  24. Robert Fendello says:

    American Rescue Bank

    Asearon seems to be onto a interesting idea. Why should Main Street fund Wall Streets past problems. This is a perfect way to solve the real problem which is to inject liquidity into the system. If you don’t do this, I see serious dilution of OUR taxpayers money to fund 1. executive compensation 2. past problems 3. deleveraging the instutions (i.e. hording cash). It would be pretty easy to set up given all the unemployed bankers out their these days. I’m sure one of the banks would be more than happy to perform the servicing for the new bank. When its time to privatize, ARB could be sold off as one group or as multiple groups.

  25. spudvol says:

    K. Keppel

    85b/200m = $425 not $425,000.

  26. DL says:

    Very simple:

    No pain, no gain.

    Let the recession happen.

  27. Jackson says:

    Why re-invent the wheel? Sweden’s been down this road, successfully. Call them in as consultants.

    http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?em

  28. JT says:

    Let the system collapse and bottom feeders come in and buy up the assets of value and the rest will end up in the trash heap of history. The best answer is that we become a nation of savers again. If we all saved our money and budgeted, we as a nation could laugh at the Wall Street and government during the crisis. The quickiest way to become a nation of common sense savers is to create a life changing event. A financial collapse would do the trick. After experiencing a collapse we all would save for a rainy day.

  29. Jerry says:

    Let’s not forget the root cause here – homeowners defaulting. Everything else dominoes from that. If we weren’t experiencing such a high % of mortgage defaults none of these problems would exist. It’s in the finance industry’s interest to convince us that their problem is what really needs fixing above all else.

    Wrong.

    The structure of our financial system may be a house of cards – that’s a different problem. Nevertheless the house was standing and still would be if house payments were still coming in. The financial industry has a problem but not THE problem.

    Paulson and Bernanke aren’t directly dealing with homeowner defaults. The amount of debt between the mortgage loan principle and the housing stock’s real value must be destroyed. So homeowners stay put with lower payments and those payments flow freely again to the financials. And discretionary income increases.

    It’s like this:

    Root Cause – Defaulting homeowners

    Bagholder – Financial industry

    Paulson’s Plan – Takes the financial industry off the hook – removes their problem debt. They’re then free to seek out opportunities elsewhere around the world.

    New Bagholder – American taxpayers

    Root Cause – Defaulting homeowners – no relief. Simply moved into the laps of tax payers.

  30. Ramstone says:

    Equity.

    Sweden did it, and came out ahead, eventually. Beats the “trust me” approach.

    http://www.swedenabroad.com/Page____77468.aspx

  31. PureGuesswork says:

    My plan is to take a page from the Reagan playbook (for those of you who remember the early 80′s). Govt agrees to pay above market price for “toxic” debt instruments. But these payments will be made chiefly in 5 pound blocks of surplus cheese held now by the agricultural department. Banks can then unload cheese in the open market. Problem is that many European banks might consider the cheese more toxic than the securities they now hold.

  32. JerryN says:

    Similar to asearon’s American Rescue Bank is this plan (http://econospeak.blogspot.com/2008/09/plan-b-how-to-restore-financial-markets.html):

    “…The plan: Create a new publicly-financed, publicly-run enterprise; for the purposes of this description we can call it Fund US. Its initial capitalization would be provided by a Treasury issue. The amount could well be much less than the $700B (or $1.4 trillion in borrowing authority) that headlines the existing plan. This is because the fund would be permitted to leverage up to some reasonable ceiling—say six-to-one. So give it $300B as an initial allocation.

    One initial function of Fund US would be to open a window for the purchase of existing financial assets at fair market value. This is not necessarily the same as the value of the moment, since, by its size relative to the markets as a whole, Fund US would be a price-maker. One possibility would be to honor prices as of September 15, before any general public plan was broached. Another, specifically for MBS’s, would be to use an algorithm based on a decline of the Case-Schiller Index to long run trend. Either way, this would protect the genuine value of financial wealth tied to housing from the cascade of defaults likely to sweep through the private sector.

    The other main function would be to serve as an all-purpose financial intermediary to the US economy and to foreign interests that do business here. It would underwrite existing loans or other contracts, originate new credit and assemble a portfolio of financial assets in a manner consistent with prudent management. On the liability side, it would accept deposits and sell instruments like mutual funds and secondary debt. In other words, it would do what the current system does, subject to greater constraint…”

  33. mock turtle says:

    the 700 billion bailout is enough money

    TO PAY THE ENTIRE MORTGAGE (the entire principal) OF EVERY SUBPRIME HOME OWNER WHO IS IN TROUBLE OF DEFAULT

    we are being robbed by wall street and bush, pure and simple

  34. leftback says:

    @ Jerry: Agree completely, this plan won’t work, it is all about kicking the can down the road. There are some interesting and thoughtful alternatives above that might help.

    In the end the (individual and corporate) savers who didn’t get in over their head will be bailing out everyone from top to bottom (individuals and banks) who took on way too much debt. This is the very definition of Moral Hazard. We know the bailout will proceed because the group doing the bailing is actually quite small and lacks effective representation.

    Looking at the 3-month T-bill yield rise and gold rallying off its lows, it looks as though credit markets are expecting this to get done. We’d better get used to it.

  35. PureGuesswork says:

    One last thing. I have approached Sarah Palin about this cheese for debt plan and her initial reaction was very positive.

  36. leftback says:

    mockturtle: it’s not about subprime. the people in washington only got worried when asset prices started to fall in the jumbo end of the market. you have to remember who they are.

  37. mw says:

    My cousin and I were talking about the bailout plan, and he came up with this CRAZY plan (I mean CRAZY) that we give every taxpayer in america between $10,000 to $20,000 (or more) He said we could find the money by cutting back or stopping the WAR. After I said YOU ARE INSANE, I began thinking… Look at the cars, houses, (a good downpayment) Big Screen tv’s, and WHATEVER you want to imagine people would spend this on. factories would have to open and employees hired etc, etc, … Hmmm….

  38. My plan:

    DO NOT DO THIS BAILOUT OR WE THE PEOPLE will revolt.

    Let them fail. If there is such concern over liquidity and availability of credit to business and homeowners, establish a credit facility to convey funds to the some of the local and regional banks and credit unions that were not culpable in this mess, or at least, less so.

  39. bk says:

    Mr. Bowles, I have read at least 100 different plans. Yours is the best I have seen yet. I think it is a very good start.

  40. Anonymous says:

    I’m sorry, but I don’t see how we have a liquidity problem. We have massive amounts of liquidity generally; look at T-bill rates. The problems are solvency and trust. Our public/private debt continues to hit all time highs; even during this credit “crunch.” If this is a liquidity “problem,” then we are at risk of a liquidity “catastrophe” if liquidity actually were to dry up for real.

  41. Anonymous says:

    The 20% rules for ownership of these institutions should NEVER be relaxed. This is the ultimate height of moral hazard. If ownership gets concentrated (remember when the rules were relaxed on S&Ls?), then those in control siphon funds and direct lending to their own risky projects, all with a de facto federal guaranty on the deposits. This is a terrible, terrible idea. We got into this mess because of deregulation. Please do not suggest that more deregulation will help get us out. There is a structural market failure with large banking institutions (i.e., contagion that makes a self-interested ‘neighbor’ feel forced to bail out the institution), and that is why regulation is not just appropriate but necessary. We as a society are ultimately on the hook and thus we as a society should have a say in how the business is operated.

  42. bk says:

    mw, that would cost 2-5 trillion. We would have hyperinflation and the dollar would collapse. Bad idea…quit thinking

  43. Mike says:

    The only thing that makes me believe that it’s a really good plan is that most Americans are voilently against it.

    Fading the intelligence of the average American is winning trade every time.

  44. Jerry says:

    Mockturtle and Leftback:

    I agree with you both are saying/implying.

    When I first heard of this my thinking was it’s pre-emptive. But I wondered why. It seems they want to quit the game, get their money back and get the hell out of Dodge. Why? Because they see it getting alot worse.

  45. HankP says:

    Barry -

    I’m not smart enough to come up with an entire plan by myself, but I have come up with a list of things that I think should be the components of any type of bailout plan here.

  46. Albert Ottoni says:

    Aaron’s idea on creating the American Rescue Bank is brilliant, and needs to be seriously looked at as a better alternative to Treasury’s TARP relief Plan. With the current proposal on the table, in addition to the problems outlined, as well as the reality of the banks just hording the cash Paulson gives them and deleveraging their balance sheets like the experience in Japan, there is no direct way for Congress to get to the root of the housing price collapse and foreclosure meltdown – ARB does this by directly injecting liquidity and supporting refinance of mortgages stuck in the escalating foreclosure inventory.

    I suspect, at the very least, putting Aaron’s suggestion forward in Congress would flush out true motives behind the TARP plan – which I have always suspected was to bail-out existing financial institutions first, with injection of credit liquidity to american households and small businesses being a distant second, or even third, goal.

    Albert

  47. BlackSwan2008 says:

    Immediately remove the accounting procedure called “mark to market”, which has forced companies to bankrupt unnecessarily.

    Change it to a 3 year rolling average.

  48. BlackSwan2008 says:

    Immediately remove the accounting procedure called “mark to market”, which has forced companies to bankrupt unnecessarily.

    Change it to a 3 year rolling average.

  49. BlackSwan2008 says:

    Immediately remove the accounting procedure called “mark to market”, which has forced companies to bankrupt unnecessarily.

    Change it to a 3 year rolling average.

  50. keefer says:

    My idea: let the banks and other current holders carry the bad debt at “hold to maturity” prices, rather than have the government spend $700bn and carry them at “hold to maturity” prices. It’s the mark to market that’s killing everyone.

  51. BlackSwan2008 says:

    Immediately remove the accounting procedure called “mark to market”, which has forced companies to bankrupt unnecessarily.

    Change it to a 3 year rolling average.

  52. Winston Munn says:

    1. Shock and awe bailout campaign.
    2. Invasion by Fed and FDIC forces.
    3. Hang the CEO.
    4. Install a democratically elected Chairman of the Board.

  53. Brad says:

    First post here, but just had to say that Steve Bowles’ post was excellent. Very well thought out. Thanks.

  54. kurt milne says:

    Re-institute a transcation tax – 0.02% on futures trades, 0.025% on equities. Keep track of cost of all bailouts with interest. Keep tax in place until taxpayer is whole.

    Make wall street pay over time, instead of main street.

    Economist Dean Baker overview here.http://tpmcafe.talkingpointsmemo.com/2008/09/16/medicine_for_wall_street_a_fin/

  55. kurt milne says:

    Re-institute a transcation tax – 0.02% on futures trades, 0.025% on equities. Keep track of cost of all bailouts with interest. Keep tax in place until taxpayer is whole.

    Make wall street pay over time, instead of main street.

    Economist Dean Baker overview here.http://tpmcafe.talkingpointsmemo.com/2008/09/16/medicine_for_wall_street_a_fin/

  56. Chance Gardiner says:

    Liked your video interview with Ms. Jeng of the WSJ this AM, Barry. In fact, it caused me to post here for the first time.

    In addition to liquidity and capital considerations, I suggest Congress consider the POSITIVE “Cash Flow from Operating Activities” at the banks for the last calendar quarter ended June 30, 2008.

    Examples:

    Citigroup $51.7 billion

    Wachovia $10.4 billion

    Washington Mutual $3.0 billion

    Attach a Cap Rate, then ask yourself, “Why the urgency, and why no expert witnesses re proposed legislation?”

    “The Big Lie”?… probably not. “The Big Loot”?… maybe.

    Insolvency” at banks can be precipitated almost any time due to the mismatch in maturities between assets and liabilities. Why is this suddenly a “crisis” that requires our IMMEDIATE attention?… and why is it always an “EITHER DO WHAT WE SAY – OR ELSE VERY BAD THINGS WILL HAPPEN” scenario?

    Fed Chairman Bernanke touched on this issue (as have others here in multiple posts) when he discussed mark-to-market accounting versus hold-to-maturity accounting. As a taxpayer, I am concerned among other things that they will strip out the good stuff and leave us (Again) as the bagholders, sticking our thumbs out on Route 66.

    Disclosure: I have no positions in any bank or other financial services firms, but I am a citizen and a taxpayer.

  57. mw says:

    War in Iraq cost is projected at 3 Trillion+ ( approx 16 Billion per month for Iraq and Afganistan)

  58. VennData says:

    Paulson has determined “it’s” $700B.

    Take the $700B and distribute it to the banks, immediately based on the dollar volume of mortgages, the number of mortgage holders, and the LTV of the loans.

    Each mortgage is written down by an amount (some formula that takes into account riskiness, size, geograghy, principle residence etc) and notify every American of the new – lower – balance on their mortgage.

    The banks have cash (capital.) They pay a percentage of the temporary cash into the CMBS over five years.

    The homeowners all get a reduction by some amount, the banks get a temporary infusion of capital, and the toxic CMBs get some cash flow raising their market value.

  59. mik says:

    “Peter Boockvar points out that the $40 Billion per year in dividends the 20 largest banks pay should be suspended, and redirected towards recapitalization.”

    Not only I should pay to bail out billionare crooks, they want my dividends.
    Why don’t you just take my house, car, bank account and Social Security and be done with it.

    Clearly Masters of Universe need money much more than I do.

  60. debreuil says:

    Alternative idea:

    Do nothing. Just jail people who have broken the law.

  61. Fred S. says:

    Any rescue must extract a fair and balanced amount of skin from the troubled institutions. It must guarantee that unethical behavior will be punished. When you drill down to the basics it really comes down to unethical human behavior at every level.

  62. Fred S. says:

    Make the all sign an agreement that says they would be subject to prosecution under the RICO
    act.

    http://en.wikipedia.org/wiki/Racketeer_Influenced_and_Corrupt_Organizations_Act

  63. obey says:

    My plan:
    Simply have Treasury set up a Credit Default Insurance fund, selling insurance backed by the tax-payer to bring down the cost of borrowing. The fund involves risks but should be largely self-financing. It attacks the problem of the high price of credit and counter-party risk directly rather in a round-about Paulson like manner.

    Perhaps an extension of Merrill Lynch’s Rosenburg’s idea…

  64. Too Much Fed says:

    I believe there is one other way to “recapitalize” the banks, although the banks are NOT the ones that need recapitalized. That would be to “recapitalize” the lower and middle class by causing a wage bubble so that more mortgages can be paid (but not all). End illegal immigration, end cheap labor outsourcing (especially to communist countries), and limit legal immigration, if not end it.

    There is your “worker bailout”.

  65. B. Casey says:

    Washington, and the media seem to be hard of hearing, or almost deaf to the writing on the wall. All over the country, Republican and Democrat alike are saying exactly the same thing. No bailout, period.

    Their constituants do not care about Wall Street. First Bernanke made a lot of noise late at night, then Paulson got involved. Then finally Bush got on tv and started talking about weapons of mass disruption. The people are not buying it. They know Bush and his cronies. They know Wall street as a money trough, but they see too many cows drinking. The only people talking about trickle down on this issue are writing from New York City. The rest of the country says to hell with Wall Street.

    They know of local banks that do things properly. They might not do student loans, but they can lend to worthy projects. People around the country are saying “I don’t need a car loan that bad right now, all those cars use too much gas anyway.” Yes there’s a credit freeze, but those banks involved are, by their actions, showing themselve to not be banks. Switch your bank. Large banks involved with this credit freeze are not puttng the customer first. Put your money in a local bank near where you live.

    That’s the writing on the wall.
    Wall Street can fail. Bush has failed, spectacularly. The election is coming soon enough, we can decide what to do by then. Perhaps a new student loan program bypassing banks with no liquidity.

  66. Greg0658 says:

    JT – “if we all saved our money and budgeted, we as a nation could laugh at the Wall Street and government”

    WE DID SAVE in pensions and 401Ks and played the consumer game like good Americans

    what good is money except for retirement – money is best spent on toys

    WHAT did they DO and ALLOW with our future retirement moneys – spent it creating factories in foreign lands to give us cheaper goods

    here is the claw back story you all are not getting still

    maybe the increased number of consumers will help some commodity players, but I think the cheap labor of foreign lands will keep the factories there producing for their people and us

    so the bottomline free market story is we gotta get our wages down to foreign land standards – that means negotiating government job wages too – my end years are going to suck

  67. Richard Kline says:

    So Barry, easily the best plan I have seen came from James Galbraith. A capsule is posted up by Yves Smith over at Naked Capitalism. Check it out. Radical. Simple. Can be explained to the public. Maximum upside for the system and the public. Full downside for present speculative stakeholders. It would probably work, and could be implemented quickly.

  68. Forget investing in complex mortgage backed securities (which is seen politically as a bailout of Wall Street) and invest in distressed mortgages themselves (which can be sold as a bailout for homeowners).

    The government could offer to buy first mortgages for 50% of the face amount or 50% of the current appraised value of the underlying property, whichever is lower. The loans sold to the government would mostly be non-performing loans. The government could then write down those loans by 20% or 30% and try to get the delinquent borrowers to start making payments again. Whether they did or didn’t, as long as real estate prices didn’t fall another 50%, the government would eventual break even or better on the deal.

    By putting a floor under the price of mortgages, this deal would, presumably, stabilize the market for mortgage backed securities and CDOs derived from MBS. If not, the same financial engineers who put the complex securities together could figure out how to unwind them and sell the underlying mortgages to the government. Since mortgages would be easier to value than the securities derived from them, the government would be less likely to overpay and more likely to turn a profit on the whole deal.

  69. vengroff says:

    Here’s a plan–provide credit by providing credit though convertible bonds, not by buying illiquid assets. Solvency and liquidity will follow, and risk will be lower.

    Are Convertible Bonds an Alternative to Buying Junk?

  70. meme says:

    What the Dems don’t understand, is that the purchase of MBSs by US treasury is NOT A BAILOUT. The bailout is necessary and will come, but should not be announced until AFTER the US Treasury has already bought the MBSs. Otherwise we, the tax-payers, will OVERPAY for the MBSs, and the difference will go to the same banks who got us into this mess.

    In other words, if you announce that you are going to help home-owners refinance their defaulting mortgages at the same time that you announce you are going to buy mortgage-backed securities, the price of those securities are going to increase before you’ve had a chance to buy them. Duh!

    Whereas, if you announce the real bailout (tax breaks, re-financings, etc), AFTER you already own the MBSs, you’ve got a GUARANTEED PROFIT MARGIN. It’s a no-brainer. That profit from owning MBSs can be used to offset the cost of the true bailout. Paulson isn’t a dummy. Let him do his job!

  71. Dianne T says:

    My Plan:

    Don’t use tax dollars…if the distressed collateral that the GOV is attempting to purchase at substantial discounts is secured then let U.S. citizens purchase some too. I can’t afford to pay cash for a bank repo but I have a few thousand $$ lying around…I wouldn’t mind buying some “secured” assests at pennies on the dollar. I could sell these assets later on down the road when the market recovers, make a profit and I would be excempt from paying capital gains taxes on this investment.

    Note: Keep an eye on the FHA loan program. This is the original sub-prime loan and is always the leader in making loans to sub-standard borrowers and then having to foreclose later. 3% down and the money can come from practically anywhere?!

  72. dcismas says:

    RE: Alternative Ideas for Rescue Plans
    Following are details of an alternative proposal Recovery Plan. Tired to hear another one?

    I’m trying to broadcast this idea through the internet. On Feb 17 I sent it to the White House web site (http://www.whitehouse.gov/contact/), but …no feedback so far. I hope somebody will pick it up someday from the cyberspace, before it’s not too late.

    Plan code name: “Cyber-Economy”, or short: CE plan.
    The following it’s a briefly description of a proposed 3-step future recovery plan after the current ARRP will be proven “successful operation, but the patient is dead”. The CE plan it’s based on simulation (attention: not stimulation :-) -based economy in a so-called “Cyber-Economy” space. By the way, how sounds “Simulus plan” instead of “Stimulus plan? It sounds crazy, but – for crazy times- crazy names and even crazier methods.

    How it will work? It’s simple as 1, 2, 3:

    Step 1. The government initiates the mechanism/infrastructure for this program. It may invoke a strategic state department and the “crème of the crème” programmers, to create a powerful internet-based program for involving voluntarily individuals and companies. Participation may be stimulated by the government with “regular” tax-incentive methods. At first stage, it will not be broadcasted until fully developed and tested on a reduced scale micro-economic platform.
    I’m not sure if it will cost a billion, a tenth of a billion or less. You figure out.

    Step 2. The program is launched through the media. Each company willing to participate will login and enter their current operating plan and will virtually step into a virtual 120% OP, describing what they will hypothetically do if their OP would increase to say – 120%. A company may choose to increase their workforce, buy capital plan, increase inventory, increase the expenditures or all of the above decided by their corporate executives. It is also important that government-founded organizations (medical, civil, education, military and others) to order new equipment for research and other capital plan investments.
    Individuals will get recommendations from the CE to invest money in the companies with a high rate of return from the CE database. Everything will be focused in getting a positive feedback in the newly created virtual economy. The Wall Street guys will need to look after new jobs because they cannot speculate anymore. Is Economics a science or a poker game? If there are rules of the economics that can be hard coded, then they will be hard coded and not left at the hand of speculators which may destabilize the trust in the economy and then the economy itself.
    After entering the input in the nation-wide CE cybereconomy, companies will soon see their “virtual”stock rising and the flow of virtual POs from other companies/individuals in the network and will witness improvements in their economic indicators, virtually speaking :-) They may choose even to increase their OP participation if they see a higher return rate. People may try investing again after so many years and see by trial and error if one or another cyber-investment will really work. All – without losing anything. Remember, it’s just a game at this stage!

    Again: this will be all regulated by a strategic state department which will create this huge database. Moreover, this department, based on the input from companies and individuals, will create software-automated “recommended” Operating Plans for every user in the program. Backed-up by other economic growth strategic departments, the “plan” will recommend the optimum growth based on the company resources and the cash-flow of every participant, all based on this simulated “cyber-economy”. Some car manufacturer companies may get a recommended OPs of 120% while some others which will have big government orders for energy sensitive projects, may operate at 200% as already initiated by the ARRP initiative. The numbers used in this document (120%) are just fictive numbers. The software program will look at the input/output slopes of the economic indicators and will calculate automatically the best operating plan for every company registered in the program. It’s expected that all the companies will operate at at least 100-120% of their 2009 OPs and everybody will report profits (including government). If necessary, for a healthier economy, the government may stimulate strategic “nodes” of the economic grid. This stimulus will be a fraction of what it’s on the board now (see ARRP) because the economy will run by itself after the next step which follows, which is the big “CE-day”.

    Step 3. Eventually, if the plan looks healthy from inside and as I said – not too late – and also reaches enough participation, it will be launched on the “CyberEconomy (CE)-day”: everybody will do what they have promised they will do, when they have joined the program. It’s not a “let’s push the button and see what it will happen” like all the stimulus bills. It’s more like “let’s push the button and get on target”. You know what: there will be lot to people who will start investing even before the CE-day just to speculate the momentum. And these will be the last days of speculations.

    No cash injection, no tax rebates and incentives, no dictatorial decisions, no loss of trust in the economy, markets and government, no “wait and see” approach. All based on proven problem-solver solution which is simulation-based decision and why not: a little bit of patriotism.

    Footnote: it will be highly recommended that all the companies will look towards domestic products instead of foreign products. Exceptions may happen and will not be enforced. Foreign companies are encouraged to participate in this program too.

    D.Cismas
    dcismas@hotmail.com
    Feb 24, 2009