1. People who get kicked out of their houses typically lose their credit rating. People who lose their credit rating typically are not attractive tenants. People, especially families, will be left in tent cities.
2. Children living on the street will be abused, infirm, unschooled, and possibly die.
3. Eventually the federal government will have to step in to remedy this, which will mean expanded welfare and affordable housing/developments. This will cost significantly more than any bailout now.

I find it interesting that the party who argued so strongly about saving Iraqi children would side with their American counterparts…for once.

Thank you for the most comprehensive assessment of the situation we face, and the most thorough approach to resolving it, that I have seen.

Here’s hoping Congress reads your letter!

=======================
September 22, 2008
An Open Letter to the U.S. Congress Regarding the Current Financial Crisis
John P. Hussman, Ph.D.

In 2006, the president of the Federal Reserve Bank of St. Louis noted “Everyone knows that a policy of bailouts will increase their number.” This week, Congress is being asked to hastily consider a monstrous bailout plan on a scale nearly equivalent to the existing balance sheet of the Federal Reserve.

As an economist and investment manager, I am concerned that the plan advocated by Treasury is essentially a plan to bail out the bondholders of financial institutions that made bad lending decisions, with little help to homeowners that are actually in financial distress. It is difficult to believe that the U.S. government is contemplating taking on the bad assets of these institutions at probable taxpayer loss and effectively immunizing the bondholders (and shareholders) of these companies.

While it is certainly in the public interest to avoid the dislocations that would result from a disorderly failure of highly interconnected financial institutions, there are better ways for public funds to accomplish this, other than by protecting corporate bondholders while homeowners remain in distress.

Consider a simplified balance sheet of a typical investment bank:

…

Again, everyone knows that a policy of bailouts will increase their number. By choosing who bears the losses for irresponsible decisions at these companies, Congress will also choose the scope of the bailouts that follow.

Sincerely,

John P. Hussman, Ph.D.
President, Hussman Investment Trust

Full article

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isn’t what I’m referring to..

Yours,
Sean Crutcher

Posted by: Sean | Sep 22, 2008 10:33:02 AM

past the fact that this is signed by Crutch-er, and is extolling the virtues of Socialism..this should be a good example of the type of ‘help’ we can expect to receive from our foreign ‘friends’..

Lafayette ain’t comin’ to Help this time.

Look, we’ve chewed a lot of Fat on these threads.

ol’ boy’s point, above, about Fascism, is no grade-school hyberpole, rather, it’s closer to the Fact of the Matter than, believe me, even I care to countenance.

towit: “Men occasionally stumble on the truth, but most of them pick themselves up and hurry off as if nothing had happened.” — Winston Churchill

Cincinnatus ain’t coming back, either.

If we don’t know what’s afoot, lend a hand in finding out. Our continued Dalliance, and Disbelief, will land us, like Dilly here, yon Crutcher, singing the praises of his Captors.

It is about Human Action, We must act to create the World we want to leave behind.

We need, not, a lever long enough to move the World, but a thorough understanding of the paths Man has taken, and the will, again, to choose that path less traveled by.

Our American Experiment, the Ideal of Freedom and the Sovereign Individual, was brief, breifer yet v. the whole History of Civilization.

Civilization that began with the mere thought of Human Action, and flowered, through our Actions, thereby inspired.

It was a Radical clique, our Forefathers and their Strong Women, that up and told, the supposed King and his Claque, to FBM.

The Torch of Liberty, that they fueled with the Freedom they fought for, illuminated a path that they hewed, for others follow.

Few did. Now, beset again by a supposed Master (yon’ wizard of FBM(board-feet) and his minions, it is up to us to find hint of that now overgrown trail, that one less traveled by. If we act, and are Hale, if we hack, not pale, and re-clear the trail, We will, see again, that, to which many fail. That of our History, that, our road to prevail.

I’m being only a little facetious — if the problem is that a whole bunch of financial institutions can no longer provide the necessary credit in order to allow for a fully functioning economy, then why doesn’t the Federal Govt. allow for the fast-track creation of a bunch of new banks?

For everyone who owns a piece of the shitpile, too bad for them…..

For that matter, this is making me think that maybe WFC, and other banks that don’t own a lot of the shitpile, ought to be good long-run plays.

wallstreet wizzard, proper valuation depends on the borrowers’ likelihood to repay (plus prevailing interest rates and other market conditions). If some irrational buyer (er, Paulson) decides to pay “above market” for a bunch of bonds, other market potential buyers will merely chuckle. They will dismiss the one-off sale as “not probative of fair value”.

And devaluing the dollar will make potential buyers want higher interest rates and, thus, lower initial purchase prices.

I can’t see how this proposal helps anyone but bankers with existing bad debt.