” • Asset prices are declining.”

Anyone have any idea on how much risk remains in the boomer asset meltdown theory? This theory has been around for a while now and basically says an asset price meltdown happens when the boomers retire and start selling their investments to younger generation, who are both a lot less numerous and also a lot less rich. Have we had that meltdown now or is there some more of it still to come?

AIG wrote CDS on CDO’s, couldn’t pay out, and so Tim Geithner believes the taxpayers should make good on the bets of Goldman Sachs. Merrill Lynch. Morgan Stanley and non-US investment banks. This would include paying out speculators. $85 billion plus $40 billion plus who knows how much?

Why? Why not just chide these IB’s for not doing proper due diligence, as they have to folks who were suckered into buying their fraudulently rated toxic sludge? They made billions selling this garbage, and now they want taxpayers to pay out billions on the insurance, too? This cannot be true, can it?

Why does Geithner believe taxpayers should pay off Wall Street speculators?

And how then is Obama change you can believe in, unless the change is some combination of coin?

I mean the world of banking is soooo opaque. It’s amazing how they have successfully hid behind the facade of respectability for so long. The opaqueness is what has got them into trouble (inter bank trust loss) but it is a large part of its success as well. I mean if more people new how flawed the system is, international banking fiat currency, fractional reserve banking and interest, they would lose all their credibility. It’s like John Law’s South Sea Bubble all over again.

Even now the Fed and the Treasury won’t say exactly whats going on with the Banks and the Tax Payers money they are spending.

Would it be cheaper? I haven’t seen any detailed analysis. If it would indeed be cheaper, then I’m all for it. (But I have my doubts).

This is no doubt true. But the Fed isn’t willing to provide any details, and so we are left to speculate as to the actual gap between prices paid, and present value. I suppose the motivation of Fed officials is that they don’t want to foster a sense of panic on the part of the general public. And they may be afraid that there’ll be runs on banks if they provide bank-specific details.

Those are scary numbers, and I talked last night with the builder who built our horse barn. When this was finished last May, he had 15 men working for him. Last night I asked him how his business was doing, and he says he has 5 workers now, and there is enough business for the 5 for about 8 weeks. I also related this weekend about another friend who builds equipment for the trucking industry has laid off 50 of his 150 employees in the last 2 months…and he told me Saturday that it appears they will go bankrupt in May, the longest he can reasonably hold out. Tough times for everyone.

http://www.nytimes.com/2009/01/20/business/economy/20builders.html?_r=2&ref=business

Banks Foreclose on Builders With Perfect Records