If there were some sanity IMHO it would focus on jobs and pay. Who’s going to feed the kitty?

As SB has said, we are yet to extinguish the credit bubble.

Consider the logic. If I were considering buying into bank assets, would I consider the rule change a confidence builder? I don’t think so. Run! It’s alive. So the taxpayer is the last payer standing around.

Well bank stock prices can be rationalized higher. Or can they? My head hurts.

This is all so stupid I think my head might explode. Yes, if you juice things enough you can reflate housing. But only at the expense of having it all crash down again once the reflation-induced illusion of demand is stripped bare.

How could it possibly be that we wish to return to the housing market of 2005 that got us in this jam to start with?

Easiest prediction I’ve ever made: This too will end badly.

Another issue which will probably arise at some time in the future will be related to offshore entities set up and administered by the banks and others, which are holding some type(s) of mortgage backed securities. The banks begged the FASB last summer to defer a rule to be implemented late in 2008 requiring entities to recognize offshore entities in their financial statements and thus would be required to take huge write-downs due to the mark-to-market rules. (I think the FASB chairman said he was a bit shocked at information presented by the banks.) These additonal disclosures and write-downs would have reduced the banks’ equity so much that they would have been required to raise large sums of capital to meet the banking reg minimums. These are a bunch of black boxes waiting to be opened, and my guess is there are only an elite few who have been made privy to this information, i.e., upper Corp. mgt. and BOD’s, the FASB and possibly the Fed Reserve, FDIC, Treasury, some Bush & Obama admins, etc.

Also, I think the Office of Thift Supervision forecasts loan losses to increase steadily through the end of this year. Their data also showed that redefault rates on loans was increasing over time. So even with temporary suspension of mark-to-market write-downs, loan losses should continue to rise. Have the banks accounted for some of these yet? I guess we shall see.

The sad thing is that this backdoor had to be created because in this idiocracy of ours it was impossible to communicate to people that this problem will land on the taxpayers one way or another. Whether you destroy pensions, economic growth, create hyperinflation or any of the other wonderful side-effects of “solutions” that screaming idiots put forth – most of the suffering will land on ordinary people. The losses WILL be socialized, however our masters would never allow that the assets also become socialized. As long as the majority in this idiocracy can be scared by buggymen word such as socializing, government and restrictions; just bend over – because it is not a question of whether you are going to get taken, just when and how.

“Every Solution Introduces New Problems”

This is as true as true can be. It applies to everything. Every time someone tries to fix something, they create the opportunity for new problems to enter the picture. They may be delayed a bit so the cause and effect aren’t obvious. But they’re going to appear. A physicist might call it entropy. A cynic might call it the “Law Of Unintended Consequences”.

It doesn’t matter who does what or when it happens. It will create a problem for someone. This will require someone to figure out a new solution which will add new problems into the system. The old problems may disappear, however, as a consequence of the new solution and the new problems.

Now, apply this to TARP, TALF, or anything in the mix at this time. Life will be interesting.