The one thing that struck me was this sentence:

“Calling the market stupid is as productive as calling reality stupid, even though you could very well be correct.”

I understood that to mean something like: “What’s done is done.”, “Water under the bridge.”, or even, “Let’s leave the past in the past.”.

QUESTIONS:
Why must we NEVER ask, “What went wrong? Why must we NEVER ask, “Who is responsible?” In other words, why must we NEVER ask for accountability?

I think it is because everything that we have been told about how the market works is a lie. What if Wall Street is not composed of our brightest and most productive citizens taking huge risk for huge reward? What if Wall Street is composed of criminals involved in criminal acts that would make Vito Corleone blush.

Sound accurate? How about this.

What if OUR IDEOLOGY is an enabler to the many crime families that live on Wall Street?

Go to hell you say? We don’t have an ideology you say. What we have are principles (but you bsjones are too dumb to tell the difference!). No, bs, you are wrong. WE HAVE A POLITICAL PHILOSOPHY!!! Reagan’s philosophy. “Government IS the problem.”

O.K., I get it. We conservatives are never wrong. When government power grows our freedom is diminished. Expanding the scope of government reduces my power to choose etc…

Just remember, the criminal elements in Wall Street want you to believe just that. It serves their interests to have government out of the way. Wall Street does not want any countervailing power to slow them down by asking questions or putting up barriers. They want to do what they want to do, when they want to do it, as often as they want to do it, regardless of the consequences for you and everyone you know. They would prefer you to think, “Where would America be without Wall Street?”

Good question.

Where would we be without Enron?
Where would we be without Bernie Madoff?
Where would we be without World com?
Where would we be without Henry Paulson, Timothy Geitner, Robert Rubin and the genius of Allen Greenspan?

(Don’t tell me these guys party affiliation. They belong to the party of ME. Don’t tell me these crooks are our government. They are the crooks who bought the government from BOTH PARTIES. Sadly, YOUR government was sold for the equivalent of a few freezers full of steak.)

Of course, Wall Street must still have TARP. Just don’t ask them to forgo a bonus. They are our most productive citizens. Don’t believe me? Ask Neil Cavouto.

Yes, Virginia, I said EVERYBODY knows what this stuff is worth. Under Capitalism this financial garbage is worth what the market will bear. If nobody buys what is being sold, the price is
lowered. If nobody buys what is being sold, lower the price again. Repeat this process until what is being sold is being purchased. IT IS SO SIMPLE. It is the IRON LAW of supply and demand. It’s called market forces, capitalism, the “invisible hand” allocating resources in the most efficient manner possible.

The only real question is who will “take the haircut”. Will it be the 1% that has 19% of the taxable income. Or will it be the rest of us?

You only get one guess.

An economy is like an ecosystem in that it responds to a complex feedback system, and a myriad of variables. The very idea that government has the “solution” is foolish to me.

Which I suppose, goes to my objection to a government that’s the fixer. It’s not the idea that government cannot have a positive influence; it’s the idea that government has the solution.

I would suggest the work of Volterra to you on this. Certainly government can mandate the numbers of supply and demand, but it cannot control the subsequent interactions.

Regards

I could not understand most of it but what i could get is that financial institutions are hopelessly stuck in trying to figure out how much their assets are “truly” worth. Given the fact that the Government is going to throw atleast another 700 billion, they are probably waiting to see if they could get the Govt to buy their assets at the highest price possible.

When they finally realize that they are not going to get the Govt to buy the toxic assets at the value they want, they may begin to act on their own.

The problem with being oversold is that you can always get more oversold. So I wouldn’t be oversold, if I could help it. Of course, short sellers will arrange to borrow shares they consider overvalued and then may or may not sell them. If the price drops, they would normally repurchase shares, return them and pocket the difference. However, they may just choose to exercise an option.

Investors who believe the VIX is signaling a trading low will give a thumbs up to asset sales for re-pricing purposes. It does not mean a permanent signal to purchase derivatives, but could be a meaningful indication to stock up. What to stock up on is the question. This is not a reason to panic. Credit default swaps should pick up the losses.

In order to insulate unprotected assets and capitalize on the chaos, a new CDS trading platform may be suggested and quickly instituted. This will regulate transparent pricing mechanisms inherent in the insolvency.

Got it? Jeez, dude, it’s not that complicated.
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By the way, all this talk about catastrophe makes me want to crawl under my bed. I’ve got kids though, so I have to act calm and mature. What an actress I am becoming. Good thing we’ve got Rick to solve our problems or else I’d be a wreck.

This is why the “let ‘em all fail and start over” solution may be the only thing that has a hope of working.

Here’s his post:

http://derivethis.blogspot.com/2009/02/whatcha-gonna-do-when-11-no-longer.html

I would say that the more banks try to avoid the pain of actually figuring out what their losses are, what their assets are truly worth (which i think they know but wont acknowledge) the more they are digging themselves into a very inflexible situation.

I dont quite understand/know this - How much of these bank bad assets affect the average bank customer’s deposits/holdings ? (i.e. assuming that the FDIC actually works)

My guess is that banks have restrictions/regulations on how much of their account holders money they can use to make investments - So the bad assets of the banks should not hurt the average customer a whole lot but mostly the bank’s profit margin. Is this true ?

If it is true, then the banks have to take the hit. If it isnt and customer deposits are seriously endangered then nationalization is inevitable.

So, the question is - what approach should conservatives take to this problem other than the idealogical one of taking responsibility for personal mistakes ( this attitude is so out of fashion now)