Welcome to the fringe

Feel free to peruse my musings and commentary, and feel free to leave a comment if you like, dislike, or are just amused by something.
I try to cover a little bit of everything, but right now Politics holds my fancy.. Especially since the Rockies are playing so lousy at the moment.

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Wednesday, September 24, 2008

The Sark Economic Bailout Plan

I've been away for a while as some have suspected :) But I felt compelled to get this up at the request of some folks in a land far far away.

The administration is proposing $700,000,000,000 (thats what billiions looks like, or $2500 per every man, woman, and child in the U.S.) bailout of the Wall Street companies that hold the significant portion of CDS (credit default swaps) the little pieces of paper of sub-prime mortgages that the Investment banks have been trading with each other at ever decreasing value until they are nearly worthless, thus the inability to use them as collateral for future business operation or other loans.

What does this actually do? It provides a place (a Resolution Trust type entity) for these Wall Street banks to essentially dump suspect mortgage paper and get them written off the books (which will actually have to be written off causing significant losses) and free up generally acceptable mortgage backed securities (the non sub-prime) paper to be used as normal collateral for inter bank loans. The dumped "bad" mortgage paper is still "bad" and suseptable to mortgage defaults and foreclosures, but the big Investment banks are relatively unscathed, and we the working tax payers get stuck with the bill eventually. I say eventually, because the governement right now is not even concerned about any of the massively growing national debt, and this just adds to it.

Ok, the Investment banks get clear balance sheets, they can use normal mortgage loan paper as collateral, the government and us get stuck with $700,000,000,000 in suspect loans that people can still fall into foreclosure on, and the tax payers get the bill.

Now let's think about this from a what went wrong perspective. Banks gave out loans to people who probably couldn't afford them in the long run, but kept pushing for average and below average earning americans to keep buying houses and the more the banks pushed the requirements lower, the more risky financially capable americans bought into the hype and tried to buy their piece of the american dream. The banks and all their accountants, auditors, and executives should have known better. The Americans who over extended themselves should have known better, but let's face it, the average american doesn't have a CPA degree, or nearly the financial acuem that the banks should have had watching over things. If the people with the financial acuem and fancy banking related degrees thought it was ok, why wouldn't the average Jane and Joe out there trying to finally be able to buy a house of their own?

Now what to do. And this is where the Sark bailout plan comes into play.

Take the $700,000,000,000 and PAYOFF those risky mortgages to some degree at the home owner level, say mortgages of $250,00 or less. 50cents on the dollar, or some scaling so that the amount owed by the individuals put their overall financial state more in line with the 33% of gross income rule. Bring the amount of the loan principle down to the proper level, so that the mortgage becomes no longer "sub-prime". Do that with the money and we do more than just save the bacon of the Wall Street big shots, but we actually strengthen the underlying American Economy, by freeing up available consumer spending to nearly the same amount of money. The Wall Street investment banks now have the majority of their CDS converted to "normal" mortgage paper, easily used as normal loan collateral, there isn't nearly as much "bad" paper that needs to be dumped to some "Resolution Trust", and laid on the heads of the ever increasingly burdened tax payer. And the very sluggish underlying economy gets an immediate inflow of non home equity disposible income from consumers which drives 2/3rds of the economy.

Available for PRIMARY home mortgages only

All renegotiated mortgages would be required to have PMI insurance.

At time of resale or refinancing of a "renegotiated" mortgage, the reduction in principle amount must be repaid to the Government

NO Home Equity loans could be made to homeowners of a "renegotiated" mortgage property.

The Sark plan is called "Trickle Up" Economics. And personally, I think it does a better job of solving more than just the one problem of some serious Wall Street Gambling that Tax Payers Anonymous have to end up footing the bill for.

Saturday, June 21, 2008

Dogs at play #1

Wednesday, June 18, 2008

Dealing with government care issues.

Working with government social services programs for the elderly will absolutely drive you nuts. I’m in the process of trying to get my 71 year old mother who has lung cancer approved for Medicaid the last couple of weeks, and I can tell you from personal experience that it can be a nightmare. There is no “single point” of contact that you can get to work with you to navigate the myriad of paperwork trails, working with LTC facilities, insurance companies, and other myriad of government and private groups to get something accomplished.

Somehow, everyone automatically thinks that the “family” can deal with all this paperwork, interviews, and endless meetings to get things done, when in fact the “family” is typically in a situation that they are barely able to deal with the mental and physical aspects of taking care of a elderly family member in need.

So if any of you out there are currently in this position as well, or perhaps you will need to be in the future, my heart felt sympathies go out to you. My only words of encouragement is “keep plugging away at the walls”, and “good luck”. It is a mentally stressful and physically draining experience to have to go through, and anyone forced into the position of dealing with a serious illness of a family member needs comfort and support as well as the family member that is ill. Often, I have found, that the agencies, both private and government, that you have to deal with, forget what the supporting family members are going through, and act as if they are intentionally forcing them to perform 3 ring circus acts to get anything meaningful accomplished.