davelj, if you are truly a pragmatist and thought this through as you say, then why defend a bailout? The govt cannot create wealth, it can merely re-distribute it. We all agree that transparency is required to restore trust, but that if transparency is provided some sort of run on the banking system will occur. This is a seeming paradox. You can’t have it both ways.
I don’t think our leadership is getting smarter, I think they are attempting to buy time and praying that somehow someone will just fix it. I haven’t seen a single criminal prosecution, yet I’ve seen trillions of dollars go down the rat hole. Your supposition that most of the assets in the TARP are money good is shot down by your later admission that your friends who work in that marketplace can’t even accurately value these instruments. Again, you can’t have it both ways.
There is NO SUCH THING as intrinsic value. At any given point a thing is worth what someone will pay for it. The mere fact that until quite recently valuations were ridiculous by any historic measure is by no means a justification for obfuscating their values on the downside. Unless you are secretly backing the socialism for the rentier class that is.
We have a process for transparency its called bankruptcy. I’m all for modifying it to speed it up! I’m all for getting everything out in the open so we can actually figure out what a house should be worth. I’m all for understanding that this isn’t a black and white issue in terms of resolving the interlocking financial dependencies. I cannot however see how any good comes from taking as much private debt as has been issued, and socializing it simply to prevent people from losing their homes.
How exactly would any of this pragmatic approach help fix the underlying problem of our entire economy (or at least the profitable parts) becoming one large leveraged ponzi scheme again?
I’m honestly open to convincing that the path that the Fed and Treasury are taking does the least damage, but so far I haven’t seen any evidence thus, especially when I think upon the cost of the process.
