Monday, September 29, 2008

Ok, Bad to Worse

The more I learn about this economic crisis the less I know.....whew....

Mark to Market - apparently an accounting procedure for valuing *things* in this case *paper*...this accounting procedure is said to *under value* *things* as bad gets worse, akin to a *fire sale* and over value things when bad goes to better... then sandwiched in all this is some sort of ratio of bad debt to assets...so as the value of the debt gets larger, they have to raise more capital or assets to keep that ratio in place...I think... thus the bubble that just keeps growing and which now has apparently popped.

Good grief, what happened to the value of something was, what a willing buy would pay for something a seller had or a willing seller would sell to a willing buyer....that sounds like what the thing is worth to me....

Apparently because of this mark to marketing thing...the fed is going to pay over, 2 or 3 times, what the *paper* is currently valued at...I think...

I suspect the politicians don't have a clue what all this is about, except that if they voted for this bill, they were going to be out the door come election time....

Here's how they voted:

http://www.foxbusiness.com/story/markets/economy/voted-b-rescue-package//

I've got a headache from all this!

Oh and in 2004, Rep Maxine Waters, Rep Frank and a few others all stated Fannie Mae and Freddie Mac were doing just fine - no changes needed...of course we know, the Fed has taken them over as well.

Then there's the Goldman Sachs interest in AIG and Paulson is a former CEO of Goldman Sachs - boy this is really getting dicey - and yes, I sorta feel for Paulson, former CEO of Sachs, boy, is he learning that government works a whole lot different than a private company...apparently most folks are saying his purchase or what ever he did with AIG would make Tony Soprano proud, as in the lending rate is close to loan shark level....

Anyone out there think the average ordinary person is going to make out in this deal?

Then there was something called a short sell ... this is some type of *bet* that a company or investors could make that a company *would* fail, well, that did a number on the stock market...thus Wall Street is now getting a reputation for being Las Vegas East...(the Huckabee Show on Fox - good show if you've not seen it...:)) Sounds like someone *put* too much on Wall Street and the Fed had to *call* it in...ok, I have no clue what puts and calls are....