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Although a good idea, I am convinced this will NOT happen, because the last thing Paulson wants is transparency in the process. .

If this act passes, Paulson will have the authority to artificially assign arbitrary value to papers that the marketplace already valued at zero. His plan is to pay top-dollar for worthless paper, with money borrowed from you, me, everyone else and the next generation. -- That's why he does not want transparency.

In fact, it specifically says it is non-reviewable:

Text of Draft Bailout Proposal:

http://www.nytimes.com/2008/09/21/business/21draftcnd.html?_...

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

How is that even legal?!
It's a law. If the law passes, it's by definition legal.

It could potentially be unconstitutional (perhaps granting this much non-reviewable power to the Treasury Department, an executive branch agency, violates the separation of powers), but I doubt it. Considering all the other power grabs that the executive branch has gotten past the Supreme Court, this one ranks fairly low.

If you're pissed off about the bailout, contact your legislators. It's their job to stop things like this, and they won't do it unless they know their constituents are really, really pissed off about it.

Precisely. There are plenty of private buyers for those papers at 0.08-0.10 on the dollar but the banks are no budging since doing so will render them insolvent.

So Paulson will use the taxpayers' money to buy the papers at above market price, ensuring survivability of the banks, while the taxpayers hold the risk of further depreciation of the papers.

More signs of the greater problem --> A fake, service economy.<br>

Stephen Colbert: "Our children are very generous, they just don't know it yet"

Aflac Salesman: "Aflac depends on continual unsubstantiated growth"

Let's do the math on continual growth. (average us citizen has 1.9 children) A generation is approx 32 years.

Our economy depends, and comes down to 1 thing, and 1 thing only - your and my ability to buy shit, lots of it!

But what is ironic is our economy is at odds with itself, because a service based industry is at odds with a commodity consumer industry.

Just ask yourself (if you are older than 21) What did my dad do when he was 21? (good chance it involved actual labor in which there was a physical product, or outcome) What did I do when I was 21 for a job? (Most like it didn't involve anything physical)

All early signs of an economy that is based on nothing, not backed by anything, currency is relative, and the consumer doesn't have faith in - what doesn't exist.

from my mobile device

that poor guy just typed that whole thing with his freaking thumbs

That was probably my favorite part of the article. I got to hang out with Mark a little bit last week. It was quickly evident to me that he is an animal in everything he does. I have no doubt this was written with two thumbs.
>On the subject of executive compensation, if they need government bailout money, take away 100pct of exit pay and any bonuses. Let them quit if need be.

>If you think you cant find someone else to take the current CEOs place,think again. No matter what number they pick for the CEOs compensation, its more than a lot of very smart people are getting paid elsewhere and those people would be more than happy to take a raise and replace the CEO who just took about his/her company

You can find plenty of smart people for a minimal CEO salary, but not smart people with any sort of executive experience. Some of this is populist drivel.

So we the people can ship eBay about 200 billion in listing fees?
I don't think he meant the government should directly list on ebay; but rather any assets should be clearly listed and auctioned off on the web.

The stock market is already a giant "ebay" for shares in these companies and the market has already voted with its dollars that it doesn't think that the underlying assets are enough to cover outstanding obligations.

Under the bailout plan, I believe that companies will be allowed to keep their valuable assets but get rid of their toxic ones so I don't know how many buyers you will find for that anyway.

> the market has already voted with its dollars that it doesn't think that the underlying assets are enough to cover outstanding obligations.

What obligations? We're talking about bundles of loans. There's some cost of servicing, but they're cash-positive.

We don't know what the default rate will be and we don't know how much can be recovered from forclosures, but do you really think that the folks who paid $0.22 on the dollar for Merrill Lynch's portfolio are going to lose money? (We also don't know whether Ford or GM will pay off its loans.)

I'd happily pay $0.25-$0.30 on the dollar for a piece of these packages.

However, if I'm not allowed to buy these assets for my benefit, why should I be forced to pay through taxes to buy them?

What is it you know that the market doesn't? Why is it no private company was willing to pay 25 cents, but you are?

If you know more about the situation other than a hunch that they'll be worth more then 25 cents, I'm really curious to hear it.

It isn't that "no company" is willing to pay 25 cents, it's that many of the "qualified to buy" companies are unwilling to do so while others are buying as much as they can afford. Me (and you) are locked out.

As to what I know, do the arithmetic with some horrendous default and forclosure recovery rates and see what you think the net present value of these loans is. (BTW - It's not just securitized home loans. There are also corporate bonds that are selling at a significant discount. Some are bargains, some aren't.)

However, in a very real sense, it doesn't matter what I know. If I'm willing to risk my money, why should the govt risk yours?

Well, there aren't enough people (or corporations) willing to risk their money with little to know knowledge of what is going on to do what the government needs to.

You can't do any basic arithmetic where credit default swaps are involved to compute EV. It's to the point where even the people holding them don't know how much they can potentially be on the hook for, but it's a far larger number than any of the mortgages they're based on. A foreclosure rate of even 10% can easily wipe you clean if you're betting 10x on it.

I will totally pay 1 cent for all those "toxic loans". I'm bound to find somebody who will pay at least 1 cent of their loan back. Eventually somebody will pay 2 cents, etc. until you get a fair market value.
Not all of these toxic assets are loans but essentially insurance, i.e. credit default swaps.

http://en.wikipedia.org/wiki/Credit_default_swap

If you bought some of these for 1 penny you would be obligated to pay out money to cover some of these bets that have already gone bad.

It sometimes pains me when people don't understand your humor. I laughed.
Probably a stupid question, but what would happen if you gave mortgagees an option to buy back their own loans at some level of discount?
Depends on the terms - and on who should decide about the discount.
Posts like this are why Mark Cuban is my hero
Can I sell my shares through ebay?