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Diminishing returns in the Nashville debate
October 8, 2008
It dragged. Obama and McCain both concentrated on talking-points that are, by now, tiringly familiar. And the format encouraged them. Neither man was ever asked to develop or elaborate. Moderator Tom Brokaw’s chief concern was time-keeping, as if covering the ground and squeezing in a couple of extra lame questions from the audience was more important than subjecting any of the answers to examination. He might as well have said: “Please state your position on the economic crisis. Thank you. Please state your position on Pakistan. Thank you.” At least Jim Lehrer tried to get them talking to each other in their first debate. Brokaw actually seemed keen to prevent it: pressure of time.
Though both candidates spent a while (and it felt like longer) on the economic emergency, I didn’t feel that either’s comments advanced the discussion, or seemed equal to the gravity of the situation. Almost the first words out of McCain’s mouth were “energy independence”; almost the first words out of Obama’s were “blame deregulation”. We know, we know. Neither gave much indication that the crisis was leading them to think things through afresh; one wonders what it would take to do that. (Correction: both seemed keen to make Warren Buffett Treasury Secretary. He’s too smart to take the job.)
Neither helped viewers to understand the rescue package or how it might be improved; neither conveyed much sense of understanding it themselves. Perhaps McCain was on to something with his idea about doing more to prevent mortgage foreclosures. (The idea is not new, but the emphasis was.) He said so little about what this might mean in practical terms, though, that I’m guessing that the idea just drifted past most viewers.
The most lively clash was, again, one we have seen before. McCain attacked Obama for his rashness in saying he would attack inside Pakistan to get bin Laden if the Pakistani government was “unwilling or unable”. Obama reaffirmed the position, noting how odd it is for McCain to chastise him for such undiplomatic talk–as though “bomb bomb bomb, bomb bomb Iran” McCain was more given to gentle persuasion than he was. (a) Most Americans support Obama on this, and are right to. (b) Are we seriously asked to believe that McCain would not also go after bin Laden if the target presented himself? McCain wants to make his charge of “inexperience” stick. This is not the way. He loses this exchange every time he initiates it.
Obama as always was calm, collected, reassuringly intelligent, and vague. McCain seemed less confident intellectually, and a bit more given to bluster in compensation; he also looked old. What else is new? Neither seemed to me to score a decisive hit or make a big mistake. Few if any voters will have switched allegiance–which makes it Obama’s night, given his recently widened lead in the polls. McCain needed a clear win. He got a draw, at best.
Clive Crook is right on point for mentioning that McCain looked old. This highlights even more how irresponsible his choice of Sarah Palin was for his running mate.
Based on McCain’s reference to Joe Lieberman, it is more likely than ever that Lieberman was McCain’s real preference for Vice-President and that Palin, far from being the bold choice that the Republican spinmeisters would have us believe she was, was forced on McCain by his Bushie handlers desperate to pander to the intolerant, mendacious, authoritarian, right wing of his party, which she is doing with such great aplomb.
What a disappointment it must have been to all of them, including Palin herself and the NY Times’ in house neocon, Bill Kristol, who was egging her on in his recent column, that McCain did not go down the Ayers/Wright mud-filled road to nowhere last night. Maybe he just forgot to.
Posted by: algasema | October 8th, 2008 at 5:53 am | Report this commentThe contrast with his competitor’s youngish appearances is certainly not working to McCain’s advantage. Would he have looked as old if he were debating Joe Biden, for instance. Anyway, this is not a beauty contest (correction: it probably is).
Is any president about to begin his first term as a lame duck? How relevant will his position be in the post-crisis world? What can a president contribute when he does not understand the main issue facing the country? What can Congress contribute? This might be the beginning of government by technocrats. Well, that is what happens to bankrupt companies: they are administered by specialists. Maybe the same will now be true for America. Or maybe Gordon Brown should take over, at least he is capable of understanding the issues and has a greater popular mandate than any technocrat (correction: or does he?).
Posted by: RCS | October 8th, 2008 at 8:35 am | Report this comment“Perhaps McCain was on to something with his idea about doing more to prevent mortgage foreclosures. (The idea is not new, but the emphasis was.) He said so little about what this might mean in practical terms, though, that I’m guessing that the idea just drifted past most viewers.”
Posted by: Maggie Knowles | October 8th, 2008 at 9:47 am | Report this comment~~~~~~~~~~~~~not true. Everyone here noticed the new “government to give $300B to buy up all the bad mortgages” plan. It’s a bad idea. We have too many homes, we have too much debt, the homes are overpriced, incomes are declining. Propping up home values is wrong judgment. Home values need to come down or income has to come up. McCain wants to be president, but he hasn’t a clue what to do about the economy. Besides, we just gave Paulson $700B+, he can buy all the mortgages he wants with that.
The USA needs a president who will put America first and not be a prisoner of Wall Street’s interests.
The real tragedy of the years since the previous
Wall Street crash (the dotcom meltdown in which USD5T was allegedly wiped out) was not that there was too much cheap money created by Greenspan, but that the cheap money was syphoned off by Wall Street and went into creating the next bubble (toxic debt). Instead that money should have been invested partly at least in public works, updating the infrastructure in the USA and in education.
Far too much US infrastructure dates from the ’30s and ’40s. As far as education is concerned, the USA does not need more university graduates; it needs either millions more well-trained, efficient workers in the industrial and service sectors (to compete with European workers, many of whom have qualified as master-craftsmen, after an apprenticeship), or many millions more of much lower paid workers - to compete with India and China.
Posted by: J.J. | October 8th, 2008 at 10:34 am | Report this commentBarack showed his ease and understanding of the plight of the American people and his dedication to the middle class and average Americans. He is geared toward them/us! He came across as serious about fixing our problems and bringing America up to 21st Century standards and getting rid of a lot of programs that just do not work anymore. He also showed his mindset toward dealing with other countries and how we are all in this together and we have to work together on a world scale to address our global and world problems.
McCain Camp cannot talk about the economy because their Economics are for the Rich, the well-off and the well connected!
“PALINS’ UN-AMERICAN ACTIVITIES
Imagine if the Obamas had hooked up with a violently anti-American group in league with the government of IRAN!. By David Talbot
Oct. 7, 2008 | “My government is my worst enemy. I’m going to fight them with any means at hand.” This was former revolutionary terrorist Bill Ayers back in his old Weather Underground days, right? Imagine what Sarah Palin is going to do with this incendiary quote as she tears into Barack Obama this week. ONLY ONE PROBLEM. The quote is from Joe Vogler, the raging anti-American who founded the Alaska Independence Party. Inconveniently for Palin, that’s the very same secessionist party that her husband, Todd, belonged to for seven years and that she sent a shout-out to as Alaska governor earlier this year. (”Keep up the good work,” Palin told AIP members. “And God bless you.”) ALSO, Palin quoted James Westbrook Pegler, a facist and racist, in the
Posted by: Angellight | October 8th, 2008 at 1:12 pm | Report this commentdebate?”
http://www.salon.com/opinion/feature/2008/10/07…
Clive,
Do you really think mortgage foreclosures are creating a problem for a large number of American? Is there a chance that many people cannot afford the house they contracted to buy and should walk away from it to a cheaper house.
The Chicago Media has been concentrating on the fate of pets when people move to a smaller residence, which provides some real insight into the seriousness of the problem. Some cats need more room!
People living in smaller cheaper houses does not seem to be a big problem to me. Homelessness (which is way down) and hunger are problems. Asking consumers to buy a house with 3 bathrooms rather than 4 does not cause me to lose much sleep.
JBP
Posted by: John Powers | October 8th, 2008 at 1:17 pm | Report this commentWith respect to age, the contrast between the two was startling. The election may not be a beauty contest, but the age difference was stark. They come from different eras and it shows. Age was a silent actor on the stage. Age was never far from your mind as you watched and listened. Age was an unspoken presence - the backdrop making everything they said stand out in relief. It proved more important than color. McCain looked like a grandpa shuffling back and forth repeating himself, peppering his arguments with the cliched, hackneyed magic words which no longer work their magic: “Reagan, my hero”, “Never again”, “my friends”, “Not another Holocaust”, “Teddy Roosevelt, another hero”, (where was Truman?), and so on.
It’s hard to watch, really. By the time he is sworn in he will be too old, the campaign having taken its toll, and he would leave the running to others, as someone has said here, to a committee of technocrats and the arriviste Sarah Palin. Dangerous. A pity he didn’t win in 2000. Eight years is a long time. Time that shows on the man. McCain: a lame duck from day one. Bush: a lame duck without an ounce of energy, ideas, or credibility. Eight years have taken their toll. Old and all used up at age 60. We count the days until January 20, 2009. So does the rest of the world. Do we want to count the days from the start of a McCain administration?
Posted by: claudia | October 8th, 2008 at 2:34 pm | Report this commentJohn,
It’s fair question. A lot depends on how much worse things might get. House prices would have to fall another 15-20 per cent to get them back to where they were a few years before the onset of the crisis (and that is what eventually happened, on average, in other such slumps). According to one estimate I’ve read (don’t know if it’s true, but I’m looking into it) that would leave a third of households with negative equity. That would be an enormous shock to the system.
Now you might say we have no choice but to endure it–why delay the inevitable? But in a broken market prices can undershoot on the downside just as they can overshoot on the upside. The best argument for relief on foreclosures is that it might avoid this undershooting, and some of the needless extra grief that would go along with it. Its not open and shut, but I’m sympathetic to this.
– C
Posted by: Clive Crook | October 8th, 2008 at 3:18 pm | Report this commentI saw only the first five minutes of the 2nd debae. It was apparent that Tom Brow was much filled with himself, talking as if he had a dentist’s wad of cotton after surgery. The first round of response was enough to convince me that James Bond 007 was more interesting, so I put in the DVD of “Die Another Day.”
Posted by: James of Longdrycreek Ranch in Texas | October 8th, 2008 at 3:22 pm | Report this commentI will vote for McCain, not because he is terrific but he is much better and more honest than BHO.
Yet, I am convinced the U.S. has changed since my childhood. [I am 73 years old.] When BHO said health care is a “right,” I wondered where he found that in the U.S. Consititution?
It is a responsibility, and the lack of responsibility lies at the root of the financial “crisis” in the U.S. Jimmy Carter and the Democrats gave us the first round in 1979 with the Community Investment Act.
In the 1990s, I was on a community bank board and we had to look at the issue of red-lining borrowers, regardless of credit worthiness. We managed to do well, but the larger banks had a gun to their heads. BHO, or whatever alias he used then, was a lawyer who, with ACORN allies, forced Chicago banks to underwrite bad paper.
The bad paper went to the Freddie or Fannie groups, who managed to sign off but did not do any due diligence apparently, and the foreign banks and investment banks bought bundles of loans that have gone bad.
Unreliable borrowers, unscrupulous real estate agents, shackled banks [with the CRA], and unable to perform due diligence or practice fiducary responsibility and a crooked Fannie/Freddie and the money-grubbing Democrats and payoffs have brought the world of finance to its knees.
Does any of this matter to a slim majority of the American electorate, addicted to entertainment and quick solutions from outside their sphere of comfort? No, the problems belows to some one “above their pay grade.” Obama is not the answer, but I forecast that he will move in the direction of a Marxist dictatorship, and the choir will say, “Amen!”
James of Longdrycreek, Texas
Yes, John, you are right once again, Clearly it was the cats who had so much to do with causing the mortgage meltdown and subsequent financial crisis. But these were not the homeless felines of Chicago. They were the fat cats on Wall Street, who, like the AIG executives who relaxed at an expensive resort AFTER the company was bailed out by taxpayers like you and me, and the CEO’s who are walking away with hundreds of millions in bonuses for destroying their companies, benefited so much from the Bush/Cheney/McSame gilded age of robber baron laissez-faire deregulation that is now, at long last, hopefully coming to a merciful end.
Posted by: algasema | October 8th, 2008 at 3:24 pm | Report this commentRoger,
The complete shock from the Left that there are some greedy people in the finance industry is bewildering. Some folks on Wall Street made money; others lost money (and some are still getting crushed). People seeking fortune has pretty much been a constant in human history.
Sensible people could look at what is unique in this instance, and the pitfalls of walking away from a contract vs. being a slave to a house.
I am beginning to believe that more people owned houses than were willing to pay for them. Question is…why?
A neighbor pointed out that the Payday Loan industry, no one’s idea of a responsible corporate player, has been immune from this crisis, but they certainly have a higher default than even the worst housing market.
JBP
Posted by: John Powers | October 8th, 2008 at 4:33 pm | Report this commentReading the exchange between John Powers and Clive Crook on the possibility of “trading down” to cheaper, smaller houses, is it not the case that most subprime, if not prime, mortgage have clauses providing for hefty penalties for prepayment, thereby making it all the more difficult to find a buyer for the house? And even if this were not the case, if it were so easy to find qualified buyers in order to avoid foreclosure, would house prices be falling like a rock as they now seem to be doing?
I also question whether relief for mortgage holders is wise merely as a means to keep prices artificially high, since this might merely prolong the bubble. A much better argument for mortgage holder relief would be one based on simple fairness - namely that so many subprime borrowers were the victims of lender fraud, a trail that the FBI is reportedly now following in its investigations of Countrywide and other large lenders.
The ideal way to remedy this injustice without sticking the taxpayers for the cost of buying up “toxic”, i.e. worthless, mortgage backed securities would be to let the bankruptcy courts adjust the interest rates on the underlying mortgages that are the root of the problem. It is an outrage that the Republicans in Congress, and the Bush administration are still blocking this essential reform.
Posted by: algasema | October 8th, 2008 at 5:13 pm | Report this commentThe only new proposal I heard was McCain wants to give welfare to people in McMansions. I wonder how the people who chose to live in a smaller house so they could put 20% down feel about their tax dollars subsidizing their neighbors with 2 car payments?
Posted by: Ted | October 8th, 2008 at 5:25 pm | Report this commentRoger,
If your house has no value, you generally can just walk away from it without penalty. You pay nothing, just step aside and leave the problems with someone else.
Many many home mortgages are specific pledges of the property vs. the loan, without recourse to individual assets. Economically rational people would do well to walk away and become renters.
JBP
Posted by: John Powers | October 8th, 2008 at 5:45 pm | Report this commentAs you well know, John, this is exactly what many people are doing, leading to blighted neighborhoods, lost life savings, and countless personal tragedies and other costs to society. Of course, in your social Darwinian world, that is all just proof of how well our system of corporate welfare for the rich and “free markets” for everyone else is working.
Posted by: algasema | October 8th, 2008 at 5:55 pm | Report this commentI really wanted to support Obama and I think he has been brilliant at his “image” but he is actually not about “change” but about mainting the status quo in Washington.
1) He never makes any decision that might be controversial - in the senate he sponsored a bill to lower mercury levels in fish which is about as controversial as BO is willing to get. He voted “present” many times.
2) The top donor to his campaign is Goldman Sachs and he not only supported the bailout, the largest transfer of wealth from lower and middle class people to wealthy shareholders and investors, but he called members of the black caucus and pressured them to change their vote. This is ironic considering many low income neighborhoods with minorities where deliberately targeted by banks for loans that had high fees or unfavorable terms. He obviously doesn’t have much integrity.
3) He has many contributions from foreigners but his campaign refuses to disclose who they’re from and they can do that because he decided not to use public funds for his campaign. I would be more comfortable at least knowing where these donations came from - if he has nothing to hide then tell us.
4) During his time in the senate only one person received more contributions than him from Fannie and Freddie and he chose someone associated with them to help him choose a VP.
5) In the debate last night he mentioned how Delaware is a safe haven for banks trying to find ways to evade the law - he seems to have forgotten his VP is from Delaware.
6) His campaign has been lying and using negative propoganda before McCain - they had a commercial for hispanics that used the words “get out of our country” that was from Rush Limbaugh but they implied McCain agreed with it. The words were taken out of context because Limbaugh was joking and McCain had nothing to do with it.
7) He won’t let reporters traveling with his campaign get near him according to some journalists - they said he only makes the same speeches to them that everyone has already heard before.
I don’t support McCain at Obama’s supporters are frightening - they absolutely have no ability to be objective about him. Their adoration seems to be for some Messiah who they don’t relate to in a normal way. They remind of the people who followed Manson or Jim Jones and I’m not implying Obama is like those people, he obviously is just a phony politician like most of them, but the way people support is strange and the media does it also.
Posted by: Jennifer - San Francisco | October 8th, 2008 at 6:13 pm | Report this commentRoger,
I don’t think you are following the issue.
Why would one lose his life savings? One is money ahead by walking away. If it is a personal tragedy to be money ahead, then I think most people would opt for personal tragedy.
Much like most Urban Americans, I would be very happy if most of my neighbors moved away, leaving my neighborhood “blighted” as you say, or as parkland in my opinion.
Since this isn’t happening (homeownership is still at a record high level), I think Clive is on to something, in viewing housing prices as over-correcting.
JBP
Posted by: John Powers | October 8th, 2008 at 6:26 pm | Report this commentJohn, I wish I could go along with your rose tinted view of America’s financial crisis. One of us must be living on a different planet, along with Phll Gramm.
Posted by: algasema | October 8th, 2008 at 6:42 pm | Report this commentJennifer, Barack Obama has certainly made his share of mistakes and has his share of shortcomings, like every presidential candidate in history. But your criticism of him reminds me of a joke that a famous centenarian comedian was supposed to have made when someone asked him if he wasn’t worried about having had so many birthdays. His answer was “Yes, but look at the alternative.”
I suggest that you take a closer look at the McPalin alternative to Barack Obama and think carefully about whether you what you see is really best for the country.
Posted by: algasema | October 8th, 2008 at 7:31 pm | Report this commentThe candidates must explain in next week debate and in detail :
How to solve the ” 60 trillion dollar credit-default-swap ” problem, these derivatives are simply gambling : bets against the success of city-county and state credits-loans and bonds, etc.,they are betting that our communities will go down, that’s how they make money,shorting our own society with reverse insurance , this absurd market is worth 60 trillion dollars aprox. worldwide and really should go down to zero, but that will create huge losses for investors ,stockholders, bondholders, etc. while the dealers and the advisers,Hedge-Funds and Lobby’s that advised the cities,states and others to invest in them will run away with hundreds of millions of dollars in fees and commissions , so how will the candidates deal with this ticking financial disaster and fraud ?
The underlying problem is Energy Independence, as long as we don’t break the imported oil and gas dependency that costs hundreds of billions of euros/dollars a year, we will continue to go down.
EU and USA must switch to solar,wind and water turbines,geothermal,synthetic jet-fuel, bio-fuels, electric-hybrid plug-in cars and trucks, hydrogen and methanol fuel-cells, biomass, fusion and coal-to-liquid capturing carbon dioxide, and the switch must be now and radical ! will the EU and USA politicians see it ? will the taxpayers demand it ? do they care ?
this week AMD, a key chip maker had to make a financial triple spin to keep going , and the buyers are Abu-Dhabi - UAE and using our own oil and gas money, so how long are we going to go like this ? will the USA presidential candidates and the EU politicians make a move and go for Energy Independence at full speed ?
Posted by: financialtools@gmail.com | October 8th, 2008 at 8:47 pm | Report this commentalgasema: We just had members of congress approve a bailout that is the biggest heist in American history and both candidates supported it. Our Treasury department has been turned into an investment bank and Paulson, former CEO of Goldman Sachs, chose another former Goldman Sachs employee to be in charge of $700 billion and now they are going to buy unsecured debt from the banks also. Everyone knows something had to be done - we were only asking that congress have hearings on it and consider alternative solutions but they refused to do it. Anyone who has worked in the industry knows that the fraud was intentional and they never expected those toxic assets to be worth anything. Instead the took a bill that already existed and put the bailout on it as an “amendment” and then threatened members of the house that if they didn’t approve it, they would be blamed for not passing the original bill.
And Obama supported them - many people who thought he really was about “change” are feeling angry right now. I always knew he was a phony but they really did think he was different and now they’re disappointed. I don’t think “he is better than the alternative” is a good reason to vote for him. Obviously McCain would have been horrible but at least he wouldn’t have been there for more than one term and we could have tried to elect someone who really did want to bring “change” to this country. Now Obama will be there for eight years.
Of course it doesn’t matter for me because I’m in a state that Democrats will win so I don’t even need to vote - if I was in a state where it might be close then I’m sure I would vote for Obama but I wouldn’t be happy about it. I don’t support either of them.
Posted by: Jennifer - San Francisco | October 8th, 2008 at 8:55 pm | Report this commentJennifer, I understand what you are saying, but at least Obama did support regulation of the lending industry back when it was unpopular to do so, while John McSame has been a Reagan/ Bush/Cheney laissez faire, capitalism for the middle class, socialism for the rich, “deregulator” right from the start and still is.
If you think that they share the same ideology about the economy, you will be horribly disappointed if McSame gets in, and it will be even worse if anything happens to him before he serves out his term(s).
I’m sure you remember that back in 2000, many people bought the line that there was no real difference between Bush and Gore. Doggone it, we found out differently. You betcha, my friends.
Posted by: algasema | October 8th, 2008 at 11:09 pm | Report this commentJennifer, please see following link, re Obama and donations from Fannie Mae and Freddie Mac:
http://politicalticker.blogs.cnn.com/2008/09/19/fact-check-did-obama-profit-from-fannie-and-freddie/
At least check your facts before making pronouncements.
Posted by: Loretta, Washington DC | October 9th, 2008 at 12:52 am | Report this commentThe creation of the $700 billion fund was not a theft from anyone. It was a rash proposal with next to no analysis behind it in a desperate attempt by the Bush Administration to do something to make it look like someone in the Administration knows what he or she is doing. Certainly no one does at the top level.
Congress apparently agreed to the proposal out of pure expediency - of course after pork-barreling by the Senate. Zero effort on the part of Congress to evaluate any alternatives which were presented in the press by the day from individuals with expertise. Demoralizing sight to see. Not to mention to hear the self-aggrandizing blather from a very wide range of politicians, almost none of whom has the slightest clue what he or she is talking about.
I am sure that most of those involved in the supply chain starting with residential developers to originators of mortgage loans through intermediate funders to the packagers of the loans to the sellers of the securities backed by loans to the sellers of derivatives that supposedly provided AAA-guarantees and so on cared less about the “true” value of what they were dealing in so long as the throughput kept up its frenzied pace so they could rake off their portion of the money flow. What the borderline is between immoral rapacity and fraud I do not know. No question that there was plenty of immoral rapacity.
Tax-payers will be fleeced eventually by whomever is in charge of administering the fund, but not to the tune of the $700 billion. On the other hand any percentage of $700 billion in the form of fees or exchanged for overvalues paper assets is a lot of money going into someone’s pocket. Self-dealing is inevitable. I am sure the lobbying by investment managers of all stripes is intensely occurring behind the scenes.
Posted by: Wendell Murray | October 9th, 2008 at 1:26 am | Report this commentJennifer’s points #1-7 right out of the talking points of talk radio (in NY: WABC), i.e. Rush, et al: good try but no cigar. Trying to pass off talk radio’s propaganda du jour as your own thoughts: intellectual bankruptcy. Not surprising if you look at the source.
Posted by: claudia | October 9th, 2008 at 3:53 am | Report this commentWM,
The Senate did suspend the mark-to-market rule albeit with no specific timetable. That in itself might have made this a dip rather than a crisis.
JBP
Posted by: John Powers | October 9th, 2008 at 3:52 pm | Report this commentJBP: What is the logic to suspending the mark-to-market rule? The effect of suspension is to permit an institution to in effect value an asset at an unrealistically inflated value. That can increase capital on the liability/equity side of the balance sheet, but it is fictitious capital. It is an accounting entry that almost certainly will not reflect reality.
Companies should seek to show accounts on their balance sheets that are as realistic - and conservative - as possible, not the opposite. Basic principle of accounting.
The erratic behavior of equity markets I still attribute to so-called “animal spirits” identified as such by Keynes due to the massive confusion in credit markets and the potential spillover of the turmoil onto employment and production levels which I assume is hard for financial market participants to assess.
“Dip” vs. “crisis” not sure what you mean. The prognosis for maintaining the current level of economic activity in the USA at least is quite bad. Already substantial loss of employment in every activity related to residential housing and now in financial services. The downward multiplier effect of that is still in process and will continue for who knows how long.
Posted by: Wendell Murray | October 9th, 2008 at 7:04 pm | Report this commentNoted the comment on “Jennifer”. Could be someone else like “Mary” who popped up on one of these weblogs a week or so ago by listing the current talking points put together by the McCain campaign operatives, including praise for Jerome Corsi, whose writings are apparently quite slanderous. May be related to Mr. Corsi’s trip to Kenya which popped up in the news a few days ago. All in all quite bizarre.
I am unaware of the talking points circulating on right-wing talk radio, although I did see a snippet on CPAN-2 a few days ago of a broadcast by Gordon Liddy’s talk program. Unbelievable lies by him and his guest who publishes some sort of extreme-right-wing “news” website. That after listening for 2 minutes, so I can just imagine what the rest of the program was like.
Posted by: Wendell Murray | October 9th, 2008 at 7:16 pm | Report this commentWM,
Suspending mark to market certanily would have dampened the credit problem that killed Merill Lynch, WaMu, and Lehman. Companies with fundamentally sound cash flow were sacrificed to accountants. Killing sound companies keeps their CEO’s out of jail, but puts a lot of people out of work, all to make the regulators happy. No one wants to end up a desaparecidos like Bernie Ebbers or the crew from Enron.
The economy grew at a healthy 2.8% last quarter. I doubt that it grows this quarter. Employment numbers actually grew (on a quarter to quarter basis, though not year to year). Again, I think that is not going to happen this quarter, because of the credit situation.
JBP
Posted by: John Powers | October 9th, 2008 at 8:43 pm | Report this commentJBP: I have not looked at the financials for any of the companies that you cite, but it is highly unlikely that any had a sufficient current or prospective cash flow sufficient to offset the write-downs on their balance sheets. A write-down is an accounting entry but the reality of it in terms of cash flow is that the cash value of the asset will never be seen in the future. Writing it off means that the theretofore expected cash inflow from that asset no longer exists. Prospectively that reduces cash flow in the future although not currently.
Attend some basic classes on accounting at the University of Chicago. I do not mean that disparagingly, but most people simply do not understand accrual accounting.
Posted by: Wendell Murray | October 10th, 2008 at 12:53 am | Report this commentAlso I am neutral in regard to the average medium to big-company CEO. CEOship is a tough job. Most CEOs take their responsibilities very seriously regardless of compensation or anything else. Most hate to lay workers off. They are fully aware of the individual hardships that layoffs cause, but their responsibility in a capitalist society is to shareholders and to the welfare of the corporate entity. those are the rule that they are entrusted to follow.
Compensation levels of big-company CEOs is ludicrous, but that is another issue.
Posted by: Wendell Murray | October 10th, 2008 at 12:58 am | Report this comment