Solving the financial crisis: "Britain's plan is better than ours, because it addresses head-on the two holes in the Paulson plan."

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    Oct 12, 2008 2:36 AM GMT
    ..."Britain's plan is better than ours, because it addresses head-on the two holes in the Paulson plan. First, as Brown himself pointed out when announcing his plan, the time has for buying toxic assets has passed. The crisis is now about mistrust among banks themselves; their reluctance to loan to each other is shutting off the credit flows that grease the world economy. The lending lockdown is as much about confidence as anything else. Britain's plan injects heavy doses of capital and a huge dollop of reassurance, and both are needed. Second, the British plan gives taxpayers something for their money. Banks that accept capital from the government have to give the government equity shares in return, and must also agree to limits on executive compensation and shareholder dividends. If the banks start making money again, dividends flow to taxpayers, who can recoup some of their original investment.

    Brown's plan borrows from Swedish experience. In the early 1990s Sweden faced its own financial crisis, which was ignited by a combustible mix of over-exuberant credit deregulation and bursting real estate and financial bubbles. As the economy collapsed and credit markets froze, the government issued blanket insurance to all Swedish banks, created an oversight board, and told the banks that it would offer them support in exchange for equity. The banks received a cash inflow equivalent to 4 percent of Swedish GDP. In the end, the Swedish economy rebounded and Swedish taxpayers recouped at least half of the original investment. Today, Sweden is one of the most competitive economies in the world.

    Sweden's compelling message, which Britain has taken on board, is that an effective support plan cannot simply reward reckless investors but must exact a price in a manner that forces them to contribute toward their own rescue. To they extent they succeed, taxpayers win too. ... "

    http://newsweek.washingtonpost.com/postglobal/sais/nexteurope/2008/10/financially_bold_britannia.html

  • metta

    Posts: 39138

    Oct 12, 2008 5:47 PM GMT
    Well.....I still question whether the so called bailout plan was really a bailout or was it really something to appease the foreign investors.


    Jim Willie

    THE BIG LIE ON THE WALL STREET BAILOUT: The historic $700 billion Congressional bailout bill had some key added provisions over the failed House bill. The new funds can buy back bonds owned by foreign investors, like those defrauded in Europe and Asia. The American public was told that the US banking system would have blockage unclogged. BS! It was a congame again, after foreign investors demanded restitution immediately, or else! The US banks will remain clogged. When almost nothing is fixed concerning US internal bank distrust due to toxin floating around, people will eventually realize the US public just paid for Wall Street fraud of foreign financial firms. It might be even worse. Foreign firms can possibly package any kind of rubbish, toxin, or acid into a bond for US swap. No end to the fraud. Oh, lest one forget, the $700 billion is only 15% to 20% of what might ultimately be needed. The overall tally will be much larger, for total bailouts, nationalizations, FDIC refills, tax stimulus, and ongoing programs to rework mortgages. The people have been ignored so far.



    http://www.financialsense.com/fsu/editorials/willie/2008/1009.html


    http://www.wlwt.com/money/17652421/detail.html



    economic fundamentalsbehind the problem:


    http://www.theoildrum.com/node/4617


    articles by Prof. Fekete, who has some highly unusual and
    unique ideas on the relation of the gold standard to all the troubles:


    http://www.financialsense.com/editorials/fekete/2008/0924.html

    http://www.financialsense.com/editorials/fekete/2008/1002.html


    the classic article by Jim Willie, who accurately predicted this whole business at the start of the year, complete with huge bank failures and a massive new Resolution Trust Corporation (the bailout):

    http://www.financialsense.com/fsu/editorials/willie/2008/0103.html
  • OptimusMatt

    Posts: 1124

    Oct 12, 2008 6:20 PM GMT
    Why Caslon, are you suggesting that capitalist America (complete with freedom fries) go a little...socialist?

    Pft. Right after monkeys fly out of my ass singing "Miss Otis Regrets" in their best Bette accent. FYI - she's at the spa.icon_twisted.gif
  • coolarmydude

    Posts: 9190

    Oct 12, 2008 9:33 PM GMT
    Cue to the 35 second mark:





    You gotta love it when the McCain flock screams "Socialism! Communism!", amongst other things about Barack Obama, but McCain wants to buy up all overvalued mortgages and resell them to the same greedy businesses at the lower fair market value mortgage prices.

    George Orwell couldn't even envision this crap!
  • coolarmydude

    Posts: 9190

    Oct 12, 2008 10:13 PM GMT
    I agree with the Europeans. It needs to be set up here to where the businesses are required to renegotiate all bad mortgages, pending foreclosures and all ARM-based mortgages to a fair market value price. This new price should be guaranteed by the government, much like Fannie Mae and Freddie Mac previously did.

    It's very clear that these big lenders did what they did expecting the government to bail them out. Whoever is personally responsible for holding the American economy hostage needs to be tried and punished for treason!