Sunday, April 5, 2009

Points of View - Economics

An interesting mix of op-eds have started to appear discussing the economy. The budget, The TARP, the bank plan, mark-to-market, the causes of the current crisis, etc. We have given a few examples below of some of the articles we read.

Geithner's Bank Plan Is a Good Start - By Martin Feldstein - The Wall Street Journal - "If it succeeds, this plan will remove some $500 billion of impaired mortgages and securities from the banks, will do so at market-determined (albeit artificially enhanced) prices, and will give taxpayers a possibility to gain along with the private investors who manage the assets. It will do all of this without nationalizing any of the major banks."

Greed and Stupidity - By David Brooks - The New York Times - "There are many theories about what happened, but two general narratives seem to be gaining prominence, which we will call the greed narrative and the stupidity narrative. The two overlap, but they lead to different ways of thinking about where we go from here."

Mark-to-Market Rule Gives More Clarity, Not Less - By John M. Berry - Bloomberg - "Mark-to-market accounting rules are being brought a little closer to economic reality -- accompanied by misplaced howls of outrage." "Take the case of the Federal Home Loan Bank of Atlanta. Following the mark-to-market rules, it wrote down the value of its portfolio of mortgage-backed securities by $87.4 million in last year’s third quarter. Its actual projected loss on the securities: $44,000."

6 reasons I'm calling a bottom and a new bull - By Paul B. Farrell - MarketWatch - I am hesitant to put this article here because this author can be out of the ordinary, but to be fair, I decided to include it too. Just be warned about some of his past articles... - "Warning: Here are 6 reasons why Roubini can never fulfill his promise ... why he may go down in history, as Portfolio suggests, as the designated "one-hit wonder" ... but worse, any investor waiting for a Roubini "call" is playing Russian roulette, a loser's game ... you will miss the market's real turning point:"

Obama's $163,000 Tax Bomb - By Michael Boskin - The Wall Street Journal - "Families well below the president's 'no-tax' threshold will get a six-figure bill." "The House and Senate are preparing to pass President Barack Obama's radical budget blueprint, with only minor modifications, by using (abusing would be more accurate) the budget "reconciliation" process. This process circumvents the Senate's normal rules requiring 60 votes to prevent a filibuster. Reconciliation was created by Congress in the mid-1970s to enforce deficit reduction, the opposite of what the president and his party are aiming for."

Obama Wants to Control the Banks - By Stuart Varney - The Wall Street Journal - "There's a reason he refuses to accept repayment of TARP money." "I must be naive. I really thought the administration would welcome the return of bank bailout money. Some $340 million in TARP cash flowed back this week from four small banks in Louisiana, New York, Indiana and California. This isn't much when we routinely talk in trillions, but clearly that money has not been wasted or otherwise sunk down Wall Street's black hole. So why no cheering as the cash comes back?"

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