March 22, 2008

Steve Forbes has a massive brainfart: "Here's How to End the Panic". His solution? Just sweep the crap mortgages under the rug. Presto!


Panic?

What panic?

I thought everything was gonna be fine?

I thought there was no housing bubble?

I thought the subprime fallout was contained?

But come on Steve-O. Junking the nation's accounting standards as the solution to the problem? ARE YOU F*CKING OUT OF YOUR MIND?

Yeah, that'll instill even greater confidence worldwide in the ol' USofA. Just fudge the numbers! Cook the books! Brilliant! The numbers aren't bad if you just say they're not bad! Crisis over!

Monkeys I tell ya. Monkeys. And the world may never trust the United States again.

Here's How to End the Panic
Steve Forbes

The Bush administration must take two steps immediately to quickly halt the unending, enervating credit crisis: shore up the anemic dollar and, for the time being, suspend "marking to market" those new financial instruments, such as packages of subprime mortgages.

The Treasury Department and the Fed should get together with the SEC, the Comptroller of the Currency and other bank regulators and announce that financial institutions for the next 12 months will no longer write down the value of exotic financial instruments (primarily packages of subprime mortgages).

Instead, writedowns will occur only when there have been actual losses on those assets. If a mortgage defaults, a bank will then--and only then--recognize the loss.

60 comments:

Anonymous said...

What happened? Has this guy gone senile or has he always been a massive tool?

This is so utterly moronic it's hard to fathom how this guy could be so wealthy - I guess he inherited his wealth. That would explain it.

keith said...

Here's their plan

1) Suspend mark to market on the crap loans

2) Have government buy up said loans at inflated prices

3) Banks and gamblers celebrate

4) Taxpayers pay for the stupid mistakes of bankers

5) Dollar is destroyed

6) Repeat process again

Anonymous said...

Here's Schiff's take on it:

http://www.europac.net/Schiff-FBN-3-19-08_lg.asp

Why is it that Schiff is the only one with common sense and a brain on Fox Business News?

Anonymous said...

Interesting . Than the next idea will be to put a freeze on foreclosures until the government can buy the foreclosures so somehow the losses can just be transferred to the government who gets the mark to market loss on their books.

Change the rules after the fact is the name of the game these days ,anything but having the losses waged against the gambling greedy lenders who should pay for the risk they took lending to flakes and frausters .

Anonymous said...

Hi,Hope you post or comment on the link to the article yesterday from the New York Times about the evolution of the debt crisis in Britain. Just what you have been saying for years! Keep up the good work! I read you everyday.
From the USA

Anonymous said...

I don't know about the rest of his ideas, but the mark-to-market rule could not have been more poorly timed and suspending it for a while makes sense under the circumstances.

The rule itself only works if the is a true market, but a lot of these securities have become illiquid that one simply cannot have any confidence in the "market" pricing.

I know 133 is a market price for AAPL because 32 million shares of it changed hands on Thursday. If only one share changed hands, and the seller had a gun to his head as he sold it, I'd strongly suspect the price doesn't reflect the true value of the company.

Suspending mark-to-market would buy time to find out what these securities are truly worth. We can always have a financial apocalypse later, should it turn out that the worst fears about this paper are correct.

Anonymous said...

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

As the practice of marking to market caught on in corporations and banks, some of them seem to have discovered that this was a tempting way to commit accounting fraud, especially when the market price could not be objectively determined (because there was no real day-to-day market available), so assets were being 'marked to model' using estimated valuations derived from financial modeling, and sometimes marked to fantasies. See Enron and the Enron scandal.

Internal Revenue Code Section 475 contains the mark to market accounting method rule. Section 475 provides that dealers that elect mark to market treatment shall recognize gain or loss as if the property were sold for its fair market value on the last business day of the year, and any gain or loss shall be taken into account in that year. The section also provides that dealers in commodities can elect mark to market treatment for any commodity (or their derivatives) which is actively traded (i.e., for which there is an established financial market that provides a reasonable basis to determine fair market value by disseminating price quotes from broker/dealers or actual prices from recent transactions)

Anonymous said...

Here's what will happen: the steps taken will fan the hit that the banks would otherwise have taken out to the masses. A gallon of milk will go up 20 cents this month and 10 more the next, and many things will creep up: insurance, flights, tuition, shoes from Walmart -- everything! The corrupt government will continue to tell us that inflation is tame, and the masses will increasingly continue to consider themselves failures as they barely feed their families and pay their bills year after year. More drugs like Prozac will come out. More than a few of these souls will flare out - maybe at a mall - and take others out with them. A not-insignificant number of others will find ways to screw back - illegally or otherwise - it won't matter to them.

Anonymous said...

By the way - the dollar won't be destroyed in terms of it depreciating against other currencies - other governments WILL devalue their paper as the dollar falls. Korea, for example, where average people save more than 25% of their take-home pay in simple savings accounts, just allowed devaluation of 10% to protect their export industry. That happened in the course of 2 weeks, and was spun to an unsophisticated public as 'foreigners pulling money out of the stock market' in other words, it's the foreigners doing (they took the path of least resistance in that Xenophobic Land)! The masses in that country can't fathom that they've just been robbed! Houses won't come down in price much -- the high prices are otherwise supported by low interest rates and by the fact that when the average wage goes up, as it will, household income goes up by twice as much (twice the rate) in many cases as both people work. In single-income households, welfare or other forms of assistance will make up the difference. In both cases, no one can save much, but they certainly won't march in the streets, and neither will you when milk only goes up 20 cents... (see previous post).

Anonymous said...

I've been having this nightmare that the government is going to swoop in one Sunday night while we're all asleep with a massive housing bailout and leave us all holding our dicks. If I come across a really good deal I might just take the plunge. It's just a matter of time until it's rescue city. Some of the REO's in my area are starting to undercut the other listings by like 10-20%. Somebody talk some sense into me before I do something stupid.

ROB

Anonymous said...

The world has to trust America. It is because we have the world's most transparent financial system. We are a shiny city on top of a hill that everyone else in the world looks up to. Our economic model is based upon honesty and transparency. Others can come close, but America is in a class by itself.

Anonymous said...

Steve Forbes has always been blessed by a consistent economic idiocy.

Sometimes you'd expect dumb people to have good ideas every once in a while, just by random chance. Even GWB did.

But Forbes? Never. An amazing persistence of cluelessness and bullshit.

Yeah, he is the son of the late smart one Malcom. Inherited. Obviously got the mistress' brains. (j.k.)

He needs to permanently STFU.

Anonymous said...

This can't possibly end the panic anyway.

Why? Because if you have to do it, everybody else sees that you have a ginormous pile of festering toxic waste which is so frightening that you can't look at it for a year. But they'll know for sure that it's going to explode in the future.

Suppose in your town the government cleared a huge field, put up razor wire and armed guards, rolled up thousands of unmarked barrels, and posted a sign. "FORBIDDEN TO OPEN FOR 12 MONTHS"

And then another yellow and black sign under it, with a happy face and "ALL CONTENTS HEREIN ARE PERFECTLY, COMPLETELY, ABSOLUTELY, TOTALLY HARMLESS. HAVE A NICE DAY."

What would you think?
What would you do?

Me? I'd get my gas mask and book.

Steve Forbes of course would stop his limo and break out his picnic table.

Anonymous said...

Guys,

If you haven't gotten things in order, it is my feeling that time is about to run out and then we'll have chaos.

I feel like the time I have to try to convince people has just about run out. Eventually, everyone was on the ark that was gonna get on the ark. I'm afraid the civil order is going to break down and that crime is going to skyrocket real soon.

Best of Luck to everyone!

Democraatus said...

Let's do the following

1. laissez-faire when I'm getting rich on some kind of CON plan

2. don't press charges when the SHTF and the CON plan explodes in my company's face.

3. gobble up all garbage my CON plan produced with tax payers money.

4. use Enron accounting to pretend everything is ok.

5. get a big paycheck from me for your next election.

The American business model.

Anonymous said...

To the anonymous poster at March 23, 2008 8:50 AM: Stop reading so much from one-sided sources already!! The world isn't going to blow up - this too will pass. Try not to get so worked up - the stress hormones do real damage to your heart! Read my posts at 6:26AM and 6:36AM (23rd). The corrupt government will devalue - little by little to the point that you won't see it. They will squeeze their fellow Americans, who they feel can withstand it. Devaluing and inflation (as well as new hidden taxes) are on the path before us. Moreover, inflation also inflates debt away: If you are sitting there with $100,000 in student loan debt, be happy: before you get the chance to pay it off, that amount may be the minimum yearly wage! Ever wonder why your parents didn't buy this or that in the 70s when things were so cheap? Because the numbers looked shocking to them, back then. Think $500,000 is shocking for a house? Think again.

stocksystm said...

Steve Forbes proved he is a simpleton and a fool. With this comment he proves he is also a sociopath. This "unmarked to market" ploy was a scam perpetuated by Garrett Van Waggoner while running his mutual funds and charging over 2% annual expenses in doing so. They are amongst the worst funds on the planet.

Thrasymachus said...

The business world just as much as the political world is driven by self-serving BS, but this is not going to fool anybody. Only a change of regime at any given company is going to make it possible to state the truth. Or possibly *two* changes of regime- no CEO wants to criticize his direct predecessor too sharply, so maybe only the second guy after can say "We have carefully reevaluated our loan portfolio, taken additional writedowns and we believe we can now reasonably state our assets and move forward."

On the political side, there are many more people involved, and the majority of them hae to go, so it may be several election cycles before the government can face reality.

Anonymous said...

Gotta love those neo liberals...
They will be the downfall of the capitalism system.

Paul E. Math said...

When did this country completely lose it's balls?

Financial institutions screwed up and the whole country is going to have to pay.

For God's sake let's not whimper and whine about a little recession or the failure of a few banks. Yes, it will be very bad and people will suffer - are we really such pussies that we can't handle that??

Forbes' idea, as well as the many other bailout programs and rescue plans are just showing what a gaggle of cowards the fed, congress and wall st really are.

Afterthought said...

Are they currently writing down loans that are ultimately being repaid?!?

THEY AREN'T WRITING DOWN ENOUGH AS IT IS!

Nobody knows the extent of the problem, look at Bear!

Forbes is telling us that it is better to pretend that all is well?

NASDAQ 5000 people!

Should we pretend that things are okie-dokie there too?

People talk about the evils of communism; well now you have it!

Buzz Saw said...

That greasy pig-f@ck can eat my sheorts.

LauraVella said...

Forbes can suggest any stupid, hair-brained idea he wishes.

There's nothing anyone can say or do to solve the lending/housing problem. Fundamentals have to make sense before any changes occur in buying real estate, with a strong economy.

Banks will only lend to buyers when they have a steady job history, and a 20% downpayment.

I'm guessing by the end of this year, it will be 'figured out' that today's housing prices are not realistic...

Anonymous said...

Rob,

Depends on a lot of things - where you live, how bubblicious it was, do you have a family to house, how long can you stay put, are you able to put a whopping down payment, do you have a portable job where you can move to a non-bubble area? It has actually been possible to buy a house *all along*, just not a smart move in bubble areas. Where I live, prices are declining, but still too expensive (for me, and I don't "need" a house).
Sounds like you may be making an emotional decision rather than one based on the bottom line. That may be OK as long as you're aware of your reasoning - at least you will have made a decision.

Bitterrenter said...

Well of course. Republican capitalists have always depended on "socialism for the rich" to carry them through lean times. For over a generation we've made policies that insure that the top 5% get all the goodies.

Aren't all you angry white males glad you put them in power?

I so enjoy hearing you whine.

SeattleMoose said...

Forbes is a one of capitalisms chief preachers...."let the market handle it", "keep govt out of business", "free trade"....ad nauseum.

And NOW, he wants to bypass his beloved "free market" and invoke the dreaded enemy of free markets....the Govt??

These Wall Streeters want it both ways as it suits them. They literally beat us over the head with "free market" when it is time to ship OUR jobs overseas, but let them feel the slightest pain and they cry for Uncle Sam and Uncle Ben!!

Where is a good asteroid when you need one?

k.w. - southern ca. said...

You can forget about the US dollar.

Bernanke's solution is to insure that his wall-street and banker buddies continue receiving their outrageous bonuses despite the collapse of the economy.

*Real* change in this country - for the benefit of the many - will only come about (unfortunately) through some form of revolution.
Bernanke's doing a great job of steering us in that direction.

Anonymous said...

Smells like a cover-up of massive financial fraud to me.

And speaking of fraud(s), here's a blast from the past...

While former US Senator Phil Gramm's wife, Wendy Gramm was a member of Enron's audit committee, and also serving on the company's of the Board of Directors, UBS was a consultant for the State of California in 2002 to help fix the State's energy crisis.

The Foundation for Taxpayer and Consumer Rights (FTCR) wanted Governor Gray Davis to fire UBS, saying the company had a conflict of interest since they represented both the State of California and Enron.- Read Article

Senator Gramm defended Enron, and basically told California that the state's energy problems were of their own making.

Shortly after, Enron went bankrupt, and Gramm resigned taking a job with UBS Warburg as a Vice President.

After Enron went bankrupt, UBS Warburg bought Enron's energy trading operations. UBS PaineWebber which is a subsidiary of UBS Warburg, was in charge of Enron's employee stock option program.

In Houston, a former UBS PaineWebber broker, Chung Wu was fired after he advised his clients to sell their Enron stock when it was trading around $36.-

Anonymous said...

"A not-insignificant number of others will find ways to screw back - illegally or otherwise - it won't matter to them."
I am in this camp! I am bringing down the system from the inside. I fuck the bourgeois class hard and fast every day. It is easy when you work in government just do EXACTLY what your boss say. This works because your boss is an idiot and their idea will be stupid. Just do the stupid shit your boss tells you to do and it will be a waste of time and you cannot get in trouble. When they asked you why everything went wrong (most times they don’t) just show them the email that told you what to do.
I show up to work stoned. I have about 30 mins of work to do each day. I do it and then I am out of there to the Museums on the mall. Around noon I get lunch and a few drinks and then smoke a joint on the mall then back to the world class Museums. Check my blackberry and smack a few people around via email. Then back to the office to pick up my shit on my way to the metro. How much do I make well let’s just say I will not be getting a $600 check. How can this go on? Well it is simple I cannot be fired as long as I deliver certain metrics on time. I am the poster boy for why we should not have contractors working in the Government. We write our contracts so they protect us and screw the Government.

Anonymous said...

Keith figured out the important part of the plan. Don't mark to market, but the Federal Reserve will still take this toxic waste as non-recourse face value collateral. It's the first step of a massive bank bailout.

The government takes the mark to market loss a la RTC.

Joe Jacari said...

El Futuro?

The elite morons: business, political, media, etc. live in their own ivory tower world of make believe unreality.

The reality is, is that the middle class is being dissolved and forced into the unenviable position of having to cook its own books in order to survive the big squeeze.

With outsourcing of jobs, and insourcing of cheap labor--illegal and otherwise--the common working man is beginning to resemble Andrew Hac's proverbial Americano Snapper Turtle.

The amount of sixties, hippy-ass moral, political and economic mass psychedelia beaming from the toxic consciousness of the psychotic Baby Boomers in power, en masse, is capable of turning even the most exotic financial nuclear waste water into wine...if only for a time.

The danger is not that they will succeed (which they won't), it's that they'll try. And as they try, the middle class will fry.

Then, when reality exerts itself, the elite jet setters will scramble to save their own selfish, "Me Generation" asses, heading for their Gulf Stream jets and 100,000 acre ranches in Argentina, so that business can continue unabated, in the new global economy.

Of course, as usual, the multitudes of hapless Americanos will be left holding the proverbial "bag."

Alas, welcome to life in your newfangled world: a Mad Max movie made manifest, an apocalypse now!

Meanwhile, the invading Barbarian hordes will continue to crash the gates of Western Civ.-- steamrolling over the remaining vestige of disarmed, stampeding Americano Snapper Turtles, as they unsuccessfully crawl for the exit--declaring (in their own languages, of course) the triumph of third-world madness over reason and common sense (financial and otherwise): "Alahu Akbar!" "Viva La Raza Revolucion!" etc., ad infinitum, ad naseum...

On the way in, I just hope they take out Scottsdale Arizona first--emblematic as it is, of the decline of this once-great land-- and rid the world of all the Tweekers, $30K millionaires, botox beauties, hip gangster wannabes, and communist City bureaucrats that have turned that city into a decomposing heap.

Anonymous said...

what about the 500 downstream holders of derivitives based on that same loan gurantee of payment?......... w

Anonymous said...

the trillion dollar crackerbox?

Anonymous said...

theives and suckers? both responsible for the big stink

Anonymous said...

gonna be hard come the next "katrina" when govt is pointing to safety in one direction and the memories of the people in the stadium run the other........sad...funny????

Anonymous said...

again with the surly old men getting a quarter percent interest on their savings to pay for higher and higher prices

Anonymous said...

Actually it sounds like a very good plan.

YOUR plan of "just watch everything fall apart" is bloody daft.

But you have been masterbating to 'armagedon' for a decade now you wanker.

Anonymous said...

I think the thought here is that even as we cheered major banks and lending companies who were $$$ whores go down, that if several key players were let go and crashed it would start an avalanche.

Once that avalanche starts it WILL NOT stop...I hate subsidies for the rich but if a 200 billion dollar loan is what they are using to get some time I understand...The other result would be a wipe out in the trillions and trillions.

In the end the poor and middle class would actually lose more if the fed didn't make this illegal/imoral move...Sad but true.

Anonymous said...

Forbes isn't a complete schmuck. The 18 countries with flat taxes are doing well with it (see Russia)

When we get a commodities bust later this year / next year and china collapses, the US will of course get much healthier overnight. Stop fear mongering people!

Anonymous said...

God bless the USA and Steve Forbes!

Anonymous said...

Again, GAAP rules (Generally Accepted Accounting Priciples) by which all accounting practice is governed (ie CPAs) is going to be violated. The last major violation was ENRON. In this case immediate write off of known loss are suggested to be hidden. Kind of makes you wonder about the scruples of Mr. Forbes

Red Rickshaw said...

IRC Section 475 DOES NOT have the mark to market rule we're talking about here - that is tax only. The mark to market rule for financial statement purposes is under what is called SFAS 157, and was only for financial entities, and the effective date started 11/15/07. That's why the shit is hitting the fan now.

By the way, Forbes is Satan, and the mark to market rule is fine, whether the banks like it or not.

Anonymous said...

Petition to impeach Bush over illegal BSC bailout!

http://financialpetition.org/petition-impeach.shtml

Anonymous said...

Don't forget that in 2004 Steve Forbes kept insisting that oil would drop back to $35. This guy doesn't have a clue. He's the GW Bush of the financial world.

Anonymous said...

Why Eliot Spitzer was assassinated

The predatory lending industry
has a partner in the White House

http://www.brasschecktv.com/page/291.html

Anonymous said...

"Start by doing what's necessary, then do what's possible,
and suddenly you are doing the impossible." - Francis of Assisi

Anonymous said...

http://www.gregpalast.com/elliot-spitzer-gets-nailed/

Peter T said...

> the mark-to-market rule could not have been more poorly timed and suspending it for a while makes sense under the circumstances

Welcome to Japan and a lost decade of no-growth! The Japanese chose this way, to not recognize losses: it slowed the fall of real estate but didn't prevent it, it let insolvent banks save their face and continue to operate, but it robbed better business ideas the capital they needed to grow. Bad, bad, bad idea!

Better to let it implode fast, kill the insolvent banks, and start fresh. Some stockholders will be wiped out, and many bondholders will be paid only pennies on the dollar, but the taxpayers won't be burdened with 150% debt of GDP, and good business ideas will find financing.

Anonymous said...

suspend mark to market? what is scary about this is that what has been marked to market has over estimated because they don't want to value the stuff at its true value.

Peahippo said...

We need to shoot people like Forbes (with real bullets) before they cause any more damage. They blatantly tell us that the wealthy are subject to rules only when it's convenient for them. They blatantly tell us that speculators run by different rules. They blatantly tell us that there's an upper class and they're in charge and ... well, that old quote about the tree of liberty should be well remembered. JUST. SHOOT. THEM.

Anonymous said...

What Forbes has proposed will happen in one shape or another. And it should. Millions of families will not be thrown out into the streets because they miss a mortgage payment.

The same racist assholes who want to deport anyone who isn't white, now want to throw out every family who might be in a little financial trouble. You people are disgusting human beings. Luckily nobody takes you seriously.

Now continue with your hatefest.

kilgore said...

Like Cramer, Forbes was ademant back in 2006 that there was no housing bubble.

Steve Forbes wouldn't have even been able to get a job at a community bank if his father hadn't been a billionaire. His opinions hold no weight.

brokersleaveyoubroke said...

OMG, it doesn't get any stranger then this, Hillery has proposed that Greenspan should be in charge of handling the mortgage crisis. She has totally lost touch with reality.

Anonymous said...

Steve Forbes is the dumbest f*cking twat on the entire planet.

Anonymous said...

Anonymous said...

What Forbes has proposed will happen in one shape or another. And it should. Millions of families will not be thrown out into the streets because they miss a mortgage payment.

The same racist assholes who want to deport anyone who isn't white, now want to throw out every family who might be in a little financial trouble. You people are disgusting human beings. Luckily nobody takes you seriously.

Now continue with your hatefest.

Hatefest? Racist assholes? Little financial trouble? BWAHAHAHAHA
Actually there are millions of us just waiting for the government to begin bailing out you little debt slaves.

You are the ultimate in welfare trash, with your HELOC's, your $50,000 gas guzzling trucks & SUVs, your granite countertops and hickory floors, all paid for with DEBT. You spend this outrageous debt on yourselves and then enroll your children in the low income school lunch program, guaranteeing that your children will grow up to be just as ignorant, snorting and greedy as you are.

You are pigs at the trough, shoving and pushing the other pigs aside to make sure that you get your entitlement right now, and we had better get outta your way.

In another year or so you won't be able to park your guzzler in the parking lot of the supermarket without people keying the door as they walk by.

You say.....Luckily nobody takes you seriously.

Oh really? The backlash is beginning in my town. What town are you in?

I would be worried if I were you.....

Anonymous said...

anon 6:15,

You need to get back on the meds and fast before you hurt yourself or worse, hurt someone else.

avkm said...

It is inevitable that the government will restrict the blog and video sites. As suffering increases in the upcoming depression, people will flock to the truth.

To avoid acts of rebellion spawned by people learning "facts" and "truth", websites such as this will be labeled "terrorist inciter" websites, and the owners promptly tazed.

Anonymous said...

avkm said...

It is inevitable that the government will restrict the blog and video sites. As suffering increases in the upcoming depression, people will flock to the truth.

To avoid acts of rebellion spawned by people learning "facts" and "truth", websites such as this will be labeled "terrorist inciter" websites, and the owners promptly tazed.

People don't want to know the truth. They prefer make believe.

How do you taser "anonymous said"... Will they have AT&T and Verizon who are tapping our phones just do trace routes on our IP addresses? Big job. Keith isn't even in the U.S. How will they taze him?

Anonymous said...

Here's Schiff's take on it:

http://www.europac.net/Schiff-FBN-3-19-08_lg.asp

Why is it that Schiff is the only one with common sense and a brain on Fox Business News?

--------------

Sciff's is just a Doomsayer who cares.

Anonymous said...

Welcome to Japan and a lost decade of no-growth! The Japanese chose this way, to not recognize losses: it slowed the fall of real estate but didn't prevent it, it let insolvent banks save their face and continue to operate, but it robbed better business ideas the capital they needed to grow.

Not so. As I understand it the idea would have banks recognise actual losses. No free lunch. But also no "instant bankrupcty" courtesy of loans that are impossible to put a value on simply because a recent change to the accounting rules says it must be so.