Chichot historii
/ 83.5.64.* / 2009-04-08 16:15
A congressional panel overseeing the U.S. financial rescue suggested that getting rid of top executives and liquidating problem banks may be a better way to solve the economic crisis.
Yep.
Elizabeth Warren deserves congratulations for maintaining independence and calling it as she sees it. Specifically:
In the report, Warren’s panel said “it is possible that Treasury’s approach fails to acknowledge the depth of the current downturn and the degree to which the low valuation of troubled assets accurately reflects their worth.”
Exactly, as I and others have said for more than two years.
The bottom line here folks is that there is no evidence that these "distressed assets" are distressed simply because of liquidity concerns. In fact no matter where you look you will find evidence - and lots of it - that these valuations in the marketplace overstate true value, as investors such as Wilbur Ross who looked like geniuses buying early at those "distressed" prices have seen their investments deteriorate further - in some cases, a lot further.
Not only that, but the "stress tests" that Treasury are using, specifically their "severe" scenario, is nothing of the kind. Their so-called "severe" scenario only anticipates 10% unemployment, while we're beyond that if you look at broad form unemployment already (U-6) - in fact, well beyond it.
The problem with using "narrower" reported numbers is that it fails to "count" a lot of people who can't pay bills any more (due to being unemployed), along with a lot of people who are severely constrained in their ability to pay as agreed (those forced into part-time jobs where benefits and pay are severely curtailed.)