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Two Bills of Interest Advancing In Congress
pgn674 writes "While the Emergency Economic Stabilization Act of 2008 failed to pass in the House of Representatives, two other bills of interest to this community are currently moving through the US lawmaking process. One is the Broadband Data Improvement Act, which Communications Workers of America claims will help us towards bringing high-speed Internet access to all Americans. It will have the FCC increase their granularity in reporting the Internet accessibility of an area in the US, and redefine broadband measurements. It has passed through the House and the Senate, and differences in the passed versions are currently being resolved. The other bill is the Webcaster Settlement Act of 2008. Pandora is excited for this one as it will give them time to negotiate with SoundExchange (i.e. the RIAA) for new, more affordable royalty rates. The bill is currently in the Senate, and is expected to pass with ease."
Didn't we ALREADY give the telecom industry a whole assload of cash to improve broadband in this country?
And exactly WHERE did that money go?
What?
What?
I can't hear you over that gi-normous flushing sound!
Chas - The one, the only.
THANK GOD!!!
Go look at the CBO estimated cost of the broadband bill. $40M in federal grants per year just to get better data? I don't care to read through the text to find where that much money is actually going because I don't care. Listen up maggots, we have a huge deficit. Killing special interest pork like this is the only way we can hope to balance the budget.
Just look at the list of co-sponsors. A rogue's gallery of porkers.
Democrat delenda est
Because after RTFAing I dont feel like I am getting my moneys worth at best, and feel more like I am getting more cataloged and invaded by FCC... For the $202 MILLION dollars they blow between 2008 and 2012 they will institute more bureacracy with zero oversigt and no concrete goals. Providers will have to submit higher detail reports on broadband use (9 digit zips vs 5 digit zips), so that means their overhead will go ip as well, great since we know who will pay for that as well. Bah, time to email Feinstein again and get another spiffin canned "Yeah I hear you loud and clear, but we know whats best for you" emails reply. Anyone else tired of hemmoraging money to the goverment to help them employ more bureaucrats?
It's peanuts. My family's share is forty cents. I'll pay it, just for the information, which ought to be available under the Freedom of Information Act.
Remember, the ISP's and such really don't have much interest in expanding access to broadband.
Not because they can't, but because they don't see a return on the required investment as ever paying off. Because it won't. Very few people are going to be willing to pay more for faster access - the few who do already are, the vast majority of internet users are still just doing web browsing and email, which really doesn't improve all that much with faster broadband.
Now, if the information gathered under this Bill results in a broadband equivalent of the Rural Electrification Act, it'll be a good thing. Annoying, to have my broadband rates raised to pay to provide broadband to the areas it isn't provided, but worth it, in the big picture.
"I do not agree with what you say, but I will defend to the death your right to say it"
When I wrote this up, I somehow thought that the House, the Senate, and the President were the three branches of the US government, instead of Judicial, Legislative, and Executive. I'd written saying that the House and Senate were branches, when they're both part of the Legislative branch. I thank the editor for catching that and modifying my submission a bit to fix it, thus saving my face :)
My understanding is that the readjustment in the MBS (Mortgage backed securities) ratings resulted in a reduced bank holding valuation. Also Money Market Accounts (MMAs) whose value is based on that valuation experienced for the first time in their history a decrease in valuation. Owners of MMAs seeing this decrease, pulled their money out of their MMAs.
Unfortunately almost all 'short term paper' loans are backed by MMA deposits.
Given the deposit ratio requirements, banks suddenly had far more loans out than deposits to cover them.
They were required to borrow money to have the correct deposit ratios, however, since everyone was hit at the same time, there was no one to borrow from.
My proposal, allows banks to make 'short term paper' loans based on their regular deposits (FDIC insured) and allow a temporary increase in leverage ratios for their loans. (Say 20:1, the exact ratio should probably be picked based on total short term paper that was available prior to the MMA withdrawals plus some margin for increased liquidity needs) the ratio would be ratcheted down at say 1/4 pt per month till previous ratios are returned to.
Also greater ratios for MMAs would be allowed, the more MMA deposits acquired perhaps the faster the regular deposit ratios would ratchet down.
Part two - valuation of MBSes.
MBSes are currently valued as nearly worthless in the market, thus no one is willing to sell them since the are clearly worth more than the market is willing to pay, and no one is really willing to buy them at a 'reasonable' price, because there is no clear idea of what a 'reasonable price' is. There is however, an alternative to 'valuing to market' which can be used when the prices the market is giving for something 'doesn't make sense'.
This methodology, known as 'net present value' or 'discounted net present value', evaluates an asset based on its 'stream of future income'. Essentially it gives the discounted value (a discounted value is the value of getting something right now versus getting it at a future date) of that stream of future income.
This would be done for current MBSes, and because they were reasonably valuated would no longer be toxic and untradable.
It would be best to only evaluate a percentage of the MBSes and use statistics to project the value of the remainder of MBSes so that they do not all need to be individually valuated (obviously this would increase the risk premium to buy them.)
For the future I would require a random sample of all assets/securities, etc. to be valued by the NPV method. If there is a significant difference between the two (say 5-10%) then the entity selling the security would need to publish the NPV as well as the market value. This would signal investors that something is amiss with the valuation given by the market, and would likely help to prevent bubbles.
It would probably be necessary for these valuations to be done by an outside auditor or government agency that would do the NPV evaluation to prevent a conflict of interest.
Tom Musgrove
LetterRip
Please forward this idea to your local congressman, senator, newspaper, if you think it worthwhile
Recessions are bad for morale, and bad morale means that the people are more likely to take an interest in those doing the governing. It makes sense for our absurd two-party system to play hot-potato with the recession. Put it off as long as possible, and hope that your party isn't in control when it hits.
Of course, informed people realize that recessions are a natural part of the economy. I guess it sucks to be born into one, but thems the breaks, right?
There's been a lot of exaggeration and misdirection on both sides of this. Credit has not completely dried up ... yet. However it is heading that way and the closer it gets the less root causes matter. You don't tell a lung cancer patient that he ought to have stopped smoking years ago. But you don't invite him to light up in his oxygen tent either.
The problem with the bailout bill is not the sheer dollar figure; the $700 billion, after all, doesn't have to be spent. The fund might accomplish what needs to by spending, say, $100 billion. The difference between what needs to be spent and what could be spent is the double edged sword of this proposal. The existence of a huge reserve creates confidence in the stabilization of credit -- very important.
This is how the Fed control the money supply: through manipulating expectations. People don't think the Fed is going to lower interest rates much, so the power of that lever on the economy is lessened. One of the bailout bill's provisions is to lower the floor on what the Fed can set the reserve rate (the cash on hand banks need to keep to cover possible withdrawals) to zero. Actually doing so would be, of course insane.
The Fed has models which say where the point of insanity comes; let's say that is 2%, and we're at 2.2%. If you know the floor is really 2%, then you know that the Fed can't lower the rate below 2%, then lowering the rate from 2.2% to 2.1% isn't going to change your behavior. If you don't know how low the Fed can go, then old Ben can simply be seen thoughtfully caressing the reserve rate lever. He doesn't actually have to push it to 2.1%, if you think he might, and go even lower, you are going to get your dollars into loans fast. If you don't their value could be seriously deflated sitting on your balance sheet.
The $700 billion figure is kind of like that. You'd be mad to set out to spend that kind of money on distressed investments. But the fact that you could is important. Suppose you really need $100 billion, and that's what you have available. You've spent $90 billion, and people are thinking "that about wraps it up for the fund." When you throw out the next five billion, people aren't even paying attention. It does very little to increase confidence in making a loan to some other institution, so you might as well not spend it at all. If you have $610 billion left, the impact of that five billion you're thinking about using is greater, even before you actually spend it, than the impact of spending five billion when it's half of what you've got left.
Unfortunately, that brings us to the other edge of the sword. Suppose we really only need to spend $100 billion, and the remaining $600 billion is there for psychology. Well, you've just created the biggest slush fund in history and handed it to an administration that is not renowned for its prudence, whatever else you may say about it. You could do a lot of favors with $600 billion.
The problem is Constitutional. The Executive isn't supposed to have a lot of leeway in how it spends money, but the size of that pot of money could buy a lot of indirect leeway.
Personally, I think the answer is to stage the funds. Wall Street does this all the time. When you buy a company, sometimes you snap it up, but frequently you stage the investment in order to make the company jump through a series of hoops.
So, let's say we created a $150 billion fund, and replenished it quarterly in each of the following quarters. If the $150 simply disappeared without a trace, then we could stop the infusion. This reduces the incentive for firms to make abusive claims because they might need the fund to be there next quarter. We can dream up new encumbrances on the funds every quarter as specific abuses arise. If in some quarter we only spent $10 billion in some quarter, we'd only put that much in, but if we spent $100 billion, there would be no questio
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
What of those people that have been out there, saving for a home they could afford...waiting for housing prices to adjust to more reasonable levels....you actually want their tax dollars to pay for people who jumped in over their heads and pay off their houses?
Re-read what I said. You're 180-degrees off from my position. I specifically avoid rewarding the people that caused this whole situation. The people being rewarded are those that did everything right, which in turn brings money back to the banks so they can mitigate their losses. In other words, it rewards people like you and me. Those that bought more house than they can pay for are still left to deal with the banks.
In other words, if you did the right thing then you get rewarded, which helps bail out the banks. If you did the wrong thing, contributing to this problem, you still have debt to pay; which the banks will still feel. What this does is it helps make the banks solvent again, defers payment for some, and pays off houses for others. Best of all, the banks are not rewarded for fraud and neither are the fraudulent home owners.
You can further qualify this by home owners who have owned their home for five or more years and are still in good standing since January of this year. After all, we don't want to punish people who are suffering because of the economic woes brought about by the fraudulent activity. So on and so on. You get the idea. In other words, qualify who is reward so as to exclude those that caused this problem in the first place. The banks suddenly have cash which allows them to be solvent again yet they must still deal with the ramifications of their own poor business practises. In short, they are still going to take a loss; but a survivable loss.
This proposal is leaps and bounds better than rewarding the banks for fraud; which ultimately is trickle down theory, which we know doesn't work to kick start the economy. At least my plan makes sense. Their plan is rewarding the rich and powerful for fraud while doing nothing to stimulate the economy - unless you consider wall street to be the economy - it is not.
And to be absolutely clear, wall street has lost 10%+ on many historic occasions before. This is not the first time. The sky is not falling. The recent fear mongering is an attempt to pass the charity which is only good for the rich and powerful.