Mortgage (global economic crisis)
Iran (potential war with Israel and surrogate war with US and Russia)
Afganistan (has never been at peace and potential for surrogate war with US, Iran, and Russia)
Russia (reconsolidation and potential surrogate wars with US)
Georgia (puppet regime thinking big brother is going to save them and sadly being right)
Venezuela (looney in charge)
Cuba (current looney being replaced by?)
Israel (stock piling US arms)
France (in the throws of unchecked imigration)
North Korea (looney power vacume)
Africa (more starvation, drought, and breading ground for new diseases/virus)
America (Hell bent on NOT getting off foreign oil unless we drill in every national wild life reserve… forget electric cars, biofuel, or other alternatives lets just burn ethenol and destroy our engines, lower our mileage and ignore the fact that it doesn’t save us any freaking money or the environment…)

So yeah, I have five kids and the world has me a bit off my ease right now.

I believe firmly in regulating the:
* Airline industry (the US “Just in time” business strategy needs acceptable time lines for delivery of people and goods)
* Energy industry (Lifes depend on energy)
* Financial Markets (To smooth the bumps be it bubble (telecom) or collapse (mortgage)) (Lives depend on financial stability)

De-regulation of many industries have crippled this countries ability to operate and compete. Our stability and ability to deliver has been greatly reduced in the past 10 years and the only thing keeping it hidden is market excess or “Irrational exuberance”

http://tinyurl.com/3thhx7

As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:

1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries “systemic risk.” The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.

2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.

3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America’s dynamic and innovative private-capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.

For these reasons, we ask Congress not to rush, to hold appropriate hearings, to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.

Full text and a list of the signers can be found at:
http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm

A paper written by economists Franklin Allen of the
University of Pennsylvania – Finance Department; European Corporate Governance Institute (ECGI) and Elena Carletti of the University of Frankfurt Center for Financial Studies traces the development of the current crisis and focus on the role that liquidity problems played in it.

One of the points made by the paper is that a method of valuing called mark to market (where the current value of something, usually contractual rights to receive, or deliver, cash or another financial instrument, based on the current market price for that instrument or similar instruments) can understate the value of banks and other intermediaries and make them appear insolvent when in fact they aren’t.

Example: the final value of a futures contract that expires in a year from today won’t be known until it expires. If it’s marked to market, for accounting purposes it is assigned the value that it would fetch in the open market currently. This can lead to an understating of the actual value of contract when it expires. Currently FAS Statement 157 (a rule put into effect by the Federal Accounting Standards Board – if you take accounting courses, you learn about these people) requires that certain assets held by financial companies, including sensitive investments linked to mortgages and other kinds of debt, be marked to market. In other words, you have to value the assets at the price you could get for them if you sold them right now on the open market. You can see how this would be a major factor in the current crisis.

The paper suggests that “…in financial crisis situations where liquidity is scarce and prices are low as a result, market prices should be supplemented with both model-based and historic cost valuations.” In other words, allow financial institutions to depart from mark-to-market accounting in determining capital ratios and solvency metrics until this crisis ends.

A little point counterpoint:
http://en.wikipedia.org/wiki/Community_Reinvestment_Act
Conservative economists claim that the CRA encouraged risky lending[6] [7] and the development of the subprime debacle, but this is disputed, as Robert Gordon has pointed out that approximately half of the loans were made by independent mortgage companies which were not regulated by CRA at all, and thus had no government obligation to offer credit to minorities. These companies made subprime loans at twice the rate of CRA banks. Another third of the major subprime lenders had very little CRA involvement.[8] Further, the weakening of the CRA in 2004 was followed by intensified subprime lending.[9] In favor of the idea that CRA encouraged the mortgage crisis, however, economics professor Stan Liebowitz expressed his opinion that banks were forced to loan to un-credit worthy consumers with “no verification of income or assets; little consideration of the applicant’s ability to make payments; no down payment.” The chief executive of Countrywide Financial, the nation’s largest mortgage lender, is said to have “bragged” that to approve minority applications “lenders have had to stretch the rules a bit”, suggesting that Countrywide was responsible for relaxing its standards rather than the other way around.[10]

Economics professor Thomas DiLorenzo attempts to counter Gordon’s statistic by arguing that even if half of the subprime loans were made by non-CRA companies, the CRA had caused tens of billions in defaults on mortgages by unqualified borrowers.[11]

Congressman and 2008 Republican presidential candidate Ron Paul has partially attributed the ongoing subprime mortgage crisis to legislation such as the CRA.[12]

Ellen Seidman, the former director of the US Office of Thrift Supervision,[2] argues that the CRA did not have an effect on the United States housing bubble. She observes that CRA banks were particularly warned to make responsible investments, citing a speech by herself as an example.[3] She notes that if unregulated independent mortgage companies do make subprime loans, affiliated CRA banks should not be able to count them for CRA purposes, although she does not indicate whether this practice currently occurs.

An analysis by attorneys Traiger and Hinckley concluded that CRA banks were less likely to sell risky mortgages onto the secondary market, and likely mitigated the effect of subprime crisis.[13]

Another good read:
http://www.lewrockwell.com/dilorenzo/dilorenzo125.html
http://en.wikipedia.org/wiki/Subprime_mortgage_crisis

People aren’t eager to bail out these large failing companies, but the alternatives seem worse. If the wrong banks fail chances are likely it will throw us into a depression and stall economies around the world. It’s as if your son confessed he owed $20k to a bookie. You might not enjoy bailing him out. He certainly doesn’t deserve it, but the alternatives are much worse.

…And just as you’d discipline your son after his debt is paid, so too must the government decide how they will avoid this crap in the future. Do we increase government regulation (ew.) or do we risk the next generation may repeat these mistakes. Bear in mind, in 1999 and 2007 two pieces of legislation designed to guard against abuses that caused the 1929 market crash were repealed. These are among the half dozen factors that contributed to our current problems. Clearly the stock market is dangerous, and we can’t leave greedy men to govern themselves.

Our 401k may be in danger, but raising our taxes to save them in like stealing from Peter to pay Paul. From what I understand, the Fannie Mae and Freddie Mac bailout were just that: free money & golden parachutes. (Please correct me if I am wrong.)

AIG was different. AIG is getting a large 2 year federal loan to help keep it’s operations afloat. Why AIG and not the airlines or Pa’s Hardware store? (1) A bankrupt AIG would sink the global economy. $1.1 trillion in assets. (2) AIG boasts diverse income. AIG stands a good chance to pay back the loan. The loan carries a hefty 12% interest rate. The government may turn a pretty profit, but even that silver lining turns my stomach. Americans already believe running a government requires the same mentality as running a business when in fact the two ought to have opposite mentalities.

This new round of “bail outs” worries me. The folks asking for the cash are applying pressure or order to avoid scrutiny. They want things to move quickly and quietly. We are fortunate that some representatives agree with Kate and others are afraid to loose Kate’s vote. From what I understand, congress did not approve the initial terms. They want to know why the cash is needed and how it will be used. (My old senator Richard Shelby lead the 5 hour panel hearing. You go, boy!)

I like your solutions, especially the part about no golden parachutes.