In a dire situation to act

Congress representative will take the blame for all, like the short sellers, little did they knew that last Monday we could have seen a 700 plunge if not for short covers, today we have no short covers to save us, no reason for government intervention, no reason to unleash the plunge protection team as there is an urgency to create panic mode, a panic mode to ask congress to pass the second bill that they are going to propose in a similar pattern of the 700 billion plan.

Either ways by hook or by crook the Feds are going to bail their counter parts, either a single powerful push, or a rate cut, both ways would strongly benefit bank and still face a drought in liquidity. The short term rates, Ted spread, Libor are not going to give in to lending so easy.

To act is to change a situation for better or worse, or in this case worst, i think the congress are persisting on holding and adapting to the principles of free market cap although they deny it, we are going in to see the dollar give a strong fight back only to give in to the fact that now the bill has been rejected a rate cut is imminent.

When we talk about this entire issue, first we take hold on what was the purpose of this bailout, to provide liquidity, to allow business to have turnover, short term loans, to free the banks out of liquidity woes, to stabilize the real estate markets, to bring up the employment as corporations have enough capital to squeeze for expansion. Dividends must go for big corporations, in such a dire insolvent situation, i strongly urge to look into the corporations cash rich, as they have the capabilities to buy buy buy.

So back to the plan we need to propose a direct route to provide cash to the down line and not shove it up the banks or major corporations. Since nationalization is such a trend in every country nowadays, why not first empower the FDIC to increase insurance in deposits, provide an emergency insurance scheme for the mortgages that facing foreclosure, the insurance that will ensure that only immediate defaults or foreclosures are going to get the delays in payment backed by the income of holders, the amount of real estate holding, the cash deposits they have and the tax they file.
If businesses have problem with solvency or expansion, enact a bill to pass to boost R&D, Expansion, Business premise Purchase, Acquisition, privileges in form of tax rebates, reliefs, and impose higher taxation on sin goods, like gambling, investment banks, use a multi tier income taxation that are more specific and well researched, Buffet once said that the taxation he faced was so low he rather give out shares to the public to compensate for his earnings. This shows how the reassessment of income tax has to be done immediately, high level CEO , hedge funds, speculators are not being taxed as much as loyal business operators.

A loan or scheme would be proposed to allow businesses to take up but at the market rate but with a longer repayment, 10 years etc or a 1 year loan with the direct opr rates, this are ways to provide liquidity, and not a rate cut that only transfers cash from the feds to the banks and they hoard it up to push rates so high they will earn from all the low yields in deposits, the taxation arbitrage is too large to ignore.

Remember to allow medicare, pensions, 401k,social security funds to be partially withdraw only for settling of mortgage debts, businesses, or unemployed for a certain period to sustain livinghood. Allow a certain percentage to be withdrawn, and those who requires emergency finance support will be required to go thru financial counselling and accessing their financial strenght and assess the ability to repay. The nationalized corporations will have to intervene with the pays of its employees setting the different level of schemes to access the efficiency of job done and the equivalent pay to the employee.

Regulations in accounting standards like the prices of assets, declarations of real estate holdings, etc, must be clear and not being manipulated. Since there have been many talks on accounting standards flaws, i believe the streets are not wrong to impose stronger regulations.

What we want is to go through this crisis and return with stronger banks, stronger financial regulations, eliminate the weaklings and flaws in the financial systems, the cost is unbearable but with the bill rejected we are in for a quicker, more painful cut in the economy, but the moment all the dust is settled, the Americans will make a stronger comeback, and we should not take a shortcut. I mean the storm has just started, 60 cents valuation to the dollar is still too high for direct intervention in Real estate markets, let the private corporations strike deals amongst themselves, eventually they will have to lend when the writedowns are too much to bear.

When the lending starts, or when the prices have significantly gone down, and significantly i value at about 30 cents to 50 cents to a dollar, it is a more viable justification for heavy massive artiliry to be churned out to the depreciating assets. At this moment, at this price and at this level, valuations are overboard for all the wall street corporations 20x p/e, and if we remove financials in the S&p, Dow we are still seeing positive growth. Interventions are still too early we need to focus on putting the money on the streets more and stimulate production, consumption of domestic products.