Wednesday, October 1, 2008

Bailout Alternatives

Are your reps in Congress listening to you? Scroll down the front page of to vote. (Thanks to Geckolizard at The Oil Drum.)

Should the Senate pass its revised version of the $700 billion bailout bill?

If you're going to complain about what's wrong, you should be willing to talk about what's right. So, here are the plans that might help.

Rubini's plan on CNBC Look for the video called "HARDTalk US Bailout Special."

Congressman Defazio's plan: No Bailouts Act

Karl Denninger's Genensis Plan:
The solution to the trust issues in our financial system is elegant and it will work.
1. Force all off-balance sheet "assets" back onto the balance sheet, and force the valuation models and identification of individual assets out of Level 3 and into 10Qs and 10Ks. Enact this requirement beginning with the 3Q 2008 reporting period which begins next month.

Total taxpayer cost: $0.00

2. Force all OTC derivatives onto a regulated exchange similar to that used by listed options in the equity markets. This permanently defuses the derivatives time bomb. Give market participants 90 days to get this done; any that are not listed in 90 days are declared void; let the participants sue each other if they can't prove capital adequacy.

Total taxpayer cost: $0.00

3. Force leverage by all institutions to no more than 12:1. The SEC intentionally dropped broker/dealer leverage limits in 2004; prior to that date 12:1 was the limit. Every firm that has failed had double or more the leverage of that former 12:1 limit. Enact this with a six month time limit and require 1/6th of the excess taken down monthly.

Total taxpayer cost: $0.00
And more...

If you like one of these, put it in the ear of your Rep/Senator.

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