Responsibility

Regardless of your politics, these truths are self-evident.

• Americans ran the world economy off the rails.
• Americans created trillions of dollars worth of paper which could not be properly valued once our real estate market tanked and foreclosures started.
• Americans in the private sector were allowed to do this by Americans in the public sector.

What these Americans did has reverberated worldwide.  The Russian stock market melted down completely over the last few weeks. We probably did more damage to them with CDEs than we ever did with the Cold War.

If this damage were limited to Russia I’m certain some Americans would cheer. But it’s not. Every market has fallen, because American dollars are (like it or not) the world’s reserve currency, and because Americans created phony ones to the tune of trillions of dollars.

Caveat emptor, you say? Maybe.

But will anyone, anywhere, ever trust the American dollar, or Americans again, if we let the economy go down on our cupidity? (No.)

I’m an American. I’m just as responsible for this as every other American. I don’t care if you’re a Republican or a Democrat or a Libertarian or someone who never voted in your life. We are collectively responsible for what has happened here. You are responsible. Nothing you do will wipe the guilt from your hands.

So we have a civic duty, as citizens of the world, to set it right. Otherwise the world will be right to turn its back on us, and your children, and your grandchildren. You can let world markets fall, you can let this crap be written down to zero, but none of the victims will ever forgive you for it.

One more thing. You’ll be one of the victims.

If this Big Shitpile isn’t cleared from the world’s financial colon,
you soon won’t be able to get a mortgage. Businesses won’t be able to
do the borrowing they normally do to meet payroll. Your credit cards
will all be called — think you can pay those notes right now? You will
lose your job and go bankrupt, and the world will still hate your guts.

Here is the solution. We buy a bunch of this shit, take it in for cash
(which we can get for practically nothing because we’ve screwed the
credit markets so bad), and then we find where the value is. We take
apart these CDEs and look at the mortgages underlying them.

Some will be bad. We write them off. Some will be getting bad. We
renegotiate them if we can. Some of those we try to renegotiate will go
bad anyway. We sell back that real estate.

The rest we repackage into new notes, based on collections of similar loans for which
prices can be set. We take a bunch of these 6% 15-year notes that are
paying off and we sell that at $106. We take some 7% 30-year paper
that’s paying off and we sell that at $107. We take some ARMs with a
10% default rate and we sell that at $87. (For every $100 in principal,
the quoted figure is the number of dollars we sell it for.)

When we sell we buy more. As we show how it is done others get into the
market and do the same thing. We make money. They make money. Gradually
the blockage clears.

Then we can talk about re-regulation. We can talk about the ways and
the means. We can talk about who should get mortgages and who should be
turned down. We can talk about all of it — later.

Not now.

Anyone who votes against this package for some lard-assed reason ("It
costs too much." "The government shouldn’t do that." "We might lose
some money.")  is walking away from America’s responsibility to the
world. They deserve to be humiliated before the whole world and
(eventually) by every American.

We did this. All of us. We must fix it. That’s our job.

Failure, in this case, is not an option. Unless you want to re-live
those stories your grandparents told you about the Great Depression.
For real.