Fear, Inc

The Wall St bailout continues unabated by 98% of the public who don't want any such thing. Washington proves yet again that it is wholly disconnected from the American public and has no intention of doing the right thing.

Last night our miserable excuse for a President addressed the nation selling the Wall St snake oil that bad things will happen if this bailout doesn't get passed. This morning, on CNBC we are being told that if it does pass to expect a 7 or 8% unemployment figure for the coming years and so on. Woo Hoo!

The Washington Post carries this story by Frank Ahrens called Bailout Could Deepen Crisis, CBO Chief Says Asset Sales May Lead to Write-Downs, Insolvencies, Orszag Tells Congress.

During testimony before the House Budget Committee, Peter R. Orszag -- Congress's top bookkeeper -- said the bailout could expose the way companies are stowing toxic assets on their books, leading to greater problems.

"Ironically, the intervention could even trigger additional failures of large institutions, because some institutions may be carrying troubled assets on their books at inflated values," Orszag said in his testimony. "Establishing clearer prices might reveal those institutions to be insolvent."

In an interview later yesterday, Orszag explained using the following example: Suppose a company has Asset X, whose value is recorded on the books as $100. Because of the current economic decline, Asset X's real value has dropped to $50. If the company takes part in the government bailout and sells Asset X for $50, the company has to report a $50 loss on its books. On a scale of millions of dollars, such write-downs could ruin a company.

Such companies "look solvent today only because it's kind of hidden," Orszag said. "They actually are insolvent" already, he said.

Exactly. The reason I am against the bailout is because the government is trying to save a house of cards. At the end of the day its still a house of cards.

By letting the cards fall, America can start building an infrastructure of credit and economy that serves the nation in this century. It is not only the regulation that is outdated but the market and the mechanisms as well.

Propping up an antique only marries us to something that no longer has relevance. And patching it and shining it doesn't make it any more worthwhile.

Already the estimates for the bailout(s) are escalating. When this fails, we may not even be able to afford an internet connection to complain on.

These are sad days in America. Mad Max here we come.