[url]http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a8DIq9yO0vzY[/url]

 Sept. 23 (Bloomberg) -- Treasury Secretary [URL="http://search.bloomberg.com/search?q=Henry+Paulson&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1"]Henry Paulson[/URL]'s $700 billion plan to buy devalued assets from financial companies is ``a joke'' because it doesn't go far enough to calm markets, said [URL="http://search.bloomberg.com/search?q=Kenichi+Ohmae&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1"]Kenichi Ohmae[/URL], president of Business Breakthrough Inc.     
    Ohmae, nicknamed ``Mr. Strategy'' during his 23 years as a [URL="http://www.mckinsey.com/"]McKinsey & Co.[/URL] partner, called for a $5 trillion ``international facility'' to be made available to financial institutions. The system could be modeled on one used by Sweden during its banking crisis in the early 1990s, he said.     
    ``This is a liquidity crisis,'' Ohmae said at an investor forum hosted by CLSA Asia-Pacific Markets, the regional broking arm of [URL="http://www.bloomberg.com/apps/quote?ticker=ACA%3AFP"]Credit Agricole SA[/URL], in Hong Kong yesterday. ``The liquidity has to be so big that people won't get panicky.''     
    Paulson's proposal to remove hard-to-sell assets clogging the financial system marks the broadest intervention since at least the Great Depression. Asian stocks fell today, following U.S. shares lower as investors questioned whether the effort is enough to prevent a recession.     
    The plan came after the collapse of 158-year-old [URL="http://www.bloomberg.com/apps/quote?ticker=LEH%3AUS"]Lehman Brothers Holdings Inc.[/URL] and the government takeover of insurer American International Group Inc. caused financial markets to seize up last week. The calamity was the culmination of a year during which the U.S. housing market slump left banks and securities firms with more than $520 billion of asset writedowns  and credit losses.     
    Yesterday, Paulson and lawmakers narrowed their differences on the plan and agreed that the U.S. should get equity in participating companies.     
    Hard to Coordinate     
    Ohmae, 65, is the author of management books including ``The Mind of The Strategist,'' ``The Borderless World'' and ``The End of the Nation State.'' [URL="http://www.bbt757.com/eng/company/profile/03.htm"]Business Breakthrough[/URL], founded in 1998, provides online management training.     
    One way of funding the $5 trillion facility would be through contributions from foreign exchange reserves in China, Japan, Taiwan, the Gulf states, the European Union and Russia, Ohmae said.     
    An international relief effort on that scale might be difficult to coordinate, said [URL="http://search.bloomberg.com/search?q=Robert+Howe&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1"]Robert Howe[/URL], founder of Hong Kong- based hedge fund manager Geomatrix (HK) Ltd., which oversees $32 million. ``I doubt the practicality of getting international cooperation on something like this,'' he said.     
    Ohmae compared the current financial crisis with Japan's 15- year economic decline that began in 1989. Both started with a property bubble, which wiped out companies' equity when it burst, and like in Japan, the current one could lead to escalating bankruptcies as banks worried about their own survival rein in lending, he said.     
    `Viagra' Economy     
    The financial-market upheaval may lead to slower growth in China and the reversal of the commodity boom as ship orders are canceled and steel supply dumped, said Ohmae. What Ohmae called Japan's ``Viagra'' economy and Australia's ``dig and deliver'' boom may also fizzle as China weakens, he said.     
    Against the backdrop of a potential global market panic, Paulson's plan is insufficient, said Ohmae. Paulson is a former chief executive of [URL="http://www.bloomberg.com/apps/quote?ticker=GS%3AUS"]Goldman Sachs Group Inc.[/URL], the world's biggest securities firm.     
    ``He wants to fix problems one by one as if he were still the chief executive officer of Goldman Sachs,'' he said. ``He has to take his CEO hat completely off and come up with a systemic solution as opposed to a one-by-one solution.''

Re: $5 Trillion Cash Pool Needed to Stop Rout

what would happen if they printed all that money, gave it to people to sort out thier business, and then started taking in money and burning it?

wouldn't that quickly solve debts....and reduce the amount of potential inflation and deflation of the dollar/

Re: $5 Trillion Cash Pool Needed to Stop Rout

This isn't a liquidity problem...its a solvency problem. What all these jokers are proposing is like giving crack to an already overdosed junkie.

Re: $5 Trillion Cash Pool Needed to Stop Rout

there was a great article in the paper regarding a potential placement of michael bloomberg to US economic czar. i'd be all for it. shit, he got NYC and the 5 boroughs back on the path to being in good shape.

Re: $5 Trillion Cash Pool Needed to Stop Rout

[quote=Lorn;653731]This isn't a liquidity problem...its a solvency problem. What all these jokers are proposing is like giving crack to an already overdosed junkie.[/quote] We've gone back and forth on this a bit, and I respect your opinion. But I want to make sure I understand you clearly. Are you really saying that we as a nation should do nothing - that we should just let this crisis work itself out in whatever way it naturally does?

Re: $5 Trillion Cash Pool Needed to Stop Rout

[quote=Miroslav;653740]We've gone back and forth on this a bit, and I respect your opinion. But I want to make sure I understand you clearly. Are you really saying that we as a nation should do nothing - that we should just let this crisis work itself out in whatever way it naturally does?[/quote]

Its a good question and one that should be put to those who are apparently in charge.

My answer? Yes and no. As the current motion by Bernanke and Paulson stands, if thats the only option Congress is willing to consider then I say yes, do nothing and let the house of cards fall where it may. America's history is one of picking itself up during tough times and striving forward.

This bailout is plain and simply a tax bill. And to boot, it creates no equity, ie. jobs, infrastructure, services. Nothing. We (tax payer) get nothing out of this. Banks (at least the chosen few) will get rid of some nasty assets off their balance sheets, but now those assets are on the governments balance sheet and they are still bad assets. The argument goes that these banks are now recapitalized. Ok. But who the hell wants to borrow money right now? And what bank is gonna lend money?

Also, what will prevent the banks from attempting to do the very same thing when precedent has just been set that government will bail them out?

So I ask, what is the real problem here?

One plausible answer: Consumers and corporations are deep in debt with increasingly fewer resources to service that debt.

The economy isn't going into recession or on the verge of recession like these clowns in washington are tongue lashing us with. No, the economy IS in a recession NOW. I don't have to wait for the official numbers to tell me that is so.

For the last decade, if not more, the US and the world, has been on a massive credit binge. The debt loads are tremendous. The train appears to have come to its last stop. Yet, it seems Paulson and company desperately don't want this train ride to end.

We need to look at the bigger picture and realize as a people (US) the amount of money being spent is simply too high for us to service.

1. Iraq war. I don't even want to think about how much this has cost, in dollar terms or lives. Lets end it now, get out and stop that spending.

2. Congressional Spending. Congress needs to step up and take their share of responsibility for this mess. Congress has passed hundreds of programs to make housing more affordable, including the biggest, Fannie Mae and Freddie Mac. We all know how successful that has been. Congress should have nothing to say on the owning vs renting subject.

Also, they are directly responsible for deficit spending. This needs to stop. Balance the budget, it can be done.

3. The FED. This entity should be abolished or changed drastically to reduce its power. Micromanaging of anything leads to failure. To think an entity such as the FED can micromanage (even manage for that matter) an economy as large as the US by raising/lowering interest rates .25 here and .5 there is to put it lightly, asinine.

So, not really sure if this gives much of an answer other than going over the problems at hand. Honestly, maybe there isn't an answer to 'get us out' of this mess.

On the other hand, I am a firm believer of the psychology of the market and the psychology of the masses. It takes confidence for things to work. If this bailout helps to bolster the confidence lvls of people than i won't dispute it. Just have to wait and see on that score.

All these are my opinions. They mean nothing in the grand scheme of things. What happens is what happens. As an individual I must deal with it and hopefully live with a certain amount of good will for my fellow man.

Re: $5 Trillion Cash Pool Needed to Stop Rout

[url]http://www.ft.com/cms/s/0/83bfe68c-8a8f-11dd-a76a-0000779fd18c.html[/url]

Here we go again...more crap. Lets just face it, american cars are crap for the most part. They need to fix that first.

Re: $5 Trillion Cash Pool Needed to Stop Rout

[URL]http://www.moneyandmarkets.com/files/documents/Final-Bailout-White-Paper.pdf[/URL]

Just thought I'd post this link. Very well presented. Certainly falls in the category of other options.

[url]http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm[/url]

List of economists protesting the current bailout bill.