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Today's
Stories
February 24, 2009
Uri Avnery
Coalition Theory
February 23, 2009
Michael Hudson
The Language of Looting
Mike Roselle
On Cherry Pond: Going Up Against Big Coal in W. Virginia
Patrick Cockburn
The New War in Iraq
Franklin Spinney
Obama Steps on the Pentagon Escalator
Einar Már Guðmundsson
A War Cry From the North
Ralph Nader
How Credit Unions Survived the Crash
Jordan Flaherty
A New Orleans Intifada?
Helen Redmond
Ted's Table: Kennedy and the Corporate Lobbyists Craft a Health Plan
Dennis Loo
The Water Line
Harvey Wasserman
Jet Crashes and Nuclear Reactors: Feds Ignore a Serious Risk
Terry Lodge
The Intelligence is Wrong
Website of the Day
BadCreditReport.Com
February 20 / 22, 2009
Alexander Cockburn
The Lawyer's Tale
Michael Neumann /
Osha Neumann
Remove Our Grandmother's Name from the Wall at Yad Vashem
Ismael Hossein-zadeh
Herbert Hoover Copycats
Paul Craig Roberts
Bill of Rights Under Fire
Linn Washington Jr.
The NY Post's Chimpanzee Cartoon
Saul Landau
On the Road Again
Marjorie Cohn
War Criminals Must be Prosecuted (And Their Lawyers Too)
Binoy Kampmark
Cricket and Cartels: the Fall of Sir Allen Stanford
Dave Lindorff
Using the Recession to Hammer Workers
David Yearsley
Edward Said's Greatest Musical Writings
David Macaray
A Closer Look at the Employee Free Choice Act
James McEnteer
Last Mambo in Minnehaha
Rick Salutin
A Canadian Looks at Obama
Wayne Clark
South Carolina Nears the Abyss
Richard Rhames
Got Farms?
Stephen Martin
Silver Mist Descending
Mitu Sengupta
Slumdog Millionaire's Dehumanizing View of India's Poor
Charles R. Larson
Slumdog Reality?
Richard Morse
Carnival Ramble in Haiti
Lorenzo Wolff
Desperation in an Unavoidable Groove
Poets' Basement
Three Poems of Tu Fu (Trans. K. Rexroth)
Website of the Weekend
Ron Paul: What If the People Wake Up?
February 19, 2009
Norman Finkelstein
The Cleanser: Lobbyists Whistle Up Cordesman to "Prove" Israel Waged a Clean War in Gaza
Harry Browne
How Ireland Went Bust
Robert Bryce
Why the Promise of Biofuels is a Lie
Brian M. Downing
The Winding Road:
From Western Europe to Kyrgyzstan
Fred Gardner
The DEA Chief's $123,000 Flight
Andy Worthington
Obama's Uighur Problem
Wajahat Ali
Aftermath of a Beheading
Laura Carlsen
A New Attitude at the White House Toward Bolivia and Venezuela?
Deb Reich
Gaza: Choose Life!
Christopher Ketcham
Crisis? What Crisis?
Website of the Day
Taking Back NYU
February 18, 2009
Paul Craig Roberts
President of Special Interests
Mike Whitney
Trouble at Treasury
M. Shahid Alam
Afghan Pitfalls
Patrick Cockburn
A Real Surge at Last
Conn Hallinan
Death's Laboratory
Dave Lindorff
Whatever Happened to Antitrust?
Rannie Amiri
The Perils of Blogging in Egypt
Gareth Porter
Pushing Back Against Petraeus on Pullout Risks
Eric Hobsbawm
Remembering V. G. Kiernan
Christopher Brauchli
The Pope's Predicament
Martha Rosenberg
It's the Cymbalta Stupid
Website of the Day
Red Gold
February 17, 2009
Michael Hudson
The Oligarchs' Escape Plan
Mike Whitney
The Global Ditch
Ralph Nader
The One-Dimensional Congress
Joanne Mariner
Benchmarking Obama: How to Evaluate the New Administration's Counter-Terrorism Policies
John Ross
Commodifying the Revolution: Zapatista Villages Become Hot
Tourist Destinations
Belén Fernández
The Venezuelan Referendum From the Back of a Pickup Truck
Mats Svensson
Who is a Terrorist?
David Macaray
Why America Needs Labor Unions
Gregory Vickrey
$400 in Change
M. Junaid Levesque-Alam
Another Hamastan?
Michael Dickinson
Unrest in Istanbul
Website of the Day
Take a Stand for Open Access
February 16, 2009
Patrick Cockburn
Iraq Reconstruction: the Greatest Fraud in US History?
Oscar Guardiola-Rivera
The Truth About Colombia's New Emperor
Paul Craig Roberts
Who Remembers Guns and Butter?
Uri Avnery
Livni's Bitter Options
P. Sainath
The Meltdown: Whose Crisis Is It?
Dedrick Muhammad / Michael Brown
White Recession, Black Depression
Carla Blank
A New New Deal for the Arts
Patrick Irelan
Venezuela Ends Term Limits
Dan Bacher
Is Delta Pumping Driving Salmon and Orca Decline?
Fidel Castro
Chavez's Clarion Call
Harvey Wasserman
Hail to the Spleef: Did George Washington Smoke Pot?
Website of the Day
Mining Black Mesa
February 13 - 15, 2009
Alexander Cockburn
On the Rocks
Joshua Frank
The Myth of Clean Coal
Mike Whitney
Geithner's Coming Out Party
George Ciccariello-Maher
Venezuela's Term Limits: More Hypocrisy From the NYT
Nikolas Kozloff
Venezuela Beyond the Referendum
Brian M. Downing
Pakistan on the Brink
Paul Craig Roberts
Deficit Nonchalance
Christopher Ketcham
Israel's Ball Boys
Ron Jacobs
At a Campus Sit-In Against Israeli Occupation
Dave Lindorff
Why Can Judd Gregg See What Obama Can't?
Alan Maass
Lincoln at 200
Chuck Spinney
Grassley Sounds Off on Obama's Man at the Pentagon
Phil Gasper
Mr. Darwin's Reluctant Revolution
Stephen Lendman
A Short History of Business Handouts
Charles Thomson
Tate Cruises: Caveat Emptor on the High Seas
Kathy Sanborn
The Suicide Rush
Saul Landau
Bowled Over
Len Wengraf
The Nightmare in Somalia
Harvey Wasserman
Striking a Blow Against Nuclear Power
David Macaray
An Easy Call for Obama on Joining a Union
Tom Stephens
Four Freedoms, Four Changes
Seth Sandronsky
Lincoln and the Collective Mind
David Yearsley
On the Road Again
Lorenzo Wolff
Freaking Out With Danny Barnes
Kim Nicolini
The Body of the Worker: What "The Wrestler" Says About the State of America
Poets' Basement
Anderson, Buknatski and French
Website of the Weekend
The Iranian Revoution and the US Dual Containment Policy: a Presentation
February 12, 2009
P. Sainath
Neo-Liberal Terrorism in India: The Largest Wave of Suicides in History
Jean Bricmont
French Echoes of the Israeli-Palestine Conflict
Michael Hudson
Trying to Revive the Bubble Economy: Obama's Awful Financial Recovery Plan
Peter Lee
Pakistan, Not Afghanistan, is the Main Event
Dave Lindorff
Judges Nabbed, Jailing Kids for Kickbacks
February 11, 2009
Neve Gordon
Few Peacemakers in the New Israeli Knesset
Peter Morici
Anatomy of a Hemorrhage
Andy Worthington
Who's Running Guantánamo?
Marjorie Cohn
A Call to End All Renditions
Fred Gardner
Change We Can Smoke?
Niranjan Ramakrishnan
The G & O (Geithner and Obama) Bank
Zoe Blunt
Vancouver Island Hippies: Top Security Threat for 2010?
Belén Fernández
Politics on the Panamericana
Martha Rosenberg
Don't Breathe the Meat
Website of the Day
George Dyson on Project Orion
Blues of the Day
David Vest on the CBC
February 10, 2009
Kathy Kelly
How Do People Keep Going?
Nikolas Kozloff
The Stimulus Imbroglio
Uri Avnery
Dirty Socks
Michael J. Berg
Will South Carolina be the Center of the Nuclear Revival?
Russell Mokhiber
Et Tu, Atul?
Joe Bageant
A Commodity Called Misery
Gareth Porter
Petraeus' Subterfuge
Dave Lindorff
Seek Truth, But Prosecute Liars
Rannie Amiri
The Implications of Recognizing Israel's "Right to Exist"
Harvey Wasserman
Nukes and the Stimulus
Niranjan Ramakrishnan
What We Didn't Learn at Obama's Press Conference
Website of the Day
RIAA Takes Over DoJ Under Obama
February 9, 2009
Vicente Navarro
Why Sanjay Gupta is the Wrong Man for Top US Health Job
Paul Craig Roberts
Driving Over the Cliff
Julio Sanchez /
Feliz de Bedout
The Threat of Peace in Colombia: an Interview with Hollman Morris
National Lawyers Guild
Strong Indications of Israeli War Crimes
Jonathan Cook
Israeli University Welcomes "War Crimes" Colonel
Alana Smith
The Nightmarish Case of Fahad Hashmi
Binoy Kampmark
Taking the Bong
Sam Bahour
End the Occupation First
Nicole Colson
Can You Afford College?
Ron Jacobs
Remembering the Second Intifada
Website of the Day
The Legacy of Ed Grothus and the Black Hole
February 6-8, 2009
Alexander Cockburn
Obama's First Bad Week
Ishmael Reed
Saint Thelma's Book
James Abourezk
Obama, Mitchell and the Palestinians
William Blum
Obama and the Empire
Patrick Cockburn
Maliki's Triumph
Henry A. Giroux
Educating Obama
Manuel Garcia, Jr.
Darwin's Living Legacy
Mouin Rabbani
A New Low on Gaza?
David Yearsley
Ein Volk, Ein Reich, Ein Springsteen!
Saul Landau
The Wrestler: an American Tragedy
Jules Rabin
Israel's Disproportionate Responses
Raymond J. Lawrence
A Country Awash in Money But Going Broke
Janette Habel
Castro's Socialism in Crisis
Dave Lindorff
Economy on a Thread
Missy Beattie
Blackout at the Gaza Zoo Massacre
Dale Gieringer
The Opium Exclusion Act of 1909: Marking 100 Years of Failed Drug Prohibition
John Ross
Davos vs. Belem; Swine vs. Pearls
Richard Rhames
Jobs is a Four Letter Word
Bob Wing
Obama, Race and the Future of U.S. Politics
Robert Bryce
Corn Dog Update: Another Study Exposes Bio-Fuel Scam
David Macaray
AFL-CIO and Change to Win in "Re-Wed" Talks
James L. Secor
Inaugural Questions Nobody Asks: Notes from Kuala Lumpur
Jason Flom /
Anthony Papa
The Scourging of Michael Phelps
Norm Kent
Ten Reasons to Get High About Pot in 2009
Kim Nicolini
When Utopia Crumbles: Why Revolutionary Road was Shut Out of the Oscars
Lorenzo Wolff
Ridiculous Flow:
How Cee Lo Green Sells Soul
Poets' Basement
Emily Dickinson (with Commentary by Daniel Wolff)
Website of the Weekend
S.J. Gould: Darwin's Untimely Burial
February 5, 2009
Michael Mandel
Self-Defense Against Peace
Saul Landau /
Philip Brenner
Killing the Monroe Doctrine
Ralph Nader
Tax the Speculators!
Robert Bryce
The Unraveling of the Ethanol Scam
Russell Mokhiber
Occupied Territory
Sameh Habeeb /
Janet Zimmerman
Innocents Lost
Dave Lindorff
Small Change
Carmelo Ruiz-Marrero
Beyond Green Capitalism
George Ochenski
A Blow to Big Coal in Montana
Website of the Day
Putting CEO Pay in Context
February 4, 2009
Arno J. Mayer
On Corruption
Paul Craig Roberts
The War on Terror is a Hoax
Patrick Cockburn
The Iraqi Elections
Jonathan Cook
An IDF Jihad?
Fred Gardner
Obama's Mixed Messages on Marijuana
Stan Cox
Slumwrecking Millionaires:
India's Fragile New Temples
Margaret Kimberley
The Deepening Economic Crisis
Lawrence Velvel
Agony & Desperation:
Madoff's Victims
Dave Lindorff
A Generals' Revolt?
Doug Giebel
A Helping of Bitter Beltway Baloney
Serge Quadruppani
Student Protests Sweep Italy
Website of the Day
The San Francisco 8
February 3, 2009
David Price
Counterinsurgency & Anthropology: Roberto Gonzalez on Human Terrain Systems
Bill Moyers
Obama's Wars: an Interview with Pierre Sprey and Marilyn Young
Kirkpatrick Sale
Obama's Lincoln Thing
Conn Hallinan
When Mind Wounds Don't Count
Peter Morici
The Slippery Slope of Stimulus
George Ciccariello-Maher
From Oakland to Santa Rita: "Fired Up, Can't Take It No More"
Muhammad Idrees Ahmad
The BBC's Nadir
Allan Nairn
What Does It Take to Get a Meal Here, an Earthquake?
Norman Solomon
Why are We Still at War?
David Macaray
The Late, Great UAW
Website of the Day
The Bloody Cove
February 2, 2009
Uri Avnery
Under the Black Flag: Israeli War Crimes
Ralph Nader
What to Do About Wall Street
Gareth Porter
Generals Move to Obstruct Obama's Iraq Withdrawal Orders
Paul Craig Roberts
The Death of American Leadership
Harvey Wasserman
The Nuclear Industry's Latest Money Grab
Rannie Amiri
Gaza and the Crimes of Mubarak
Cal Winslow
Stern's Gang Seizes UHW Union Hall
Steve Early
Checking Out of Stern's Hotel California
Alan Farago
Superbowl as Panopticon
Diane Farsetta
Banning Domestic Propaganda
January 30 / February 1, 2009
Alexander Cockburn
Obama and the Oddsmakers
Michael Hudson
Obama's New Bank Giveaway
Ismael Hossein-Zadeh
"Too Big to Fail:"
a Bailout Hoax
Dave Lindorff
The Ugly Truth: the American Economy is Not Coming Back
Saul Landau
Freedom Fighters, Terrorists or Schlemiels?
Andy Worthington
Blame the Chef: How Cooking for the Taliban Can Get You Life in Gitmo
Subcomandante Marcos
Gaza Will Survive
Robert Jensen
Future Farming: an Interview with Wes Jackson
Ron Jacobs
Return of the Democrats
Gareth Porter
Is Gates Undermining Another Opening to Iran?
Allan Nairn
Hope for the Dump Cities?
Laura Carlsen
NAFTA's Dangerous Security Agenda
Rev. William E. Alberts
The Feelings of a Stranger
Christopher Brauchli
From Gitmo to Supermax?
Jules Rabin
Israel and the Bomb
Col. Dan Smith
Thoughts From an Inauguration Refugee
Missy Beattie
The US Garden of Evil
Tom Barry
Obama's Immigration Challenge
J. Michael Cole
The Downfall of an Academic
Manuel Garcia, Jr.
Burning the First Amendment
Dan Bacher
How Dam Removal Can Save the Klamath River
David Rosen
Last Gasp of the Culture Wars?
Don Monkerud
Religion in the American Bedroom
Binoy Kampmark
Updike: Apostle of the Middlebrows
Lorenzo Wolff
Playing Down a Bad Reputation: the Lovin' Spooful's Near Perfect Record
David Yearsley
When Orfeo and Euridice Lived Happily Ever After in Upstate New York
Poets' Basement
Valentine and Rihn
January 29, 2009
Peter Linebaugh
Tom Paine's Birthday
Paul Craig Roberts
Is It Time to Bail Out of America?
Riz Khan
The Future of Gaza:
an Interview with Jimmy Carter
M. Reza Pirbhai
Pakistan: a New Cambodia?
Wajahat Ali
Obama's Al-Arabiya Interview
Gregory Vickrey
What About the Environment?
Cap and Trade and Selling Out
Dina Jadallah-Taschler
Whither the Two State Solution?
Alison Weir
Killing Palestinians Doesn't Count: Fact-Checking Ceasefire Breaches
Alan Farago
Economy Without Escape Routes
Walter Brasch
Taxing a House of Cards
Website of the Day
Madoff Inc.
January 28, 2009
Norman Finkelstein
Behind the Bloodbath in Gaza
Noam Chomsky
Obama's Emerging Policies on Israel, Iraq and the Economic Crisis
Patrick Cockburn
Is Mitchell's Mission Already Doomed?
Rob Larson
The Clinton Foundation Donors
George Wuerthner
Who Will Speak for the Forests?
Allan Nairn
South-East Asian Groups Threaten Retaliation Over Gaza Invasion
M. Junaid
Levesque-Alam
A Muslim's Memo to Obama
Stefan Simanowitz
The Silent Trade
Charles R. Larson
The Autumn of the Patriot
Website of the Day
Veggie Love: PETA's Banned Superbowl Ad
January 27, 2009
Winslow T. Wheeler
Save the Economy by Cutting the Defense Budget
Yigal Bronner /
Neve Gordon
Fueling the Cycle of Hate
Joshua Frank
Obama's Neocon: the Curious Case of Richard Holbrooke
Jordan Flaherty
Torture at a Louisiana Prison
Ralph Nader
Access to Economic Justice
Rev. José M. Tirado
How Iceland Fell: a Hundred Days of (Muted) Rage
Benjamin Dangl
Bolivia Looking Forward
Russell Mokhiber
What If Israel Were in Your Neighborhood?
Martha Rosenberg
Who Says Technology Transfer Doesn't Pay?
C. G. Estabrook
The Inaugural Address: the Digested Read
Website of the Day
Who Profits From the Occupation?
January 26, 2009
Paul Craig Roberts
Speaking the Truth is a Career-Ending Event
Deepak Tripathi
The BBC's Day of Shame
Vijay Prashad
The India Lobby:
Drunk with the Sight of Power
Peter Lee
Geithner's Pop Gun Volley at China
Allan Nairn
The Torture Ban That Doesn't Ban Torture
Uri Avnery
On the Wrong Side of History
John Sayen
The Next Shoe to Drop
Dave Lindorff
Afghanistan is No Threat to America
Lawrence R. Velvel
Investing with Madoff
David Macaray
Obama vs. Labor
Roger Burbach
Winds of Change in Cuba
Norman Solomon
The Ghost of LBJ
Website of the Day
Landscapes of Occupation
January 23 / 25, 2009
Alexander Cockburn
The Ghosts at Obama's Side
P. Sainath
The Freefalling Economy
Patrick Cockburn
In Israel, Detachment From Reality is the Norm
Saul Landau
Reasons for War?
Sasan Fayazmanesh
Our Current Economic Crisis: the Monks' Cure
Alan Farago
The Problem with the Stimulus
Christopher Brauchli
When Due Diligence is a One-Way Street
Andy Worthington
Return to Law?
Ron Jacobs
Obama's Pentagon:
Bowing to the Masters of War?
Lawrence Velvel
Investing with Madoff: My Experience (Part Four)
Henry A. Giroux
The Audacity of Educated Hope
David Yearsley
The Music That Wasn't There: Chamber Music for Obama's Masses
Raymond F. Gustavson
Here We Go Again:
General Shinseki and Veterans
Dave Lindorff
The Way Forward
Roberto Rodriguez
Fighting for Migrant Justice in the Desert
Dina Jadallah-Taschler
The Struggle of an Un-People
Fidel Castro
Meeting Cristina
J. Michael Cole
Can Obama's Shift on Terror Succeed?
Bob Fitrakis /
Harvey Wasserman
It's Time to Free Leonard Peltier
Ramzy Baroud
Breaking Gaza's Will
Mohammad Ali Shabani
The Aftermath of the War on Gaza
Richard Rhames
Panning for Pyrite on a Cold Day at the Mall
Stephen Martin
Voices in the Mirror
Lorenzo Wolff
Jurassic Radio
Kim Nicolini
Katrina's Endless Loop
Poets' Basement
Fleming, Henson, First, Jaramillo and Glendinning
Website of the Weekend
Cartoon Love
January 22, 2009
Paul Craig Roberts
Another Real Estate Crisis is About to Hit
Kathy Kelly
Worse Than an Earthquake
Allan Nairn
US Intel Nominee Lied About Church Murders
Lawrence Velvel
Investing with Madoff: My Experience (Part Three)
Andy Worthington
Halting the Gitmo Trials
Peter Morici
How to Fix the Banks
Joseph G. Davis
The First MBA Presidency and the Business Academy: a Damage Assessment
Adriana Kojeve
The Democrats on Israel: a Brief Oral History
Benjamin Dangl
Bolivia Poised for Historic Vote
Website of the Day
Support the Gaza Community Mental Health Program
January 21, 2009
Gabriel Kolko
Understanding Gaza
Harry Browne
Obama's Work Ethic
Michael Colby
Ready. Aim. Organize.
Lawrence R. Velvel
Investing with Madoff: My Experience
Audrey Stewart
Starting Over in Gaza
Wajahat Ali
Obama and the Muslims
Binoy Kampmark
The Marketing of Hope
David Kεr Thomson
Abolition
John Ross
In My Own Bones
Allan Nairn
Killer in Chief: Will This President Murder Civilians?
Sheldon Richman
The Peaceful Transfer of Violent Power
Website of the Day
Globistan
January 20, 2009
Chuck Spinney
Hosing Obama Israeli Style
Kathy Kelly
The Strongest Weapon of All
Raymond Deane
The EU, Gaza and the Lisbon Treaty
Ralph Nader
State Terrorism Against Gaza
Audrey Stewart
Why I am in Gaza
Jonathan Cook
Israel's Doctrine of Destruction
Harvey Wasserman
A Ten-Point Solar Agenda for Obama
Christopher Ketcham
Inauguration Ad Nauseam
Robert Jensen
A Citizen's Oath of Office
Dave Lindorff
Commie Chorus on the Mall: This Land Really is Made for You and Me
David Macaray
SAG Watches It All Slip Away |
February 24, 2009
One Big Bad Bank
Is Nationalization Inevitable?
By PETER MORICI
The Obama Administration is on track to nationalize the nation’s largest banks, unless it alters policy and creates a Bad Bank to absorb commercial banks’ mortgage-backed securities.
The housing market and banks are caught in a vicious cycle.
The market is glutted by builders with too many new homes, speculators unloading vacant houses, banks with repossessed properties, and homeowners seeking relief from mortgage commitments.
As housing prices fall, more homeowners with adjustable-rate-mortgages cannot refinance when their rates reset, and others, simply discouraged, default. Supply increases again, perpetuating the spiral of falling home values, mortgage defaults, and bank losses on mortgage-backed securities.
To cover losses, banks should raise new private capital by selling additional stock. But investors, seeing no end to falling home prices and bank losses, have pushed down share prices to levels making it impractical for banks to raise capital.
The TARP has aggravated the problem.
When first approved by Congress, Treasury was to buy mortgage-backed securities from the banks, but it ultimately determined it was not possible to assess their values. Instead, Treasury used TARP to inject capital into banks, purchasing warrants convertible to bank shares, and left banks to work out their problems.
As losses mounted, so did Treasury’s equity stake and involvement at Bank of America, Citigroup and several other banks. Many investors fear sweeping nationalization is inevitable, and have become even more reluctant to purchase bank stocks.
Those fears will continue until the mortgage-backed securities are removed from the banks’ balance sheets or their potential damage neutralized. However, Treasury Secretary Geithner’s proposal to create a public-private investment fund to value these assets and mitigate their consequences is vague and hauntingly reminiscent of the strategy the original TARP was forced to abandon.
As housing prices fall, the banks will have no place to go but the government for the capital to cover losses, and their ownership will pass into government hands, first Citigroup and then others.
Economists, whether employed by banks or the Treasury, cannot reasonably estimate the ultimate value of mortgage-backed securities and the losses banks will take until the number of defaults and foreclosures is known, and that is the trap that snares the market.
The number of foreclosures cannot be divined without knowing how far housing prices will fall, and the drop in housing values cannot be estimated without knowing the number of defaults and how many houses will be dumped onto the market.
A federally sponsored “bad bank,” or “aggregator bank” could purchase all of the mortgage backed securities from commercial banks at their current market-to-market values on the books of the banks. It could determine the number of defaults by performing triage on mortgages—deciding which homeowners if left alone will pay their mortgages, which if offered lower interest rates and moderate principal write downs could reasonably service new loans, and which must be left to fail.
Implementing those standards and necessary mortgage modifications across the entire market would, at once, limit the number of defaults and determine how much housing prices will ultimately fall. That is something the individual banks cannot accomplish acting independently.
The Bad Bank could be capitalized with $250 billion from the TARP, and it could raise additional capital by selling $250 billion in shares, and another $500 billion to $1 trillion by issuing bonds. The commercial banks could be paid for their securities with 25 percent in shares and the rest in cash.
By sweeping all the mortgage-backed securities off the books of the banks and limiting losses on those securities, the Bad Bank would earn money collect payments on the majority of mortgages that ultimately pay out and sell off repossessed properties at a measured pace. Like the Savings and Loan Crisis Resolution Trust, and the Depression- era Home Owners’ Loan Corporation, it would likely make a profit.
Relieved of the mortgage backed securities, the banks would not be trouble free—they still have auto loans and credit card debt to repent. However, having huge deposits and vast networks of branches, they would be worth a lot to investors again, and could raise new capital, repay their TARP contributions and write new mortgages.
The bankers could then go on their merry way, until a few decades hence, they once again determine their salaries should support the lifestyles of rock stars and create financial products to pay them.
My son plans to study finance. He can solve that crisis.
Peter Morici is a professor at the University of Maryland School of Business and former Chief Economist at the U.S. International Trade Commission.
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