Secretary Paulson Knows His Latin

March 3, 2008

Quod licet Iovi,

Leading banks are being advised that it would be cheaper to walk away from big buy-out deals than incur further losses on their funding commitments, increasing the chances that more high-profile private equity transactions will collapse.

This advice from lawyers contrasts with the conventional wisdom that
banks would risk serious damage to their reputations if they were to
drop out of deals.
[…]
“We are already there in terms of the economic pain,” said
the head of debt capital markets at one major Wall Street firm.
Big deals under threat over bank losses, Financial Times, March 3, 2008

non licet bovi.

Obviously, being underwater is not insignificant to homeowners in that position. But negative equity does not necessarily result in foreclosure. [..] And let me emphasize, any homeowner who can afford his mortgage payment but chooses to walk away from an underwater property is simply a speculator – and one who is not honoring his obligations.
[…]
People who speculated and bought investment properties in hot markets should take their losses just like day traders who speculated and bought soaring tech stocks in 2000.
Remarks by Secretary Henry M. Paulson, Jr., March 3, 2008

Posted by b on March 3, 2008 at 19:19 UTC | Permalink

Comments

Paulson doesn’t mention that lowering interest rates didn’t actually result in lower mortgage rates. It did result in lower interest rates on saving accounts.
It’s all part of the program.
Cheny said deficits don’t matter.
Bush said there is no recession.
Sanya Gupta said you can releive stress by leaving your money in the stock market during a recession:
HOUSE CALL WITH DR. SANJAY GUPTA
How to Stop Stress; Your Gender and Age Can Affect the Type of Headaches You Get; Hunting Down an Illness; Inspiration to Get off the Couch
Aired March 1, 2008 – 08:30 ET
The first thing that happens is that they want to sell stocks willie nilly. I can’t tell you how many e-mails I’m getting from folks, young folks who want to get out of the stock market right now. How crazy is that? They’ve got lots of time to plan for the future, but they want to sell stocks. Don’t do it.
Look, leave your portfolio alone for a little while. Don’t check your stocks every day. You know, have a little patience You got to sit back and think. And then get a plan. Think about putting a plan in place, because this will relax you a little bit. Maybe you go out, you find a financial adviser.
http://transcripts.cnn.com/TRANSCRIPTS/0803/01/hcsg.01.html
Ain’t the boob tube just wonderful?

Posted by: Sam | Mar 3 2008 20:49 utc | 1

I’m a big fan on the DNA theory of political culture, that when a nation is
ossified to the extent America is, repeating the slogans of a James Buchanan
or a James Garfield, a nation becomes twisted, a repetitive gene expression
recircling itself over and over, to where here we are in 2008, but it’s 1930,
like dog lives in reverse, 2001->1990, 2002->1980, 2003->1970, back and back.
1930, and once again we’re at war with Iran, oil at it’s highest in history,
housing at it’s low ebb again, unemployment at it’s high flood again, our
U.S. President ___ announces suspension of offensive action in ___, Premier
___ becomes president for life of the ___, United States Dollar is devalued
by 41% this time, the United States and the People’s Republic of China agree
to unrestricted trade until one or the other bankrupts, and so on, until:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/03/02/MN72V8VGT.DTL
Until a new paradigm is created, Maerogel … if our genes don’t destroy it.

Posted by: Avo Lanning | Mar 4 2008 4:38 utc | 2

Avo, I expected the sfgate article to be about the end result of US/China deal.
The Aerogel story is fascinating though; one thing that occurs to me is that although the scientist’s cost estimate of $17 per ounce is still way high, the simple fact that material cost is low means that with process development the cost can fall a lot more. Question is will Owens-Corning kill it in its cradle.
Lets see… 37 times more effective than fiberglass, $17/37 = $.46/oz or $7.35/lb. fiberglass equivalent. A ways to go on cost reduction but doable most likely. Goal should be about $5/oz. for demand to reach millions of pounds.

Posted by: rapt | Mar 4 2008 16:32 utc | 3

There are several aerogel products, and several fiberglass products. But a rough comparison would indicate 2-3 times better thermal performance for aerogel compared to fiberglass, not 37.

Posted by: Browning | Mar 4 2008 20:27 utc | 4

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