Paulson resists calls for added help in bailout

Please, this notion that the taxpayer is writing a "Pass Go, Collect Your Money" check to a bunch of Bad Actors is simply not true. The taxpayer has made money in the past, with loans to Chrysler, with the Resolution Trust, etc. The assets being taken over aren't necessarily bad.
How did we get here? You take a bundle of loans -- thousands of them -- paying between, say 7% and 9%. You figure in an actuarial rate of default, say 6%, and arrive at a yield -- say, 8.5% for the sake of argument. These look like a good deal, so hedge funds want lots of them. There's an almost unquenchable thirst for them and brokerages like Bear and Lehman will lend money to those funds until they're leveraged out ten-to-one so they can buy, buy, buy. Then, horror of horrors, the actuarial calculations prove too optimistic because lenders are writing some incredibly shaky loans out there in order to keep feeding the monster. So, the default rate goes to 9% and the yield on the bundle goes to 7.5% (I'm making up numbers here, the direction of the numbers is more important than the accuracy). The Triple-A ratings go up in smoke. The collateral (the bundles) underlying all that leverage is suddenly of "unknown" value. The lenders (Bear, Lehman) want the borrowers (hedge funds) to come up with more equity (a margin call). The fund manager, looking at the direction things are taking and faced with coughing up billions, says, "No thanks, I'm out of here." Now, Bear and Lehman and the rest of them OWN all these bundles the same way a bank owns a house in default. They own LOTS of them. And because of mark-to-market rules they have to carry them on their books at -- what? No one knows the market value of the bundles because there are so many of them and people are panicking. Bear and Lehman and the rest have these bundles that are paying 7.5%, but in panicked market they have to mark them down so far on their books that it looks like they're holding Kryptonite, not a yield-producing debt instrument.
Okay, flash forward to today. The government is taking those bundles off the hands of the brokerages the way you'd take a cement block away from a drowning man. Good idea, right? And, to torture the metaphor, that cement block, used properly, has value. That's where the government's ability to "wait it out" comes in. Yes, the taxpayer is taking some risk, but the taxpayer is also taking over a HUGE number of mortgages that are going to be paid off over time. In fact, the majority by far of what the taxpayer is taking over will be paid off and those bundles will have a positive yield. AIG is just the next daisy in the chain -- if politically the government had been able to do a "bail-out" a long time ago, things wouldn't have gotten nearly this bad. But because of everyone who doesn't really understand what's going on screaming "bail-out! The Bad Guys are getting away with it!" the government had to wait until things were REALLY bad before taking steps. Trust me, the Bad Guys are going to get a serious change in lifestyle...

Very good job in explaining the situation, Jimmy. I commend your understanding. But as you have included, there is risk to the taxpayer and that is of grave concern for most of them (us). In a perfect world the scenario you have laid out would be less risky, but the world isn't perfect and we don't know what will be the next shoe to fall ~ or how many shoes will eventually fall. Therefore, certain protections for taxpayers should be included in the legislation ~ plainly stated, not left to ambiguity or subsequent interpretation. That is not too much to require when the principal amount is $700-billion. I'm certain the Democrats will catch Holy Hell for demanding some consideration for homeowners who are in default (not foreclosure), but the "little guy" deserves some consideration ~ just as much as the fat cats ~ if for no other reason than there are a lot more "little guys" than fat cats. I hope congressional Democrats stand firm on this ~ but I wouldn't bet the butter and egg money on it. In an election year, all bets are off.

Thank you JimmyBobby.
A few of my aqquaintances, who prefer not to enlighten themselves in national politics or economics have a hard time understanding "What's the big deal?" and I was having a hard time explaining what happened. I'll just direct them to your post.

For those who want to blame the Bush administration, read this:
"The House Committee of Financial Services, chaired by Barney Frank (D-MA), has the following responsibilities: (Based on their website):
The Committee oversees all components of the nation's housing and financial services sectors including banking, insurance, real estate, public and assisted housing, and securities. The Committee continually reviews the laws and programs relating to the U.S. Department of Housing and Urban Development, the Federal Reserve Bank, the Federal Deposit Insurance Corporation, Fannie Mae and Freddie Mac, and international development and finance agencies such as the World Bank and the International Monetary Fund. The Committee also ensures enforcement of housing and consumer protection laws such as the U.S. Housing Act, the Truth In Lending Act, the Housing and Community Development Act, the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Community Reinvestment Act, and financial privacy laws."
Seems to me that there's plenty of blame to go around. Congress has oversight responsibility over these markets. Where were they? Out campaigning?

Nice insight Jimmybobby:

unfortunately its not governments job to be in private business and to bailout those that fail.

Trust me, the Bad Guys are going to get a serious change in lifestyle...

I seriously doubt that. They have not in the past or present...they walk away with impunity..enough is enough.

good story though, except you leave out important details...the tax payers make nothing..the boys on the hill do. but the people whose labor is pledged to this do not.

Yes, the taxpayer is taking some risk, but the taxpayer is also taking over a HUGE number of mortgages that are going to be paid off over time.

Keep your freaking kool-aid to yourself!!!! THESE ARE BAD DEBTS!!! WE ARE ONLY BUYING BAD DEBTS!!!

Just one more point to respond to comments: the risk the taxpayer is taking is not that great -- we're getting a great deal on these debt instruments -- and, more importantly, if we don't clear these off, if the credit markets continue to be frozen, the consequences will be catastrophic beyond anything that risk represents. Credit is the oil in the engine of our economy. Without it, the engine freezes up and anyone who knows anything about engines knows that when it freezes, you can't just put a little oil in it and start it back up again. It's f**ked. So, as Paulson says, this is a regrettable circumstance but we have to fix it now or we'll all be living in the Stone Age in a month.
The villains here are the hedge funds, who were allowed to take on WAY too much debt and were unregulated because in the old days, when they played with their own money and didn't leverage so much, they were seen as having no great effect on the economy. Warren Buffett saw this coming a long time ago, but no one listened. And yes, those hedge fund guys -- some of them lost their income but some got to keep it, and I wouldn't have a problem if you wanted to put them in jail. But they are NOT the people who are being bailed out by this program. They're long gone. The people getting bailed out are the financial institutions who lent them all that money.

sorry jimmy your not even close to selling me on anything

Comment to ROY WILSON-336103:

Barney Frank has been chair for only 2 years. this debacle goes further back than that.

The committee is chaired by the ruling party, who since 1993-2005 were the Republicans. If you want to point fingers, it should be pointed toward them (and be my guest and use your middle one while you are at it!) Their cry of smaller government and DEREGULATION got us into this. And it seems that now, under the current Republican administration, we have the biggest government in our history!

As to the situation at hand, I see nothing wrong in the Democratic Congress asking that the taxpayers, who are bailing out Bush's rich friends, get some sort of protection and help from all this, after all the money is coming from our pockets (and please spare me the "The rich pay more tax" BS, they also have more loopholes to hide the money under too.)

But no matter how you slice or dice this situation, the blame will be placed on the Democrats, and the Repugnants will skip merrily out of this mess like the rats they are!

If most of the debt could be recouped, than why couldn't these financial institutions do this on their own? Because they are in business to make big profits, not just to be solvent. This is a bail-out for a reason, which is that the tax payers will be stuck with about 1/3 of the debt after selling off assets.

My question is why wouldn't banks continue to lend to qualified businesses and individuals? This is their business and how they make profit, so why not? What is the proof that loans would not be available at all (frozen), even to those who are not a risk? I'm not sure I buy this.

As for homeowners that got in over their heads, it may sound harsh, but I don't think they should be bailed out either. The reason Fannie Mae/Freddie Mac were established was to help people achieve the American Dream of home ownership. Now home prices are artificially high and need to correct--yes a lot more. If prices were realistic, and people were earning incomes in keeping with inflation, then people could buy homes without subsidies or risky financing. The very problem with Fannie Mae/Freddie Mac is that these institutions were already quasi-government agencies not held to market forces ("moral hazard"). What I see is more of the same with the bail-out solution.

In regard to the depression, let's not forget that there were several programs for recovery, including the WPA, etc. that provided jobs and largely how our nation's infrastructure was built. Lord knows we need jobs and investment in infrastructure again. This would be a much better and productive way to help Main Street than keeping home prices out-of-reach with tax dollars.

JimmyBobby said the following:

. . . . Credit is the oil in the engine of our economy."

Jimmy that is a big part of the problem there has been simply too much credit handed out that never EVER should have been. What should have been done instead of handing out all this credit and printing all this money was to take our damn foot off the credit gas pedal. The oil to our economy should be real earnings and real savings, not credit. All that credit being handed out by lenders and other financial institutions that then bundled their bad loans up and dumped them on the big boys (who should have played much smarter for there share holders) and ultimately as it looks right now the American people is the problem.

Since 1999 we've had the financial markets deregulated through legislation as well as having the watch dogs of of our markets getting hamstrung and their hands tied by shrinking budgets and shinking manpower. Why? Well it certainly made it easier to not only hide the problem but to prolong the mess and allowed for many of the people you called the "bad guys" get out with a very nice profit (Yes I own stocks and had a very nice 401k and I was doing pretty well myself, then early this year the worm turned and I've seen my retirement shrink in 9 months over 12%).
We've seen this mess coming for months if not a couple years and no one did a thing until now and even now this mess stinks to me and I'm going to say right now this is STILL NOT over.

Not only have the financial markets been deregulated but the credit card companies got to rewrite the bankruptcy rules and have made it nearly impossible for a single citizen to seek bankruptcy relief and NOW you say screw the little guy but bailing out the the big guys is all fine and dandy. Yes, I know if we let the big guys sink then it is very likely I'll lose even more of my retirement but you know what, I'm really okay with that because I do not believe it is fair to put this beast on the backs of our children and beyound without some kind of consumer protections to not include those types of protections simply smacks of yet more corporate and government backroom dealing leaving the people (you know US) holding the bag and the REAL problem is although you want to act like you are CERTAIN what the risks to us are you really do not KNOW anymore than the rest of us. That my friend is why you couldn't use real numbers and that is why we're getting ESTIMATES of the cost this bail out is LIKELY to reach, NO ONE KNOWS FOR SURE ANYTHING about the health of alot of other giants out there because no one's been watching for far far far too long.

And lastly, we've still got to deal with the energy market deregulation that is a big piece of this mess in my opinion because those investors and banks were doing the same things in the energy markets and I bet my last $10 has some yet unknown connections to this whole mess.

See JimmyBobby, not everyone has put the oil price inflationary problems caused by speculation in the same room as the mortgage crisis but they are 2 sides to the same coin and for you to sit there (where ever there is) and act like you know the REAL RISKS to the American people you are not only fooling yourself but you are trying to fool others as well.

Part of the bailout legislation must be to hold individuals involved in these bad transactions responsible at every step. Therefore, require that someone(including managers and CEOs) who approved a bad loan would each get taxed the amount of the homeowner's mortgage payments up to the point of foreclosure. If the paper was sold to another institution, the individuals there involved in the transaction would each be taxed that amount also. No individual would be taxed so that their total income for the years in question dipped below the average annual incomes in that state. Would these financially inattentive/unethical people suffer? Yes, that is the point, but then so do the duped mortgage holders. Use this "tax" money to reimburse the buyers their full amount of mortgage payments. Use the excess "tax" monies to pay for the auditors who will track down the people involved in every single transaction involving every single bad loan. Anything left over goes to the US Treasury. There will be many questions about what is fair to do in some circumstances. Randomly pick a US citizen to make the decision, which would be appealable only to a panel of 3 randomly picked US citizens, and not to any court or agency. However, any "taxed" individual could sue their company to get reimbursed (dollar for dollar only, no punitive damages) in civil suits.

Here are the problems not discussed in this article:

1. Paulson approved changes in the debt to asset ratios for 5 banks and 5 banks only, about 4 years ago. That change was to reset the limit from 12:1 to 30:1. It is those banks that are failing.

2. There is one reason why the "instruments" being sold by those banks are not liquid at this time. Those so-called "instruments" are so complex that they cannot be valued. They were sold on confidence, but at this point in the cold light of morning, what they are is a big question mark. Are they worth anything at all? Who knows?

Instead of sending in teams to pore through these "instruments" that cannot be sold anymore in order to establish their value or lack thereof, Paulson is wanting to hand them off on the taxpayer at face value. Why? I think that is a very strange thing for him to do.

Banks have failed regularly. The most common reason is fraud by the bank or by a customer of the bank.

The problem with the taxpayer buying this stuff is that if it is worthless paper (which it likely is) that is a huge cost for us to absorb.

Letting them fail will send a harsh lesson through the system which will result in long term health of the financial system.

Florida, your ignorance is showing. We're not buying only bad debt, no matter whether you put it in capital letters or not. Go read up and find out what a Collateralized Mortgage (or Loan) Obligation is, then come back and yell some more, okay?

JaRagga -- there's credit and there's credit. I agree with you, obviously, that there's been too much credit handed to the consumer. The credit I was talking about is specifically the short-term commercial paper that businesses in this country -- large and small -- use to get through their days and weeks. Even successful businesses like AIG, that make lots of profit, need short-term credit to function. What's happened is that because of the effects of the other credit excesses, this very necessary form of credit -- to keep the wheels turning -- has started to be unavailable. When that happens, and the wheels stop turning, everyone goes down. We really can't afford that, which is why Paulson is pouring oil into the crankcase.

Thers aren't very many robberies that were not supposed to happen "very quickly"

JimmyBobby

A later version expands the definition of the financial firms that would qualify to sell their bad debt to the government

Perhaps I'm mis-reading all of the news reports...

Collateralized Mortgage (or Loan) Obligation

You mean the ones where the mortgage industry packaged all of the sub-par loans together and resold them as high-yield investments? You mean those bonds? Either way, please feel free to quote the line from the "Treasury's Financial-Bailout Proposal to Congress" that specifies that they will be buying bonds that are a mixture of "good" and "bad" loans.

Florida:
No, no, and no again. The CMO's and CLO's and other such things were not "where the mortgage industry packaged all of the sub-par loans together and resold them as high-yield investments." No, dammit! They packaged mortgages, period. Some of them went bad. They anticipated that SOME would go bad, and factored that into the yield. But more went bad than anticipated because mortgage lenders, feeding into the frenzy, made awful loans. So, the yield went down, which wasn't supposed to happen with AAA ratings. And all hell broke loose in a crisis of confidence. But please, please, if you do ANYTHING today, let go of the idea that the mortgage industry packaged only the bad loans and sold them off. They packaged ALL the loans, most of which will be paid off by people who could afford to borrow. Do you get that? Please tell me you do.

Jimmy, as other people have already pointed out, your reasoning is flawed. If we were buying good debt, there wouldn't be any need for the government to step in and buy it; others would be happy to do that for them. Your reference to Chrysler is also flawed, it's true that Chrysler went on to make money, but only because the government hedged their bet and put a 1,500 tariff on imported cars. That deal was bad for Americans because Chrysler raised the price of their cars by 1,000 dollars and simply started making cars overseas anyway. Our cars cost more and the jobs went overseas anyway. That's usually what happens after the government gets involved: poor decisions get made. It is time for the financial firms to bite the bullet and take their losses, I didn't hear them screaming for intervention when they were making money. The real problem with bailing them out is that it encourages more risky behavior. A 700 billion (!!!!!!) dollar bailout this time will become a 7 trillion dollar bailout next time. And yes we will hear the same tired line: bail us out or bad things will happen to you. Isn't that called extortion?

Thanks for the civil discussion there JimmyBobby, but those banks and other institutions churning that paper knew full well the risks they were taking. I understand that no bailout will hurt and it will hurt badly but it needs to happen or we're simply prolonging the issue and that is the bottom line and it will catch up to us sooner or later but my bet is it will be far sooner even with a bailout than what is being stated. This is a stall to buy time only to get republicans out of the cross hairs right before election, they CANNOT afford for this to happen before the election to help them save what seats they can in the House and Senate. It is a political move not a sound financial decision that MUST be made.

"You can fool all of the people some of the time and some people all of the time" I'm not going to be fooled this time.

JaRagga, you are 100% correct. far better to take a temporary hit than to absorb the long term damage that this bailout will do if it passes. Think hyperinflation like the U.S. has never seen. Jimmy is probably one of the politicians (most likely a staff member) who needs this bail out to pass in order to keep his job. For most Americans, this is an utter disaster. Speaking of political parties, does any one else in the middle class feel like they are too poor for the Republicans to care about their needs, but too rich for the Democrats to care either?

Who cares? Why does the media even publish crap that the administration calls for? This plays to their innuendo and half-truths - if they don't act fast, it is all their fault!

The Bush Administration and their ilk need an enema.

google comunity reinvestment act....it was the law that they had to give loans to people even if they were a bad risk...if they didn't the feds would punish them in ways such as not allowing them to expand, etc.

JimmyBobby

, nice fairy tale.

Unfortunately you left off 2 very big 'facts'.

1- If these are quality loans, why are they in default ??

2- This proposal is still from the most irresponsible president in American history. And you think we are going to believe ANYTHING outa his mouth. NOT

So basically even if you know what you're talking about, you still don't know what you're talking about. Sorry, to be rude, but I have NO reason to "trust" you.

Some of you may think this is a screwball idea, but here goes. This bailout is totally unacceptable. It is the biggest financial rape in world history. It only proves there is a class warfare going on between the Super Rich and the rest of us.

I have bought a poster and Monday I'm going to protest at my local Federal Building. I'm retired and I realize not everyone can do this. But can you imagine if people all across the country started protesting this, who knows, maybe more people will notice and we can start to take back our country. It did stop the Vietnam War.

Just get a poster and write

NO BAILOUT FOR IRRESPONSIBLE BUSINESSES

CARE TO JOIN ME - BE THERE.

me-348585 stop trying to mislead people.

The Community Reinvestment Act purpose was to require banks and other lenders to offer credit in all market areas they serviced not just the wealthy ones. There were NO provisions in the act that required banks and other lenders to change their lending standards only that they had to service all segments of their markets. Companies like Countrywide showed up and companies like them started the no money down loans this was in 2000 or 2001 I want to say. Yes it is true that the Act encouraged lenders to soften their standards but it was NOT required.

In 2005, yes that is right 2005 banks and other lenders after complaining that data collection, record keeping, and reporting requirements were too difficult or burdensome that they sought and Washington gave them changes that changed the tests for lenders which were viewed by some as reducing the lenders obligations to meet lending requirements of low- and moderate-income households for the smallest of lenders and banks and that is a big part of this problem. Washington in the 2000's closed it's eyes to the problem and some saw it clearly as early as 2003 if not earlier. Basically, these lenders said it's too much trouble to determine if these people could repay the loans they didn't care if the loan was repaid cause they knew they would bundle the risky loans and pass the risk to the markets and they'd have their money again up front.

In fact, one chief executive of a large mortgage lender, is said to have on more than one occasion said that to give minority applicants loans that they had to stretch the rules a bit which shows complacency to the problem on the lenders part because they knew they'd get their money up front when the sold the bad loans all nice and bundled as high yield investments. This type of statement screams that the lenders knew what they were doing was wrong or illegal and in violation of the RULES set down in the CRA.

Further you have completely ignored the Fed maintaining artificially low interests rates that made investing in sub-prime lending markets very profitable.

Bottom line time, the CRA did have an impact but not to the degree you seem to believe if not for the greed of the lenders themselves for the quick buck, if not for artificially low interests rates, if not for Washington turning one blind eye after another to the coming of the crisis. The responsibility is Washington's both sides of the aisle, the banks and lenders, the people taking loans that were way to big for them, and the markets themselves. Plenty of blame to go around my friend, plenty.

Deja vu. Last time an extreme right winger whose brain wouldn't work properly, they also had a hundred billions of dollars bailout for the financial system of the day.(Ronald Reagan)

Reply to angelica-295056:
I never meant to imply that the Bush administration was innocent in this mess. They were as clueless as anyone. I just wanted to point out that this is a bi-partisan mess, and they both share responsibility. Oversight was severely lacking on all sides, but it's been in the last two years that the proverbial **** hit the fan, and only in the last year has it been brought to everyone's attention. Much of the problem has been trying to make the "homeownership dream" available to everyone regardless of creditworthiness, and that goes back even to the Clinton Administration.

Typical ploy of the Republicans. Fear tactics. Rush it through before anybody can put a stop to it. It could at least be debated so we know what it is we are signing on to pay for over the next generation or two or three or four. As far as I am concered, no bailout, no Bush, they are just a bunch of whiners!! Let them fail - they asked for it. They top dogs still got their payouts and bonuses. Tough S##t!!!

This is in addition to all the other bailouts we are going to be paying for. Like two wars, and maybe two or three more coming. high energy , high food costs, etc.etc etc. And don't forget, now the Automobile Industry wants to be bailed out. Where are we, the US Tax Payers going to get all this money from for the bailouts? This will be passed onto our children and grandchildren and more. No bailout for the American Tax Payer thought, who are the ones to be paying for it all.

No penalties for all the CEO's who still received millions and bonuses, even while it was know that their companies were failing. Where is the justice in that.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke made the joint decision last week, for the taxpayers to buy trillions of dollars of bad debt from the big Wall Street financial firms.

Another case of persons, having not been elected to any office, therefore having no legislative powers under the Constitution dictating legislation to Congress.

The proposed legislation just three pages long, gives persons not elected to any office sweeping powers to give away TRILLIONS of dollars in taxpayers monies, a program that would be sheltered from court review.

How legitimate can this proposal be if it has to be sheltered from court review?

An inquiry into usurpation of CONSTITUTIONAL POWERS, is at this time highly necessary.

Why the panic by the Administration and Congress?

How much money would members of Congress, Bush, the Administration, their families, friends and co-conspirators lose, but for the "bail out"? Imagine the size of their investment portfolios.

And of course President Bush, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke have nothing to gain by the "bail out".

There's no self interest here it's all being done for the benefit of the little people, the average citizens and their families, seniors and small business. How courageous and honorable.

Face it this "bail out" is nothing more than a red herring to cover up corruption, fraud and grand larceny on an astronomical scale.

I don't know why I keep trying, but I do. Folks, we're not buying BAD DEBT. We're buying packages of debt, SOME OF WHICH is bad. More of which is bad than the hedge funds who originally leveraged themselves to the moon to buy it thought was bad. They borrowed so much money they were like a guitar string pulled eight notes too high, sounds nice but about to break. When more of the underlying mortgages were shaky than expected, the ratings went south and everyone headed for the exits, leaving Wall Street holding these packages of debt SOME OF WHICH WAS BAD. If they could have picked out the bad debt like raisins out of oatmeal, and left nothing but the good debt, there wouldn't be a problem. The problem is EXACTLY that the good debt and the bad debt are mixed together like sugar in coffee. Can't take the sugar out, right? So, we are not buying BAD DEBT ONLY, we're buying bundles of mortgages that have, overall, a positive yield. The government may very well make money on the deal, over a fairly short amount of time. But if we don't do this, if the morons who are screaming "Bailing out Wall Street! Giving away taxpayer billions!" carry the day, then the businesses that provide our jobs are going to have a very hard time functioning.
And to whoever said I was a government employee here to make the government's argument, phuque you! I'm sorry I'm smarter and better informed than you, I'm sorry if your ego can't take that. But no, I'm just a regular citizen who uses his brains instead of his emotions to arrive at his opinions.

Jimmy...I think you went to school too much and now you are loosing focus with reality...I read what you are saying and its sounds like a cool approach of "THE BIGGER PICTURE." But why people are screaming bad debt is because it simply is 'BAD DEBT' ...

Taking a small scale approach to the problem----Person A(lehman) takes a loan from person B(Creditors) of say $200 and gives person C(me) this loan for a home(collateral) with a hope of making $250($50 profit), now Person C(me) since he is paying for a home with credit is going to pay $250, yet if he had bought the house with cash would have paid $150. What is happening today is person C(me) has defaulted and cannot pay for the home therefore person A(lehman) has repossess my home(which is really worth $150) and because i was a bad debt it has resulted in Person A (Lehman) not making any profit and still owing $200 to the guys it borrowed money from, Person B. Now government wants to bail out Person A(Lehman) by giving them $250 which includes profit just to ensure that they resume business and all such debts are removed from their books.

According to this analysis government is stuck with a house worth $150 but which it took off someone hands for $250.(which is already a loss) in addition when home prices go down to about $100 and government then receives the cash it will then be another loss of $50.

All at the same time Person C has received his profit and Person B has received his Profit for a decision they both made by themselves. Jimmy now expand this analogy by a million that is the real situation on the ground...so don't tell me that only SOME of the debts are bad. These firms would not give up the good debts but only the shaky debts and then keep moving on with business. Let these firms handle their own S#%t and get themselves out of the mess that they created...afterall we are all makings of our choices....

So Jimmy there is NO BIGGER PICTURE, but to let the market be the market and correct its own mistakes....

Don't take it from me. Now, Warren Buffett is saying what I've said.

Warren Buffett is a brilliant investor for sure, however and with all due respect to him, now that he's put his money into Goldman Sach's, his voice is tainted with the need of self preservation and the conflict of interest requires us to question the motivation of anything he says as it relates to the current crisis.

I'm not saying he's wrong but the motivation must be questioned.