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When Dr.Paul says "let all the bad debt liquidate" what does he mean?


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As already discussed below,

the term used was "mark to market".
This term made Paulson turn white as a sheet.
It means to sell at what the market determines the value of the assets, and not the original value at time the loan was made.
In other words, they eat the losses.

Sure Paulson doesn't like mark to market

He would have only needed to ask for a $700 bailout instead of $700,000,000,000 if that were the case.

Exactly but $700 more like 70cents if that

Man was born to be free and independent

It means ...

It means the debt must be sold at prices determined by the market. In other words, no propping up the prices of the bad debt that the banks are carrying. When the prices of the instruments fall to levels that attract bids from businesses (not the Treasury), then it is said to be "liquid" - convertible to money on short notice.

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"Fully half the quotations found on the internet are either mis-attributed, or outright fabrications." - Abraham Lincoln

it can mean several things

cut your losses

go bankcrupt

sell below market price

watch your 401k diminish

watch prices go up


look for a deal

buy below market prices

invest in performing stock that doesn't use the dollar

preserve purchasing power

unfortunately, we were faced with only two results, no matter how many porposals were put forth: a. deep, painful, short recession or b. a long depression.

keynesian economics at the end of its lifespan, simply put.


"Allow me to issue and control a nation's money and I care not who writes its laws!" Amshell Rothschild







World's Greatest Business

"The Number one reason people lose money is the FEAR of losing money." Sir John Templeton

"Committed To The Eradication Of Poverty Among Patriots"

Could you imagine the cost for the fed to admininister

the liquidation of these assets.

I thinks that where jp Morgan and friends come in and buy it all up for a fraction of the cost.


That's where these clowns were headed.

They want you and I put up the money to take the paper off the bank ledgers say for $10. We pay $10.
Then they sell the paper to their cronies for $2.

This was already being done months ago. Any savvy trader could call up a bank and say, "Hey I see you got some mortgages in forclosure, I'll take $1 million worth off your books for $100,000."
The bank gets rid of a 'non-performing' asset. Then they look good for the FED and bank examiners and are allowed to go to the FED 'window' or cash machine for up to 9 times their performing assets.

The reason they came to us was because they waited too long, thought things would get better, thought the FED would take care of them.

But it gets worse...It appears as though the owners of the FED, JP Morgan, Brown Brothers Harriman and a few others in the UK are getting ready to move their main operations out of the country. They have their sights on the Asian markets, China, India and other growth areas (South America - where they will probably run into resistance) to do to those growth areas, what they have done to America.

This could be good although painful for those who are not cash rich. Credit will dry up. Prices will decline due to decreased demand (good if you have cash) but any inported items will be very expensive.

Its hard to believe but this is a blessing in disguise. Our country will be forced to unite against the enemy of depression. We'll have to become self sufficient again, raising our own food nationally and producing our own energy. Without abundant credit and capital, it will be difficult to build manufacturing, agriculture and power projects. And we'll have millions of people demanding products and services......

World's Greatest Business

"The Number one reason people lose money is the FEAR of losing money." Sir John Templeton

"Committed To The Eradication Of Poverty Among Patriots"

Well Put !

Do they get to cherry-pick the assets also?

Isn't The Interest Owed Figured in the Future

value of these mortgage assets?

Don't they overstate these assets this way?

Bad debt is debt that isn't

Bad debt is debt that isn't being paid back.

Mortgage debt, credit card debt, business loan debt etc... Are all debts...

The majority of the bad debt is mortgage debt. If we don't bailout the banks who are holding bad mortgage debt, home prices will fall... Which is what the market is telling us it needs. The market is telling us that home prices need to come down.

Do you know someone who cares a lot about Israel? Send them this link that explains why Ron Paul's message is better for Israel, America, and the world. www.AmericansForIsrael.com

Should I pay back my blockbuster fees? Or just wait till...

they go out of business?


A nation of sheep will beget a government of wolves.

You'll just owe it to the new owners.

When a company goes bust, someone buys the assets, which includes accounts receivable.


"The problem with trying to child-proof the world, is that it makes people neglect the far more important task of world-proofing the child." -- Hugh Daniel

He means

let it return to its intrinsic value.

"the only thing that keeps the banking system from failing is general ignorance about how the banking system works."

Answer here ^^^^^^^^ That

Answer here ^^^^^^^^

That means let the market tell you how much it is worth (book value not face value).

Turn bad notes into cash

Notes, secured by real property, that go bad (i.e., aren't being paid), can be sold at a loss, renegotiated or the property sold to become "liquid" (i.e., money). If it's bad enough, the company can sell their own real estate, cut back staff, etc., or sell one of their divisions to a competitor.

The key thing is that the person(s) who made the mistake suffer the consequences, not those of us who did not.


What do you think? http://consequeries.com/

He means

let whoever has money owed to them, that's not being paid back, take the hit. Let them lose money and/or go out of business. Don't support people who make bad lending decisions with tax dollars or inflation, because continued easy money from the Fed will just perpetuate bad loans and create a larger bubble and therefore a larger collapse in the future.

He also means that if one shlep (speculator? developer? bank?)

is unlucky and loses money because a house get's foreclosed, auctioned and/or sold BELOW its previous "assessed value" (i.e. say a house sells for $125K, when a year ago it was supposedly worth $250K)...

That just means that some other LUCKY person (probably someone who has managed their money better, saved, etc) gets to buy a house at a very reasonable price (perhaps even at a bargain price). And the money that THEY save (being wiser financially) will probably be put to better use in the economy than (yet another) bailout of the people who do NOT manage their money wisely.

So keeping house prices HIGH does absolutely nothing to help anyone who wants to BUY a home (and keeping interest rates LOW just create more demand and makes house prices higher, and LESS affordable).

Likewise with stocks -- for everyone who panics and sells a stock, there is someone else buying that same stock, and likewise there was someone that they BOUGHT that stock from in the first place. Money changed hands and it was essentially a zero sum game (with the exception that the brokers & trading firms made transaction fees). When people sell a stock "at a loss" it is actually the loss of a PERCEIVED value -- a price they *might* have been able to sell it at in the past, or a value they THOUGHT the company had (but which was fictitious or fleeting) -- whether they actually lost money depends on what they paid for the stock in the first place; if they paid too much then they may have lost money (but the previous seller probably gained money); etc.

It's a "Circle of Life" type thing.

Similar to houses selling cheap, consider that if/when a company goes bankrupt -- for example when a lot of the dot-coms went belly up in 2000 -- someone ELSE gets to buy the bankrupt company's assets really cheap (meaning some other little web-startup bought servers, laptops, desks, chairs & etc for pennies on the dollar) -- and thus these NEW companies have lower costs and are much more likely to succeed (and/or hire more people, pay them more, etc). Unless the assets are literally "destroyed" (think GM and it's "killed" electric cars) the loss of asset value to one company's investors is the gain of another company's investors.

Every single old large tree that dies and deteriorates on the forest floor, a "space" is cleared that allows several new young saplings to take root and begin to grow (where otherwise they would have withered and died in the shade of the large tree)... using the dead tree as a source of nutrients to grow more quickly.

It is as true in business as it is anywhere else.

thats what i thought

But I didn't want to say without reassurance. Thanks.

So basically, if an individual has credit card debt for example, and the company folds...do you pay the debt back?

Yes, because that debt is an asset

that another company will purchase, even if it's just for pennies on the dollar. The market will determine that worth of that debt, taking in the probability of you being able to pay it off.

thank you!!!

i barely understand that either!