'Dirty' Bank

xtreyier SG

A concept simply explained for easier understanding.

This dirty bank idea was mooted by the US. Dump all toxic assets into this 'bank' and get aid for its pre-crisis value.

Toxic assets are not without value, eg - a house. In this crisis, that house is worth very low if sold. In future, when stability returns, such assets will rise in value and be transferrable for better cash.

Majority of nations have treasuries. While such funds are meant for social spending, a large significant proportion of it is left untouched, used only for emergencies. Such funds would be use to fund the dirty bank.

When existing banks become solvent and better regulated, confidence and stability will return and jobs re-created.

Meantime, the dirty bank will only operate to find ways to secure better prices for its assets. They will not be subjected to any govt tax regulations, such as property tax or stamp duties.

Maintenance costs will be borned by the govt and where possible, the assets such as properties be rented out to earn income and refund the treasury.

Perhaps this is better than giving money to ALL banks, whom only use such gifts to hide their insolvency and ineptitudes?

angel7030 SG

Sir,

we are more concern on our local banks, US banks dirty is their problem, are our banks dirty too, or perhaps dirtier??

Afterall, The capitalists created their own downfall even without the communist and socialist or even the terrorist intervention.

reyes SG

but, the banks might not want to sell it.

1.The possible writedowns from such a bank would be in trillions of dollars.

No banks can tahan such a writedowns, in fact most will be bankrupt and nationalise. If you are a bank CEO, shareholders, do you want your bank to nationalise?

2. how do you define fair value for this assets? eg pre crisis $1. would the bank like to sold at market value of $0.20? since they are receiving bailout money, they would rather survive Q by Q. they also hoping market recover soon and hopefully make a less lost.

This is not easy to implement. Henry paulson had propose it before but it fail.

i dont think the next 800billion bailout from the senetors next week is enough to do so.

reyes SG

SSangel,

if the US dont recover, how are we gona do better?

tharma say economy could contract 5% in 2009.

this is really veryveryvery serious!!

parn SG

A concept simply explained for easier understanding.

This dirty bank idea was mooted by the US. Dump all toxic assets into this 'bank' and get aid for its pre-crisis value.

When existing banks become solvent and better regulated, confidence and stability will return and jobs re-created.

Meantime, the dirty bank will only operate to find ways to secure better prices for its assets. They will not be subjected to any govt tax regulations, such as property tax or stamp duties.

Maintenance costs will be borned by the govt and where possible, the assets such as properties be rented out to earn income and refund the treasury.

Perhaps this is better than giving money to ALL banks, whom only use such gifts to hide their insolvency and ineptitudes?

I would have agreed with you if you had use the Sperm Bank as an example.

Trash sperms for trashy wombs to produce trashier generations.

angel7030 SG

SSangel,

if the US dont recover, how are we gona do better?

tharma say economy could contract 5% in 2009.

this is really veryveryvery serious!!

the world is sick of US, i believe when the world recovered, the way of doing business and the trust of USA financial institions will be totally different, and if you are to stick to US and practice the same way of investment and doing business, another economy downturn will hit you out into the drain.

To make a big mistake is ok, to make the same big mistake will be a total stupidity.

My dear Fuhrer, if u hv the chance to revive the glory of our Nazisim and it influence, most likely you will not commit to what you did in WW2, if you hadn't attack Russia, if you had captured Britain, the world of will be a different one today....long live Hitler!!!

Worldlybusinessman SG

have u realised, this is a chance for the asian financial system to rise, to have its own currency system independent of US

reyes SG

personally, i cannot see how in the next 10years, we can have another economic powerhouse to replace USA.

to be a economic powerhouse, it seem it need to be military powerful too. that seem to be the course of history.

StealthLeo SG

personally, i cannot see how in the next 10years, we can have another economic powerhouse to replace USA.

to be a economic powerhouse, it seem it need to be military powerful too. that seem to be the course of history.

US is the source of the problem and US should be the country to recover from the crisis to solve the problem.

reyes SG

US is the source of the problem and US should be the country to recover from the crisis to solve the problem.

certain extend it is true but..each country should also try to better regulate its own financial market.

we depends and trust too much on the americans. the world at fault too.

xtreyier SG

Sure thing, blame the americans. When they buy our products, we smile ear to ear and blame their high consumption habits. When they stop buying, we cry foul play, and guess what? - americans get blamed again.

Too late for the blame game anyway. Finding a solution out is more appropriate.

We dont face much toxic assets problem in Spore. The only problem we faced is toxic papers(derivatives). Uncles and grannies bought them with their old age pension funds and now are bankrupted.

Creating the dirty bank may be a solution these uncles and grannies may get their monies back.

US creates the bank, nationalize it, buys up toxic assets, get Harvard biz grads to look after it, earn some money from it and when confidence returns, these toxic papers becomes profits.

Trillions now, perhaps, but it will double or treble its value when good times return, as it will.

Secondary effect will be that banks will look good, confidence return, money circulates again.

If it doesnt circulates, rest assured one way or another ,the rich will have to part with their hoard.

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As for those who had been hit by ponzi schemes, a new law must be created in every civilised society. Ponzi schemes are schemes of deceit, anathema to every civilised being, thus a law must be enacted to combat them.

The law would be to give them a quick trial, claw back as much of their wealth as possible, trace every single spending or bank transaction, whether deposited into Charities, friends or relatives, every single cent must be made back. With such amounts, victims will be given a percentage of the total whole. While it may not be much, it will at least give confidence back to the ordinary laymen that there is indeed justice.

Otherwise, each day ex bank staff and conmen luxuriating in bahamas instead of paying for their crime in a prison will only alienate laymen to the financial system.