ericAZ's Blog tag:www.talkingpointsmemo.com,2008:/talk/blogs/ericaz//2841 2008-09-21T02:19:25Z Movable Type Pro 4.21-en Sorry, But We Have To Step Up tag:tpmcafe.talkingpointsmemo.com,2008:/talk//17.218445 2008-09-21T02:19:25Z 2008-09-21T02:19:25Z ericAZ Though it is hard for Democrats to swallow, we have to step up to the bailout. And if the bill is written well, it won't be as bad as you think.

This crisis does confirm that Bush is the Worst President Ever, and it might not be a bad name for the legislation. But Democrats do have to show they can govern in a crisis. Taxpayers won't be much hurt, and fatcat bankers won't be much enriched, as long as the legislation is written so that the government buys mortgage bonds for value.

Let's say a car dealer is in financial trouble and needs to get rid of his inventory. It's your job to go there and make an offer. He has a few current models in pretty good shape, so you offer 85 cents on the dollar for the wholesale price. He has a Hummer that has been on the lot for a year and a half, so you offer 35 cents on the dollar. You give him $200 each for two 10-year-old Toyotas, and you don't buy the cars that don't run or don't have good title.

The car dealer is neither enriched or empoverished by accepting your offer. He is more liquid. He can take the money and pay one of his bills. You are not enriched or empoverished by the deal. If you bought right, you can sell your carss for a little profit.

In a similar way, we have to make sure the bailout legislation buys mortgage bonds for value. That way, it won't enrich the banker, or empoverish the taxpayers.

First, let's look at what the taxpayers will be buying. Let's say that within a brief period about two years ago, 1,000 people closed on new houses, taking out $200 million in mortgages. Someone bundled the mortgages and sold the interest payments to one group of buyers and the principal payments to another.

Let's say Goldman has bought $10 million of the principal bonds. Since then, things haven't been good for this group of homeowners. A few have been transferred, repaid their loans, and Goldman already received its share of that principal. Another 20% of the houses are in foreclosure. Prices have dropped, and some homes are not worth what is owed on the mortgage. Goldman would like to sell its bonds at a steep discount, but nobody wants to buy.

So the federal government steps in and says it will buy $10 billion of mortgage bonds on Friday, and asks for offers. Goldman offers its bonds in this series at 32 cents on the dollar. Merrill, which originally bought $25 million, offers its bonds at 39 cents on the dollar. Citibank, which bought $5 million, offers its bonds at 53 cents on the dollar.

The government decides to accept all offers on this bond below 35 cents. For other bonds, the government might not know enough yet to accept any offers.

The government sets up another auction and goes through the process again, as long as bonds are offered at a price at which the government wants to buy. When there are no more good offers, the government stops the auctions.

Just like the car dealer, the bankers are not financially enriched or empoverished by the transactions. They are more liquid. If they have enough money to pay their bills, they can operate. If not, they can close.

As long as the government has not overpaid, it won't lose much money. The key is to make sure the government gets value for what it pays. An auction format would help to do that.

This could be sweetened by offering stimulus cash to Americans, and offering incentives for fuel efficient cars built in America.

Though the Republicans are totally discredited, the Democrats will have to demonstrate they are ready to govern. It should be clear to everyone that Bush/McCain made this mess and the Democrats are cleaning up after the worst president ever.

Please don't be mad at Obama and the other Democrats when they step up to lead the country through this Republican-made crisis.

]]> Horrified By AP Bias tag:tpmcafe.talkingpointsmemo.com,2008:/talk//17.202913 2008-07-06T17:35:06Z 2008-07-06T17:35:06Z As a 10-year veteran of the Associated Press, I was horrified to read Josh's articles about obvious bias by the AP in election coverage. I remember some very tough meetings with former AP president Lou Boccardi, who insisted on the... ericAZ
The AP is famously owned by its U.S. daily newspaper "members." They exercise their control through a Board of Directors, made up of newspaper executives.

If you find something outrageous in AP coverage, please write to one or more members of the board in your area. As a 150-year-old quasi-military bureaucracy, the AP can be very sensitive to anything that concerns those higher up in the command structure.

Here is the list. It is probably best to be professional and specific in your letters.

William Dean Singleton – Chairman
Vice Chairman and CEO
MediaNews Group Inc.
Denver, Colorado

Gary Pruitt – Vice Chairman
Chairman, President and CEO
The McClatchy Company
Sacramento, California

Donna J. Barrett
President and chief executive officer
Community Newspaper Holdings
Birmingham, AL

Craig A. Dubow
President and chief executive officer
Gannett Co., Inc.
McLean, VA

R. Jack Fishman
Publisher and Editor
Citizen Tribune
Morristown, Tennessee

Walter E. Hussman Jr.
Publisher
Arkansas Democrat-Gazette
Little Rock, Arkansas

Julie Inskeep
Publisher
The Journal Gazette
Fort Wayne, Indiana

Mary Jacobus
President and Chief Operating Officer
The New York Times Regional Media Group
Tampa, Florida

Boisfeuillet (Bo) Jones
Publisher and CEO
The Washington Post
Washington, D.C.

Mary Junck
President and CEO
Lee Enterprises, Inc.
Davenport, Iowa

David Lord
President
Pioneer Newspapers, Inc.
Seattle, Washington

Rupert Murdoch
Chairman and chief executive officer
News Corp.
New York, NY

R. John Mitchell
Publisher
Rutland Herald
Rutland, Vermont

Steven O. Newhouse
Chairman,
Advance.Net
New York, New York

Charles V. Pittman
Senior Vice President-Publishing
Schurz Communications Inc.
South Bend, Indiana

Michael E. Reed
CEO
GateHouse Media, Inc.
Fairport, New York

Bruce T. Reese
President and CEO
Bonneville International Corp.
Salt Lake City, Utah

Jon Rust
Publisher
Southeast Missourian
Co-president, Rust Communications
Cape Girardeau, Missouri

David Westin
President
ABC News
New York, New York

H. Graham Woodlief
President, Publishing Division
Vice President,
Media General Inc.
Richmond, Virginia

Sam Zell
Chairman and chief executive officer
Tribune Company
Chicago, IL

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