Wednesday, September 24, 2008

The Dave Ramsey Solution

Dave Ramsey has come up with a plan to fix the current financial situation--a serious one. He places the blame on post-Enron regulations forcing companies to more closely match their balance sheet to market values. He says that these unnecessary rules required companies to set the value of their mortgages (and bundles of mortgages) pretty close to zero, since no one really wants to buy them. However, mortgages represent real houses and property, and these cannot suddenly be worth nothing. Ramsey says if Congress would simple repeal "mark to market" it would solve about half of the trouble overnight. Listen to his explanation here.

Whatever needs to be done, I think it has become obvious to all financial conservatives that a massive "bailout" (could be called a buyout?) forcing taxpayers to risk $700B on bad debt is NOT the answer. Bernanke and Paulson keep saying the alternative would be worse for "everybody." Just who is this everybody? I suspect it includes a lot of their banking pals. Meanwhile, Democrats are just stalling until they figure out 1.) how they can get money from this scheme, and 2.) how they can socialize our entire economy. Why can't we just sit back for a while and see what happens?

3 comments:

Stephen said...

I agree that overturning FAS 157, the accounting standard that requires banks to mark these illiquid assets to market, is a fantastic idea. But don't imagine that Dave Ramsey came up with this.

Many people made this point last week.

Actually, the fallout from FAS 157 was anticipated from the beginning.

Philip said...

He does say that it wasn't his idea.

MSmusic2 said...

Dave gave credit to Brian Wesbury for the solution. Also interviewed him on Fox business last nigt.