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Wednesday, April 29, 2009
Tuesday, April 07, 2009
Friday, April 03, 2009
Global Economic Crisis (Opinions Reviewed)
The opinions here were written by me on October 12, 2008, at the start of the global financial and economic crisis. It is interesting to review what I wrote and to see whether any of these ideas are still relevant. I also posted it on my barackobama page on 11/10/2009.
With the passage of nearly one month, this is a look back at my thoughts about solving the global financial crisis.
1. Secure and stabilize the mortgage payments by homeowners unable to pay. Federal government should force the mortgage lenders to write down the mortgage principal to reasonable value and offer current interest rate (i.e., take their loss for their stupidity to loan above reasonable values) and give a second mortgage to the homerowners with deferred payments. Idea is to enable these homeowners to hold on to their homes and continue to pay at their maximum ability. Eventually they will have to pay the government back. Restoring sustainable payments by these homeowners will stabilize the values of the "toxic" financial papers, instead of "mark to market" value of zero.
2. Federal government can inject capital into failing banks as equity investment and lower the reserve % on bank deposits for a 6 month emergency period, so that the banks can start lending more money with the same deposits. This is Soros' idea also.
3. Regulate and reform the rating agencies so that there is confidence in the market about the ratings of different financial papers from different issuers (Step in to nationalize them temporarily if necessary).
4. Develop a massive global database of all the toxic financial papers, tracing their relationships to all the companies and the subrpime mortage lenders and borrowers. This is provide transparency and certainty about the actual financial soundness of all companies involved with this financial crisis. With clarity, transparency and certainty, the sound and the unsound companies will be separated and ratings can be restored.
5. Change the mindset of all Americans, starting from the President, to act responsibly as a global citizen, and spend within the means. Raise taxes, cut spending, and be willing to work hard and settle for a lower standard of living.
Looking back at these issues, some progress has been made to stabilize home foreclosure and refinancing, but the problem is not yet solved. Huge unrestrained capital has been injected into the banks, so the credit problem is eased but the toxic papers are still there. Not much has been done with the rating and valuation of the toxic assets. The political pressure on the FASB to change from "Mark to Market" to "Mark to Model" for asset evaluation will not solve the problem but may add to the non-transparency of the toxic assets. Lastly Obama in trying to stimulate the economy has not yet acted responsibility to promote "living within the means".
It looks like there is a cushion to slow down the move towards the new lower equilibrium, but there is no attempt to steer it towards the long term equilibrium. Also, the attempt to use the energy and electric vehicle industries as the new boost to raise the long term equilibrium has not yet gotton off the ground, especially with the latter. China on the other hand, has caught on strong with its national priority on taking the global lead in electric vehicles.
With the passage of nearly one month, this is a look back at my thoughts about solving the global financial crisis.
1. Secure and stabilize the mortgage payments by homeowners unable to pay. Federal government should force the mortgage lenders to write down the mortgage principal to reasonable value and offer current interest rate (i.e., take their loss for their stupidity to loan above reasonable values) and give a second mortgage to the homerowners with deferred payments. Idea is to enable these homeowners to hold on to their homes and continue to pay at their maximum ability. Eventually they will have to pay the government back. Restoring sustainable payments by these homeowners will stabilize the values of the "toxic" financial papers, instead of "mark to market" value of zero.
2. Federal government can inject capital into failing banks as equity investment and lower the reserve % on bank deposits for a 6 month emergency period, so that the banks can start lending more money with the same deposits. This is Soros' idea also.
3. Regulate and reform the rating agencies so that there is confidence in the market about the ratings of different financial papers from different issuers (Step in to nationalize them temporarily if necessary).
4. Develop a massive global database of all the toxic financial papers, tracing their relationships to all the companies and the subrpime mortage lenders and borrowers. This is provide transparency and certainty about the actual financial soundness of all companies involved with this financial crisis. With clarity, transparency and certainty, the sound and the unsound companies will be separated and ratings can be restored.
5. Change the mindset of all Americans, starting from the President, to act responsibly as a global citizen, and spend within the means. Raise taxes, cut spending, and be willing to work hard and settle for a lower standard of living.
Looking back at these issues, some progress has been made to stabilize home foreclosure and refinancing, but the problem is not yet solved. Huge unrestrained capital has been injected into the banks, so the credit problem is eased but the toxic papers are still there. Not much has been done with the rating and valuation of the toxic assets. The political pressure on the FASB to change from "Mark to Market" to "Mark to Model" for asset evaluation will not solve the problem but may add to the non-transparency of the toxic assets. Lastly Obama in trying to stimulate the economy has not yet acted responsibility to promote "living within the means".
It looks like there is a cushion to slow down the move towards the new lower equilibrium, but there is no attempt to steer it towards the long term equilibrium. Also, the attempt to use the energy and electric vehicle industries as the new boost to raise the long term equilibrium has not yet gotton off the ground, especially with the latter. China on the other hand, has caught on strong with its national priority on taking the global lead in electric vehicles.
Wednesday, April 01, 2009
Holistic Power Supply and Delivery Chain – Foundations for a Smart Grid
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