Washington Doesn't Understand the Problem

As I've said not once, but twice before, the bailout doesn't seem to be working. The problem isn’t just $1 trillion in subprime loans, the problem is $62trillion in credit default swap (CDS) liability for collateral debt obligations (CDOs) that no one can unravel or value (or even understand).

But read this proposed solution, The New York Times, Time to Unravel the Knot of Credit-Default Swaps, that recognizes that credit-default swaps clearly played a role in this financial debacle, and it is crucial that they are part of the solution.

This would even benefit Goldman Sacks, a zombie bank. Goldman Sacks, you might recall, is the former firm of Treasury Secretary Paulson, the focus of an initial bailout proposal that never made sense, beneficiary of over a hundred billion bailout dollars, and then a hundred billion more.

These effort to reanimate Goldman Sacks have been insanely costly and fruitless, all because as I said in early October, the problem is $62trillion in credit default swap (CDS) liability for collateral debt obligations (CDOs) that no one can unravel or value (or even understand).

Someone in Washington should explain why the proposals in The New York Times article should not be implemented, or offer a better solution, or resign. I prefer the latter.

The money spent on the executive and legislative branches of government is, like the money spent so far on the bailout, wasted.