Michael Gracie

Jeffrey Miron opines that instead of accepting a bailout, banks facing failure should opt for bankruptcy filing instead:

Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

Further, Chapter 11 passes restructuring risk to willing participants - those motivated and capable of adding new value to the business, whether it be capital, brainpower, or in most cases both. As banks go, I am not sure who understands the credit derivatives transaction chain well enough to take on such contingencies (but I’m am certain they exist), and court-supervised reorganization does allow for due diligence time if the entity can hold out (often assuming debtor-in-possession financing is available too, which could be questionable in this credit environment).

Outside of the banking crisis, Forbes notes it is never a bad idea to be prepared:

If you feel your business may be facing financial distress, meet with a work-out attorney now, before it is too late and your business becomes another statistic.

What Forbes doesn’t tell you is that once in Chapter 11, you’ll be faced with a myriad of financial and operational decisions that can become, to put it mildly, emotionally overwhelming. Add that in a reorganization you will be required to prove the business is worth more alive than dead, meaning get ready for a ton of strategy shifting and number crunching.

Editor’s Note: If you need someone who can stay alert during the trauma, priming objective decision making and spreadsheet mashing during trying times, contact me. I’m not only capable - I actually enjoy the stress. And I have plenty of references, both professional and personal, that can attest to the effectiveness of my candor and elbow grease.

Despite the resounding success … miserable failure … mixed emotions involving the bank bailout plan, constituents of our fine land are willing and capable of cutting through the bull:

• Mike Masnick says take a deep breath - there are still opportunities. While Mr. Masnick published that commentary prior to the bailout vote failure, the words are still relevant - almost prescient.
• Mark Cuban reiterates that stock prices are not a fair gauge of value without short sellers involved. I concur wholeheartedly, noting that the S&P Financials Index was clobbered yesterday without short sellers, while the TED spread grows ever wider (3.54 - ouch!). It should have been worse, and now that “gurus” are touting regional banks as a value play in the midst of daily bank failures, I’d say it’s time to really head for the exit AND weld the door shut behind.

Finally…

• Singlebarbed is willing to make extraordinary sacrifices for fish and country. Leave it to fly fishing folk to really buck up.

Adieu.

In a poll from Glenn Reynolds almost half of respondents chose…

Can’t answer — too busy stockpiling shotgun shells and canned goods.

Based on panel estimates from Quantcast, Instapundit readers are solidly middle class, and over 80% are college or graduate school educated. In other words, I’m not sure they were just joking.

I’m not sure I blame them either.

Wall Street Journal:

The House of Representatives delivered a stunning defeat to legislation designed to rescue the nation’s troubled financial system, sweeping aside a call from President Bush to “send a strong signal” of confidence to markets at home and abroad.

The 228-205 vote Monday exposed deep unease among rank-and-file lawmakers in both parties with what would be an unprecedented intervention in the private sector.

The financial markets reacted with disaccord…

Tallies for the day: Dow -777.68 (-6.98%); Nasdaq -199.61 (-9.14%); S&P 500 (above) -106.59 (-8.79%).

Side note: Barron’s added that the Nasdaq was headed for one of it’s top ten worst days. Today’s result wound up ranking #3. Paul Kedrosky says watch out for rolling boulders.

UPDATE: Today’s market result was also the biggest one day point drop for the DJIA.

A chronology

I wonder who will take credit for the plan next.

Probably not a big deal, but this is the first Snake River Cutthroat I’ve seen up close and personal (i.e. recently on the end of my fly line).

Didn’t take much time setting up this photo (which is a good thing if you’re a fish)

Up close and personal - note the bright yellow body and distinctive orange fins

Beautiful, and headed home

No comment on the rest of the weekend’s fishing, which should tell you something.

You can be gratuitous too

I’ve had a pretty darn good September so far. For some odd reason more than a few folks have been abnormally kind to me - I hardly deserve it, but I’ve had a chance to do some much needed gear upgrading … engage in more frivolous purchases … contribute back what I can to the local fly fishing economy as a result. And in not-so-grand fashion, I’m now getting rid of a few things.

UPDATE: My excess gear is gone, so I’ve removed the portions of this post dealing with it (particularly since the pictures were such fine examples of my piss poor photography skills). Onward…

Second to last but still not least, Tom Chandler is cleaning out his closet too. From the sounds of it, he has enough gear to outfit every commenter on his blog for a solid decade, but the George Maurer Bamboo he’s seeking a good home for deserves attention that the average brownliner simply can’t provide.

And lastly (there is no “least” in fly fishing - the joke’s on you), Jason Puris of The Fin fishing social network nabbed a cap in my little Drift trivia contest. But instead of taking the goods and heading for the hills, Jason decided to return the favor - I received a fine t-shirt in the mail today that reminds all fly fishing folk to…

Thanks Jason!

Email me (or comment) with any questions - my contact information is here.

Adieu.

Senator Hillary Clinton:

This is not just a financial crisis; it’s an economic crisis. Therefore, the solutions we pursue cannot simply stabilize the markets. We must also deal with the interconnected economic challenges that set the stage for this crisis — and reverse the failed policies that allowed a potential crisis to become a real one.

Senator Clinton makes tremendous sense in the WSJ op-ed, but like many misses one crucial point. Saving those that are already underwater assumes there is nobody more creditworthy (and more patient) willing to step in once asset prices normalize. Most would rather have struggling homeowners think they are getting a fresh start, when all the process accomplishes is maintaining a semblance of bubble times and the perception of wealth.

It exacerbates illiquidity and decreases economic mobility.