Alan Quasha on the U.S. Debt

In an analysis of the U.S. economy in light of the ongoing financial crisis, Alan Quasha investigates exactly how households are doing as far as their assets, net worth and liabilities are concerned.

Published on the on-line version of Forbes magazine, Forbes.com, The $54 Trillion Budget Bomb was written by Quasha to explain to readers the state of the national debt and its effect on the economy.

In one interesting observation Quasha notes that “at the end of 2006 American households collectively have a very strong balance sheet.”

On the asset side of the balance sheet there was $42.9 trillion in financial assets and $26.7 trillion in non- financial assets, the vast majority, and $22.6 trillion was real estate. Liabilities amounted to $13.4 trillion, $10.1 trillion of which were mortgages. These numbers translate into a net worth of $56.1 trillion.

This information flies in the face of the commonly held notion that American households are heavily in debt. On the contrary, U.S. families have created significant net worth and are amazingly productive.

Quasha: Banking Crisis Can Be Solved Rationally

Alan Quasha believes there are better ways for stimulating our distressed economy than bailing out the banks. A new plan should be based on speedy reform and a recapitalization of the banking system in the United States. Citizens should be given assurances that banks that are FDIC insured are worth the same 1.4 trillion dollars that they were valued at before the recent financial crisis.

Alan Quasha is of the opinion that not all banks should get the same treatment, and the idea of nationalizing our banking system is the wrong way to go.

Quasha asks rhetorically,

“Why should bad banks be allowed to compete unfairly with good banks because they are government-owned and have a lower cost of funding?”

Alan Quasha has determined four feasible alternatives to a bank bailout plan. In no particular order they are:

1) Banks should be allowed to fail through bankruptcy; deposits in these banks should immediately be transferred to successful banks.
2) Solid banks should be allowed to continue but their toxic assets should be transferred to a government body set up for the purpose of facilitating an orderly liquidation of those assets.
3) Weaker banks should be forced to merge together with stronger banks.
4) Asset insurance schemes should be implemented where the government insures troubled assets above a certain percentage of the loss.

Believing that the American people have a tradition of being able to fix their problems rationally if allowed to do so, Alan Quasha urges that banks not be bailed out and more prudent solutions be found so that generations to come can benefit from the affluence this generation has been privileged to experience

Reinet Investments Acquires Lehman with Assistance of Alan Quasha

In a complex deal requiring many parties, a lot of direction changes and fingers in the pie, Alan Quasha explains that he has lots of experience with similar deals, and that is why Quadrant was chosen to bring Reinet and Lehman Brothers together. As a public investment company with over $3 billion in capital, it is trying to acquire the private equity operation of Lehman Brothers. Quasha admits that this transaction has been complex but is confident that Quadrant and its partners are up to the task.

Based on Quadrant’s history of creating win-win situations in the most difficult of situations, Alan Quasha is satisfied that Reinet will acquire Lehman in the most positive and productive way possible.

Restructuring of Genius an Example for Alan Quasha and Quadrant

Genius is a well-known media and entertainment distribution outlet which was owned by Harvey and Bob Weinstein which Quadrant recently took control of. Quasha refers to Genius as the leader in “non-Blockbuster” titles, meaning that it handles most types of entertainment mediums. This includes movies and DVDs now, and will include music and games in the future, as we move into new areas using the same distribution channels. Restructuring of this company should bring it back to its peak performance as it expands its products and services.