hey guys remember no more government bailouts [Archive]

Debaser

09-20-2008, 01:48 AM

gain some knowledge of the situation:

Why the Fed can't let AIG go under (http://www.nytimes.com/2008/09/16/opinion/16lewitt.html)

When Lehman Brothers filed for bankruptcy on Monday, it became the latest but surely not the last victim of the subprime mortgage collapse. Lehman owned more than $600 billion in assets. Financial institutions around the world have already reported more than half a trillion dollars of mortgage-related losses and that figure will most likely double or triple before the crisis exhausts itself.

But there is a bigger potential failure lurking: the American International Group, the insurance giant. It poses a much larger threat to the financial system than Lehman Brothers ever did because it plays an integral role in several key markets: credit derivatives, mortgages, corporate loans and hedge funds.

Late Monday, A.I.G. was downgraded by the major credit rating agencies (which inexplicably still retain an enormous amount of power in the marketplace despite having gutted their credibility with unreliable ratings for mortgage-backed securities during the housing boom). This credit downgrade could require A.I.G. to post billions of dollars of additional collateral for its mortgage derivative contracts.

Fat chance. That’s collateral A.I.G. does not have. There is therefore a substantial possibility that A.I.G. will be unable to meet its obligations and be forced into liquidation. A side effect: Its collapse would be as close to an extinction-level event as the financial markets have seen since the Great Depression.

A.I.G. does business with virtually every financial institution in the world. Most important, it is a central player in the unregulated, Brobdingnagian credit default swap market that is reported to be at least $60 trillion in size.

Nobody knows this market’s real size, or who owes what to whom, because there is no central clearinghouse or regulator for it. Credit default swaps are a type of credit insurance contract in which one party pays another party to protect it from the risk of default on a particular debt instrument. If that debt instrument (a bond, a bank loan, a mortgage) defaults, the insurer compensates the insured for his loss. The insurer (which could be a bank, an investment bank or a hedge fund) is required to post collateral to support its payment obligation, but in the insane credit environment that preceded the credit crisis, this collateral deposit was generally too small.

As a result, the credit default market is best described as an insurance market where many of the individual trades are undercapitalized. But even worse, many of the insurers are grossly undercapitalized. In one case in the New York courts, the Swiss banking giant UBS is suing a hedge fund that said it would insure nearly $1.5 billion in bonds but was unable to do so. No wonder — the hedge fund had only $200 million in assets.

If A.I.G. collapsed, its hundreds of billions of dollars of mortgage-related assets would be added to those being sold by other financial institutions. This would just depress values further. The counterparties around the world to A.I.G.’s credit default swaps may be unable to collect on their trades. As a large hedge-fund investor, A.I.G. would suddenly become a large redeemer from hedge funds, forcing fund managers to sell positions and probably driving down prices in the world’s financial markets. More failures, particularly of hedge funds, could follow.

Regulators knew that if Lehman went down, the world wouldn’t end. But Wall Street isn’t remotely prepared for the inestimable damage the financial system would suffer if A.I.G. collapsed.

redbull

09-20-2008, 04:20 AM

hey so the fed is gonna buy like a trillion dollars of bad debt apparently

shitty idea huh

(i'm not making up that trillion number, its going to be at least a few hundred billion)

Future Boy

09-20-2008, 04:50 AM

fuck it

Starla

09-20-2008, 05:21 AM

It's just that once again, although I didn't make dumb purchases or greedy investments, I have to bail out the fuckers that did. We need to end the bailouts, even if it hurts the economy in the short term.

I agree to an extent, but I think the aftermath would be long term. It would be worse than the great depression, because this time around we can't afford to have a weakened country, especially with the enemies we have.

On the other hand, I think the bail out is a band aid on a gaping wound. Relying on the government to rescue us is not going to last forever. Congress wouldn't listen to Ron Paul when he laid it all down about this - and they act like they are helpless victims who have no other choice but to bail out when it could have been prevented. It disgusts me that there's no accountability, and we're supposed to trust them to make economical decisions.

SpFission

09-21-2008, 11:03 AM

FROM 2003: Bush Administration tried to seek regulation to stop Fannie/Freddie, New Agency Proposed to Oversee Freddie Mac and Fannie Mae-Dems Say No

NYT
http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B 63&sec=&spon=&partner=permalink&exprod=permalink

Interesting.

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

More from archives
http://www.google.com/search?hl=en&q=New+Agency+Proposed+to+Oversee+Freddie+Mac+and+F annie+Mae&btnG=Google+Search&aq=f&oq=

jczeroman

09-21-2008, 03:53 PM

there are no free markters in a financial crisis.

There are plenty.

jczeroman

09-21-2008, 03:54 PM

The guys who are screaming about "the collapse of the economy!!!!" are the same people who just happen to stand to lose money. Really, think about this - would the bankruptcy of AIG or Freddie Mac affect you in any way? Would it cost you money? Because it's already cost you your tax dollars to bail them out.

This is dead on Mike.

jczeroman

09-21-2008, 04:02 PM

Guys, this is way more simple than everyone is making it. When it comes to getting in line for free money, a corporation is going to say anything to get it. Suddenly every industry has some huge national interest (banks, airlines, autos, oil etc...) and needs to be propped up specially "for the sake of the nation." Is anyone willing to see the basic contradiction there? We need to 1) guarantee private profits at the 2) expense of the public for the 3) sake of the public? This is not a logically consistent argument and is appeals to the most base economic fallacies and excuses to enrich the already wealthy at the expense of the poor.

If AIG is "too big to fail" and we prevent a company which acted so ridiculously stupid from bearing any consequences of that stupidity, then we are setting ourselves up for more stupid behaviour in the future. You don't have to be an economist (heck, any school teacher can see it) to know that if you positively reinforce bad behaviour, you will generate more bad behaviour. In other words, you will prevent AIG from failing, but there will be five AIG's later.

Moreover, have any of you seen what this bailout actually does. Bush's friends and Paulson is going to get $700 Billion to spend and the act BANS any court or government oversight of how the money is spent. Are you all so naive as to think that this isn't just an excuse for another Bush power grab?

jczeroman

09-21-2008, 04:09 PM

redbull

09-21-2008, 06:07 PM

someone explain to me why the FUCK we are bailing out foreign banks

http://www.politico.com/news/stories/0908/13690.html

Future Boy

09-21-2008, 07:39 PM

Moreover, have any of you seen what this bailout actually does. Bush's friends and Paulson is going to get 7000 Billion to spend and the act BANS any court or government oversight of how the money is spent. Are you all so naive as to think that this isn't just an excuse for another Bush power grab?.

killtrocity

09-21-2008, 08:07 PM

you can sweep dirt under the rug only as long as there's enough room for it

"the risk of doing nothing..." - that's my Bush!

The Omega Concern

09-21-2008, 11:38 PM

The problems cannot be resolved by shifting the debts of the banks onto the taxpayer. That’s an illusion. By adding another $1 or $2 trillion dollars to the National Debt, Paulson is just ensuring that interest rates will go up, real estate will crash, unemployment will soar, and foreign central banks will abandon the dollar. In truth, there is no fix for a deleveraging market anymore than there is a fix for gravity. The belief that massive debts and insolvency can be erased by increasing liquidity just shows a fundamental misunderstanding of economics. That’s why Henry Paulson is the worst possible person to be orchestrating the so called rescue project. Paulson comes from a business culture which rewards deception, personal acquisitiveness, and extreme risk-taking. Paulson is to finance capitalism what Rumsfeld is to military strategy. His leadership, and the congress’ pathetic abdication of responsibility, assures disaster. Besides, why should the taxpayers be happy that the stocks of Morgan Stanley, Washington Mutual and Goldman Sachs surged on the news that there would be a government bailout yesterday? These banks are essentially bankrupt and their business models are broken. Keeping insolvent banks on life support is not a rescue plan; it’s insanity.

http://www.infowars.com/?p=4717

Here's what was eye-opening to me about the macro developement of this Lucipherian facade of greed we seem to be in the midst of..

"No one has any idea of the magnitude of the deleveraging ahead or the size of the debts that will have to be written down. That’s because 30 years of deregulation has allowed a parallel financial system to arise in which over $500 trillion dollars in derivatives are traded without any government supervision or accounting."

jczeroman

09-22-2008, 03:03 AM

someone explain to me why the FUCK we are bailing out foreign banks

http://www.politico.com/news/stories/0908/13690.html

Out of national interest? Oh wait...

Nimrod's Son

09-22-2008, 02:39 PM

Nimrod's Son

09-22-2008, 02:41 PM

Nimrod's Son

09-22-2008, 02:43 PM

http://www.usnews.com/blogs/the-home-front/2008/9/19/ron-paul-this-bailout-wont-be-the-last.html
Ron Paul: This Bailout Won't Be the Last

September 19, 2008 05:35 PM ET | Luke Mullins (http://www.usnews.com/Topics/tag/Author/l/luke_mullins/index.html) | Permanent Link (http://www.usnews.com/blogs/the-home-front/2008/9/19/ron-paul-this-bailout-wont-be-the-last.html)

I recently chatted with Rep. Ron Paul (R-Texas) about the gigantic financial bailout that the government is preparing to undertake.
Some excerpts from the interview:
What's your take on this huge financial bailout?
"It's more of the same. More debt and more inflation and more pressure on the dollar. Ultimately, although the markets are responding very favorably at the moment, I think it is going to be devastating to the dollar and to our financial situation in this country."
But don't we need to get these toxic assets off banks' balance sheets?
"Sure, they need to be removed. Somebody needs to suffer the consequences not the taxpayer. Everybody knows that they have to be removed. They are priced too high. The assets don't have real value—some have zero and some have 10 cents on the dollar.
The people who had been making profits for all these years and dealing in all of this debt creation and derivatives—that now is becoming unwound—are claiming that it would be so painful if somebody went bankrupt and therefore we have to put so much burden on the taxpayer and on the dollar because the alternative is worse. But quite frankly, if they destroy the dollar and the dollar system, then they have a much bigger problem that they are going to have to deal with and it would be the collapse of the whole international monetary system—which is conceivable."
[B]So instead of having taxpayers buy the bad debt, the market should take care of it by itself?
"Sure, prices need to go down. Bad debt needs to be eliminated. The taxpayer ought to be protected. Taxes ought to be lowered...We are following the same routine that we did in the Depression, and that is artificially try to keep prices up. People were starving in the Depression and the only thing they did was try to keep wages artificially high and keep food prices high. We are doing the same thing now—we are trying to keep housing prices high. Low prices for houses mean poor people could buy a house. This is the most important part of a free market economy and that is free market pricing. Without free market pricing, the market can't work. And this is in a way a major effort to price fix."
So you think the government should not have bailed out any companies during this crisis?
"That would have been the best thing. It would have been painful, but housing prices would have come down sharper and faster, and it would have been over by now. But this whole idea of price fixing—that's what they are doing—has been trying to keep housing prices up and trying to stimulate home building. Well, if you have 100 percent more homes than the market really wants, you can't keep prices up and you can't stimulate home building. If the prices go down, then people will go out and buy homes again. So they should allow the liquidation of debt.
Before the Depression, [the government] generally allowed these kinds of problems to unwind. They were very severe. They would last six months or a year—a lot of liquidation of debt would be wiped off the books. And then it would go back to work again. What we've been doing now—especially since 1971—is preventing the real liquidation of the malinvestment and the excess of debt... If this process continues, we're going to own General Motors and Ford, then we will have to own the airlines. We are socializing our country without even a vote by the Congress. It's a horrible situation."
Will this bailout stabilize the crisis?
"I personally don't think so. It might be temporary, but no, there is much more involved. I mean, we are talking about trying to unwind trillions of dollars of derivatives . . . You have to get rid of all that stuff."
Will this bailout be the last?
"No, no. This won't be the last one. There will be something else later on. But that doesn't mean you might not have a few months of a reprieve. But it will continue."
Will we have to bail out the auto makers?
"Oh I think so. We are not going to let them fail. Our policy is such that everybody gets bailed out. It's like a drug addict, they've got to take their fix. It's too tough getting off these drugs. And the drug here is easy credit.

Tags: cars (http://www.usnews.com/Topics/tag/Subject/c/cars/index.html) | Ron Paul (http://www.usnews.com/Topics/tag/People/r/ron_paul/index.html) | Wall Street (http://www.usnews.com/Topics/tag/Subject/w/wall_street/index.html) | car manufacturers (http://www.usnews.com/Topics/tag/Subject/c/car_manufacturers/index.html) | government intervention (http://www.usnews.com/Topics/tag/Subject/g/government_intervention/index.html)
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jczeroman

09-22-2008, 04:40 PM

Ron Paul in 2003 (http://www.house.gov/paul/congrec/congrec2003/cr091003.htm):

Fannie Mae and Freddie Mac Subsidies Distort the Housing Market

Mr. Chairman, thank you for holding this hearing on the Treasury Department’s views regarding government sponsored enterprises (GSEs). I would also like to thank Secretaries Snow and Martinez for taking time out of their busy schedules to appear before the committee.

I hope this committee spends some time examining the special privileges provided to GSEs by the federal government. According to the Congressional Budget Office, the housing-related GSEs received 13.6 billion worth of indirect federal subsidies in fiscal year 2000 alone. Today, I will introduce the Free Housing Market Enhancement Act, which removes government subsidies from the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the National Home Loan Bank Board.

One of the major government privileges granted to GSEs is a line of credit with the United States Treasury. According to some estimates, the line of credit may be worth over $2 billion dollars. This explicit promise by the Treasury to bail out GSEs in times of economic difficulty helps the GSEs attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a huge unconstitutional and immoral income transfer from working Americans to holders of GSE debt.

The Free Housing Market Enhancement Act also repeals the explicit grant of legal authority given to the Federal Reserve to purchase GSE debt. GSEs are the only institutions besides the United States Treasury granted explicit statutory authority to monetize their debt through the Federal Reserve. This provision gives the GSEs a source of liquidity unavailable to their competitors.

The connection between the GSEs and the government helps isolate the GSE management from market discipline. This isolation from market discipline is the root cause of the recent reports of mismanagement occurring at Fannie and Freddie. After all, if Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurance that they follow accepted management and accounting practices.

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

Despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing.

Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.

No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that government subsidies provided to GSEs make investors underestimate the risk of investing in Fannie Mae and Freddie Mac.

Mr. Chairman, I would like to once again thank the Financial Services Committee for holding this hearing. I would also like to thank Secretaries Snow and Martinez for their presence here today. I hope today’s hearing sheds light on how special privileges granted to GSEs distort the housing market and endanger American taxpayers. Congress should act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors who were misled by foolish government interference in the market. I therefore hope this committee will soon stand up for American taxpayers and investors by acting on my Free Housing Market Enhancement Act.

What wacky free-market ideas - they would never come about in the real world.

09-22-2008, 06:57 PM

Just a thought: Maybe all this stuff that happened over the last few months was intentional? Did the slums of LA get any bigger because of this 'crisis'? No. Famine, revolts? Nada.
And yet, by nationalizing the biggest insurance company and two of the largest investment firms the United States gained mediate access to a few entire national economies. In my opinion there's a giant shift in power going on, especially if all goes well and the Brits and Japs chip in.

Also, neo-liberalism clearly failed.

TuralyonW3

09-22-2008, 11:12 PM

Ron Paul is an idiot not to run as a third party candidate. Should have announced it months ago.

Future Boy

09-23-2008, 01:03 AM

Doesnt he still have like ten mil from his run? Waiting til 2012 maybe.

Starla

09-23-2008, 01:52 AM

Moreover, have any of you seen what this bailout actually does. Bush's friends and Paulson is going to get $700 Billion to spend and the act BANS any court or government oversight of how the money is spent. Are you all so naive as to think that this isn't just an excuse for another Bush power grab?

I change my mind. Let them fall on their asses and see what it feels like.

Starla

09-23-2008, 02:17 AM

wow.

“Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency,” the original draft of the proposed bill says.

http://www.nytimes.com/2008/09/23/business/23sorkin.html?ref=business

TuralyonW3

09-23-2008, 03:01 AM

Doesnt he still have like ten mil from his run? Waiting til 2012 maybe.

won't he be like 76 then

Nimrod's Son

09-23-2008, 12:03 PM

Ron Paul is an idiot not to run as a third party candidate. Should have announced it months ago.

He knows he has a better chance of changing the Republican party from within than challenging it from without.

Nimrod's Son

09-23-2008, 12:07 PM

http://www.buymyshitpile.com/

Nimrod's Son

09-23-2008, 12:14 PM

I heard on CNN this morning that congressional Democrats are asking for three things..

- No CEO golden parachutes or payouts for companies involved in the bailout.
- Judges can rewrite mortgages and loans.
- Give government the power to buy up virtually any kind of bad asset, including credit card debt or car loans
- Give the government "a stake" in each of these companies.

1 - Ok, if you're going that route of bailout, then fine, no huge CEO bonuses/bailouts.
2 - I don't really see what a judge has to do with any of this, but would this be some sort of arbitration? Fine, but we're treading dangerous waters here.
3 - No.... stop this now.
4 - Holy shit no. The government does not need a "stake" in private companies. That's called fascism.

jczeroman

09-23-2008, 01:12 PM

4 - Holy shit no. The government does not need a "stake" in private companies. That's called fascism.

Agreed. I'd rather them just nationalize everything (and subsequently run the economy into the ground so we can be done with it and start over again) than pull this fascism crap.

Caine Walker

09-23-2008, 03:20 PM

I heard on CNN this morning that congressional Democrats are asking for three things..

- No CEO golden parachutes or payouts for companies involved in the bailout.
- Judges can rewrite mortgages and loans.
- Give government the power to buy up virtually any kind of bad asset, including credit card debt or car loans
- Give the government "a stake" in each of these companies.

jesus christ....

http://d.yimg.com/us.yimg.com/p/afp/20080923/capt.cps.nrj65.230908203126.photo02.photo.default-512x341.jpg?x=400&y=266&q=85&sig=QbUdzz9dLQBmO1a1vtPr_Q--

Starla

09-23-2008, 08:57 PM

the Treasury dramatically expanded its bailout plan to ******* buying student loans, car loans, credit card debt and any other "troubled" assets held by banks.

That's nice. I wish someone would pay off my loans.

Travis Meeks

09-23-2008, 10:13 PM

Let it all fall and it will correct itself in the ashes

ravenguy2000

09-24-2008, 08:24 AM

http://www.gop.com/2008Platform/Economy.htm

BTW here's something from the 2008 Republican platform. Just thought this would be worth posting for hahas.

"We do not support government bailouts of private institutions. Government interference in the markets exacerbates problems in the marketplace and causes the free market to take longer to correct itself. We believe in the free market as the best tool to sustained prosperity and opportunity for all. We encourage potential buyers to work in concert with the lending community to educate themselves about the responsibilities of purchasing a home, condo, or land."

09-24-2008, 08:53 AM

So wait, the Treasury Department wants $700,000,000 without any administration and control? Fucking brilliant.

jczeroman

09-24-2008, 11:16 AM

So wait, the Treasury Department wants $700,000,000 without any administration and control? Fucking brilliant.

Don't you see? It's not the treasury - it's for the nation. It's not a few wealthy corporations and their executives - it's for the nation.

sppunk

09-24-2008, 11:21 AM

We're so incredibly poor now. :(

bardy

09-26-2008, 12:53 PM

ugh:

http://www.ireport.com/docs/DOC-95260

bardy

09-26-2008, 12:55 PM

I want to know what would happen if there were no bailout.

Nimrod's Son

09-26-2008, 12:59 PM

I want to know what would happen if there were no bailout.

The companies would be responsible for their own financial problems, they would have another institution buy their notes at a fraction of the cost (which is fair, since the notes are overpriced). Wall Street would take a hit.

But then we would recover, and the public wouldn't be stuck with a huge debt.

Debaser

09-26-2008, 01:04 PM

naive.

bardy

09-26-2008, 01:15 PM

I didnt expect a thread of this ummm .... intelligence?... on a beastie boys forum:

http://beastieboys.com/bbs/showthread.php?p=1618849

bardy

09-26-2008, 01:20 PM

I think im gonna go buy a house in the middle of nowhere in Wyoming and start a commune. anyone want to join? I am pretty good at growing stuff

I am scared for my company moreso than myself. I can always go work in the metals or coal industry which aren't really in immediate jeopardy. But no one is going to build roads if the gov't doesnt have any money to pay for them :( no roads = no job

Nimrod's Son

09-26-2008, 05:09 PM

naive.

I'm really amazed that you of all people are supporting this. I mean I know you blindly support whatever your candidate of choice does, but this is a bailout for big business. Totally goes against your redistibution of wealth paradigm.

Debaser

09-26-2008, 06:48 PM

I definitely don't support the initial Paulson plan (I don't think any significant economist I read did) and the compromised plan with a lot more oversight seems better (again, just based on what the experts I trust say) but whether I support or not is beside the point. It's your view that letting it all come crashing down would only affect Wall street and nothing else is what I was pointing out as an obviously naive statement.

Nimrod's Son

09-26-2008, 07:01 PM

That's not what I said. Why do you always have a problem remembering what people have written?

Debaser

09-26-2008, 07:11 PM

I dunno. Because I just read what you write?

I want to know what would happen if there were no bailout.

The companies would be responsible for their own financial problems, they would have another institution buy their notes at a fraction of the cost (which is fair, since the notes are overpriced). Wall Street would take a hit.

wHATcOLOR

09-26-2008, 08:00 PM

didn't really read this thread. i haven't read a ton of articles, but i've read some. here's my take, given my current understanding.

the "bailout" is being marketed very poorly, and if done properly, should be positioned for the incredible buying opportunity that it is.

heard some stats that there are 51M mortgates in the US right now. 1.3M are in default. so that's less than 3%. to be fair, more will be uncovered. let's bump it up to 10% in default (which i think is aggressive). so 90% of mortgages are good and will come to maturity.

us taxpayers have the opportunity to buy these for pennies on the dollar. in 10 years, the return on those mortgages is going to be regarded as a hell of a buying opportunity.

so long as the government pays market value (low), not previous value for these assets, it's a big win for taxpayers. the government has the ability to take a much more long-term view on investments. take advantage of business leaders very poorly evaluating risks (assumed that property markets are essentially regional, and figured they were hedging/diversifying simply by investing across multiple regsions -- oh wow surprise, it turns out propertly values across the nation can be impacted in the same way, whoops!) and getting in liquidity trouble for being in such highly leveraged positions (margin call, fellas).

that said, of course it's an ugly issue when you see executives benefit (or not be "punished") and not really face much consequence aside from tarnished reputations. i really do think that's a separate issue and should be evaluated independently from the rest of the situation.

i think it's an absolute debacle if the government pays above market value though. at that point you've set an ironclad precedent that the government will cover your ass for taking on excessive risks, and you've created a moral hazard that would be a complete disaster.

bardy

09-26-2008, 08:43 PM

thanks jesse you are awesome

Debaser

09-27-2008, 10:24 PM

Great story and drama on how it all went down when the deal fell apart.

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/26/AR2008092603957.html?sub%3DAR&sub=AR

How McCain Stirred a Simmering Pot

By Jonathan Weisman
Washington Post Staff Writer
Saturday, September 27, 2008; A01

When Sen. John McCain made his way to the Capitol office of House Minority Leader John A. Boehner (R-Ohio) just past noon on Thursday, he intended to "just touch gloves" with House Republican leaders, according to one congressional aide, and get ready for the afternoon bailout summit at the White House.

Instead, Rep. Paul D. Ryan (Wis.), the ranking Republican on the House Budget Committee, was waiting to give him an earful. The $700 billion Wall Street rescue, as laid out by Treasury Secretary Henry M. Paulson Jr., was never going to fly with House Republicans, Ryan said. The plan had to be fundamentally reworked, relying instead on a new program of mortgage insurance paid not by the taxpayers but by the banking industry.

McCain listened, then, with Sen. Lindsey O. Graham (S.C.), he burst into the Senate Republican policy luncheon. Over a Tex-Mex buffet, Sens. Robert F. Bennett (Utah) and Judd Gregg (N.H.) had been explaining the contours of a deal just reached. House Republicans were not buying it. Then McCain spoke.

"I appreciate what you've done here, but I'm not going to sign on to a deal just to sign the deal," McCain told the gathering, according to Graham and confirmed by multiple Senate GOP aides. "Just like Iraq, I'm not afraid to go it alone if I need to."

For a moment, as Graham described it, "you could hear a pin drop. It was just unbelievable." Then pandemonium. By the time the meeting broke up, the agreement touted just hours before -- one that Sen. Lamar Alexander (Tenn.), the No. 3 GOP leader, estimated would be supported by more than 40 Senate Republicans -- was in shambles.

An incendiary mix of presidential politics, delicate dealmaking and market instability played out Thursday in a tableau of high drama, with $700 billion and the U.S. economy possibly in the balance. McCain's presence was only one of the complicating factors. Sen. Barack Obama played his part, with a hectoring performance behind closed doors at the White House. And a brewing House Republican leadership fight helped scramble allegiances in the GOP.

It is unclear whether the day's events will prove to be historically significant or a mere political sideshow. If the administration and lawmakers forge an agreement largely along the lines of the deal they had reached before McCain's arrival Thursday, the tumult will have been a momentary speed bump. If the deal collapses, the recriminations spawned that day will be fierce.

But if a final deal incorporates House Republican principles while leaning most heavily on the accord between the administration, House Democrats and Senate Republicans, all sides will be able to claim some credit -- even if the legislation is not popular with voters.

"If there is a deal with the House involved, it's because of John McCain," Graham, one of the Arizonan's closest friends in the Senate, said yesterday.

In truth, McCain's dramatic announcement Wednesday that he would suspend his campaign and come to Washington for the bailout talks had wide repercussions.

Democrats, eager to reach a deal before McCain could claim credit, hunkered down and made real progress ahead of his arrival. Conservative Republicans in the House reacted as well, according to aides who were part of the talks.

The Republican Study Committee, an enclave of House conservatives, had already begun turning against the Paulson plan. When McCain announced his return, the conservatives feared he would forge an agreement largely along Paulson's lines, with slight alterations and the GOP leadership's blessing.

"No one knew where he was going," one of the aides said.

Boehner, who had initially greeted Paulson's plan with some warmth, faces a brewing battle next year for the party leadership. Conservatives were making it no secret that they were thinking of backing House Deputy Republican Whip Eric Cantor (R-Va.) in a challenge to Boehner, and Paulson's request for $700 billion was not making matters better.

On Wednesday afternoon, Boehner appointed a new working group, led by Cantor, Ryan and Republican Study Committee Chairman Jeb Hensarling (R-Tex.), and including some moderates, to see if they could put together an alternative proposal. McCain's impending arrival shifted that effort into high gear. By the time McCain arrived in Boehner's office Thursday, the principles of a new plan were ready.

According to Republican aides, McCain was in Boehner's office when the announcement of a deal crossed their BlackBerrys. Rep. Spencer Bachus (Ala.), the House Republicans' representative in the talks, stumbled into the meeting to be peppered by participants with incredulous questions.

It was Ryan who made it most clear that there really was no deal. The core of Paulson's plan -- using $700 billion in taxpayer money to buy distressed assets from failing financial firms -- had to be changed, he told McCain. Instead, banks should have to pony up money for a new federally administered insurance program, like the Federal Deposit Insurance Corp. Banks suffering from mortgage defaults would then be able to draw funds from the insurance pool to remain solvent.

It was not a new idea, White House and Treasury officials said. Paulson and Federal Reserve Chairman Ben S. Bernanke had considered a similar option and rejected it. For one thing, asking banks teetering on the edge of bankruptcy to pay into the insurance fund would be like asking a patient facing heart surgery to buy health insurance before being wheeled into the operating room. The banks would be too weak to pay, and the cost of the insurance would be so high, drawing on the fund after a round of mortgage foreclosures would merely be repaying the banks what they had paid in.

Besides, one Treasury official said, it would do nothing to address the problem at hand. Banks would have no more money than they do now to lend. And they would still be holding the bad assets that are making it impossible for them to borrow.

Paulson made those points Wednesday at a contentious meeting with House Republicans. But Ryan convinced McCain that the idea had to be taken seriously to bring House Republicans on board.

"McCain has been trying to help the House guys, trying to get their ideas into the broader bill," said a senior Republican Senate aide. "If McCain can do that, he can bring 50 to 100 House Republicans to the bill. That would be a big damn deal."

McCain and Graham made just that point at the Tex-Mex lunch, but McCain also spoke in the starkly personal terms of a presidential candidate in trouble: "You all put me on the hook for $700 billion," he told his colleagues, according to an aide familiar with the lunch.

The breakdown was serious enough that word reached Paulson. Just 25 minutes before the scheduled meeting at the White House, Paulson phoned House Speaker Nancy Pelosi (D-Calif.) to alert her to trouble, according to a Senate Democratic leadership aide. When congressional leaders converged on the White House, the Democrats peeled off into the Roosevelt Room to discuss the revolt over the insurance plan. President Bush was kept waiting, something he has always hated.

After the cameras left the Cabinet room, Bush thanked everybody for their spirit of cooperation and said he knew it was not an easy vote. He knew elements still needed to be worked out and said he wanted to go around the table to hear people's views.

Pelosi said Obama would speak for the Democrats. Though later he would pepper Paulson with questions, according to a Republican in the room, his initial point was brief: "We've got to get something done."

Bush turned to McCain, who joked, "The longer I am around here, the more I respect seniority." McCain then turned to Boehner and Senate Minority Leader Mitch McConnell (R-Ky.) to speak first.

Boehner was blunt. The plan Paulson laid out would not win the support of the vast majority of House Republicans. It had been improved on the edges, with an oversight board and caps on the compensation of participating executives. But it had to be changed at the core. He did not mention the insurance alternative, but Democrats did. Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, pressed Boehner hard, asking him if he really intended to scrap the deal and start again.

No, Boehner replied, he just wanted his members to have a voice. Obama then jumped in to turn the question on his rival: "What do you think of the [insurance] plan, John?" he asked repeatedly. McCain did not answer.

One Republican in the room said it was clear that the Democrats came into the meeting with a "game plan" aimed at forcing McCain to choose between the administration and House Republicans. "They had taken McCain's request for a meeting and trumped it," said this source.

Congressional aides from both parties were standing in the lobby of the West Wing, unaware of the discord inside the Cabinet room, when McCain emerged alone, shook the hands of the Marines at the door and left. The aides were baffled. The plan had been for a bipartisan appearance before the media, featuring McCain, Obama and at least a firm statement in favor of intervention. Now, one of the leading men was gone.

The rest of the actors poured out of the room still highly agitated. Democrats clustered in the hall between the lobby and the Oval Office, pressing Bachus to explain what had happened to the deal. The Democrats discussed whether to go before the cameras waiting in front of the White House, but Obama refused. Without McCain next to him, he said, he would be skewered for using the White House as a backdrop. As the talk grew louder, Obama asked if they could duck into a room, and back they went to the ornate, windowless Roosevelt Room.

It was then that Paulson gingerly walked in to beg, "Don't blow this up, please." The secretary feared that Democrats would throw their hands up and declare the deal dead.

The crowd erupted in unison, all barking at Paulson that they were not the problem -- he needed to talk to his own party. Under the barrage, Paulson dropped to one knee, clasped his hands in front of his face as if he were praying and joked: "Please, please, don't blow this up. Give me some time."

"Hank," Pelosi replied, "I didn't know you were Catholic."

Staff writers Michael Abramowitz and Paul Kane contributed to this report.

Ever

09-28-2008, 06:50 PM

I wonder why the U.S is so scared of a laissez-faire redistribution of wealth

2

Nimrod's Son

09-29-2008, 10:18 AM

Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, pressed Boehner hard

http://static.blogo.it/tvblog/BeavisButthead_01.jpg

Nimrod's Son

09-29-2008, 10:19 AM

so long as the government pays market value (low), not previous value for these assets, it's a big win for taxpayers.

I thought the whole point of this was that the government would be paying full value on the loans, not market value.

Starla

09-29-2008, 10:35 AM

<a href='http://mine.icanhascheezburger.com/view.aspx?ciid=2138456' ><img src='http://images.icanhascheezburger.com/completestore/2008/9/29/128671758418343173.jpg' alt='funny pictures' /></a><br />moar <a href='http://icanhascheezburger.com'>funny pictures</a>

Starla

09-29-2008, 10:36 AM

Including Pelosi

Debaser

09-29-2008, 01:13 PM

dow down 700 as bailout vote is about to fail

redbreegull

09-29-2008, 01:23 PM

Vote just failed.

severin

09-29-2008, 01:25 PM

dow down 700 as bailout vote is about to fail

cnn has the plan as failed, not about to fail...interestingly it was the reps that didn't vote it through...

Debaser

09-29-2008, 01:30 PM

so. wachovia bought out.

what's next to fail?

JokeyLoki

09-29-2008, 01:38 PM

Here we go.

http://www.upmeup.com/out/i2391_EyeTVScreenSnapz010.jpg

Dow was down more than 600 points after the voting ended.

Jesus.

Future Boy

09-29-2008, 01:40 PM

Nice job Pelosi.

severin

09-29-2008, 02:00 PM

post/av

sppunk

09-29-2008, 02:30 PM

Pelosi should be impeached immediately.

JokeyLoki

09-29-2008, 02:31 PM

It's now down 717.

AndySlash

09-29-2008, 02:34 PM

Pelosi should be impeached immediately.

what did she say/do?

JokeyLoki

09-29-2008, 02:38 PM

Gave a crappy partisan "Republicans suck" speech before the vote that probably changed some minds and caused the vote to go south, or so I've been hearing. I haven't been able to listen.

But aside from that, she's been the most ineffective, useless speaker in (recent) history.

sppunk

09-29-2008, 02:40 PM

Nothing to do with a speech, she had been pushing for a floor vote prior to it reaching even caucus consensus.

She's a fraud and a tool and has made this Congress the worst in history.

JokeyLoki

09-29-2008, 03:13 PM

Nothing to do with a speech, she had been pushing for a floor vote prior to it reaching even caucus consensus.

Wow, didn't know that. Jeez.

bardy

09-29-2008, 03:35 PM

glad I dont have to retire in the near future

Debaser

09-29-2008, 03:39 PM

sppunk

09-29-2008, 03:41 PM

aw poor babys the republicans got their itty witty feelings hurt and that's why they voted no?

Yeah, that's horseshit.

This had to happen - the markets have been arbitrarily floated for years. It should hit at around 7500 then spur back. No one here is over 50 so invest now for your future.

redbull

09-29-2008, 03:42 PM

i thought we didn't really want this to pass anyways

bardy

09-29-2008, 03:42 PM

all I have in the stock market is my 401k... so this is all irrelevant to me unless I lose my job. I would not like to go into another depression. I don't own a home and neither do my parents. I'd have to live on the streets or shack up with someone else who owned a home. maybe live in the woods.

nah I'd move to austrailia and try to mine shit over there

Debaser

09-29-2008, 03:42 PM

i hope at least this convinces the dems to stop trying to court republican votes for a bipartisan plan. just tear up up the current plan and rewrite it from scratch. a much more progressive bill and pass it on party lines.

*Edit* ehhh, that's not realistic either cuz the blue dog dems would balk.

Debaser

09-29-2008, 03:49 PM

Nothing to do with a speech, she had been pushing for a floor vote prior to it reaching even caucus consensus.

She's a fraud and a tool and has made this Congress the worst in history.

not sure how this is directly pelosi's fault. the left characterizes the situation as this: the dems made a ton of concessions on the plan to lure republican house votes and naturally, the repubs double-crossed them and failed to deliver the votes.

But that's just their side of the story...

JokeyLoki

09-29-2008, 03:54 PM

aw poor babys the republicans got their itty witty feelings hurt and that's why they voted no?

It didn't help, basically. Our congress is full of incompetent boobs.

sppunk

09-29-2008, 03:56 PM

They could go it alone, but they don't want to be the ones in charge if it fails.

This was not a partisan defeat - 2/3 of Republicans defeated it while 40 percent of Democrats did, too.

Debaser

09-29-2008, 03:59 PM

They could go it alone, but they don't want to be the ones in charge if it fails.

This was not a partisan defeat - 2/3 of Republicans defeated it while 40 percent of Democrats did, too.

right, i think basically if the repubs are going to refuse to have any part of this bailout and leave the Dems on the hook for it, then why even try to pass a moderate bill? just rewrite it from scratch, exactly the way the dems want it, instead of just modifying an already bad bill. i can't find one expert that is happy with the current bill and most just give a very reluctant approval.

Debaser

09-29-2008, 04:01 PM

didn't mccain suspend his campaign in the first place to bring the house republicans to the table? i guess he needs to suspend it again huh

Debaser

09-29-2008, 04:06 PM

They could go it alone, but they don't want to be the ones in charge if it fails.

This was not a partisan defeat - 2/3 of Republicans defeated it while 40 percent of Democrats did, too.

pretty sure this is a failure of leadership by both dem and republicans in congress with a massive revolt from both sides. republican leaders failed to deliver votes, and then the rank and file dems quickly saw that they would alone be on the hook for this bill and decided to vote nay.

JokeyLoki

09-29-2008, 04:09 PM

didn't mccain suspend his campaign in the first place to bring the house republicans to the table? i guess he needs to suspend it again huh

There were originally only 3 Republicans in favor of the bailout, in the end, 63(?) voted for it. He tried, at least.

sppunk

09-29-2008, 04:19 PM

pretty sure this is a failure of leadership by both dem and republicans in congress with a massive revolt from both sides. republican leaders failed to deliver votes, and then the rank and file dems quickly saw that they would alone be on the hook for this bill and decided to vote nay.

Most likely, yes. They are not going to get overall consensus on this bill, especially with the nonsense terms the Dems want in (yes, I'm against most Dems positioning here).

Debaser

09-29-2008, 04:25 PM

I don't know how much wonkery I can muster, but from what I've read, its the republican alternatives that are pure nonsense. I mean, the republicans say instead of buying their bad debt - the government should make these companies buy insurance from the govt instead? hello? the problem here is that these companies are running out of money, so how can they purchase the insurance? This is something that both Paulsen and Bernanke rejected awhile ago.

You can call the dem proposals bad. But the republican proposals are nonsensical.

Travis Meeks

09-29-2008, 05:35 PM

Isn't this sudden increase in debt (700B) going to totally wipe out the value of our dollar? Shouldn't we do nothing and let banks continue to buy up the other failing banks. Wouldn't this be the best long term scenario for our country?

Short term disaster but isn't that something we need? This is confusing.

Debaser

09-29-2008, 05:49 PM

Sen. John McCain (R-Ariz.) and his top aides took credit for building a winning bailout coalition - hours before the vote failed and stocks tanked.

The rush to claim he had engineered a victory now looks like a strategic blunder that will prolong the McCain's campaign's difficulty in finding a winning message on the economy.

Shortly before the vote, McCain had bragged about his involvement and mocked Sen. Barack Obama for staying on the sidelines.

"I've never been afraid of stepping in to solve problems for the American people, and I'm not going to stop now," McCain told a rally in Columbus, Ohio. "Senator Obama took a very different approach to the crisis our country faced. At first he didn't want to get involved. Then he was monitoring the situation."

McCain, grinning, flashed a sarcastic thumbs-up.

Ever

09-29-2008, 06:30 PM

House republicans just saved free enterprise and did more for your country's long term future than you can imagine. Thank them sometime

sppunk

09-29-2008, 06:33 PM

No, not House Republicans - the entire House. Nearly 1/2 of all Dems voting against this bullshit.

Ever

09-29-2008, 06:35 PM

I stand corrected. All the men and women who voted against are heroes.

Future Boy

09-29-2008, 07:20 PM

They could go it alone, but they don't want to be the ones in charge if it fails.

This was not a partisan defeat - 2/3 of Republicans defeated it while 40 percent of Democrats did, too.

.

Travis Meeks

09-29-2008, 07:34 PM

so what does everybody think the government should do?

JokeyLoki

09-29-2008, 07:53 PM

I don't have a damn clue, at this point. I think things are going to continue going south regardless of what happens.

Esty

09-29-2008, 08:00 PM

so what does everybody think the government should do?

Fuck the bailout, more stimulus checks for everyone!!!

Ever

09-29-2008, 08:01 PM

Ever

09-29-2008, 08:06 PM

There are something like 11 trillion dollars borrowed against bad assets floating up in the air and someone's gonna have to pay for them with their sweat and blood or you can just let it deflate and instead focus on giving investors something to invest in rather than just let banks use houses to lend money to each other til they realize that that doesn't really mean they're making it.

sppunk

09-29-2008, 08:40 PM

so what does everybody think the government should do?

Bush will cancel the election, citing martial law.

bardy

09-29-2008, 08:45 PM

lets build bridges across the entire country

sppunk

09-29-2008, 08:48 PM

Your job's fucked - no one can get car loans or afford gas.

Gish08

09-29-2008, 09:16 PM

No, not House Republicans - the entire House. Nearly 1/2 of all Dems voting against this bullshit.
It doesn't fucking matter. Pelosi ensured that there would be enough votes on the Democratic side if Republicans held up their end of the deal. They did not. The Democrats on the other hand had enough votes to make it work. And this wasn't even their bill! If the Republicans voted like they said they would have, this would have gone through. But it turns out that Democrats wanted it more than Republicans.

It's funny. Boehner is crying today about how many Democrats voted nea even though Republicans were responsible for shooting it down. If the god damn Republicans would have done what they committed to, the Democrats who happened to vote against it would be irrelevant.

This is almost entirely the fault of the GOP. There's clearly an internal power struggle and they'll stop at nothing -- this includes completely wrecking the economy in the biggest economic crisis since the great depression -- for some kind of tangible gain.

It's more of the same "gotcha" bullshit from this party, and they're likely going to pay dearly for it in the fall. McCain just made one step closer to getting his ass kicked. Obama now basically has a 1 in 4 chance of a blowout, and rightfully so.

Eulogy

09-29-2008, 09:19 PM

It doesn't fucking matter. Pelosi ensured that there would be enough votes on the Democratic side if Republicans held up their end of the deal. They did not. If the Republicans voted like they said they would have, this would have gone through. More Democrats wanted it than Republicans.

this is the impression i've gotten. but of course that's the impression i've gotten from dems. but on the other hand, the only thing we're getting from republicans is that nancy pelosi hurt their feelings.

if a party deserves blame, i think we know which one does.

but everyone sucks, clearly. but people want to be elected, and uninformed (or maybe not, whatever) constituents didn't want this thing to go through. that's where the problem is. if this is actually a good plan that will help, that needs to be communicated much more effectively.

note: i don't know anything and am not coming down on either side here. really, no idea. i'm looking at this from a purely political perspective.

Travis Meeks

09-29-2008, 09:27 PM

Not that I want this to go through but if republicans changed their votes because of Pelosi's speech then they should all be rounded up and shot.

This country is embarrassing. Shameful

Gish08

09-29-2008, 09:29 PM

I never said the Democrats were perfect but they should be the last party to blame;

-Pelosi herself basically ADMITTED that she knew there'd be Democrats against it, but she was also able to twist enough arms to get enough to vote for it because the Republicans all but promised that they'd have the same amount of votes to make this work. BOTH PARTIES were in agreement and then, at the last second, the Republicans dropped it.

-Blaming this on Pelosi and her not so kind words for Republicans is the most pathetic excuse I've ever heard! If they were smart, they would have voted for the bill regardless, in a cheerful manor, and then later blast Pelosi and the rest of the Democratic leadership for being partisan in a time where the Republicans were trying to reach across the aisle. Instead, they COMPLETELY pussed out, didn't even vote for it, then cried about getting picked on during a live press conference. Class act!

-It's obvious that the GOP was looking for any excuse they could think of to not support this at the last minute. Had Nancy Pelosi been nothing but kind to Republicans when she spoke earlier, they would have just blamed it on something else and still dropped their support for the bill.

My only guess is they are hoping McCain will emerge as a "maverick" once more and actually say that this time, he encouraged the party to drift away from Bush's disastrous policies while most Democrats were in support of it. It's not going to work.

The GOP just really hurt themselves today.

neopryn

09-29-2008, 09:30 PM

i actually feel good about the economic crisis. i was going to lead a failure of a life and be destitute anyway, now everyone else can join me.

Travis Meeks

09-29-2008, 09:32 PM

McCain will always be a Maverick to me. He told Bush that Iraq needed more soldiers and it doesn't get anymore bad ass than that.

ravenguy2000

09-29-2008, 09:32 PM

i actually feel good about the economic crisis. i was going to lead a failure of a life and be destitute anyway, now everyone else can join me.

i haven't lost any money because i don't have any to lose

Travis Meeks

09-29-2008, 09:35 PM

I've been loaning all my money to bums on the streets of NY and I can't wait to get this bailout money. Chachingmothafucka

Gish08

09-29-2008, 09:38 PM

McCain will always be a Maverick to me. He told Bush that Iraq needed more soldiers and it doesn't get anymore bad ass than that.
Big deal. Iraq is a lost cause. The surge was also supposed to give the country a real opportunity to start securing itself without the Iraqis sucking on the teet of the US Military, but that sure as hell hasn't happened. I wish the Democrats would hammer the point that really only ~50% of the surge's proposed successes have worked -- that is, stabilizing the country with more troops, AND finally allowing the Iraqis to help themselves and not keep killing each other.

All the surge does is allow more security in key areas thanks to more troops, but it's that beefed up military presence alone that is allowing for this to work, which really doesn't do a damn thing for when we finally get the fuck out of there. It's artificial success as far as I'm concerned, because you cannot have all of those troops there indefinitely.

i actually feel good about the economic crisis. i was going to lead a failure of a life and be destitute anyway, now everyone else can join me.
This could get a lot worse than anyone could possibly imagine right now. Remember that "complete collapse" thread I posted?

http://forums.netphoria.org/showthread.php?t=160488

This is basically what they were talking about, and I don't even think we've seen the worst of it.

The Omega Concern

09-29-2008, 10:21 PM

it's good that it failed and that they'll end up taking their time with the process. It'll expose Bush even further for being such a fear mongerer and probably get Paulsen out of the picture, we can all hope. These guys have been like the Keystone cops while the crack addicted wall st. freaks think of anything to get more crack for themselves, NOW!!!

Future Boy

09-30-2008, 01:07 AM

Pelosi and the Dems had the numbers to craft and push through whatever bill they choose to, ******* as many safe guards. Pelosi not wanting to be held responsible for an unpopular bill, so they compromised out this turd of a bill that no one really wanted. So important, but not enough to go it alone if needed. But it's all the Republicans fault. Those Republicans who in the same position would find a way to force whatever they wanted through. Well that's one way to look at it.

Lets see what Dennis thinks about all this.

REP. DENNIS KUCINICH: This is a copy of the bill which will provide for a $700 billion bailout of Wall Street. It has provisions in it where it talks about helping homeowners, but when you read the fine print, you see it has language like “may” instead of “shall” and “encouraging” instead of “mandating” help for the millions of homeowners who are worried right now about whether they’re going to lose their home. There’s no help for them in this.

So what we have here is a rescue plan that essentially gives all the speculators a bailout and puts the bad debts in the custody of the government. The president of the Dallas Federal Reserve Bank has said that this plan could create a fiscal chasm, says that the problem isn’t tight monetary policy, it’s the reckless behavior of some of these investors who have now found themselves in a position where a government bailout is going to help reward their bad behavior.

AMY GOODMAN: Is it any better than when it was first introduced by the Treasury Secretary, by Henry Paulson?

REP. DENNIS KUCINICH: Well, you know, that implies that you would accept the underlying premise. I reject the underlying premise that we needed this bill. And as a matter of fact, that we’re putting this up before an adjournment in an election season shows that Congress is being put under extraordinary pressure to bail out Wall Street. We haven’t looked at any alternatives, Amy. This is—you know, it isn’t as though, if you had a liquidity crisis, that—you know, a real one—that you’d start to look at all the alternatives. We haven’t done that. We have a bill here, a bill of more than a hundred pages, that we haven’t had a single hearing on the bill, you know—on the concept, yes, on what Paulson and Bernanke asked for initially. But, you know, we need to have hearings on this. There’s 400 economists and three Nobel Prize-winning economists who have said, “Whoa, wait a minute! What are you doing? Why are you rushing this?” You know, this thing doesn’t smell right, frankly.

AMY GOODMAN: What do you think has to happen right now?

REP. DENNIS KUCINICH: Well, you know, Congress better get ready with a plan B. If this thing goes down, we need to find a way to help Wall Street pay for its own problems. You can do that with a 20—.25 percent stock transfer tax, cancellation of dividends. You know, make the shareholders and the investors have to pay for the funny business that was going on on Wall Street. Why make the taxpayers pay? You know, the very underlying idea of this needs to be challenged, and frankly, there hasn’t been enough of that going on.

Well, what we have is a transfer of wealth, actually. It’s a continuation of a transfer of wealth. This whole government has become nothing more than a big machine that transfers the wealth upwards with our tax policies, our energy policies, with this fiscal policies, with the war. All the wealth of the country goes from the pockets of the people into the hands of a few. This is a very dangerous moment. You know, it’s the biggest amount of injection of capital by the government in a single time since the New Deal. And frankly, there is no trickle down here. There’s just rewarding bad behavior.

AMY GOODMAN: It sounds like it was mainly the House Republicans who balked, who revolted on Friday. Yet, you and a number of your colleagues are joining them. Do you believe this will pass today?

REP. DENNIS KUCINICH: It’s going to be a very close vote. And I don’t see this as a partisan issue, by the way. I mean, in a way, the debate that tries to make it a partisan issue is a diversion. This is really whether or not people will side with Main Street in a struggle with Wall Street, because, you know, this is not about left or right. This is about up or down, and it’s about the color green.

And frankly, Wall Street is—has put itself on a trajectory with now we have almost a quadrillion—half a quadrillion dollars of derivatives that are out there, floating out there. People have said that if this is intended to be a fix, it’s a joke, on one hand. On the other hand, who’s paying for it? Why are we rushing this? I don’t—you know, and everything about this, I think, is unacceptable.

AMY GOODMAN: Congressman Kucinich, what happens if this doesn’t pass?

REP. DENNIS KUCINICH: Well, that’s exactly right. I mean, we need to be ready with plan B, which helps Wall Street restrain some of this bad conduct, which immediately, you know, puts—looks at some of the issues of liquidity that have to do with the policies of the Fed. We had a former head of the FDIC tell a group of congressmen yesterday that the Bush administration has been going around the last few weeks, actually, so tightening up on the practices of banks that they’re forcing them to have bigger reserves, which in a way would, you know, kind of create—help to create the kind of tight money policies that we’re saying we’re trying to alleviate with this bill. So, you know, there needs to be a deeper look at this.

It seems to me there’s a possibility that this crisis has a little bit of manufacture to it. And that really concerns me, because we haven’t had enough time to look at this in an in-depth way, to analyze the impact of it on the economy, to see if it’s going to do anything about a recession that we’re obviously headed into, to see if it’s going to handle the underlying concerns on Wall Street about the speculation and a lack of regulation. The bill doesn’t, by the way, address anything about the speculation, anything about the lack of regulation. The SEC has failed. The Fed has failed. And we’re essentially telling all the same actors, “Go for it. You know, here’s another opportunity,” except this time it’s with taxpayers’ money.
---

And my favorite, nothing like selling out the little people all in the name of Unity. Let the capitulation begin:

---
AMY GOODMAN: Right, but the Democrats are in charge of this.

REP. DENNIS KUCINICH: Right. You know, I’ll tell you something that we were told in our caucus. We were told that our presidential candidate, when the negotiations started at the White House, said that he didn’t want this in this bill. Now, that’s what we were told.

AMY GOODMAN: You were told that Barack Obama did not want this in the bill?

REP. DENNIS KUCINICH: That he didn’t want the bankruptcy provisions in the bill. Now, you know, that’s what we were told. And I don’t understand why he would say that, if he did say that. And I think that there is a—the fact that we didn’t put bankruptcy provisions in, that actually we removed any hope for judges to do any loan modifications or any forbearance. There’s no moratorium on mortgage foreclosures in here. So, who’s getting—who’s really getting helped by this bill? This is a bailout, pure and simple, of Wall Street interests who have been involved in speculation.

And I don’t, for the life of me, understand why this is going to do anything to address the underlying problems in the economy, which actually had to do with the recklessness. This is what the president of the Federal Reserve Bank in Dallas said, that—and, you know, I might have the actual quote here. Listen to this quote: he said, “The seizures and convulsions we’ve experienced in the debt and equity markets have been the consequences of a sustained orgy of excess and reckless behavior, not a too tight monetary policy.” This is the Dallas Federal Reserve Bank president, Richard Fisher.

So, you know, we’re getting stampeded here to vote for something that doesn’t help homeowners, that doesn’t do anything about foreclosures, that doesn’t help those people who have been in bankruptcy and are looking for a way out. As a matter of fact, it made sure they can’t get out. So, who’s this for? It’s for speculators. It’s to play a game that provides some temporary help in the market, and, you know, you might see an uptick today if this passes the House. On the other hand, if it doesn’t, we need to be ready to find a way for Wall Street to address its problems without having to tap the increasingly diminishing resources of the federal taxpayers.

---

More at http://www.democracynow.org/2008/9/29/is_this_the_united_states_congress

jczeroman

09-30-2008, 06:13 AM

Thanks God. Now let's take our medicine for a few months and get this correction over with.

Debaser

09-30-2008, 10:45 AM

I want to know what would happen if there were no bailout.

tyler cowen (http://www.marginalrevolution.com/marginalrevolution/2008/09/the-best-and-wo.html) (libertarian economist):

The best and worst case scenarios

The best case scenario: The bad banks continue to be bought up, there is no run on hedge funds next Tuesday, only mid-sized European banks fail, money market funds keep on buying commercial paper, and the Fed and Treasury continue to operate on a case-by-case basis. Since Congress doesn't have to vote for something called "a bailout," it can give Paulson and Bernanke more operational freedom than they would have otherwise had. The American economy is in recession for two years and unemployment does not rise above eight or nine percent.

The worst case scenario: Credit markets freeze up within the next week and many businesses cannot meet their payrolls. Margin calls cannot be met and the NYSE shuts down for a week. Hardly anyone can get a mortgage so most home prices end up undefined rather than low. There is an emergency de facto nationalization of banks to keep the payments system moving. The Paulson plan is seen as a lost paradise. There is no one to buy up the busted hedge funds, so government and the taxpayer end up holding the bag. The quasi-nationalized banks are asked to serve political ends and it proves hard to recapitalize them in private hands. In the very worst case scenario, the Chinese bubble bursts too.

I still think some version of the best case scenario is more plausible, but I wish I could tell you I am sure.

Nimrod's Son

09-30-2008, 12:59 PM

Nothing to do with a speech, she had been pushing for a floor vote prior to it reaching even caucus consensus.
^ this.

She pushed for a vote probably knowing it would fail.

Nimrod's Son

09-30-2008, 01:03 PM

I think the government should put those 700 billion dollars they were gonna give to an inflated mortgage industry and shove it into education/health/infrastructure and get the foundations of a strong middle class and a real economy happening again.

Here's a hint encourage automation/retraining instead of exploiting cheap labor in sudan or something

But... people seem to think this is a magic stockpile of money that's just sitting around. Like "what do we do with this extra 700B?" It's not real money and the last thing we need to do is go into 700B debt to invest in "education" and the like, which the federal government should stay the hell out of to begin with.

Nimrod's Son

09-30-2008, 01:06 PM

It doesn't fucking matter. Pelosi ensured that there would be enough votes on the Democratic side if Republicans held up their end of the deal. They did not. The Democrats on the other hand had enough votes to make it work. And this wasn't even their bill! If the Republicans voted like they said they would have, this would have gone through. But it turns out that Democrats wanted it more than Republicans.

It's funny. Boehner is crying today about how many Democrats voted nea even though Republicans were responsible for shooting it down. If the god damn Republicans would have done what they committed to, the Democrats who happened to vote against it would be irrelevant.

This is almost entirely the fault of the GOP. There's clearly an internal power struggle and they'll stop at nothing -- this includes completely wrecking the economy in the biggest economic crisis since the great depression -- for some kind of tangible gain.

It's more of the same "gotcha" bullshit from this party, and they're likely going to pay dearly for it in the fall. McCain just made one step closer to getting his ass kicked. Obama now basically has a 1 in 4 chance of a blowout, and rightfully so.

You are so ridiculously partisan, it's not even funny anymore. Enjoy drinking your Kool-Aid.

First of all, this was a bill from President George W. Bush, Republican, and supported by most of the House Democrats. It was a bad bill, and failed to enact the safetys or the alternatives that many in the House want. This wasn't "political dirty tricks!!!!!"

Seriously, you need to grow or, or take a class or two before you start blowing this shit from your ass on this board.

Nimrod's Son

09-30-2008, 01:09 PM

Thanks God. Now let's take our medicine for a few months and get this correction over with.
You and I both know that's not going to happen. There are too many politicians in the pockets of too many people who stand to lose money if that happens.

Eulogy

09-30-2008, 01:24 PM

You and I both know that's not going to happen. There are too many politicians in the pockets of too many people who stand to lose money if that happens.

since you and jczeroman are so clearly against the government taking any action here, i'll ask you two what will happen if no action is taken. would it be catastrophic? i assume you don't think so, but then why do so many economists think it would be? are you basing your thoughts on this situation on principle or on practicality?

sppunk

09-30-2008, 01:28 PM

Economists don't think it'll be catastrophic, the Bush administration says it will be - big differences there.

Most economists don't want a bailout, either, unless they have direct ties to Wall Street firms.

Debaser

09-30-2008, 01:39 PM

Most economists don't want a bailout, either, unless they have direct ties to Wall Street firms.

Oh, really? I'd like more on this. (I honestly don't know)

Eulogy

09-30-2008, 01:40 PM

Oh, really? I'd like more on this. (I honestly don't know)

^

From what I've gathered, most have said that the proposed bill was a bad one. but that something needs to be done. correct me if i'm wrong though.

Nimrod's Son

09-30-2008, 01:59 PM

^

From what I've gathered, most have said that the proposed bill was a bad one. but that something needs to be done. correct me if i'm wrong though.

Those are television pundits and politicians though.

Nimrod's Son

09-30-2008, 02:05 PM

Nimrod's Son

09-30-2008, 02:06 PM

An Aussie perspective:
http://www.theaustralian.news.com.au/story/0,25197,24421918-20261,00.html

Blame the bubble on FDR, Jimmy Carter and Bill Clinton

September 30, 2008

 Johan Norberg, on his blog JohanNorberg.net, points out the Democratic intervention that caused the financial crisis
SOME milestones in the prehistory of the crisis. 1933: As part of the New Deal, investment banks are stopped from also acting as commercial banks (which would have given them bank deposits and more stability). 1938: As part of the New Deal, president (Franklin D.) Roosevelt creates Fannie Mae and in 1970 Congress creates Freddie Mac. With their implicit government guarantees they can offer cheaper loans and expand until they dominate the American mortgage market. 1989: The American government step(s) in and pay(s) for the savings and loan crisis, which sets a precedent. 1995: The Community Reinvestment Act is revised so that banks and thrifts are forced to give home loans to low and moderate-income households as well. In return they are allowed to repackage and sell those sub-prime risks to others, which Bear Stearns pioneers in 1997. 2001-03: Instead of letting the market get rid of bad businesses and loans after the dotcom bubble and 9/11, the (Federal Reserve) reduces its rate from 6.5 per cent to 1 per cent (with) a dramatic expansion of the money supply, which creates a real estate bubble.
Mae and Mac ran leverage ratios that exceeded 60 to one (cheered on by the Democrats) to keep giving loans to people who could not really afford it. It only took more traditional interest rates for the bubble to burst. The independent investment banks that did not have access to bank deposits collapsed and almost brought the whole system down. All those who now think that the solution is to give more powers to politicians, authorities and central banks should look at what they did with the powers they already had.
Quadrant Online provides more detail:
IN the past week, the Australian media (has) given copious quantities of space and time to commentators seeking to blame the American sub-prime loans crisis on the market economy. These commentators, most of them from state-funded universities and media, think their own commitment to state ownership, government intervention and a heavily regulated economy has been vindicated as market forces and corporate greed apparently spin out of control. It is revealing, therefore, to re-read an article from the conservative City Journal in 2000 predicting problems for the banking sector from the Clinton administration's resurrection of Jimmy Carter's 1977 Community Reinvestment Act, which appears to have been the major single factor in the origins of American high-risk sub-prime loans. Under Bill Clinton: banks were required to provide loans on an affirmative action basis to poor inner-urban ghettoes; the scheme's intentions were to help low-income earners buy homes and revive decaying neighbourhoods; much of the money was funnelled through a nationwide network of left-wing community activist groups; government regulators were appointed to measure banks' performance and ensure they reversed their previous racially discriminatory policies of declining to lend money to high-risk clients; by 2000, banks had committed nearly $1 trillion for loans to low-income ethnic and inner-urban groups; at the time, the chairman of the US Senate banking committee, Republican senator Phil Gramm, denounced the program as a vast extortion scheme against the nation's banks.

alexthestampede

09-30-2008, 02:26 PM

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1
"Published: September 30, 1999"

mainly clinton

Eulogy

09-30-2008, 03:26 PM

Those are television pundits and politicians though.

not all of them are

sppunk

09-30-2008, 03:30 PM

Oh, really? I'd like more on this. (I honestly don't know)

I can't cite anything at this moment, but go away from journalists/TV talking heads/politicians and look at guest columns and things.

Most think something has to be done, but they don't think a government bailout is key. More of a "put the assholes in jail" deal, I believe.

Andrew_Pakula

09-30-2008, 03:30 PM

wHATcOLOR

09-30-2008, 03:50 PM

No one here is over 50

Wilford Bramley, Mark Foley, and ******sDad, to name a few...

Debaser

09-30-2008, 04:23 PM

I finally did find an anti-bailout perspective from an <s>economist</s> investigative journalist on tax and economic issues, I regularly like to read.

David Cay Johnston: (http://blogs.tnr.com/tnr/blogs/the_plank/archive/2008/09/29/celebrating-the-bailout-bill-s-failure-and-looking-ahead.aspx)

Celebrating The Bailout Bill's Failure--And Looking Ahead

Whether you favor the $700 billion bailout or not, the House vote today should make you cheer--loudly.

Why?

Because the majority vote against it shows that Washington is not entirely in the service of the political donor class, by which I mean Wall Street and the corporations who rely on it for their financing. These campaign donors, a narrow slice of America, have lobbied and donated their way into a system that stacks the economic rules in their favor. But faced with as many as 200 telephone calls against the bailout for every one in favor, a lot of House members decided to listen to their constituents today instead of their campaign donors.

The GOP members voted overwhelmingly against the bill, while two-thirds of the Democrats favored it. Right now you can be sure that cajoling and arm twisting is underway in an effort to persuade 16 GOP members (or perhaps a dozen Republicans and a few Democrats) to vote the public largesse for Wall Street.

None of this is to say that we need, or do not need, some government intervention in the markets. Rather it is to say that the administration has failed to make its case, instead assuming that just as with the war in Iraq and the Patriot Act, it could stampede Congress into thoughtless action and terrify the public into going along.

Also, do not get stampeded by the awful, ill-informed, and heavily one-sided coverage on cable TV, which I have been monitoring. Several friends have emailed me in a panic asking if they should sell their holdings. Politicians and cable news deserve a lot of blame for fostering fear.

The Dow Jones Industrial Average, a measure of just 30 companies out of millions, closed down just under seven percent. Back in 1987 the Dow fell 22 points in a single day, and it was not the end of Western Civilization or even investing.

The stock markets may fall more. They also may rise. After all, Goldman Sachs shares were in a free fall just before the Bush administration declared a crisis, and even with today's 12.5 per cent drop, they are trading at more than $30 per share higher than at the low point eleven days ago.

Questions abound: Do we believe in markets, which can be volatile--or only in managed markets biased by government policy to the upside? Or do we believe in corporate socialism?

Is our economy so fragile that it cannot withstand shocks? Or is it fundamentally sound, as Senator John McCain was declaring until just days ago? And if our economy really is fragile, just how will borrowing $700 billion more to pay for bad loans make things better for anyone but the lenders and some of their customers?

What assurance do we have that borrowing $700 billion will not make things worse? None.

Keep in mind a paper released last week by two economists at the International Monetary Fund, who studied 42 banking crisis over the past 37 years. Their conclusions (not the IMF's) are: bailouts often do not work, they often result in more bad practices, and they distort economies by transferring wealth from taxpayers to bankers and their customers.

Congress held hearings last week, but it only listened to the advocates of the bailout. We deserve better. If Americans have to give up, on average, more than $2,300 of our substance, then it's incumbent on the plan's advocates to make a compelling, coherent case for sacrifice to the national good. But remember, this money is being sought by an administration that told us not to sacrifice after 9/11, but to go shopping.

It is also an administration that, as I revealed in a story in The New York Times in 2004, said that the American taxpayer could not afford an extra $12 million to pursue Osama bin Laden's financing of terrorist plots. And how tiny is this sum? Roughly the interest every three hours on $700 billion. Ponder that--we cannot bear $12 million to get a murderous zealot determined to strike again, but we can afford 58,000 times that much in a bid to avoid the inevitable declines in asset prices that were artificially inflated by the offerings of Goldman Sachs and other Wall Street firms?

Perhaps the dissolution of this bailout bill means that we will now get a serious look at just where the problem is, how pervasive or concentrated bank problems are, and whether there are less expensive options, as suggested by economists like NYU's Nouriel Roubini, BU's Larry Kotlikoff and Columbia's Perry Mehrling, and the Center for Economic Policy and Research's Dean Baker.

Maybe we will also get answers to some hard questions. Like:

--Why was the CEO of Goldman Sachs in the room when government officials decided to bailout the insurer AIG, especially since Goldman has about $20 billion, half of its shareholder equity, at risk on AIG? Keep in mind that Treasury Secretary Paulson is the immediate former CEO of Goldman.

--Why was Lehman Brothers, a Goldman competitor, the only Wall Street firm in trouble so far left to collapse on its own? The Wall Street Journal reports today that it was the collapse of Lehman (which because of its structure may not have been an attractive firm for purchase) that "triggered cash crunch around the globe."

--Has Treasury obtained from every bank the amount of its illiquid assets, which would tell us if the problems are concentrated at a few banks or are pervasive?

--Would a temporary provision in the bankruptcy code, allowing people with toxic mortgages to get their loans rewritten or pursued to foreclosure, be a cheaper and better alternative?

Disclosure, transparency, options--those should be the issues in the next few days.

Ever

09-30-2008, 04:44 PM

Oh, really? I'd like more on this. (I honestly don't know)Some milford or milton guy from harvard just spoke on CNN outlining why the bail out is completely horrible. He also says its likely the bill will eventually get passed which is very terrible. I've just had my faith in the U.S legislative system boosted I don't want it to come crashing down.

Eulogy

09-30-2008, 04:52 PM

the bailout in its current form or any sort of "bailout"

Nimrod's Son

09-30-2008, 04:52 PM

Debaser

09-30-2008, 04:59 PM

nimrod & alexthestampede,

what utter ridiculous bullshit.

Debaser

09-30-2008, 05:09 PM

jczeroman

10-01-2008, 05:08 AM

since you and jczeroman are so clearly against the government taking any action here, i'll ask you two what will happen if no action is taken. would it be catastrophic? i assume you don't think so, but then why do so many economists think it would be? are you basing your thoughts on this situation on principle or on practicality?

Well, define "catastrophic?" There won't be bread-lines and 25% unemployment - but there will be a period of time where the bad debt is cleaned up. This normally brings about deflation, low consumption, higher interest rates (market rates, not the fed rate) and unemployment. The government sitting back and letting this happen through natural processes such as mergers, buyouts, downsizing and streamlining will result in the shortest period of discomfort - and in fact, enables the market to create new innovations to prevent these errors from happening again. If they insist on throwing pots of money around during the correction, causing market distortions, then assets are not going to go where they are needed, lengthening this period and possibly augmenting it.

If a bailout is passed and the government starts tinkering, then the correction will just be passed forward a few years, compounding it's severity. Moreover, irresponsible behaviour will be incentive, strengthening bad firms and rewarding unethical businessmen.

Realistically, the US market is still powerful enough to rebuild a catastrophe, but continuing to let it get worse by sustaining intervention definitely tempts fate.

Ever

10-01-2008, 07:06 AM

Well, define "catastrophic?" There won't be bread-lines and 25% unemployment - but there will be a period of time where the bad debt is cleaned up. This normally brings about deflation, low consumption, higher interest rates (market rates, not the fed rate) and unemployment. The government sitting back and letting this happen through natural processes such as mergers, buyouts, downsizing and streamlining will result in the shortest period of discomfort - and in fact, enables the market to create new innovations to prevent these errors from happening again. If they insist on throwing pots of money around during the correction, causing market distortions, then assets are not going to go where they are needed, lengthening this period and possibly augmenting it.

If a bailout is passed and the government starts tinkering, then the correction will just be passed forward a few years, compounding it's severity. Moreover, irresponsible behaviour will be incentive, strengthening bad firms and rewarding unethical businessmen.

Realistically, the US market is still powerful enough to rebuild a catastrophe, but continuing to let it get worse by sustaining intervention definitely tempts fate.In concrete terms, just out of curiosity, what do you mean by "innovations"? What would they entail? Moreover how will it stop banks from using homes as a pyramid scheme style funneling of wealth or was that the unethical business practice jazz?

I agree with what you're saying though.

jczeroman

10-01-2008, 09:18 AM

In concrete terms, just out of curiosity, what do you mean by "innovations"? What would they entail? Moreover how will it stop banks from using homes as a pyramid scheme style funneling of wealth or was that the unethical business practice jazz?

I agree with what you're saying though.

Unfortunately, it's not a concrete statement. I mean, if they are innovations yet to come, then I don't know the specifics because they haven't been invented yet. What we do know is that allowing bad businesses to fail, keeps the ones that had better, wiser, more ethical (maybe) business models around. These practices stay in and are further refined while those that failed are purged from the corporate gene pool.

Also, the problem wasn't that banks were using homes as wealth funnels because they good - rather Bush ande congress passed numerous incentive packages and spending bills that radically distorted the market and (this is key) incentivised the kind of wanton greed and bad investments that are now going bust. While the potential for greed is inherent in all people, these kind of government incentives neuter the market's ability to handle bad/immoral decisions (failures, firings, arbitration, new entrants, competition, innovations, etc...).

Eulogy

10-01-2008, 09:47 AM

Unfortunately, it's not a concrete statement. I mean, if they are innovations yet to come, then I don't know the specifics because they haven't been invented yet. What we do know is that allowing bad businesses to fail, keeps the ones that had better, wiser, more ethical (maybe) business models around. These practices stay in and are further refined while those that failed are purged from the corporate gene pool.

Also, the problem wasn't that banks were using homes as wealth funnels because they good - rather Bush ande congress passed numerous incentive packages and spending bills that radically distorted the market and (this is key) incentivised the kind of wanton greed and bad investments that are now going bust. While the potential for greed is inherent in all people, these kind of government incentives neuter the market's ability to handle bad/immoral decisions (failures, firings, arbitration, new entrants, competition, innovations, etc...).

ok, but can't the government assist in purging those practices after helping them to continue to exist? i know that goes against your principles, but from a practical standpoint, is there some concrete reason as to why that couldn't work?

alexthestampede

10-01-2008, 09:48 AM

nimrod & alexthestampede,

what utter ridiculous bullshit.

what is bullshit about it?

the article i posted is from the ny times and was written in 1999 and predicted exactly what happened while attributing the policy to the clinton administration

the policy was developed in part to help minorities but you can see from the end of the article that they dont make up a majority of these sub-prime customers. noone is blaming minorities, theyre blaming a bad policy that was put into effect for some minority brownie points

killtrocity

10-01-2008, 11:29 AM

Nimrod's Son

10-01-2008, 11:29 AM

massive and thorough debunks of the wingnut "blame the minorities" theory here (http://www.newamerica.net/blog/asset-building/2008/no-larry-cra-didn-t-cause-sub-prime-mess-3210)and here (http://www.prospect.org/cs/articles?article=did_liberals_cause_the_subprime_c risis). bare in mind that nimrod resorted to a fucking australian news site for his source because all other closer sources are from obvious wingnut sites.
Bill Clinton and FDR are minorities?

Seriously though did you read the Times article? It spells out exactly what the Clinton Administration tried to do with Fannie, which is exactly what the Dems are blaming on Bush today (or in Obama's case, BushMcCain).

Debaser

10-01-2008, 11:58 AM

You two have a fundamental misunderstanding of the disaster here.

Yes, the govt from even way back in 1977 has been pushing lenders to give subprime loans to minorities (hey, no disaster for 30 years).

But what makes just a bunch of defaulting loans the gigantic potential world affecting disaster that it may be is because wall street was making large highly leveraged bets on these loans (e.g., securitized mortgages and credit default swaps) during a friggin housing bubble.

Sure blame clinton (and bush) for pushing bad loans. But they didn't force Wall Street to bet on these risky loans, acting as if the housing bubble would never burst.

Nimrod's Son

10-01-2008, 12:09 PM

Well the funny thing about a bet is, when you lose you usually have to pay your wager. Not in this case.

And of course it's Bush and Clinton as well. I was simply saying that Pelosi et al politicizing this as "Bush did this in 8 years!!!" is wrong.

Wall Street was flush with cash and had no place to invest after the dotcom bubble burst (funny how nobody blamed Clinton for that - not that they should have, but it seems that the President is to blame for everything today) so they put it into housing, creating another artificial bubble.

Something else will come along soon, and we'll bail them out again. Don't worry.

Debaser

10-01-2008, 12:13 PM

I'd have to agree - the Pelosi speech was dumb and especially unnecessary (but it's even dumber to change your vote over it).

And to be fair, subprime loans weren't "bad" loans until the housing bubble formed (before the bubble, if the loan defaults, the creditor could recoup the loss by selling the house - but after a bubble burst and the house is worth way less, you can't do it anymore). oh and plus the fact that lenders got sick in the head during the bubble and were giving loans for no money down. jesus.

Debaser

10-01-2008, 12:15 PM

Well the funny thing about a bet is, when you lose you usually have to pay your wager. Not in this case.

that's a different argument. the "too big/many to fail" argument.

alexthestampede

10-01-2008, 12:42 PM

they were always bad loans. what makes russian roulette a bad game is the risk involved. it's not just a bad game when you get the chamber with the bullet. there was always too much risk involved in these transactions. It would be dumb to try to reduce this crisis to a single cause but you can't ignore that a part of it was politicians telling banks to make dumb economic decisions for politically correct reasons

sppunk

10-01-2008, 12:48 PM

Debaser, no money down loans are perfectly acceptable if the person taking out the loan has assets in other arenas.

The following plan is what should happen:

I. INSURANCE

A. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.

B. In order for a company to accept the government-backed insurance, they must do two things:

1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.

a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.

b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while working with the borrower—again limiting foreclosures and ruined lives.

2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don’t do their jobs.

C. This backstop will cost less than $50 billion—a small fraction of the current proposal.

II. MARK TO MARKET

A. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.

B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.

III. CAPITAL GAINS TAX

A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.

alexthestampede

10-01-2008, 12:48 PM

also wouldnt this have contributed housing bubble

alexthestampede

10-01-2008, 12:49 PM

IMO all this "WALL STREET GREED" bullshit is a smokescreen thrown up for the common slob so he can stay a loyal party member (on both sides) and will direct his anger towards those wall street fat cats, whoever that is

Debaser

10-01-2008, 12:59 PM

Debaser

10-01-2008, 01:02 PM

Part II rebuttal:

Matt Yglesias:
Starting at around minute 40 of this video, Princeton Economist Alan Blinder has an informative discussion (http://www.youtube.com/watch?v=TbhqyO_tQNo) of the mark-to-market issue. Let me try to give a written account that’s less flip than what I wrote this morning. The idea of mark-to-market accounting is that when you’re reporting your balance sheet — your assets and your liabilities — you need to report the value of your alleged assets at what you could actually get for them on the market. In a normal highly liquid market, this is easy and non-problematic. But as Blinder says, in an illiquid and non-functioning market, as we currently have for our “troubled” assets, you get into trouble. Specifically, you get these huge spreads between the bid price and the ask price for the assets and no actual sales happening. Blinder’s example is that if the highest bid is $20 and the lowest bid is $60, where do you value the asset? Thus, “there are legitimate problems that need some attention in how you apply mark-to-market accounting when markets aren’t functioning.”

He continues, however, with “having said that, I know a wrong answer, which is to put it in at face value.” And that’s what proponents (mostly on the right, but also some on the left) of ending mark-to-market want to do. They want to say that you can value your assets not at what you could sell them for, but at what you paid for them. Blinder returns the example of the $20/$60 bid/ask spread and notes that “I’m pretty sure $100 is the wrong answer.” And yet this is the essence of the proposal — take the fact that the assets are hard to value, and use that as an excuse to unambiguously overvalue them. Mark-to-market, Blinder concludes, is “the worst form of accounting until you start thinking about the alternatives.” For obvious reasons, though, this switch has substantial support in some sectors of the finance community and also appeals to some in congress as a “free” way to “solve” the problem.

sppunk

10-01-2008, 01:04 PM

Removing CGTs is a bit reckless, I agree. However, at this point money flowing into the economy would help strengthen banks and allow them time to reallocate assets and rid themselves of negative loans somehow.

You can argue it, though, and make perfectly rationale sense - it's just a thought. None of that will ever happen, though.

The fucking U.S. Senate is in the process of lowering taxes which will devastate the country even more just to look good to the commoner. Idiots.

Caine Walker

10-01-2008, 01:24 PM

The fucking U.S. Senate is in the process of lowering taxes which will devastate the country even more just to look good to the commoner. Idiots.

well, they want to keep <i>their</i> jobs.

Debaser

10-01-2008, 05:34 PM

also wouldnt this have contributed housing bubble

Yeah but so did Wall Street by placing bets on these mortgages by backing them. It all feeds into each other. You got banks making risking loans, then Wall Street backing these loans (mortgage insurance, credit default swaps), which makes the banks more confident to deal out more risky loans. For the past eight years, conservatives have blocked any attempt to regulate this part of the market, wall street making millions and millions of dollars placing bets on these loans.

Debaser

10-01-2008, 06:29 PM

clinton always had a gift in explaining policy in laymen (after the first 2 minutes of obama endorsing):
<iframe height="339" width="425" src="http://www.msnbc.msn.com/id/22425001/vp/26975188#26975188" frameborder="0" scrolling="no"></iframe>

Ever

10-01-2008, 07:08 PM

But if the bill goes through then all the loans businesses receive so that they can create jobs etc, whether they be big or small, will be still based off of bad money. Sure they'll have $400,000 for their payroll but this is an inflated sum. It's backed by bad assets not nearly worth the amount they currently are on the market. What needs to happen is rapid deflation. Its not pretty but like I said there are elven trillion dollars or so completely unaccounted for with any kind of labor or production or actual desirable product and either they disappear or someone works them off. You can't just let the government buy them at the inflated price and keep them at the inflated price that's just horrible.

I agree that the economy needs to be fixed from the ground up, but all the government has to do to make sure that happens is ensure that every citizen has equal opportunity to compete to his full potential and ensure corporate law means unethical/cyclical business does not go unpunished. The market will sort everything else out.

JokeyLoki

10-01-2008, 09:46 PM

Bailout approved

Nimrod's Son

10-01-2008, 10:03 PM

Bailout approved

..by the Senate, where any bailout was expected to pass. The House is still the point of contention. I hope the Republicans stick to their guns.

Ever

10-01-2008, 10:26 PM

*crosses fingers*

JokeyLoki

10-01-2008, 10:49 PM

D'oh, that's what I get for not paying attention today. The way CNN was freaking out over it, you'd think it passed both.

jczeroman

10-02-2008, 02:50 AM

But what makes just a bunch of defaulting loans the gigantic potential world affecting disaster that it may be is because wall street was making large highly leveraged bets on these loans (e.g., securitized mortgages and credit default swaps) during a friggin housing bubble.

Sure blame clinton (and bush) for pushing bad loans. But they didn't force Wall Street to bet on these risky loans, acting as if the housing bubble would never burst.

This is true.

jczeroman

10-02-2008, 03:01 AM

ok, but can't the government assist in purging those practices after helping them to continue to exist? i know that goes against your principles, but from a practical standpoint, is there some concrete reason as to why that couldn't work?

Astute.

Yes, it does going against my principles. But, to the point you bring up about pragmatism, the answer why the government "helping" will cause problems is because when the government intervenes in the market it causes distortions.

I think it helps to think about this ecologically sometimes - think about a pristine ecosystem that is thriving in a gradually evolving state of natural balance - with little niche creatures and plants that all eat each other and one devours the other's poop to make food for another and all that good stuff. Some guy comes in and decides for some arbitrary reason that there aren't enough poop producing creatures and so injects a chemical into the air that doubles their population. Maybe they produce so much poop that (even though he never intended it) it drowns out some plants that produced food for some other creatures, which support some other part, and so on and so on.

Government interventions (either taxes or subsidies or regulation) create distortions in the price system (which is the natural way that goods and services are moved through the economy to the places where they are most needed). So the government might "over-purge" or "under-purge" against what the market actually needs, and unless they got it exactly right, then we get distortions - and bubbles and busts spring up in other places - and then more problems when they burst.

So, in the very short-term, and with the most immediate of effects, the government can definitely "help" and it would solve the most direct problem. But it would do much more harm over time. This is the exact mentality that has led to our arrival at this juncture.

jczeroman

10-02-2008, 03:07 AM

1. The recession is an eventuality of the monetary system we use. No doubt Bush helped speed up the process with the billions of dollars we continue to spend every day but that's not really the issue.

2. The bailout is intended to transfer wealth from sinking ships and to satisfy foreign investors. It will not benefit the public. Everyone in congress knows this, but the majority of them are funded by the same people who stand to lose money.

3. The media creates yet another false dilemma in which we can either bailout the ridiculously rich or enter a recession when in reality a bailout would have a positive effect on the market for a very small amount of time and recession is inevitable.

Yes, ultimately the greatest distortion is in the very monetary unit we use. Imagine if the length of an "inch" were arbitrarily changed by the government every month. We couldn't measure anything consistently any more.

Right now, we have no way to get exact data on prices at any given moment because the government's meddling in the value of the monetary unit is arbitrary - not market-based. This is, at the very least, going to cause ripples of instability in the market and more likely "waves" of booms and busts if the government uses this power at all (which they have).

Ever

10-03-2008, 12:41 AM

Some milford or milton guy from harvard just spoke on CNN outlining why the bail out is completely horrible. He also says its likely the bill will eventually get passed which is very terrible. I've just had my faith in the U.S legislative system boosted I don't want it to come crashing down.Ah yes, Here it is. His name was Miron.

http://edition.cnn.com/2008/POLITICS/09/29/miron.bailout
The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company. 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.

In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy's allocation of its financial resources. Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time.

Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.

Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents. The costs of the bailout, moreover, are almost certainly being understated. The administration's claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion. If these assets are worth something, however, private parties should want to buy them, and they would do so if the owners would accept fair market value. Far more likely is that current owners have brushed under the rug how little their assets are worth.

The bailout has more problems. The final legislation will probably contain numerous side conditions and special dealings that reward Washington lobbyists and their clients.

Anticipation of the bailout will engender strategic behavior by Wall Street institutions as they shuffle their assets and position their balance sheets to maximize their take. The bailout will open the door to further federal meddling in financial markets. So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.

The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer.

And now those numerous side conditions are there. Don't agree with the principles behind our bill? Don't worry we'll clip on that funding you've been wanting for the old arrow mill. You don't think this will actually benefit your constituency? No problem just look at paragraph three article five, we put in a clause ensuring tax cuts for that toy company your wife holds a chair in.

What happened to that promise that this time the interests of Washington won't come ahead of the people? What about all that straight talk and those messages of hope that the old ways are gone? Sure, some of these tack-ins and clip-ons might be socially responsible, and most are formed in good will, but just like all legislation it is only fair that they be subject to individual debate, and not just passed with a larger bill in a time of panic without considering their own merit.

I personally don't have much dependence on the outcome of this election being on the other side of the pacific and all, but if I'm looking at the characteristic of judgment, and that is the quality that determines a competent leader, I'm looking for someone that can think things through and is not scared to be patient - someone not scared to hold his own in the middle of complete chaos and cataclysm. So far all I've seen from Obama, a man I greatly admire and whose message I believe in, is brashness and quick decisions. From McCain I've seen an old man with simple and time-proven values now wavering under the pressures of a new world he just doesn't quite understand.

I prefer one over the other and I still want to see him in the white house. In my eyes Obama is socialist in all the right ways. He seems to understand that you aren't going to see much production if the workmen, engineers, innovators and dreamers of the future can't get to college cause they have to duck into their savings to help their ill mother. He seems to understand that there is little motivation for the man whose job is made redundant and he is given no new training, he does not move forward with his company. He seems to understand that in the global economy, where workers in one nation are exploited with low wages and workers in another are laid off because giving a person a fair day's wage for a fair day's work is simply asking for too much, you cannot afford to allow big corporations to shift jobs overseas that easily. How can anyone expect the free-market system to possibly work if the playing field is uneven? How can anyone expect there to be competition at its full potential if being born in a rural community means your denied broadband services or there simply isn't enough money to get books in the local library? Or if the boy in the urban ghettos is given no market but the drug market? Its akin to exploiting a glitch in a video game.

Obama shows this basic understanding, that is so simple and so pragmatic, and yet seems so lacking from so many politicians today. But it is the lack of patience and the recent betrayal of his own ideals that makes me question his integrity and whether the message of hope he extends to the American people is going to be what they vote for. By voting for this monstrous bailout bill it takes everything he just said and makes it worthless. The old ways didn't work, the market didn't focus on the right things and it collapses. This is how its supposed to be, it will re-adjust itself and move into things of real worth and that which the general consensus measures as valuable. This is the free market ideal. You cannot and I repeat cannot just say "No, these worthless assets must hold their current value too much depends on people believing they're not worthless" eventually it will all come down. With his strong support and involvement on this bill Obama has shown that he has come to the point where his image of being a person who gets things done, comes before the means by which they're done or to what end they're done.

He's saying he wants to build the economy from the ground up yet he wants to use taxpayer money to keep the garbage that has accumulated at the top? Ladies and gentlemen this man doesn't have the judgment required to lead, and I'm disillusioned and sad. Either that or he simply buys into the same special interests he so vigorously fights against.

If there are 700, now 850 billion dollars that you absolutely must spend why throw it into what we know has already failed? There is no real way to fix this so why not invest it into the future of the nation? Invest it into all those things he's been talking about for so long - infrastructure, education, healthcare and incentives for companies to stop exploiting the uneven playing field which is the international economy. Investigate what happened, put the crooks in jail, destroy any government interference which might have messed things up and expand corporate law ensuring that it doesn't happen again.

Personally I'm tired of the absolute gutter shit that is the politics of Australia and crave the meaningful drama of the American stage and I bought into a lot of the ideals Obama sold me. A lot of the world bought into the ideals. And now I'm just sad and disillusioned with the man

like this ---> ;_;

Eulogy

10-03-2008, 08:19 AM

I think it helps to think about this ecologically sometimes - think about a pristine ecosystem that is thriving in a gradually evolving state of natural balance - with little niche creatures and plants that all eat each other and one devours the other's poop to make food for another and all that good stuff. Some guy comes in and decides for some arbitrary reason that there aren't enough poop producing creatures and so injects a chemical into the air that doubles their population. Maybe they produce so much poop that (even though he never intended it) it drowns out some plants that produced food for some other creatures, which support some other part, and so on and so on.

i see what you're saying. as much as i can with my extremely limited and essentially nonexistent knowledge on the subject, anyway. but, i think some people would take issue with you comparing the market to a pristine and perfectly functioning ecosystem. i mean, isn't this an ecosystem that's been screwed around with regardless of how perfect it could have been from the beginning? it seems like with your analogy, your solution would be to leave the ecosystem alone and have faith that it would sort itself out. could that actually work at this point?

does that make sense

probably not

i need to take some economics classes :(

severin

10-03-2008, 08:36 AM

i see what you're saying. as much as i can with my extremely limited and essentially nonexistent knowledge on the subject, anyway. but, i think some people would take issue with you comparing the market to a pristine and perfectly functioning ecosystem. i mean, isn't this an ecosystem that's been screwed around with regardless of how perfect it could have been from the beginning? it seems like with your analogy, your solution would be to leave the ecosystem alone and have faith that it would sort itself out. could that actually work at this point?

does that make sense

probably not

i need to take some economics classes :(

the fundamental flaw is, that a well balanced ecosystem of plants knows no greed. every plant uses exactly what it needs and doesn't feel like gathering more to get an advantage above the plant beside him. human greed is the main factor why a 100% free market will never work out

10-03-2008, 11:55 AM

^^

- - - -
John Boehner just choked while talking about his daily prayers this morning. Fucking hypocrite.

Nimrod's Son

10-03-2008, 12:04 PM

the fundamental flaw is, that a well balanced ecosystem of plants knows no greed.
many times, animals or plants go extinct because another species takes its resources, or eats it. nobody is saying that an ecosystem is free of greed.

the point is that the ecosystem continues on, regardless.

10-03-2008, 12:09 PM

many times, animals or plants go extinct because another species takes its resources, or eats it. nobody is saying that an ecosystem is free of greed.

the point is that the ecosystem continues on, regardless.

You are wrong. If in an ecosystem a species goes extinct it's because of natural disasters, diseases or over-population of a predator. Greed is never in play.

sppunk

10-03-2008, 12:39 PM

House passes bailout bill - we're so fucked in 15 years.

Debaser

10-03-2008, 12:40 PM

yay...?

Tchocky

10-03-2008, 12:43 PM

Boo-hiss.

Eulogy

10-03-2008, 02:13 PM

many times, animals or plants go extinct because another species takes its resources, or eats it. nobody is saying that an ecosystem is free of greed.

the point is that the ecosystem continues on, regardless.

so are you suggesting that it would be ok if the rich people eliminated all the poor people

SURVIVAL OF THE FITTEST

severin

10-03-2008, 03:19 PM

many times, animals or plants go extinct because another species takes its resources, or eats it. nobody is saying that an ecosystem is free of greed.

the point is that the ecosystem continues on, regardless.

only when that "other species" is human, or is brought into the local ecosystem by humans

Nimrod's Son

10-03-2008, 04:32 PM

so are you suggesting that it would be ok if the rich people eliminated all the poor people

SURVIVAL OF THE FITTEST

You're now trying to say that I am supporting mass murder? Obviously that would violate nherent rights.

Nimrod's Son

10-03-2008, 04:34 PM

You are wrong. If in an ecosystem a species goes extinct it's because of natural disasters, diseases or over-population of a predator. Greed is never in play.

Except when another species, like a locust, swarms in and consumes its food source, right?

Nimrod's Son

10-03-2008, 04:55 PM

Ever

10-03-2008, 08:14 PM

Looks like those clowns in congress did it again.

What a bunch of clowns.

killtrocity

10-03-2008, 08:39 PM

martial law was to be temporarily instated on capitol hill if it didn't pass

jczeroman

10-04-2008, 02:51 AM

the fundamental flaw is, that a well balanced ecosystem of plants knows no greed. every plant uses exactly what it needs and doesn't feel like gathering more to get an advantage above the plant beside him. human greed is the main factor why a 100% free market will never work out

Are you kidding me? You've obviously never heard of evolution, survival of the fittest, competition for territory, limited resources, food, etc... nature is greed in action.

jczeroman

10-04-2008, 02:54 AM

i see what you're saying. as much as i can with my extremely limited and essentially nonexistent knowledge on the subject, anyway. but, i think some people would take issue with you comparing the market to a pristine and perfectly functioning ecosystem. i mean, isn't this an ecosystem that's been screwed around with regardless of how perfect it could have been from the beginning? it seems like with your analogy, your solution would be to leave the ecosystem alone and have faith that it would sort itself out. could that actually work at this point?

does that make sense

probably not

i need to take some economics classes :(

yes. I would argue that we need to gradually begin to pull back our little experiments with intervention - we are in a pretty dramatic feedback loop with those already in play. I don't advocate just pulling the plug on the government - but ideally, we should at least slow down the pace at which we are tinkering with the market.

severin

10-04-2008, 03:32 AM

Are you kidding me? You've obviously never heard of evolution, survival of the fittest, competition for territory, limited resources, food, etc... nature is greed in action.
but only innerspecies.

jczeroman

10-04-2008, 10:14 AM

but only innerspecies.

no, all kinds of species will eat/attack/steal from other species like crazy. Even with natural limits - it's not as though every single species of animal that died out was because of some volcano or other outside influences. The very essence of survival is selfishness and greed.

dudehitscar

10-04-2008, 10:20 AM

no, all kinds of species will eat/attack/steal from other species like crazy. Even with natural limits - it's not as though every single species of animal that died out was because of some volcano or other outside influences. The very essence of survival is selfishness and greed.

greed is NOT the essence of survival... in fact it can be counter productive to survival due to the instability that creates with the ecosystem around you and the social system that protects you from being dragged out of your mansion and shot without consequence.

10-04-2008, 10:28 AM

no, all kinds of species will eat/attack/steal from other species like crazy. Even with natural limits - it's not as though every single species of animal that died out was because of some volcano or other outside influences. The very essence of survival is selfishness and greed.

Selfishness and greed in natural ecosystems? You really believe that?
Of course they will "steal" from other species or kill them - but not because they're greedy, it's just in their, well, nature. They don't know greed in a "less for you, everything for me!" kind of way.

Nevermind, this is pointless.

ravenguy2000

10-04-2008, 10:40 AM

bardy

10-04-2008, 11:02 AM

del

bardy

10-04-2008, 11:08 AM

dudehitscar

10-04-2008, 11:12 AM

redbreegull

10-04-2008, 11:19 AM

do you guys actually think some type of bailout shouldn't have happened or do you think the one we passed was bad?

There is no doubt in my mind that it needed to happen... if it didn't, I doubt there would be any credit for any large companies to use (including states, california is already claiming they are unable to borrow money)

no one is saying this is going to stop the recession, it was going to stop a depression.

I really don't know enough of economics to make an intelligent decision on this. Neither do the economists. No one can say for sure if there is going to be a crash, no one can say for sure if this bill will save the economy. What does drive me crazy though is people who are like, "I am against the bailout because we should be helping families, not the businesses who are at fault". Even I have enough an understanding of the economy to know that it hurts everyone when a major financial institution goes under. People who are against the bailout because it doesn't do enough for "main street" are mentally deficient.

My girlfriend's neocon mom:

"I'm against the bailout completely. Why should we help out the big corporations? They made the mess. The banks should be forced to give the houses to families to stop foreclosure."

bardy

10-04-2008, 11:26 AM

I took a financial class this week from a guy who is pretty amazing at making it all seem simple (it's all really addition and subtraction, isn't it? ) anyway... he explained why we got into the bailout mess in the first place and then explained what the government was proposing to do... and then sort of what he GUESSED would happen if it didn't go through.

Anyway, there were some retards in my class that understood what he was saying.

What am I getting at? I think that the news stations and the government have done a TERRIBLE job at explaining this to the public. It's really not all that complicated if you break it down to the basics and ignore politics. But that is, of course, all the media is focused on right now. Stop pointing fingers and just give us the data, you know?

ravenguy2000

10-04-2008, 11:28 AM

Stop pointing fingers and just give us the data, you know?

Yeah. But data doesn't sell laundry detergent to fat housewives in Nebraska.

bardy

10-04-2008, 11:30 AM

yeah I guess people want to be angry instead of informed. I agree with you. It's just unfortunate, you know?

jczeroman

10-04-2008, 11:34 AM

Selfishness and greed in natural ecosystems? You really believe that?
Of course they will "steal" from other species or kill them - but not because they're greedy, it's just in their, well, nature. They don't know greed in a "less for you, everything for me!" kind of way.

Nevermind, this is pointless.

A rat hunting bird eggs has no idea whether or not there are only 3 bird eggs of X species left in the rainforest - he's going to eat them because he's hungry. If there's enough bird eggs for three other rats to eat, he might very well fight them all off so he can be the only one to eat them - the fat jerk.

jczeroman

10-04-2008, 11:37 AM

The moral of the story is that greed, selfishness, accumulation of wealth through business and competitive capitalism is perfectly natural and essential for economies.

Just don't forget, when the people who get fucked over, manipulated, exploited and marginalized try to get their slice back through legislation, government, and public policy, that's stealing. Or unnatural. Or socialism. However you want to spin it.

no, the moral is the greed and selfishness and "fucking people over" have consequences in a market (and really only in a market will there be the most just consequences) and when pin-heads like GW and Paulson try to steal more money from people in the name of "the nation" and benevolence for "main street" (whatever that means) we should view it as exacerbating the greed problem, not helping it. People are not magically neutral and benevolent because they have a government title or uniform.

dudehitscar

10-04-2008, 11:57 AM

no, the moral is the greed and selfishness and "fucking people over" have consequences in a market (and really only in a market will there be the most just consequences) and when pin-heads like GW and Paulson try to steal more money from people in the name of "the nation" and benevolence for "main street" (whatever that means) we should view it as exacerbating the greed problem, not helping it. People are not magically neutral and benevolent because they have a government title or uniform.

simple thing you fail to realize is that our goverment is actually part of the FREE market. The market chose to form this government and we have FREE elections. It's not always Majority rules.... but that's just like the free market as well.

Your real concern is that the government is an inefficient use of our freedom meaning there are better ways to use our market forces to cause change then going through elected officials and I will grant that you have a decent argument with that logic sometimes but it's hardly the norm.

jczeroman

10-05-2008, 03:20 AM

simple thing you fail to realize is that our goverment is actually part of the FREE market. The market chose to form this government and we have FREE elections. It's not always Majority rules.... but that's just like the free market as well.

Your real concern is that the government is an inefficient use of our freedom meaning there are better ways to use our market forces to cause change then going through elected officials and I will grant that you have a decent argument with that logic sometimes but it's hardly the norm.

Incorrect. The only kind of government that can come out of the free market is a voluntary one that is unanimously consented to by all involved and that does not violate the rights of those same people or others on their behalf.

The fact that a majority can vote away the rights of a minority is not "free-market" - John Stewart Mill aptly called it a tyranny of the majority. A free market is based on contracts and a government that arose out of a free-market would support contract enforcement, not contract breaking by whichever crowd can either get the largest numbers or the most guns.

duovamp

10-05-2008, 03:39 AM

Incorrect. The only kind of government that can come out of the free market is a voluntary one that is unanimously consented to by all involved and that does not violate the rights of those same people or others on their behalf.

The fact that a majority can vote away the rights of a minority is not "free-market" - John Stewart Mill aptly called it a tyranny of the majority. A free market is based on contracts and a government that arose out of a free-market would support contract enforcement, not contract breaking by whichever crowd can either get the largest numbers or the most guns.

You missed his point- this government developed much like a free market would. Enough people demanded the formation of a democratic republic in an area that it was established, the general principle behind all governments. Humans did not start out with a giant governing force- it was created by the market. At first it was a simple matter of obtaining power over others through force, and people could work together to accomplish great things (like corporations). As people felt underrepresented by their governors they essentially refused their product (had a revolution). It's all about demand and meeting that demand. You do what the people want if you wish to succeed. So it was demanded that this government be formed and that demand was met. Regulations are created by governments and governments are allowed to exist by a people who created them- the people make the regulations. You elect a politician who enacts policies; a person you chose to rule rules. Governments are more of a "free market" than the most "free" markets on the planet. That's what he's trying to say. This is of course economics and political science 101, so I'm sure you knew both of these things already but the picture was not painted clearly.

Gish08

10-05-2008, 05:40 PM

You are so ridiculously partisan, it's not even funny anymore. Enjoy drinking your Kool-Aid.

First of all, this was a bill from President George W. Bush, Republican, and supported by most of the House Democrats. It was a bad bill, and failed to enact the safetys or the alternatives that many in the House want. This wasn't "political dirty tricks!!!!!"

Seriously, you need to grow or, or take a class or two before you start blowing this shit from your ass on this board.
I'm not being partisan, even I acknowledge that initially many congressmen voted against it because they were up for re-election regardless of party.

As for it being Bush's bill -- that's just it. Dems agreed to a certain number of votes if Republicans would meet them halfway. And it wasn't a bill proposed by a Democratic President.

I'm not being partisan, simply pointing out the fact that the GOP is clearly in the midst of an internal power struggle, running around like a chicken with its head cut off. Learn how to fucking read before you accuse me of not understanding things.

I was no big fan of what Bush proposed btw, but something had to be done, doing absolutely nothing is the worst thing anyone could possibly do, D or R next to their name.

And you can't possibly tell me that McCain did not make himself and his party look like a bunch of idiots. The guy says he's gonna save the day in Washington only to find his (political) plans backfire right into his face.

Also, I'm really interested in what you'd like me to learn in this "class".

alexthestampede

10-05-2008, 09:58 PM

http://www.maplight.org/node/43109

The gist of it: MAPLight.org has found that, over the past five years, banks and securities firms gave an average of $231,877 in campaign contributions to each Representative voting in favor of the bailout, compared with an average of $150,982 to each Representative voting against the bailout--54 percent more money given to those who voted Yes. 205 Representatives voted Yes and 228 voted No, with 1 Not Voting." (this is on the first vote)

dudehitscar

10-05-2008, 10:35 PM

jczeroman

10-06-2008, 04:30 AM

You missed his point- this government developed much like a free market would. Enough people demanded the formation of a democratic republic in an area that it was established, the general principle behind all governments. Humans did not start out with a giant governing force- it was created by the market. At first it was a simple matter of obtaining power over others through force, and people could work together to accomplish great things (like corporations). As people felt underrepresented by their governors they essentially refused their product (had a revolution). It's all about demand and meeting that demand. You do what the people want if you wish to succeed. So it was demanded that this government be formed and that demand was met. Regulations are created by governments and governments are allowed to exist by a people who created them- the people make the regulations. You elect a politician who enacts policies; a person you chose to rule rules. Governments are more of a "free market" than the most "free" markets on the planet. That's what he's trying to say. This is of course economics and political science 101, so I'm sure you knew both of these things already but the picture was not painted clearly.

I understood it the first time - I just think it's wrong. This is like saying that communism is in-line with natural law because it was ultimately formed "by the market." This is basically, though informally brought up in this conversation I expect, a form of social contract theory which I think is easily rejected by pointing out the inherent contradiction between "tolerated" contract bending/breaking and firm adherence to contracts.

A thief or dictator is not "free-market" because he happened to arise in a very natural way based on conditions in society. Free-markets don't inherently exist in nature, in the sense that everyone is always obeying them naturally at all times (thus the rationalization of very un-free-market contract-breaking government). They do inherently exist in the sense that those rules which govern free-markets can be derived from nature and the way that nature operates - but beings with free-will have every option to break natural law and do all the time.

Of course government, and "taxation" (in a very limited sense) can be "free-market" but only if they hold to those virtues which define "free-market." A government that is contracted to by all who agree to it or which is funded by a mechanism that all <i>explicitly</i> agree to is a free-market government. This whole implicit social contract idea might be very natural and common, but it is not free-market.