hey guys remember no more government bailouts

[Nimrod's Son]

Originally Posted by jczeroman

shit, i was on the way here to post this

[Nimrod's Son]

[Nimrod's Son]

http://www.usnews.com/blogs/the-home...-the-last.html
Ron Paul: This Bailout Won't Be the Last

September 19, 2008 05:35 PM ET | Luke Mullins | Permanent Link

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 [but] 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."
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 | Ron Paul | Wall Street | car manufacturers | government intervention
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[jczeroman]

Ron Paul in 2003:

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.

[Mo]

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]

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

[Future Boy]

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

[Starla]

Originally Posted by jczeroman

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]

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/bu...l?ref=business

[TuralyonW3]

Originally Posted by Future Boy

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

won't he be like 76 then

[Nimrod's Son]

Originally Posted by TuralyonW3

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]

http://www.buymyshitpile.com/

[Nimrod's Son]

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]

Originally Posted by Nimrod's Son

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]

Originally Posted by Nimrod's Son

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/...BmO1a1vtPr_Q--

[Starla]

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]

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

[ravenguy2000]

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."

[Mo]

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

[jczeroman]

Originally Posted by antipop

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]

We're so incredibly poor now.

[bardy]

ugh:

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

[bardy]

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

[Nimrod's Son]

Originally Posted by bardy

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]

naive.

[bardy]

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

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

[bardy]

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]

Originally Posted by Debaser

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]

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]

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