hey guys remember no more government bailouts

[Debaser]

I dunno. Because I just read what you write?

Originally Posted by bardy

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

Originally Posted by Nimrod's Son

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]

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]

thanks jesse you are awesome

[Debaser]

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

http://www.washingtonpost.com/wp-dyn...ub%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]

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

2

[Nimrod's Son]

Originally Posted by Debaser

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]

Originally Posted by wHATcOLOR

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]

moar funny pictures

[Starla]

Including Pelosi

[Debaser]

dow down 700 as bailout vote is about to fail

[redbreegull]

Vote just failed.

[severin]

Originally Posted by Debaser

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]

so. wachovia bought out.

what's next to fail?

[JokeyLoki]

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]

Nice job Pelosi.

[severin]

post/av

[sppunk]

Pelosi should be impeached immediately.

[JokeyLoki]

It's now down 717.

[AndySlash]

Originally Posted by sppunk

Pelosi should be impeached immediately.

what did she say/do?

[JokeyLoki]

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]

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]

Originally Posted by sppunk

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]

glad I dont have to retire in the near future

[Debaser]

Originally Posted by JokeyLoki

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.

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

[sppunk]

Originally Posted by Debaser

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]

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

[bardy]

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]

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]

Originally Posted by sppunk

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]

Originally Posted by Debaser

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.