BAILOUT: Yes or No?

Quote:

---

Originally Posted by Koga No Goshi

I trust Congress on the whole to recognize that something must be done and act accordingly. The fact that SOME form of bill WAS going to be passed has been an almost foregone conclusion since day one, whereas if public sentiment had its way this thing would be dead, dead, dead. So that puts Congress at the very least ahead of the general public, in this case, doesn't it?

---

Considering the bill failed due to partisan reasons, no it doesn't.

BTW, this is funny. I just caught Pelosi, speaker of the house, on tv addressing the House. She blames this all on the republicans, which is HILARIOUS due to the fact that this was a combination of FED policy, democratic policy, and republican policy. This is why I hate politicians with an utter passion.

She then goes on to talk about what great credentials Paulson has along with Bernanke. She calls Bernanke an expert on the Great Depression, which closely resembles what is going on now, but then wonders why the bill drafted by the two gives sole power to them to deal with the crisis and any extra money. It honestly boggles the mind. She is a idiot.

Quote:

---

Originally Posted by Crazed Rabbit

Sorry, Kush, but I'm still not convinced. There's a lot of good arguments to be made against the bill from what I've read (on realclearmarkets.com ).

CR

---

I'd like to see some if you wouldn't mind posting. Like I've repeatably said, I can see where you guys are coming from, but when the you have banks failing and freezing up liquidity, you have major problems. Does anyone enjoy paying 20% interest on a loan? I know I don't. Hey, who needs cash for college? I'm currently paying an absurd premium on my students loans due to this. What about a new mortgage?

Quote:

---

Originally Posted by Kush

Considering the bill failed due to partisan reasons, no it doesn't.

BTW, this is funny. I just caught Pelosi, speaker of the house, on tv addressing the House. She blames this all on the republicans, which is HILARIOUS due to the fact that this was a combination of FED policy, democratic policy, and republican policy. This is why I hate politicians with an utter passion.

She then goes on to talk about what great credentials Paulson has along with Bernanke. She calls Bernanke an expert on the Great Depression, which closely resembles what is going on now, but then wonders why the bill drafted by the two gives sole power to them to deal with the crisis and any extra money. It honestly boggles the mind. She is a idiot.

---

Exactly why America needs a purging. In a democracy, change must come from the bottom up, from the people. Perhaps if this crisis rocks us enough, we'll wake up not just to meet our own financial responsibilities, but also stop having such apathy over our political situation.

Quote:

---

Originally Posted by Koga No Goshi

I trust Congress on the whole to recognize that something must be done and act accordingly. The fact that SOME form of bill WAS going to be passed has been an almost foregone conclusion since day one, whereas if public sentiment had its way this thing would be dead, dead, dead. So that puts Congress at the very least ahead of the general public, in this case, doesn't it?

---

If the public wants it dead, dead, dead, who is Congress to deny them?

Quote:

---

Originally Posted by makaikhaan

Exactly why America needs a purging. In a democracy, change must come from the bottom up, from the people. Perhaps if this crisis rocks us enough, we'll wake up not just to meet our own financial responsibilities, but also stop having such apathy over our political situation.

---

Ban the Democratic Party and Republican Party and force them to create completely new ones. Something like that. :dizzy2:

Quote:

---

Originally Posted by Evil_Maniac From Mars

Ban the Democratic Party and Republican Party and force them to create completely new ones. Something like that. :dizzy2:

---

:inquisitive:

Wow, way to totally misrepresent my statement. Good job.

Quote:

---

Originally Posted by GeneralHankerchief

If the public wants it dead, dead, dead, who is Congress to deny them?

---

Well that's why we're in a you-can't-win. Both Republicans and Democrats are voting against the first couple variants of the bailout in sufficient numbers to stop passage. And that is most certainly in some part because of re-election considerations and public sentiment. I do not believe that the original bill should have been passed as-is. If it had, and that unaccountable money had gone poof, everyone would be blaming the "Democratic congress" anyway, even though a bailout has been high pressured by both McCain and Bush. It's funny that many of you seem quick to condemn that people in Congress seemed as concerned with how they'll come out in the "blame game" when this is said and done, as what's best for the country, and then quickly render your own blame judgments. Congress is never perfect but I think what we have is a result of a) our system and b) the passive aggressive moods of the voters.

I am not sure expecting better than what you're seeing is rational, given the way our system works, and given the way people cast votes. Especially in the House, where all representation is very local and each of those people is there representing a narrow slice of the constituency. I'm horrified by a lot of Bible Belt congresspeople like Coburn but I have no say in him keeping or losing his seat.

Edit: Err Colburn might be Senate? Still the same situation though, no say in his seat. ;)

Quote:

---

Originally Posted by makaikhaan

Exactly why America needs a purging. In a democracy, change must come from the bottom up, from the people. Perhaps if this crisis rocks us enough, we'll wake up not just to meet our own financial responsibilities, but also stop having such apathy over our political situation.

---

They aren't apathetic, just idiotic. This is why you leave stuff like this to the Federal Reserve and Treasury Security. I mean they do this stuff for a living and are very well educated in current and past economics situations and principles. The Fed has come a very long way dealing with these kinds of crises.

Quote:

---

Originally Posted by makaikhaan

Wow, way to totally misrepresent my statement. Good job.

---

You might say that what I said was an exaggeration, but honestly, I think it would probably be a good idea to get rid of the two-party system in America, however that is achieved. I wasn't trying to misrepresent your statement - in fact, I largely agree with it.

I'm currently of the opinion that we're basically screwed either way. We can print 700 billion dollars and have all the problems associated with that, just to get the credit machine running again- the same one that got us into this mess in the first place. Wealthy corrupt businesses will get big fat bailouts from their wealthy corrupt patrons in congress and maybe the unsustainable system can trundle on for a few more years. What's solved then? If we don't do anything we're probably heading for a serious recession. Both options stink, but right now I lean towards letting "nature" run its course.

Let's reform it Fight Club style. Problem solved.

It's hard to say for me. I mean I didn't read (I don't know if it's available?...much less would I understand it all?) the plan the senators voted against. It seems bailing them out would not be the best idea, especially because 700 billion is just an estimate, of what it's worth. Whether the taxpayers will receive that much is not really known. Now this might mean the government would own more, which might not be such a horrible thing (but with who is currently in office, perhaps it is...).

Maybe the hindsight bias is making say this, but I would be in favor of a bill that would NOT give any amount of money to the companies, but would put restrictions on loans, mortgages, etc. It's more strict, but this devolution in these categories is obviously not working out.

My 2

Kush:
http://hussmanfunds.com/wmc/wmc080929.htm
He argues buying the bad assets does nothing to lower liabilities. He proposes a streamlined bankruptcy process as well, among other things.

http://faculty.chicagogsb.edu/luigi....n_is_wrong.pdf
An essay from the one thing I like about Chicago, their school of economics, on the need for a streamlined bankruptcy process.

http://www.becker-posner-blog.com/ar...ncial_c_1.html
Lists many problems with the plan.

I am really, insanely happy that the first version (the one that 'Republican holdouts' prevented, I suppose), did not get passed:

Quote:

---

Thanks to the House GOP's intervention, the Paulson plan is also better than it would have been. Republicans helped to eliminate the Barney Frank-Chris Dodd slush fund for liberal housing lobbies; a plank to let judges shield deadbeat homeowners from bankruptcy laws; and a ploy to stack bank boards with union members.

---

http://online.wsj.com/article/SB122264821035984089.html

CR

Quote:

---

Originally Posted by Crazed Rabbit

Kush:
http://hussmanfunds.com/wmc/wmc080929.htm
He argues buying the bad assets does nothing to lower liabilities. He proposes a streamlined bankruptcy process as well, among other things.

http://faculty.chicagogsb.edu/luigi....n_is_wrong.pdf
An essay from the one thing I like about Chicago, their school of economics, on the need for a streamlined bankruptcy process.

http://www.becker-posner-blog.com/ar...ncial_c_1.html
Lists many problems with the plan.

I am really, insanely happy that the first version (the one that 'Republican holdouts' prevented, I suppose), did not get passed:

http://online.wsj.com/article/SB122264821035984089.html

CR

---

Was helpful. Thanks.

EDIT: But I think this is true only in a perfect world. The corruption in these companies is changing these balance sheets and A bill (maybe not this one) would benefit by changing this (hopefully). I'm not sure what I want here...... :wall:

Quote:

---

Thanks to the House GOP's intervention, the Paulson plan is also better than it would have been. Republicans helped to eliminate the Barney Frank-Chris Dodd slush fund for liberal housing lobbies; a plank to let judges shield deadbeat homeowners from bankruptcy laws; and a ploy to stack bank boards with union members.

---

That's got to be one of the most idiotic things I have ever read.

Thanks for the laugh, CR :2thumbsup:

Quote:

---

Originally Posted by Xiahou

I'm currently of the opinion that we're basically screwed either way. We can print 700 billion dollars and have all the problems associated with that, just to get the credit machine running again- the same one that got us into this mess in the first place. Wealthy corrupt businesses will get big fat bailouts from their wealthy corrupt patrons in congress and maybe the unsustainable system can trundle on for a few more years. What's solved then? If we don't do anything we're probably heading for a serious recession. Both options stink, but right now I lean towards letting "nature" run its course.

---

This is exactly how I have felt, as well. In EITHER scenario, the party that gets screwed is the taxpayer, working and middle class. And maybe some dumb rich people who aren't rich enough to be major CEO's and own corps, but rich enough to have tied tons of money into Wall Street. The people directly responsible for this pyramid scheme? They had their golden parachutes pre-packaged. ANd they KNEW this was coming down; look at how many retired as CEO just months before this came down the pipeline. Look at how whatcha call it... Indy Mac and others were saying they were "just fine" right up until the day it was announced they were entering Federal conservatorship. Liars, the bunch of them.

I think the reason the fear tactic isn't working on us (the normal peon folk) is because the fact that we're in an economic downturn is NOT NEWS TO US LIKE IT APPEARS TO BE TO RICH PEOPLE AND INVESTORS. How long has gas been over $3 a gallon? How long have house values been going down? But, when it hits Wall Street--- then it's a crisis? The American people are stupid, but they weren't stupid enough to panic and start fleeing the theater no matter how many times Bush yelled "FIRE! FIRE!!!"

One of the neat ideas I've heard (this is pure pipedream, I'm sure, but I still love it) is get all these CEO's and execs under RICO laws, and repossess their property up to an equivalent value of what they got out of all of this racketeering. Won't happen, but I am mad for the idea.

To me this is not an issue of "I'm just stubbornly against the bailout because I'm mad at Wall Street fat cats." To me that ship has sailed; they made their money on this pyramid scheme and they're not going to be the ones losing a house (their ONLY house, to boot) over this, or struggling to make ends meet. That falls to us, the peons.

There isn't a pretty solution. I think we get screwed in this either way.

Quote:

---

I am really, insanely happy that the first version (the one that 'Republican holdouts' prevented, I suppose), did not get passed:

Quote:
Thanks to the House GOP's intervention, the Paulson plan is also better than it would have been. Republicans helped to eliminate the Barney Frank-Chris Dodd slush fund for liberal housing lobbies; a plank to let judges shield deadbeat homeowners from bankruptcy laws; and a ploy to stack bank boards with union members.

---

CR I am really confused, a page back weren't you blasting the Democrats for not overwhelmingly voting lockstep to get this bailout passed? I can't even keep track of whether you are for or against the bailout that failed today. I am against it, because of insufficient accountability and the fact that it basically made Paulson into Finance Czar with no oversight of how he choose to dole out the money. Also, while you are busy applauding your little GOP minority for squashing this bill, let's not overlook that the head of the GOP (the President) and the heir apparent (McCain) both pushed for it in unchanged fashion. I agree with others that this partisan crap isn't helping but if you're going to take partisan snipes let's place blame where it's warranted.

Quote:

---

Originally Posted by HoreTore

That's got to be one of the most idiotic things I have ever read.

Thanks for the laugh, CR :2thumbsup:

---

Do you know what they're talking about?

I suppose not, so I'll spell it out for you:
One of the things prevented was a huge amount of money being given to ACORN ( Association of Community Organizations for Reform Now ), which intimidated banks as much as they could into giving out subprime loans:
http://online.wsj.com/article/SB122264821035984089.html

Quote:

---

In February 1990, Illinois regulators held what was believed to be the first-ever state hearing to consider blocking a thrift merger for lack of compliance with CRA. The challenge was filed by ACORN, led by Talbott. Officials of Bell Federal Savings and Loan Association, her target, complained that ACORN pressure was undermining its ability to meet strict financial requirements it was obligated to uphold and protested being boxed into an "affirmative-action lending policy." The following years saw Talbott featured in dozens of news stories about pressuring banks into higher-risk minority loans.

IN April 1992, Talbott filed an other precedent-setting com plaint using the "community support requirements" of the 1989 savings-and-loan bailout, this time against Avondale Federal Bank for Savings. Within a month, Chicago ACORN had organized its first "bank fair" at Malcolm X College and found 16 Chicago-area financial institutions willing to participate.

Two months later, aided by ACORN organizer Sandra Maxwell, Talbott announced plans to conduct demonstrations in the lobbies of area banks that refused to attend an ACORN-sponsored national bank "summit" in New York. She insisted that banks show a commitment to minority lending by lowering their standards on downpayments and underwriting - for example, by overlooking bad credit histories.

---

Koga - I was criticizing the dems not because I wanted the bill to be passed, but because they have the numbers to get it passed, and they are blaming the GOP - it is their fault and not the GOP's that it failed.

CR

Quote:

---

Originally Posted by Crazed Rabbit

Koga - I was criticizing the dems not because I wanted the bill to be passed, but because they have the numbers to get it passed, and they are blaming the GOP - it is their fault and not the GOP's that it failed.

CR

---

Which is a pity- they should be congratulating those Dems that voted it down. The news media, regardless of orientation, is acting as though the world is going to explode. I have major doubts that the downturn will be as bad as the '29 depression. Not to mention that things will eventually get straightened out, and will be better for it in the long run. Point is- things will get pretty bad, but they will get better.

EDIT: Tuff is right about the last part, both deserve "blame" as far as the bill not passing. I missed that bit.

Quote:

---

Originally Posted by Crazed Rabbit

Koga - I was criticizing the dems not because I wanted the bill to be passed, but because they have the numbers to get it passed, and they are blaming the GOP - it is their fault and not the GOP's that it failed.

CR

---

I'm sorry CR, but both the Republicans and Democrats failed in this endeavor. The Democrats failed after the Republicans failed - but you can't say that the Republicans didn't fail.

I'm not sure that sucess would have been a good thing anyway, but the dual failure is pretty obvious.

Quote:

---

Originally Posted by TuffStuffMcGruff

I'm sorry CR, but both the Republicans and Democrats failed in this endeavor. The Democrats failed after the Republicans failed - but you can't say that the Republicans didn't fail.

I'm not sure that sucess would have been a good thing anyway, but the dual failure is pretty obvious.

---

My feeling as well. I'm glad this incarnation didn't pass, and I don't think going "ha ha the Republicans blocked this one" and then "ha ha the Democrats failed to pass that one" is very informative or helpful at this point. By a 9:1 margin public calls to Congressional offices are saying no, no, no to both parties. So expecting a partisan lockstep vote either way by either side is totally unrealistic. Pelosi couldn't get all the Dems to vote yes but Bush and McCain combined could only get 1 out of 3 Republicans to vote yes. So um... let's call that one a draw. ;)

Quote:

---

Originally Posted by Koga No Goshi

My feeling as well. I'm glad this incarnation didn't pass, and I don't think going "ha ha the Republicans blocked this one" and then "ha ha the Democrats failed to pass that one" is very informative or helpful at this point. By a 9:1 margin public calls to Congressional offices are saying no, no, no to both parties. So expecting a partisan lockstep vote either way by either side is totally unrealistic. Pelosi couldn't get all the Dems to vote yes but Bush and McCain combined could only get 1 out of 3 Republicans to vote yes. So um... let's call that one a draw. ;)

---

You've got to admit that her speech was insanely incendiary. I don't believe that it caused the house Republicans to vote no, but it certainly didn't inspire them with the bi-partisan sentiment necessary to get the bill through.

Quote:

---

Originally Posted by TuffStuffMcGruff

You've got to admit that her speech was insanely incendiary. I don't believe that it caused the house Republicans to vote no, but it certainly didn't inspire them with the bi-partisan sentiment necessary to get the bill through.

---

If you dont' believe it influenced the Republican vote then it is totally irrelevant. It is the excuse I'm hearing floating around on the airwaves a lot for why so many Republicans voted no. It doesn't say much if Republicans sincerely believe the country needs this, to give a spite vote because they don't like Pelosi. I don't think she's the best thing since sliced bread but I think we should be getting our panties into a twist less over what she can or can't do considering that Bush and McCain together apparently can do even less than she can.

FYI Gentlemen: Working in Saudi my TV news source is BBC World News. I really like them, but last night while I was watching the vote, the anchor blamed Republicans for the failure. She didn't even mention that 40% of the Dems voted no. Not once.

I wonder if this is because Bush has given all Republicans a bad name or if BBC World News wants a Democrat president for the USA.

At any rate, back on topic: I still know so little about all of this I don't even know which way I would have voted. Personally, I am inclined to think that the market can (eventually) sort itself out. We've been due for another recession anyway. Yuck.

I do think it is interesting to speculate on the future. Will the USA still be a superpower? Is it still a superpower? The country has been brought low not by wars (even if they are costly) but by some greedy bastards on Wall Street.

Azi

Quote:

---

Originally Posted by Azi Tohak

FYI Gentlemen: Working in Saudi my TV news source is BBC World News. I really like them, but last night while I was watching the vote, the anchor blamed Republicans for the failure. She didn't even mention that 40% of the Dems voted no. Not once.

I wonder if this is because Bush has given all Republicans a bad name or if BBC World News wants a Democrat president for the USA.

---

The vote was:

Dems Reps
Yes 140 65
No 95 133


Rep no votes nearly equalled the Dem yes votes, even though they're the minority party.

So how does it constitute a foreign conspiracy to influence our Presidential outcome by saying the Reps were primarily responsible for stopping the bill? They were. People are getting hypersensitive and tossing around the term blame. You guys should be proud the Reps stopped it, the bill in its current form is crap.

Quote:

---

Originally Posted by Crazed Rabbit

Kush:
http://hussmanfunds.com/wmc/wmc080929.htm
He argues buying the bad assets does nothing to lower liabilities. He proposes a streamlined bankruptcy process as well, among other things.

http://faculty.chicagogsb.edu/luigi....n_is_wrong.pdf
An essay from the one thing I like about Chicago, their school of economics, on the need for a streamlined bankruptcy process.

http://www.becker-posner-blog.com/ar...ncial_c_1.html
Lists many problems with the plan.

I am really, insanely happy that the first version (the one that 'Republican holdouts' prevented, I suppose), did not get passed:

http://online.wsj.com/article/SB122264821035984089.html

CR

---

Thanks, CR. I'll get back to you tommorow or when I have some free time. My brain is fried, and I don't want you to think I'm blowing you off.

I realise that this is not really the time to be talking about solutions longer-term, but you might be interested in this analysis of the Santander Bank, a Spanish business that is quietly growing on the back of the British government's panic.

Not only has Santander weathered the storm, it has spectacularly benefited from it, announcing 9bn euros profit this year, a staggering 19.3 per cent improvement on last year.

Two reasons, really: first the Spanish banking system is very strictly regulated, largely as a result of a devastating crisis that shook the country's banking industry in the 1970s, and sent many regional and family banks to the wall. The Bank of Spain imposes iron controls in assuming high-risk assets, and insists that ordinary customers be protected from their vagaries. Second, Santander concentrates on retail banking – the unsexy stuff of high-street branches, current accounts and savings deposits – rather than investment banking, or anything fancier. The bank reckons its business is therefore largely immune from market swings.

In other words, a really conservative bank. You know, conservative in the real sense of the word.

Quote:

---

Originally Posted by Banquo's Ghost

I realise that this is not really the time to be talking about solutions longer-term, but you might be interested in this analysis of the Santander Bank, a Spanish business that is quietly growing on the back of the British government's panic.

Not only has Santander weathered the storm, it has spectacularly benefited from it, announcing 9bn euros profit this year, a staggering 19.3 per cent improvement on last year.

Two reasons, really: first the Spanish banking system is very strictly regulated, largely as a result of a devastating crisis that shook the country's banking industry in the 1970s, and sent many regional and family banks to the wall. The Bank of Spain imposes iron controls in assuming high-risk assets, and insists that ordinary customers be protected from their vagaries. Second, Santander concentrates on retail banking – the unsexy stuff of high-street branches, current accounts and savings deposits – rather than investment banking, or anything fancier. The bank reckons its business is therefore largely immune from market swings.

In other words, a really conservative bank. You know, conservative in the real sense of the word.

---

A lot of very conservative banks that operate in the U.S. are doing just fine. The Japanese banks, for instance, here on the West Coast, are doing okay, such as Union Bank of California. (There are several others, the names just elude me at the moment.) One of the prime reasons of course is that they really only gave loans on relatively "strict" guidelines, you had to basically have A credit to get an A loan. (Sort of a novel concept in today's context.) But, six months ago, a year ago... people were saying "screw you guys, you're not competitive, you're offering me 3%? PFFT" and took their money to the risky subprime mortgage & re-fi based savings/CD/banks. (I heard this all the time, working in an accounting office.)

It brings a quote to mind. After I read this, I never forgot it. It's so eminently relevant to so much of what's going on in America today, from economics to foreign policy.

Smedley Butler on Interventionism
-- Excerpt from a speech delivered in 1933, by Major General Smedley Butler, USMC.

War is just a racket. A racket is best described, I believe, as something that is not what it seems to the majority of people. Only a small inside group knows what it is about. It is conducted for the benefit of the very few at the expense of the masses.

I believe in adequate defense at the coastline and nothing else. If a nation comes over here to fight, then we'll fight. The trouble with America is that when the dollar only earns 6 percent over here, then it gets restless and goes overseas to get 100 percent. Then the flag follows the dollar and the soldiers follow the flag.

I wouldn't go to war again as I have done to protect some lousy investment of the bankers. There are only two things we should fight for. One is the defense of our homes and the other is the Bill of Rights. War for any other reason is simply a racket.

There isn't a trick in the racketeering bag that the military gang is blind to. It has its "finger men" to point out enemies, its "muscle men" to destroy enemies, its "brain men" to plan war preparations, and a "Big Boss" Super-Nationalistic-Capitalism.

It may seem odd for me, a military man to adopt such a comparison. Truthfulness compels me to. I spent thirty- three years and four months in active military service as a member of this country's most agile military force, the Marine Corps. I served in all commissioned ranks from Second Lieutenant to Major-General. And during that period, I spent most of my time being a high class muscle- man for Big Business, for Wall Street and for the Bankers. In short, I was a racketeer, a gangster for capitalism.

I suspected I was just part of a racket at the time. Now I am sure of it. Like all the members of the military profession, I never had a thought of my own until I left the service. My mental faculties remained in suspended animation while I obeyed the orders of higher-ups. This is typical with everyone in the military service.

I helped make Mexico, especially Tampico, safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefits of Wall Street. The record of racketeering is long. I helped purify Nicaragua for the international banking house of Brown Brothers in 1909-1912 (where have I heard that name before?). I brought light to the Dominican Republic for American sugar interests in 1916. In China I helped to see to it that Standard Oil went its way unmolested.

During those years, I had, as the boys in the back room would say, a swell racket. Looking back on it, I feel that I could have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.

I talked to a stock broker and former loan officer on the phone for 2 hours last night (family friend). This guy is a real genius. Anyway, I have a lot better understanding of where a lot of this came from, but long story short a bill should be passed because it's the only thing we really can do at this point. We have to make sure we watch over them like hawks though, and I would agree with him, some people need to be arrested.

A great point:

If things are indeed as bad as the proponents say, and if they are the responsible, sober voices of wisdom that they pretend to be, the truly irresponsible thing was to wait up until the last weeks before the recess, rush out a terrible plan, demand immediate adoption of this terrible plan (which they were happy to admit in public was a terrible plan) and then not even correctly gauge the level of support for the legislation before bringing it to a vote. Calling the question when there likely wasn’t enough support (as opponents of the bill had said yesterday!), if you believe what these people claim to believe, was an act of brazen recklessness. If they are wrong about the consequences of not adopting this plan, they are merely politically incompetent.

Quote:

---

Originally Posted by Crazed Rabbit

Kush:
http://hussmanfunds.com/wmc/wmc080929.htm
He argues buying the bad assets does nothing to lower liabilities. He proposes a streamlined bankruptcy process as well, among other things.

http://faculty.chicagogsb.edu/luigi....n_is_wrong.pdf
An essay from the one thing I like about Chicago, their school of economics, on the need for a streamlined bankruptcy process.

http://www.becker-posner-blog.com/ar...ncial_c_1.html
Lists many problems with the plan.

I am really, insanely happy that the first version (the one that 'Republican holdouts' prevented, I suppose), did not get passed:

http://online.wsj.com/article/SB122264821035984089.html

CR

---

Good stuff there.

Quote:

---

Originally Posted by Banquo's Ghost

I realise that this is not really the time to be talking about solutions longer-term, but you might be interested in this analysis of the Santander Bank, a Spanish business that is quietly growing on the back of the British government's panic.

Not only has Santander weathered the storm, it has spectacularly benefited from it, announcing 9bn euros profit this year, a staggering 19.3 per cent improvement on last year.

Two reasons, really: first the Spanish banking system is very strictly regulated, largely as a result of a devastating crisis that shook the country's banking industry in the 1970s, and sent many regional and family banks to the wall. The Bank of Spain imposes iron controls in assuming high-risk assets, and insists that ordinary customers be protected from their vagaries. Second, Santander concentrates on retail banking – the unsexy stuff of high-street branches, current accounts and savings deposits – rather than investment banking, or anything fancier. The bank reckons its business is therefore largely immune from market swings.

In other words, a really conservative bank. You know, conservative in the real sense of the word.

---

Indeed. De-regulation in the late 1990s allowed new avenues for making profits in America. Those who used those opportunities wisely are doing fine.

But our problem is beyond mere capitalistic greed - the government and special interest groups pushed Fannie Mae and Freddie Mac to accept sub prime loans and the government didn't put the standard regulations on Fannie and Freddie.

I'm hearing the Democrat leadership is going to reinstall the liberal provisions of the bill to get more demos on board, including a huge amount of money for ACORN, the special interest group that pushed for giving sub prime loans to poor minorities.

CR

How about raising wages to make poor people afford a house instead of playing with the loan market?

Quote:

---

Originally Posted by Crazed Rabbit

Indeed. De-regulation in the late 1990s allowed new avenues for making profits in America. Those who used those opportunities wisely are doing fine.

But our problem is beyond mere capitalistic greed - the government and special interest groups pushed Fannie Mae and Freddie Mac to accept sub prime loans and the government didn't put the standard regulations on Fannie and Freddie.

I'm hearing the Democrat leadership is going to reinstall the liberal provisions of the bill to get more demos on board, including a huge amount of money for ACORN, the special interest group that pushed for giving sub prime loans to poor minorities.

CR

---

Seriously, stop with the reinventing history. If you want to turn this into a pure partisan matter (and of course, from your perspective, it is all and only the Democrats) then let's get into the ownership society. Whose deal is that? Bush. You guys are still complaining to this day about the New Deal, when your party has given us such wonderful things as the ownership society, the idea that you can have whatever you want, with a joke tax cut, on a subprime loan, a credit card, or by taking a part time minimum wage job or going to night school. This is the guy who told us to go shopping after 9/11.

"We're creating... an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property. - President George W. Bush, October 2004."

Any finger you want to point at the Dems, three more are pointing back at you. The fact that we were even in a housing bubble is in large part because of heavily (not exclusively, but dominantly) Republican policies of deregulation, tax incentives for outsourcing, and the gutting of many major domestic industries. The last big cash cow was the housing market, and people's ability to pull big credit out of a house to pay for things their jobs didn't afford them but the economy depended on people buying (no matter how much we want to lecture about individual responsibility.) The fact that subprime loans were popping up like Starbucks was the result of deregulation of the financial markets, not regulation. The fact that they were not checking credit scores or income was deregulation. This was private failure enabled by pro-business, deregulation policies. This was not private victimhood brought on by too much regulation.

And, if you want to make this all about homeownership regulations regarding Freddie and Fannie, and blame it on the Dems... well, you guys controlled all three branches for nearly 8 years. But you were too busy with your ownership society.

I love how the defense of Republicans today, especially the McCain campaign, is "well we've been talking about the need for reform in the housing market for awhile now." Yeah, well, you did nothing with 7 and change years in control of government about it, so we know what your words were worth, right?

Quote:

---

Originally Posted by TuffStuffMcGruff

You've got to admit that her speech was insanely incendiary. I don't believe that it caused the house Republicans to vote no, but it certainly didn't inspire them with the bi-partisan sentiment necessary to get the bill through.

---

I can understand why she said those things... She's probably still bitter about the fact that nobody bought her recent book. :laugh4:

Nothing makes an egomaniac more bitter and resentful than when they're being blatantly ignored.

Amazon.com Sales Rank: #28,245

http://www.amazon.com/Know-Your-Powe...2794427&sr=8-2

Quote:

---

Originally Posted by Spino

Nothing makes an egomaniac more bitter and resentful than when they're being blatantly ignored.
http://www.amazon.com/Know-Your-Powe...2794427&sr=8-2

---

Certainly explains McCain, and Bush too for that matter. Spino, is there any political opinion you have that doesn't boil down to, some half-baked psychological deconstruction which seems exclusively reserved for people not on your side of the aisle? Someone listens to too much Michael Savage.

Quote:

---

Originally Posted by Koga No Goshi

then let's get into the ownership society. Whose deal is that?

---

It's both parties. The "ownership society" has been promoted by both parties.

1994 changes in regulation of employee stock options were a major cause of the 2002 downturn. We had incentives in place to inflate stock prices rather than actual earnings. Dems favored generous employee stock options, to give workers a share of their company. Republicans liked the idea too in 1994, they finally fixed it.

Quote:

---

According to US generally accepted accounting principles in effect before June 2005, stock options granted to employees did not need to be recognized as an expense on the income statement when granted, although the cost was disclosed in the notes to the financial statements. This allows a potentially large form of employee compensation to not show up as an expense in the current year, and therefore, currently overstate income. Many assert that over-reporting of income by methods such as this by American corporations was one contributing factor in the Stock Market Downturn of 2002.

---

http://en.wikipedia.org/wiki/Employee_stock_option



http://uk.youtube.com/watch?v=_MGT_cSi7Rs

Who was pushing home ownership beyond any rational limits?

Quote:

---

Originally Posted by Mangudai

It's both parties. The "ownership society" has been promoted by both parties.

1994 changes in regulation of employee stock options were a major cause of the 2002 downturn. We had incentives in place to inflate stock prices rather than actual earnings. Dems favored generous employee stock options, to give workers a share of their company. Republicans liked the idea too in 1994, they finally fixed it.

---

I agree Clinton was crap. "Centrist" as the Republicans would say, or "Republican" as my brand of Dem would say, on economic issues. But, that was 14 years ago. 1994 was FOURTEEN YEARS AGO, even if Clinton feels like yesterday to people. So I still fail to see how posters like CR can legitimately convince themselves that after 2 terms of FULL Republican control, this is all the fault of Democrats, or even primarily so would be a stretch in my mind. The bar here seems to be, the Dems need to do everything correctly the first time, and fix anything wrong that the excesses of greed or corporate influence that inhabit the Rep party might try to slip in here and there, because we can't count on the Reps to do crap but line pockets and pick their nose. That is the message I'm getting out of people like CR who claim to be SO against the conditions that enabled all of this, while his political party sat in control for the last 8 years. Clearly he and his party have a difference in opinion as to whether or not regulation or deregulation was needed.

Again, goin back to page 1... deregulation has been the mantra of the GOP since Reagan. All these fake protests now, after the fact, about how McCain or the Republicans or the GOP or this or that or so and so's friend George "talked about better control of the financial industry" isn't worth the paper it was never printed on.

https://img.photobucket.com/albums/v...fest_money.jpg


it´s funny....because it´s true :book:

Quote:

---

Originally Posted by Koga No Goshi

Certainly explains McCain, and Bush too for that matter. Spino, is there any political opinion you have that doesn't boil down to, some half-baked psychological deconstruction which seems exclusively reserved for people not on your side of the aisle? Someone listens to too much Michael Savage.

---

Or Franks, or Obama, or Biden, or Stevens, and so on and so on and so on. Pelosi is like Bush, she's far too easy to pick on but you do it anyway because you can't help yourself. You're reading waaaay too much into my comedic drive-by. Feel free to let one loose at a Republican congressmen/senator of your choosing.

Savage? Bah. I don't listen to talk radio, there's far better things I can do with my time... like playing computer games or flaming in my favorite forums.

You see Idaho has shown me the light. I'm all about the drive-bys now. I've decided to cash in my partisan bickering wheels for a dee-lux pimped out gangsta coach with phat rims and a Tec-9 stashed under the seat. I offered to ride shotgun for Idaho but he said no way, I might ruin his custom Corinthian leather upholstery... :sad: :no:

Quote:

---

Originally Posted by Spino

You see Idaho has shown me the light. I'm all about the drive-bys now. I've decided to cash in my partisan bickering wheels for a dee-lux pimped out gangsta coach with phat rims and a Tec-9 stashed under the seat.

---

I wasn't aware you ever did much more than that in political discussions anyway, but suit yourself.

Quote:

---

Originally Posted by Koga No Goshi

Any finger you want to point at the Dems, three more are pointing back at you. The fact that we were even in a housing bubble is in large part because of heavily (not exclusively, but dominantly) Republican policies of deregulation, tax incentives for outsourcing, and the gutting of many major domestic industries. The last big cash cow was the housing market, and people's ability to pull big credit out of a house to pay for things their jobs didn't afford them but the economy depended on people buying (no matter how much we want to lecture about individual responsibility.) The fact that subprime loans were popping up like Starbucks was the result of deregulation of the financial markets, not regulation. The fact that they were not checking credit scores or income was deregulation. This was private failure enabled by pro-business, deregulation policies. This was not private victimhood brought on by too much regulation.

And, if you want to make this all about homeownership regulations regarding Freddie and Fannie, and blame it on the Dems... well, you guys controlled all three branches for nearly 8 years. But you were too busy with your ownership society.

---

And the dems control congress and can't pass the bailout. But when that happens, you call it a bipartisan failure.

I'm not saying the FNMA collapse was brought on by too much regulation. I'm saying there was too little.

It was the GSEs that got special privileges and bonuses from the government. They bought up sub prime loans, which encouraged banks to give those loans which encouraged more people to buy homes, which increased the price of homes. This has little to do with late 1990s deregulation.

Fannie and Freddi enabled this, and they are not private companies. And that's without mentioning their accounting scandals.

As for blaming political parties, perhaps I've been a bit soft on the GOP. But they never had 60+ in the Senate, and democrats were against this regulations because it meant regulating a GSE instead of a private firm. And the GOP failed getting all sorts of other legislature conservatives wanted passed. So it was not pure GOP aversion to regulating Fannie and Freddie that stopped regulations in '04 and '05.

I'm sorry, but with that post you seem to be piling on the democrat talking points.

CR

First off I'm not exactly the smartest or most informed person on this subject. I'm really trying to be... in a sense and following it when I can. But school is a nice little nag :wall:. So please excuse me if my question is a bit ignorant or already been answered in some way shape or form...

My question is,
Since it appears that the US will borrow 700 billion from foreign banks and such, how will this, in the long run, help the US economy and those around the world who are connected to our economy? It will put us further into debt, and the more I think about the current bail out plan (and from what I've heard and read, as I have yet to see the actual details about it), it will just make everything "feel" good now, but bite us harder in the future. I feel like we should have let it collapse and then build it back from the ground up. I know it may takes years and maybe even decades, but I'm looking at how this will work out for future generations.

Quote:

---

Originally Posted by Crazed Rabbit

And the dems control congress and can't pass the bailout. But when that happens, you call it a bipartisan failure.

---

It is. The Republicans are almost ALL against it. And a lot of the Dems are. This is a very unpopular bill, what do you want? You are operating on a total double standard, you say you are not for the bailout, but then you want to declare a Democratic failure to pass one. If you don't want the bailout, then not passing it is a victory. Simple as that.

Quote:

---

I'm not saying the FNMA collapse was brought on by too much regulation. I'm saying there was too little.

---

No, you keep repeating that the only reason any of this happened was the government "forcing" home loans for people who couldn't afford them, purportedly as part of some pet project to help minorities or poor people that only the Dems espoused. Even though, as already pointed out, both parties have been part of the "Ownership society", with our current Republican President being quite enthusiastic for it.

Quote:

---

It was the GSEs that got special privileges and bonuses from the government. They bought up sub prime loans, which encouraged banks to give those loans which encouraged more people to buy homes, which increased the price of homes. This has little to do with late 1990s deregulation.

---

Dude. Do you even KNOW anyone who works in finance? Ask anyone why these banks wanted to give out subprime loans. They didn't need "encouraging" from anyone. Commission fees, and very nice commissions for the loan agents who brokered them. This became the financial equivalent of used car salesmanship. Everyone, BANKS INCLUDED, believed the housing market was continuing upwards for a very long time. So they didn't worry (and the law did not require them to worry, or even do basic checking on loan applicant information) because by the time subprime borrowers got crunched, their housing value "should" have increased to the point where they could either a) sell at a profit and get out of the loan b) take equity out for more on hand cash.

Quote:

---

Fannie and Freddi enabled this, and they are not private companies. And that's without mentioning their accounting scandals.

---

Freddie and Fannie were not private? You just pulled a Sarah Palin.

Quote:

---

As for blaming political parties, perhaps I've been a bit soft on the GOP. But they never had 60+ in the Senate, and democrats were against this regulations because it meant regulating a GSE instead of a private firm. And the GOP failed getting all sorts of other legislature conservatives wanted passed. So it was not pure GOP aversion to regulating Fannie and Freddie that stopped regulations in '04 and '05.

I'm sorry, but with that post you seem to be piling on the democrat talking points.

CR

---

If you "don't want to get into the blame game", then stop making every other post a little snippet about how this is all the Democrats. And the Dems don't have 60+ in the Senate either, and you have been more than happy to heap blame on the "Democratic Congress" for not fixing an economic and political trend of laissez faire Christmas Day for Investor Class capitalism that has been going back to Reagan in a couple of months. Oh, and don't even give me a "they didn't have a big enough majority to pass things they wanted to" excuse for the Republican Congress, which changed the rules of the House and Senate and threatened the nuclear option left and right. So if you don't want a fight about whose party sat in power for years and either enabled, or advocated, and put their stamp on, A LOT if not most of the policies hurting us at the moment from Iraq to the economy, then stop starting one.

A bunch of high-grade economists discussing where we are and what may happen. Long, but worth it.

The dollar is up, oil is down. Im sick of this fear mongering and pessimism. I use to think people who thought the world was controlled by a select few were crazy but now Im not so sure.

Quote:

---

Originally Posted by Strike For The South

The dollar is up, oil is down. Im sick of this fear mongering and pessimism. I use to think people who thought the world was controlled by a select few were crazy but now Im not so sure.

---

Oil came down just before the 2000 election, just before the 2004, and just before the 2008. It's not a coincidence. Just like how the color-coded alert system disappeared right after Bush won in 2004. "Wait, weren't we on orange alert yesterday? What? They don't show me the pretty colors anymore? Then I don't know how scared to get!" We just had Ike, and yet prices are still steadily going down. If Ike had happened five weeks after the election it would be an excuse for prices to jump a dollar for five months.

Hopefully people wont buy into this propaganda. I refuse to bail out the powerful I refuse to have a king. I will not see my republic turned into an oligarchy.

Quote:

---

Originally Posted by HoreTore

How about raising wages to make poor people afford a house instead of playing with the loan market?

---

That way the rich wouldn't be as rich anymore(since rich is always relative) so that's obviously a pretty bad idea.

Quote:

---

Originally Posted by Koga No Goshi

No, you keep repeating that the only reason any of this happened was the government "forcing" home loans for people who couldn't afford them, purportedly as part of some pet project to help minorities or poor people that only the Dems espoused. Even though, as already pointed out, both parties have been part of the "Ownership society", with our current Republican President being quite enthusiastic for it.

---

By forcing you must mean the government laws that say banks have to give out loans not just to the safest customers, and the laws that allow special interest groups to hold up bank mergers and the like if the special interest groups don't think the banks are helping out minorities enough by giving out subprime loans?

Quote:

---

Dude. Do you even KNOW anyone who works in finance? Ask anyone why these banks wanted to give out subprime loans. They didn't need "encouraging" from anyone. Commission fees, and very nice commissions for the loan agents who brokered them. This became the financial equivalent of used car salesmanship. Everyone, BANKS INCLUDED, believed the housing market was continuing upwards for a very long time. So they didn't worry (and the law did not require them to worry, or even do basic checking on loan applicant information) because by the time subprime borrowers got crunched, their housing value "should" have increased to the point where they could either a) sell at a profit and get out of the loan b) take equity out for more on hand cash.

---

Those banks made those loans because they knew Fannie and Freddie would buy about risky subprime loans, so they could make money without the risk.

Quote:

---

Freddie and Fannie were not private? You just pulled a Sarah Palin.

---

:laugh4:
Oh, I'm sorry, do private corporations have huge lines of credit with the US treasury? Do private firms have the benefit of the Federal Reserve purchasing their debt? Are private firms exempt from local and state taxes?

Here's an article by Ron Paul five years ago:
http://www.lewrockwell.com/paul/paul128.html

Quote:

---

If you "don't want to get into the blame game", then stop making every other post a little snippet about how this is all the Democrats. And the Dems don't have 60+ in the Senate either, and you have been more than happy to heap blame on the "Democratic Congress" for not fixing an economic and political trend of laissez faire Christmas Day for Investor Class capitalism that has been going back to Reagan in a couple of months. Oh, and don't even give me a "they didn't have a big enough majority to pass things they wanted to" excuse for the Republican Congress, which changed the rules of the House and Senate and threatened the nuclear option left and right. So if you don't want a fight about whose party sat in power for years and either enabled, or advocated, and put their stamp on, A LOT if not most of the policies hurting us at the moment from Iraq to the economy, then stop starting one.

---

Funny thing; McCain gave a speech in support of the tougher regulations on Fannie and Freddie. Obama was completely silent.

Finally, an article about how deregulation has nothing to do with this mess:
http://www.bloomberg.com/apps/news?p...d=a6M1QA55PB9Y

Quote:

---

Sept. 30 (Bloomberg) -- In the debate on Sept. 26, Democratic presidential nominee Barack Obama argued that the current crisis in the financial markets is the result of Republican deregulation.

The advertising from his campaign has been saying the same thing, and this claim is becoming a fixed element in the talking points of Democratic candidates this year.

The credibility of the charge depends on ignoring several important facts:

-- There has been a great deal of deregulation in our economy over the last 30 years, but none of it has been in the financial sector or has had anything to do with the current crisis. Almost all financial legislation, such as the Federal Deposit Insurance Corp. Improvement Act of 1991, adopted after the savings and loan collapse in the late 1980s, significantly tightened the regulation of banks.

-- The repeal of portions of the Glass-Steagall Act in 1999 -- often cited by people who know nothing about that law -- has no relevance whatsoever to the financial crisis, with one major exception: it permitted banks to be affiliated with firms that underwrite securities, and thus allowed Bank of America Corp. to acquire Merrill Lynch & Co. and JPMorgan Chase & Co. to buy Bear Stearns Cos. Both transactions saved the government the costs of a rescue and spared the market substantial additional turmoil.

None of the investment banks that got into financial trouble, specifically Bear Stearns, Merrill Lynch, Lehman Brothers Holdings Inc., Morgan Stanley and Goldman Sachs Group Inc., were affiliated with commercial banks, and none were affected in any way by the repeal of Glass-Steagall.

---

EDIT: Fannie and Freddie were also exempted from some of the Sarbanes-Oxley Act, passed to force disclosure of more accounting information after Enron failed.

CR

Quote:

---

Originally Posted by Strike For The South

Hopefully people wont buy into this propaganda. I refuse to bail out the powerful I refuse to have a king. I will not see my republic turned into an oligarchy.

---

Then say "hello great depression II" and a very troubled future. I hope I'm wrong, but that's my opinion based on the facts I've read/heard.

EDIT: Though as I've stated I don't know how much, nor do I know what regulations should be put on the banks. And the link doesn't work to Bloomberg from what I've tried...:embarassed:

Shrub probably didn't understand the problems with Fannie and Freddie. Most of the public and the politicians didn't understand it either. That's OK, not everybody is expected to be an expert on these issues. Only the Senators and Congressmen on particular committees are expected to understand details like banking regulation.

http://uk.youtube.com/watch?v=_MGT_c...eature=related

It's pretty clear that a group of Republicans wanting reform would have to persuade the rest of their party who didn't understand the issues, at a time when the war of terror was everybody's focus. Then they would have to force a purely partisan bill through both houses. The democrats would be screaming that these measures discriminate against the poor and racial minorities.

Spread the blame, that's fine with me. But, lets be honest about who had the right ideas, and whose ideas were wrong.

Quote:

---

Originally Posted by Koga No Goshi

Again, goin back to page 1... deregulation has been the mantra of the GOP since Reagan. All these fake protests now, after the fact, about how McCain or the Republicans or the GOP or this or that or so and so's friend George "talked about better control of the financial industry" isn't worth the paper it was never printed on.

---

You're oversimplifying in the extreme. Nobody is against all regulation, and nobody is for every conceivable regulation. The main divide is that republicans favor only regulation to protect the public safety, democrats also favor regulation to distort price incentives to promote the interests of the underprivileged.

Reagan style deregulation was extremely successful. Here are two important examples:

http://www.econlib.org/Library/Enc/T...egulation.html

Quote:

---

The Motor Carrier Act of 1935 required new truckers to seek a "certificate of public convenience and necessity" from the ICC. Truckers already operating in 1935 could automatically get certificates, but only if they documented their prior service, and the ICC was quite restrictive in interpreting proof of service. New trucking companies, on the other hand, found it extremely difficult to get certificates.

---

http://en.wikipedia.org/wiki/Airline_Deregulation_Act

Quote:

---

Since 1937, the federal Civil Aeronautics Board (CAB) had regulated all domestic air transport as a public utility, setting fares, routes, and schedules. The CAB promoted air travel, for instance by generally attempting to hold fares down in the short-haul market, to be subsidized by higher fares in the long-haul market. The CAB also was obliged to ensure that the airlines had a reasonable rate of return. It also earned a reputation for bureaucratic complacency; airlines were subject to lengthy delays when applying for new routes or fare changes, which were not often approved.

---

We used to have crap like that in all sorts of industries. Thanks to Reagan style deregulation most of it is gone now.

India's economy was known as the "permit raj" because it required licensing for all sorts of activities. India has "liberalized" (republican style) their economy, and they are taking off.

China is totally different. Their regulation has more to do with personal relationships and less to do with written codes. Their model sucks.

Quote:

---

Originally Posted by Crazed Rabbit

By forcing you must mean the government laws that say banks have to give out loans not just to the safest customers, and the laws that allow special interest groups to hold up bank mergers and the like if the special interest groups don't think the banks are helping out minorities enough by giving out subprime loans?

---

This is absolutely not true. Unscrupulous subprime lenders were frequently totally separate from regional banks. There is no overarching law saying thou must give bad loans to everyone who asks. The banks that didn't mess around with subprime are doing okay. Companies specifically set up for that ran out and did it to earn commission fees, NOT to follow some government mandate to "help minorities", but because they believed it was viable because of expected continuing inflation of the housing market. And most of them made a ton of money until the housing market caved in.

Quote:

---

:laugh4:
Oh, I'm sorry, do private corporations have huge lines of credit with the US treasury? Do private firms have the benefit of the Federal Reserve purchasing their debt? Are private firms exempt from local and state taxes?

---

How do you do a Federal intervention on something that was already Federal and not private?

Quote:

---

Funny thing; McCain gave a speech in support of the tougher regulations on Fannie and Freddie. Obama was completely silent.

---

McCain has been in the Senate for 26 years and Palin "will have to get back to you" via Katie Couric as to whether any single instance can be found in his entire record of voting on the side of more regulations as opposed to less. I'm not interested in what McCain lip flapped about and then went and voted the opposite way on. (There's an awful lot of that, like veterans, torture, tax cuts..)

And my advice, CR.... if I were following my party's "talking points", I would be in support of this bailout. I'm not. People who live in glass houses shouldn't throw around stones. This is nothing but a weak and ill-supported ideological attempt to insist there has been nothing wrong with the Reaganomics school of deregulated free market that has been consistently applied by the GOP for the last three decades, that the problem is Democrats hiding in the ricebowl here, or minorities trying to invade your gated community over there. More scare tactics, more smoke and mirrors, yes there were problems with the structure of the regulations and financial markets, most of that revolving around almost no regulation whatsoever. We wouldn't even be having this discussion if there was even a baseline-- not a socialist, not a strict, not an overly controlling, but even a COMMON SENSE level of regulation-- that for instance, a bank had to check on your reported income before stamping approved. So, if you want to run around swallowing every talking point and every right-wing spin on this whole situation, and your best answers are "banks were forced to do this cause of civil rights crap" and "McCain TALKED about regulation, while his campaign manager and twelve other members of his campaign staff are or were paid Fannie and Freddie deregulation lobbyists", then don't go around lobbing accusations of who is mindlessly swallowing their party's talking points.

Quote:

---

Originally Posted by Mangudai

You're oversimplifying in the extreme. Nobody is against all regulation, and nobody is for every conceivable regulation. The main divide is that republicans favor only regulation to protect the public safety, democrats also favor regulation to distort price incentives to promote the interests of the underprivileged.

---

I absolutely am not, in the context of Republican control for the last 8 years and CR's insane piecemealed tack-on arguments to say this is all the fault of Democrats and minorities and "liberal pet projects." If Republicans believe there can be good regulation (debatable, especially considering the GOP's voting record), and also believed that Freddie and Fannie and the financial market needed it, nothing stopped them from sitting on their hands for 8 years and then, when the whole thing exploded, blaming it on Democrats. What great leaders on this issue.

And, your characterization of the differences is very inadequate. The kinds of regulations various different Democrats may support can run the gamut and frequently DO cover issues like safety and public health, rather than just some imaginary oppress-the-whites pro-minority advocacy you seem to be implying. The only consistency, whatsoever, to what Republicans seem to support when it comes to corporations, laws, and regulation, is what's profitable for corporations who have significantly contributed to the current GOP congress, the GOP politicians up for re-election, or the present GOP administration. Iraq, for instance... stories about septic contamination of water the troops are receiving from private contractors connected with Cheney. Yes, I see the attention to care and safety there that you say Republicans support regulation for. Everything else, from checking social security numbers of employees to try to catch illegal immigrants, to minimum wages, to safety inspections (mine cave-in's of the last few years), is very expendable depending on who didn't want it, whose profit it hurts, and if that industry happened to give a lot of money to GOP politicians.

http://www.daveramsey.com/common_sense_fix.txt

Quote:

---

Originally Posted by Strike For The South

http://www.daveramsey.com/common_sense_fix.txt

---

Okay, I mistook your post to mean you didn't want ANY sort of meddling. I agree regulations need to be posed and a better number is possible. With no market for these assets, 700 billion seems to be a hefty number pulled out of their ass.

Quote:

---

Originally Posted by Strike For The South

http://www.daveramsey.com/common_sense_fix.txt

---

How would you know what value to insure the loans and debt at the policy would have to be hugely weighted because of no one really having a clue what to value them at. You couldnt value them at the old price only todays price.

Quote:

---

Originally Posted by Alexanderofmacedon

Okay, I mistook your post to mean you didn't want ANY sort of meddling. I agree regulations need to be posed and a better number is possible. With no market for these assets, 700 billion seems to be a hefty number pulled out of their ass.

---

Quote:

---

Originally Posted by gaelic cowboy

How would you know what value to insure the loans and debt at the policy would have to be hugely weighted because of no one really having a clue what to value them at. You couldnt value them at the old price only todays price.

---

lol. I was just posting another option. The type didnt show up. I say let it all burn.

Quote:

---

Originally Posted by Strike For The South

lol. I was just posting another option. The type didnt show up. I say let it all burn.

---

Well it looks like you may get your wish.

Quote:

---

Originally Posted by gaelic cowboy

Well it looks like you may get your wish.

---

Be one of the few times they get something right

Here is Russell Crowe's plan to bail out the US:

Quote:

---

RUSSELL Crowe has an Oscar and is co-owner of the Sydney Rabbitohs rugby league team, but maybe his next job should be US treasury secretary.

The New Zealand-born actor announced, during a US TV talkshow appearance, a plan to cure America's financial crisis.

"I have been intently watching the political process,'' Crowe told talkshow host Jay Leno.

Crowe believes the US Government should give each American $US1 million ($1.26 million).

His reasoning was that the US has a population of about 300 million, and a $US300 million ($377.05 million) outlay was a fraction of the $US700 billion ($879.78 billion) financial bailout package rejected by politicians in Washington DC yesterday.

"I was thinking,'' Crowe said.

"If they want to stimulate the economy and get people spending so they can look after their mortgage ... give everyone $US1 million.''

He should have thought a little harder though - a $US1 million handout to 300 million people would cost $300 trillion.

---

I always love how when he stuffs things up (like getting whipped in a bar fight) the Aussie press mentions that he was born in New Zealand and skip over him being an Aussie citizen. When he does win something it is described as 'Aussie Actor Wins' and no mention of NZ. :laugh4:

nvm, it's 5 in the morning here and my head and math skills are hurting...

Yeah a few pages back I put up Time's list of things you could do with 700 billion. In individual payouts, it would work out to roughly $2,300 per person in the U.S.

After I read this article I am more convinced that everyone in congress has lost their ever loving minds.

http://news.yahoo.com/s/ap/financial_meltdown

The Senate wants to force the House to reach a decision - so they load a bill intent on spending 700 billion with tax cuts........

Watch out here comes the surpise after the election cycle

Quote:

---

Originally Posted by Papewaio

Here is Russell Crowe's plan to bail out the US:



I always love how when he stuffs things up (like getting whipped in a bar fight) the Aussie press mentions that he was born in New Zealand and skip over him being an Aussie citizen. When he does win something it is described as 'Aussie Actor Wins' and no mention of NZ. :laugh4:

---

Great actor though.

Quote:

---

Originally Posted by Koga No Goshi

Yeah a few pages back I put up Time's list of things you could do with 700 billion. In individual payouts, it would work out to roughly $2,300 per person in the U.S.

---

I think that the 2000 McDonalds Apple Pies for every citizen in the US is a much better option (At about 38 seconds).

At what point are we supposed to be all naked and starving? Ive been going hard in the gym the past couple of months and have some killer hammies to show off.

Quote:

---

Originally Posted by Koga No Goshi

This is absolutely not true. Unscrupulous subprime lenders were frequently totally separate from regional banks. There is no overarching law saying thou must give bad loans to everyone who asks. The banks that didn't mess around with subprime are doing okay. Companies specifically set up for that ran out and did it to earn commission fees, NOT to follow some government mandate to "help minorities", but because they believed it was viable because of expected continuing inflation of the housing market. And most of them made a ton of money until the housing market caved in.

---

*sigh*
Those bankers going after the commission fees got the loans, and then the loans were bought by Fannie and Freddie. Thus they could sell all sorts of risky loans and not face the inherent risk.

Fannie and Freddie were following the 'give loans to the poor who can't afford them' principles.

Liberal special interest groups like ACORN brought pressure on banks that didn't lend to enough poor people who couldn't afford the loans (among other criminal activities for ACORN.)

Quote:

---

How do you do a Federal intervention on something that was already Federal and not private?

---

They are GSEs: Government Sponsered Enterprises, hideous Frankenstein concoctions of firms started and given special advantages by the government.

Quote:

---

McCain has been in the Senate for 26 years and Palin "will have to get back to you" via Katie Couric as to whether any single instance can be found in his entire record of voting on the side of more regulations as opposed to less. I'm not interested in what McCain lip flapped about and then went and voted the opposite way on. (There's an awful lot of that, like veterans, torture, tax cuts..)

---

He didn't vote against it. The dems prevented it from getting a floor vote.

Quote:

---

And my advice, CR.... if I were following my party's "talking points", I would be in support of this bailout. I'm not. People who live in glass houses shouldn't throw around stones. This is nothing but a weak and ill-supported ideological attempt to insist there has been nothing wrong with the Reaganomics school of deregulated free market that has been consistently applied by the GOP for the last three decades, that the problem is Democrats hiding in the ricebowl here, or minorities trying to invade your gated community over there.

---

*sighs*

I'll link the article again, but deregulation has nothing to do with this.
http://www.aei.org/publications/pubI...pub_detail.asp

Quote:

---

-- There has been a great deal of deregulation in our economy over the last 30 years, but none of it has been in the financial sector or has had anything to do with the current crisis. Almost all financial legislation, such as the Federal Deposit Insurance Corp. Improvement Act of 1991, adopted after the savings and loan collapse in the late 1980s, significantly tightened the regulation of banks.

-- The repeal of portions of the Glass-Steagall Act in 1999--often cited by people who know nothing about that law--has no relevance whatsoever to the financial crisis, with one major exception: it permitted banks to be affiliated with firms that underwrite securities, and thus allowed Bank of America Corp. to acquire Merrill Lynch & Co. and JPMorgan Chase & Co. to buy Bear Stearns Cos. Both transactions saved the government the costs of a rescue and spared the market substantial additional turmoil.

---

Alright? Is that clear? Can we get off the 'deregulation is the problem'? rail?

CR

Quote:

---

Originally Posted by Strike For The South

At what point are we supposed to be all naked and starving? Ive been going hard in the gym the past couple of months and have some killer hammies to show off.

---

hammies?!? son, you need to stay focused on the bench press. like a real man.

I'd rather endure a global recession so that the US can start all over with a better performance.

Quote:

---

Originally Posted by Decker

First off I'm not exactly the smartest or most informed person on this subject. I'm really trying to be... in a sense and following it when I can. But school is a nice little nag :wall:. So please excuse me if my question is a bit ignorant or already been answered in some way shape or form...

My question is,
Since it appears that the US will borrow 700 billion from foreign banks and such, how will this, in the long run, help the US economy and those around the world who are connected to our economy? It will put us further into debt, and the more I think about the current bail out plan (and from what I've heard and read, as I have yet to see the actual details about it), it will just make everything "feel" good now, but bite us harder in the future. I feel like we should have let it collapse and then build it back from the ground up. I know it may takes years and maybe even decades, but I'm looking at how this will work out for future generations.

---

Your question: "...how will this...help...?" is a fine one, Decker, and one actually not adequately addressed by either the right or left, here, on TV, or in Congress/Administration.

My answer is just my personal opinion: it might not help at all. They're basically gambling that we can spend our way out of the mess by covering (that is: removing from play) bad paper and holding it for awhile, until things (the housing and credit and monetary markets) get better on their own; then slowly re-introducing that bad paper into the system, a little at a time - sort of like an immunization plan for a patient with cancer, who took too much of an anti-cancer wonder drug, but saw his liver and kidneys fail from too much of a good thing. The "doc" has to roll back the dosage, and make the treatment more long term, so the patient survives, AND the cancer goes away, over time. He hopes.

If he fails, and either the cancer, or the drug side-effects, win, the patient dies. And in this case, we go into Great Depression v2.0. No jobs, no credit, no capital, etc.

As to "how it will work out for future generations": you and your kids will be paying for this for about 40 years+. Because if government intervention really is the only way to fix this (and I'm not convinced yet that it is), then $700bn isn't gonna be enough. They pulled that number out of thin air anyway. My ignorant blue-collar best guess would be more in the neighborhood of $2 Trillion. That amount should be about enough to buy up all mortgages that have 2 or more missed payments - which I would define as 'bad paper', and include properties going to auction next week.

Net effect: U.S. Gov't becomes the biggest property-holder, bank, landlord, and insurance company on earth. And how it's all paid for depends on whether we elect the "tax and spend" Dems, or the "borrow and spend" Rep's. Either way it's spending OPM (other people's money - that hasn't been earned yet).

And finally, none of this refers to anything in the Constitution, except that there is some semblance of voting going on.

I'm just wondering if in 3-4 pages of unflinching confrontation, CR & Koga ever considered the possibility that they're BOTH right. That Fannie Mae and Freddie Mac WERE incentivizing people to make loans to people that might not be the most secure risk, but that loan officers were off on a tear and doing well more than anything being asked of them by FM/FM?

Seriously, guys, take it down a notch. Take the 10,000 foot view for a second:

-You have Democrats arguing that in order to save the economy, we must subsidize Wall Street's bad investments. Privatized profits, socialized losses. Does that sound like a Populist stance to any of you?

-At the same time, I would argue, in an even greater departure from their avowed principles, you have Republicans arguing that the only way our credit markets can be resolved is to socialize them. Hmmm....

Similarly, the bill didn't pass for 2 reasons: 1) too many House Republicans dug their heels in and showed some spine (65%) 2) some Democrats showed commitment to their prinicples too, and voted against redistributing wealth upwards (I'd peg that at about 25%).

And yes, I think to a limited degree, Nancy Pelosi getting up and saying "By voting for this bill, you wisely and publicly agree that Republican fiscal policies are a failed joke" was about 10% responsible. That was one of the dumbest political stunts I've ever seen. Or was it? I wonder if she didn't speak to her true feelings and try to sabotage the bill while simultaneously voting for it.

By the way, while we're all patting ourselves on the back and talking about how the responsible taxpayer is going to get shafted by the irresponsible fatcats, how about a little bit of sobering reality for all of us?

-We have a 9.6 trillion national debt.
- The average American taxpayer holds over $12K in unsecured debt (credit cards, educational loans, car loans).
-Over 70% of the government's money comes from the top 10% of wage earners.
-About 40% comes from the top 1%.
-When people talk about "giving" $2300 to each American, that's exactly what it is. Pure redistribution of wealth. The bottom 50% pay less than 3% of their income in taxes.

Seriously folks, let's get real. For all our "soak the rich" talk, we already are. And we're not talking about paying this bill ourselves. We're talking about screwing our kids. We've over consumed the wealth our current 2 generations can produce, and we're now eating into our kid's future earnings. I'm not going to pay for this bailout, Jillian and Allison will, and they're 3 years and 6 mos, respectively!

Any plan that restores us to fiscal conservatism, balanced budgets and $0 debt is good in my book. Which is why I'm thrilled to death that the bailout bill went down, even though it personally cost me about 20% of my retirement savings. And if Koga wants to give me and the other evil Republicans credit for it, I'll at least proudly take my 65% of that credit. :bow:

Seriously folks, we should go to Frankfort and study how successful markets are run. While we've been busy playing world cop, the Germans have quietly and successfully transformed themselves into the largest exporter as a percentage of GDP (greater than China!). That used to be what we did.

Very good post, Don :2thumbsup:

But this:

Quote:

---

Seriously folks, let's get real. For all our "soak the rich" talk, we already are.

---

It's sad that certain people still haven't figured out that we can't pay our way out of everything by taxing the rich. If we're going to get anywhere, if we're going to raise any decent amount of money, then sorry, the regular guy has to pay. And by looking at your debt, I'd say you ought to start taxing yourselves... Very soon.

Quote:

---

Originally Posted by HoreTore

It's sad that certain people still haven't figured out that we can't pay our way out of everything by taxing the rich. If we're going to get anywhere, if we're going to raise any decent amount of money, then sorry, the regular guy has to pay. And by looking at your debt, I'd say you ought to start taxing yourselves... Very soon.

---

Who are you, and what have you done with my socialistist friend, Hore Tore? :inquisitive:

What I forgot to mention in my earlier post, while I was on my rant about how we're all irresponsible...

I want to invoke an image for you. One that's not all that unrealistic.

BankOfAmerica, who's just gobbled up some banks hit by the sub-prime lending losses, actually realizes they over ambitiously absorbed too much loss. Regulators, poring over their books, issue a call for more liquidity of assets against their outstanding loans. Nervous, BankOfAmerica calls on a couple of larger corporate loans they have outstanding. The client bank announces that they have to default, for at least a quarter. Waves of nervousness ripple around the market, and the credit markets tighten even more. The regulators really start putting the screws to BofA, telling them they better produce $18 billion in liquid assets within the next week or start facing some stiff penalties. BofA response? They call the note on unsecured loans they have outstanding. Translation? Your credit card bill comes due. In its entirety. Right now, all credit card balances you hold, come due.

Did you just take a big gulp? Then stop whining about irresponsiblity in the markets, because you are in fact part of the problem. And in the interest of full disclosure, so am I. Which is why Mrs. Corleone and I are making some moves towards liquidity to get all unsecured debt retired within the next 12 months. I strongly and vehemently urge all of you to do what you can to move down the same road. If you have a rainy day fund, well, it's coming down pretty hard right now...

Funny you should mention that, Don. The Kukri household has begun a similar move as of last Friday, on top of moving TSP (the Federal 401(k)) funds into 'safe' Treasuries, and away from stocks.

If we really do have some cash laying about in 6 months (by no means a sure bet), we'll have to decide whether to invest in storeable food, or trying to buy some Federal "fire-sale" foreclosed property. :)

I live entirely debt-free, and not because I make millions per year. It's a lifestyle thing, trying to consistently live below your means. I can't be the only American who pays his cards down to zero every month, can I?

Nope, you're not alone. We're just trying to get the latest auto loan paid up ahead of time, cuz we wanna keep the car in case we have to escape to the hills or something. :)

Well, I would argue that my current debt is neither smart nor bad debt. It's more of a cash flow thing....

I bought a pellet stove and enough wood pellets to last though the winter. So, in a sense, I already have a savings for that... my budgeted amount for fuel oil this winter will pay off the stove. Add to that some auto repairs and our outstanding car loan (which is still unsecured mind you), it's not like we're going on vacations every month.

If you can pay cash up front for a car, that's great Lemur. I got the best used car rate I'd ever heard of, even less than my mortgage. It was 6.00%, on a USED car. :dizzy2:

All of my debts "make sense" on the surface, or at least they did 2 weeks ago. But right now, with the threat of a bank calling the notes on one of them, it doesn't seem all that smart, hence my new found resolution to only pay cash for cars.

Hmm, if we get to the point where retail banks are calling in performing loans, we'll have bigger problems to worry about. Like how to discourage the leather-clad cannibal biker gangs led by the Lord Humungus.

I think your scenario is extreme.

Picked up my free Irish Independant in college today and this greeted me €400 billion bailout of our Irish banks and instituitions. Ireland is 75 time samaller in population terms than USA and yet only this separates the bailout.

Spoiler Alert, click show to read: 

Universal Currency Converter© Results
Using live mid-market rates.
Using live mid-market rates. More currencies...
Printed from the XE Universal Currency Converter at: www.xe.com/ucc
Memo: .................................................................................................... ...................................................................

.................................................................................................... ...................................................................

Live rates at 2008.10.01 14:21:17 UTC

400,000,000,000.00 EUR = 560,772,093,676.09 USD

Euro United States Dollars

1 EUR = 1.40193 USD 1 USD = 0.713302 EUR

THE Government last night battled for sweeping powers to allow it to step in and prevent troubled banks from going under.

Following a long day of drama, the full details finally emerged of Taoiseach Brian Cowen’s unprecedented €400bn guarantee to safeguard the country's six banks. But the wide-ranging new laws go far beyond just guaranteeing loans.

New legislation to back up €400bn worth of loan guarantees for banks, introduced to the Dail late last night, gives Finance Minister Brian Lenihan the ability to step in “as he sees fit” to help out with financial support, including loans, guarantees, exchange of assets, and buying up shares.

In effect, the legislation stops just short of nationalising a bank, if the Government thinks it is necessary, as it allows for a stake to be bought up. It also provides for the overriding of competition laws if a merger of a bank is required, similar to a recent case in Britain.

The action taken by the Government in giving €400bn worth of guarantees to six of the main banks prompted a bounce back on the domestic financial market.

However, the numerous delays in introducing the legislation to the Oireachtas were described as a “farce”, and the scale of the legislation sparked concerns on the opposition benches, especially since no reference is made in the law to the pay of chief executives of banks availing of the guarantees. There was also little detail on the level of scrutiny involved or on the amount the banks had to pay to get their loans guaranteed.

The day began with the Government decision to safeguard the Irish banking system being announced at 6:45am and ended with the Dail debate adjourning at midnight.

Mr Lenihan said the move was “in no way a bailout for the Irish financial system”.

“This guarantee is not ‘free’ and the taxpayer who ultimately underwrites this support will be remunerated for the value of the support provided. The terms and conditions on which the guarantee is provided will ensure that the taxpayer gets value for money,” he said.

Fine Gael, Labour and Sinn Fein backed the passing of the law in principle, but wanted their concerns addressed in this morning's debate.

Fine Gael said the specific powers it wanted in relation to regulation of banks was not dealt with. The party also wanted to ensure the legislation was robust and would pass the scrutiny of European Union directives.

Fine Gael finance spokesman Richard Bruton said the Government was seeking to play down the exposure of the taxpayer and the rules were being changed.

The Labour Party said it was alarmed by the lack of detail on how much the banks would have to contribute and wondered if deposits will flood towards Irish banks because of the added guarantees.

Labour finance spokesperson Joan Burton said there was no indication if any limitations would be put on the pay packets of executives in the banks who avail of the guarantees.

“This bill is an extraordinary blank cheque to the Minister for Finance, the Financial Regulator and the Central Bank to offer terms and conditions of support to banks,” she said.

Mr Cowen insisted there would be no exposure of the taxpayer in helping out the banks.

He said the stability of the Irish banking system would have been put at risk if he had done nothing in the face of the liquidity crisis facing Irish banks. The new law, the Credit Institutions (Protection) Bill 2008, was intended to be signed off on by the Dail and Seanad and signed by President Mary McAleese last night.

But debate on the legislation will continue today in both the Dail and Seanad, due to the delays in the drafting of the bill. The bill passed the second stage of the legislative process in the Dail last night and will be completed today.

The Government was forced into crisis talks after a sell-off across the four listed banks on Monday, following a raft of bailouts across Europe over the weekend.

Anglo Irish Bank, whose share price had tumbled 46.2pc on Monday, had borne the brunt of the collapse in confidence, and was understood to be main focus of the talks to avert an implosion in the system. The lender's stock rocketed 67.1pc higher yesterday in light of the Government lifeline.

One trader reported that Ireland may well be seen as the safe haven for European cash and investments after the Government's decision to underwrite the Irish banks.

However, among concerns raised were those voiced by the Financial Services Authority in Britain which suggested that the Irish action had resulted in depositors draining funds from British banks to place with Irish institutions.

There were also concerns that the Government guarantee could fall foul of the European Commission which last night said it would study the details of the guarantees to see whether they constituted illegal state aid.