BAILOUT: Yes or No?

[TevashSzat]

The Great Depression was a "rough couple of years" too. That invisible hand spanked our asses red. I don't want to go through anything like that.

Well, I don't think it ever will happen because politicians won't let something as big as the Great Depression happen nowadays.

But think of it, in a purely economist point of view, there is no thing wrong with great depressions. It is merely the market trying to correct itself and it will teach a TON of lessons. Just look at how much government changed due to the Great Depression.

That is, after all, one of the prices of being in a more or less free market economy. You either go along during both the good and the bad times or have the government intervene and hopefully, things will get better without a much bigger debt

[Jolt]

Well, I don't think it ever will happen because politicians won't let something as big as the Great Depression happen nowadays.

But think of it, in a purely economist point of view, there is no thing wrong with great depressions. It is merely the market trying to correct itself and it will teach a TON of lessons. Just look at how much government changed due to the Great Depression.

That is, after all, one of the prices of being in a more or less free market economy. You either go along during both the good and the bad times or have the government intervene and hopefully, things will get better without a much bigger debt

WON'T? As far as I'm aware, the Great Depression only got "Great" because one of the "measures" the current president at that time did was letting the market work for itself.

[Reverend Joe]

Well, I don't think it ever will happen because politicians won't let something as big as the Great Depression happen nowadays.

But think of it, in a purely economist point of view, there is no thing wrong with great depressions. It is merely the market trying to correct itself and it will teach a TON of lessons. Just look at how much government changed due to the Great Depression.

That is, after all, one of the prices of being in a more or less free market economy. You either go along during both the good and the bad times or have the government intervene and hopefully, things will get better without a much bigger debt

Well, to be fair, any major mistake should logically lead to people learning. The problem is a lot of people get hurt in the process. And besides, who's to say it can't happen again? The economy is really a lot like an 18-wheeler: you can put all the energy in that you want, but you can only control it with the brakes up to a certain point; past a certain speed it's just not going to obey. In our case, it all depends on if we caught this one early enough to stop the crash.

[Sasaki Kojiro]

I haven't decided yet, I'd have to know what the effects of the market collapsing would be. Saying "let it burn and we'll become stronger afterwards" is too vague. Consider that during the stock market crash of 1929 only 2 percent of the population owned stock...

[ICantSpellDawg]

I haven't decided yet, I'd have to know what the effects of the market collapsing would be. Saying "let it burn and we'll become stronger afterwards" is too vague. Consider that during the stock market crash of 1929 only 2 percent of the population owned stock...

Oh no, don't get me wrong, I think leaving the market alone will lead to an immense tragedy. I'm just saying to hell with it. We deserve hellish torment for letting it get this bad.

[Koga No Goshi]

Oh no, don't get me wrong, I think leaving the market alone will lead to an immense tragedy. I'm just saying to hell with it. We deserve hellish torment for letting it get this bad.

What infuriates me, and I can't emphasize this enough, is that the people who most were responsible for this are not going to suffer, no matter which way the bailout decision goes. In either case the pain is left with the taxpayers. I don't think a crash would fix a thing or make any of the people who did this "hurt." We'd need mass mobbings and guillotines to accomplish that.

[Jolt]

And of course, since you don't like the capitalists gaining too much money, and being responsible for this vicious cicle, makes you either a socialist or a communist (In the USA I think.) I think a good left-wing socialist welfare state would only revive the USA and help terminate some of the most stupid things I've seen in the Western world.

[Koga No Goshi]

And of course, since you don't like the capitalists gaining too much money, and being responsible for this vicious cicle, makes you either a socialist or a communist (In the USA I think.) I think a good left-wing socialist welfare state would only revive the USA and help terminate some of the most stupid things I've seen in the Western world.

Frequently called a Commie, yes, but since anything to the left of Margaret Thatcher = Communist to American Republicans, it's a rather meaningless blanket.

[HoreTore]

What infuriates me, and I can't emphasize this enough, is that the people who most were responsible for this are not going to suffer, no matter which way the bailout decision goes.

I think I heard something on the news about a possible investigation that may result in jail time for the CEO's. Anyone got info on that?

EDIT: Also, the current situation should really shake even the most hardened freemarketeer up from his daydreaming and face the reality that the current system just isn't working. If this had happened in a country like the USSR, China or EU, conservative yanks would be relentless in their criticism of it.

[Lemur]

A handy graphic from the LA Times:

[cmacq]

This has been a long time in coming, and the people say they want change. Thus, its time to start anew, and the cards will fall as they may. Most are sick of the betrayal, thieving, and lies. The ledger must be balanced, all debts cleared, and atonements made! Prepare the bounty hunters, inform the hangman and ready the gallows...


the piper may now be paid, and watch oil fall like a rock!


CmacQ

[drone]

I think I heard something on the news about a possible investigation that may result in jail time for the CEO's. Anyone got info on that?

Freddie Mac/Fannie Mae get subpoenas

AIG has been under investigation since March

Lehman/FM/FM/AIG, the first time I saw anything about the investigations.

To my untrained eye, the FBI is mainly looking into accounting issues, whether or not they broke laws by hiding losses in financial reports. If they can find some cooking of the books, maybe we can claim some heads.

I think I'm fairly happy with the House right now. I'm sure this is going to be painful, but the fact that neither party's leadership could get enough votes (for different reasons) makes me feel better. Revolt!

[Kralizec]

The CEO's ought to be held accountable for such disasters. Stockholders don't care about the longterm health of a company because the vast majority of them is only waiting for a good moment in the near future to sell them. Making this change won't solve the current mess but will prevent future ones if implemented properly.

I just voted no. I think it would be preferable if the government would just buy a ton of houses from involvant families and some of the mortgages (not the crappiest ones at the bottom of the pile, though), or any solution that doesn't involve shareholders.

[drone]

The House says: No!

http://www.washingtonpost.com/wp-dyn...l?hpid=topnews
Markets, understandably, plummet.

[Alexanderofmacedon]

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

[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:

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

[Alexanderofmacedon]

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......

[HoreTore]

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

[Ice]

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.

[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.

[Mangudai]

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.

[Shaka_Khan]

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