View Poll Results: Bailout or Let the Market Work Itself Out?

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Thread: BAILOUT: Yes or No?

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  1. #1
    Member Member Decker's Avatar
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    Default Re: BAILOUT: Yes or No?

    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 . 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.
    "No one said it was gonna be easy! If it was, everyone would do it..that's who you know who really wants it."

    All us men suffer in equal parts, it's our lot in life, and no man goes without a broken heart or a lost love. Like holding your dog as he takes his last breath and dies in your arms, it's a rite of passage. Unavoidable. And honestly, I can't imagine life without that depth of feeling.-Bierut

  2. #2
    Nobody expects the Senior Member Lemur's Avatar
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    Default Re: BAILOUT: Yes or No?

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

  3. #3
    Master of Few Words Senior Member KukriKhan's Avatar
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    Default Re: BAILOUT: Yes or No?

    Quote Originally Posted by Decker View Post
    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 . 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.
    Be well. Do good. Keep in touch.

  4. #4
    Jillian & Allison's Daddy Senior Member Don Corleone's Avatar
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    Default Re: BAILOUT: Yes or No?

    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.

    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.
    Last edited by Don Corleone; 10-01-2008 at 13:56.
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  5. #5
    has a Senior Member HoreTore's Avatar
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    Default Re: BAILOUT: Yes or No?

    Very good post, Don

    But this:

    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.
    Still maintain that crying on the pitch should warrant a 3 match ban

  6. #6
    Jillian & Allison's Daddy Senior Member Don Corleone's Avatar
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    Default Re: BAILOUT: Yes or No?

    Quote Originally Posted by HoreTore View Post
    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?

    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...
    Last edited by Don Corleone; 10-01-2008 at 14:39.
    "A man who doesn't spend time with his family can never be a real man."
    Don Vito Corleone: The Godfather, Part 1.

    "Then wait for them and swear to God in heaven that if they spew that bull to you or your family again you will cave there heads in with a sledgehammer"
    Strike for the South

  7. #7
    Master of Few Words Senior Member KukriKhan's Avatar
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    Default Re: BAILOUT: Yes or No?

    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. :)
    Be well. Do good. Keep in touch.

  8. #8
    Nobody expects the Senior Member Lemur's Avatar
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    Default Re: BAILOUT: Yes or No?

    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?

  9. #9
    L'Etranger Senior Member Banquo's Ghost's Avatar
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    Default Re: BAILOUT: Yes or No?

    Quote Originally Posted by Don Corleone View Post
    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...
    Well, we're all being told off. I have listened to several economists recently pointing out that the rich are withdrawing a lot of investment funds which makes the problem worse by reducing liquidity. I have certainly reduced a great deal of exposure to the stock market and moved capital to safer havens. As noted earlier, we did take a very profitable but entirely surprising punt on bank shares before the bailout plan, but that will go some way to paying inheritance taxes in two countries.

    I can see this is not the typical problem, but are politicians really expecting large fund-holders to stay in the market?

    Anyway, I agree with Lemur - it'll be a very nasty day when responsible loans are called in - not least because by then, you won't need to pay them back to the hollowed husk of a finance system unless it be in sea-shells.
    "If there is a sin against life, it consists not so much in despairing as in hoping for another life and in eluding the implacable grandeur of this one."
    Albert Camus "Noces"

  10. #10
    Member Member Koga No Goshi's Avatar
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    Default Re: BAILOUT: Yes or No?

    Quote Originally Posted by Don Corleone View Post
    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...
    I still think that people are perhaps overestimating how much of this was single home owners and not giving consideration to the fact that a lot of people have ALREADY walked from investment homes they had mortgages on they knew they could never swing long-term. They wanted to just hang on for six months while the house increased in value 10 or 15% and then sell. Those people have already walked and I think even if all the remaining people trying NOT to walk away from a mortgage pulled in every resource and did the responsible thing, the crisis would still exist.

    (This is not to say, at all, that what you are doing is not very responsible and admirable, Don Corleone. I just think people like you were not the real source of this problem; you might have been part of it, but the greed and the belief that everyone could make quick short-term turnaround profits on this, not worrying about the long-term, was more of the source.)
    Koga no Goshi

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  11. #11
    boy of DESTINY Senior Member Big_John's Avatar
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    Default Re: BAILOUT: Yes or No?

    Quote Originally Posted by Don Corleone View Post
    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.
    any representatives who changed their vote based on her speech need to be deported.
    now i'm here, and history is vindicated.

  12. #12
    Jillian & Allison's Daddy Senior Member Don Corleone's Avatar
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    Default Re: BAILOUT: Yes or No?

    Quote Originally Posted by Big_John View Post
    any representatives who changed their vote based on her speech need to be deported.
    Changed, no. But dragged kicking and screaming to vote for something they don't agree with, then have her fling pooh like that?
    "A man who doesn't spend time with his family can never be a real man."
    Don Vito Corleone: The Godfather, Part 1.

    "Then wait for them and swear to God in heaven that if they spew that bull to you or your family again you will cave there heads in with a sledgehammer"
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  13. #13
    Member Member Koga No Goshi's Avatar
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    Default Re: BAILOUT: Yes or No?

    Quote Originally Posted by Don Corleone View Post
    Changed, no. But dragged kicking and screaming to vote for something they don't agree with, then have her fling pooh like that?
    If this really had any effect on the vote, at all, then Republicans have no room to ever accuse anyone of petty partisanship and playing politics.

    But, I think it more likely they just didn't want to vote for it before re-election and used her as a scapegoat for the vote.
    Koga no Goshi

    I give my Nihon Maru to TosaInu in tribute.

  14. #14
    Jillian & Allison's Daddy Senior Member Don Corleone's Avatar
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    Default Re: BAILOUT: Yes or No?

    Come on. If George Bush had stated "And because the Democrats left the White House so woefully unprepared to prevent such an attack, and their failed foreign policy invited Al Queda to breed in Afghanistan, we must now go in and drive their Taleban hosts out of Kabul", do you really think a single Democrat would have voted for the Afghanistan resolution?

    If I agree to go along with something I don't like, and somebody stands up and says "And by going along, you're admitting just how wrong and stupid you were for disagreeing in the first place", I'm going to take issue.

    Now, I view the failed vote as a GOOD thing, so I don't feel a need to defend them. But I do think you guys are expecting an awful lot of people. They have to vote for something they don't like AND publicly lick Nancy's boots?

    Like I said, I think she did it on purpose.
    Last edited by Don Corleone; 10-01-2008 at 21:33.
    "A man who doesn't spend time with his family can never be a real man."
    Don Vito Corleone: The Godfather, Part 1.

    "Then wait for them and swear to God in heaven that if they spew that bull to you or your family again you will cave there heads in with a sledgehammer"
    Strike for the South

  15. #15
    Nobody expects the Senior Member Lemur's Avatar
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    Default Re: BAILOUT: Yes or No?

    I find it very hard to believe that Pelosi's speech had a major imapact on the vote. As I pointed out earlier in the thread, the big dividing line was between people who are up for re-election in tough districts and those who aren't. This was all about Congresscritters who were more afraid of you and me than they were of their own leadership. Which is as it should be.

    Here's what kills me — it's possible that the bailout was a good plan. But nobody made a case for it. If we had a President whom more than 15% of the population trusted, it might be a different story. But hey, if you want us to fork over a sum of cash equal to the Gross National Product of the Netherlands, you have to make a case. You have to sway us.

    Nobody did that, so tough on them.

  16. #16
    boy of DESTINY Senior Member Big_John's Avatar
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    Default Re: BAILOUT: Yes or No?

    Quote Originally Posted by Don Corleone View Post
    Changed, no. But dragged kicking and screaming to vote for something they don't agree with, then have her fling pooh like that?
    you vote on the issue. completely inexcusable for a congressman to do otherwise in this case. someone that was 1) cowed into voting for something they didn't want and then 2) flipped because mean ol' nancy gave a dime-a-dozen partisan speech is doubly reprehensible. i wouldn't want that type of person in charge of trimming my shrubs.
    now i'm here, and history is vindicated.

  17. #17
    Jillian & Allison's Daddy Senior Member Don Corleone's Avatar
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    Default Re: BAILOUT: Yes or No?

    Kogo: Never said Democrats voted along party lines against the best interests of the country. I'll actually give them credit for passing more resolutions than I would have expected them to (and probably more than they should have). But W didn't stand there like a gate-keeper and say "bow and admit you were wrong" on the way by either...

    Big John: I'm not arguing that they're in the right. I'm arguing that it's human nature. Let me try putting it another way. Let's say your boss comes to you and says "alright, I've mismanaged the funds around here. In order to stay solvent, you're going to have to sign a document the HR manager will pass around in which you'll voluntarily take a 10% paycut". As the HR rep comes around, they announce "and by signing this document, you admit that you're lazy and stupid and only deserve 90% of what we're currently paying you".

    Do you still think you'd sign?

    Again, I'm happy the bill failed. I'm trying to get you guys to see that if you really wanted the bill to pass, you should be ticked at Nancy for failing to keep her fool mouth shut.
    "A man who doesn't spend time with his family can never be a real man."
    Don Vito Corleone: The Godfather, Part 1.

    "Then wait for them and swear to God in heaven that if they spew that bull to you or your family again you will cave there heads in with a sledgehammer"
    Strike for the South

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