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$700 Billion Bailout Signed Into Law
Many readers reminded us of what no-one can have failed to hear: that the Congress passed and the President signed a $700B bailout bill in an attempt to avert the meltdown of the US economy. The bill allocates $700 billion to the Treasury Department for the purchase of so-called "toxic assets" that have been weighing down Wall Street balance sheets. This isn't particularly a tech story, though tech will be affected as will virtually all parts of the economy, and not just in the US. Among the $110B in so-called pork added to the bill to sway reluctant legislators are extensions of popular tax benefits for business R&D and alternative energy, relief for the growing pool of people subject to the alternative minimum tax, and a provision raising the FDIC's ceiling of guaranteed deposits to $250,000. Some limits were also imposed on executive compensation, though it's unclear whether they will be effective.
The major effect of this bill is that it is causing fiscal conservatives to blow gaskets. They can't accept the fact that the free market is what caused this mess.
It is funny to hear them complain about how people on Wall Street became "greedy." I'm not a financial expert but I think that is part of the design. Everyone on Wall Street works for their own self interest. That is how the invisible hand is supposed to work. But conservatives complaining about the essential 'feature' of the free market is sort of twisted.
then I won't notice a thing. I am lower middle class, barely making ends meet. I usually get a refund at tax time, but not much. I've never come anywhere NEAR the FDIC cap in my bank account, and even if my bank went under, big deal. I'd be out less than 200 bucks. But the FDIC would cover it, so no loss. The only thing that the government could do to "bail" me out of rough times would be to:
Lower my income tax
Regulate fuel prices to a reasonable level
Give me free health care
Give me free college just like the African Americans and Latinos and Single Moms and Sudanese and pretty much everyone who isn't a white male/female with no kids
Other than that, big deal. 700 billion dollars that I basically receive no real benefit from, while people who are already rich just get richer. Yay America.
Halitosis - (n.) Halle Berry's Camel Toe.
Carping right now, when the boat is sinking, is just plain stupid
You know it's an amazing coincidence. You're saying the exact same thing that Henry Paulson and his cronies say. I'm sure that it is just that - a coincidence - and that you independently came up with the identical position completely on your own.
I also suppose that if Henry Paulson said you needed to come to his house and blow him or the economy would go under you'd think, "No time to think!" and head right over to do it. If that's not the case, then why did you fall for his, "Sure, I'll give you a life preserver - throw me your wallet first!" scheme? There is time to think. Henry Paulson has said he has no plans to spend any of the $700B for FOUR WEEKS. Why the rush to pass it into within days?
I'm a big tall mofo.
Luckily for the politicians, most people don't want news and just ignore the news.
Then let private firms buy it up and make that money... why the panic?
Ryan T. Sammartino
"Ancora imparo"
"Bushtards, every single one of them."
They're not dumb, they're just evil. They have learned that they can get away with anything, and we'll allow it. No interest in principles, no interest in truth. This is the product of modern political and social pragmatism - a free-for-all, every man for himself. Lie, cheat, steal, whatever it takes to maintain your grasp on the teat of the American public tax pool. The alternative is to make it on your own, using your rational mind to survive and fulfill your goals; but, reason is outdated, obsolete.
generally you save the women and children first rather than the idiot with a shotgun that blew a hole in your lifeboat in the first place.
Sigs are too short to say anything truly profound so read the above post instead.
Great. So, the banks that issued those faulty credits are free now, because someone else (hint: you) pay their debt. The people who took those loans for ridiculously overpriced houses on the other hand still owe that very same amount now to your government instead of banks. If that's not a bailout for banks, I don't know what is.
Between 1 and 1.3 trillion dollars has been spent on military projects and war for the last few years, depending on how you look at old debt. The money is not clearly accounted for, against constitutional principles, and it only goes to serve large corporations.
Where is the public outcry? Where are the Republican talking heads when the budget is being discussed?
The bailout plan may be awful, but it's by no means the biggest con ever. The biggest con ever has been going on since the end of WWII, and it has cost American money and lives, and in no small number. Any of these transparently partisan personalities are just squawking for advertising dollars and votes, same as always.
Then let private firms buy it up and make that money... why the panic?
Because private firms are under pressure to make money NOW, and always turn a profit. No private enterprise would ever go for this type of long term investment with zero profits in the foreseeable future. Government, however, can wait. It really doesn't matter if it takes ten years for the money to return.
It is in the general interest of the public to resolve these type of situations as fast as possible, because in the end, it's (as usual) Joe Sixpack that's going to suffer if a larger chunk of Wall Street goes belly up.
GAAH! MY PRINTER IS ON FIRE!!! PUT IT OUT! PUT IT OUT!
First of all, I hate this kind of argument by analogy, although the analogy happens in this case to point in the right direction.
Secondly, not all "carping" is bad. We should be skeptical. This isn't the first time we've heard "wolf" called by this administration.
What is going on is that credit markets are breaking down. Credit hasn't "dried up". It doesn't work that way. Credit can't disappear, any more than the world can run out of oil. What happens to these commodities is that they become too expensive to be useful. That's what is happening now to credit, and upshot is that the Fed is losing control of the money supply, and that is very, very bad because controlling the money supply is the main way we have avoided having economic downturns spiral out of control ever since the Great Depression.
It is a very serious situation, and we need to start fixing it fast, but in any case the fix doesn't have to be accomplished overnight. It can't be. We have a situation that grows graver every day, but not say grave that at bad move today is better than a mediocre one tomorrow. It's all about balancing less than perfect action against diminishing returns.
I think there are better ideas out there than this bill, but getting enough support to put them into action runs up against diminishing returns. On the other hand, the bill sent to us last week was dangerous.
"Carping" improved the TARP component of the bill considerably, putting in place a mechanism by which distressed assets are secured by stock warrants to control taxpayer risk, aligning taxpayer and shareholder interests. I originally though the CEO payout provisions were Democratic red meat, but in this context it is good for shareholders too because it keeps CEOs from stabbing the shareholders and taxpayers alike in the back.
So "carping" got us a much better bill than we had a week ago last Friday. The pork incentives to get those last dozen votes, frankly, sucks, but as Barney Frank pointed out: if you don't want politics in this process, you shouldn't hand it over to 535 politicians.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
What I find MOST incredible about this whole bailout, is the fact that nationwide polls of the general populace indicated between 70% and 75% were AGAINST the legislation, yet the Senate passed it through with FLYING COLORS, and House of "Representatives" were swayed to voting for it in a matter of only a few days. All it really took was throwing in a few key financial incentives and bonuses to the appropriate special interests, and some empty promises by potential presidents to be.
The whole time, these "Representatives" were being flooded with demands from the American people NOT to vote for the bailout - but they turned a deaf ear to everyone, and made bold claims like "I may not be re-elected because of this, but I'm confident I did the right thing for America's future anyway." One moron said he changed his vote from NO to YES, simply because "I talked with potential president to be, Obama, and he personally assured me he would enact legislation after his election that's in alignment with what I want to see." (WHAT?!? You were VERBALLY promised some B.S. by a guy who MAY or MAY NOT become president, so that's more important to you than listening to the people who elected you and trusted you to represent their wishes?!)
When HUGE taxpayer expenditures like this are voted through and signed into law in less than a week, despite 3 out of 4 Americans being strongly against them - it's clear we no longer live in a Democracy at all! This seems like as good a reason for an overthrow of our government as what we dealt with back around 1776! Yet people will not only sit back and accept it, but probably not even vote in protest for a 3rd. party like the Libertarians. (Incidentally, Bob Barr has been speaking out against this bailout the whole time, unlike our Democratic or Republican contenders. The man gets MY vote for that reason alone. At least he's in support of the will of the PEOPLE still!)
This situation is so absurd. The supporters act as if this thing is so urgent and there is no alternative, but then they take their time by taking off due to a Jewish holiday that not even a lot of Jews celebrate..
Then they come back and basically vote on the same bill again, but this time a few house members take the bait and it passes. Some of the amendments being totally weird and not really having anything to do with "bailing out" Wallstreet, such as subsidizing rum, wool research and wooden arrows for children?!? I'm not making this shit up!
Then we have McCain sitting in a interview riling against the pork barreling and at the same time taking credit for convincing his Republican buddies to back this "sweetened" bailout plan.
And the really ironic thing is that we have old-school (i.e. fiscally conservative) Republicans opposing the bill as well as far left dudes like Kucinich. Not to mention Paulson's conflict of interest in this whole mess.
And when you gaze long enough into the code, the code will also gaze into you.
Bush and collegues came into office promising to implement Grover Norquists ideas for contracting govenrment. The graphic phrase most often used was they would have to "strangle it in the bathtub" which was Norquist's shorthand for meaning that to reduce spending they had to basically remove govenement agencies and kill off revenue.
Fast forward we have years of the biggest govenement expansion ever. Some bandy the word "socialist" over the bailout. But actually that misses the big picture.
Suppose your goal was to move the governement more towards a corporatist outlook and to really strangle spending how could you do this.
You do it with debt. This 700 billion will be paralytic both in crippling elective goverment spending as well as it's ability to raise future debt. Oddly It does not actually go on the books as debt even but it is a liability.
And even if some day the loans and options they are buying pay off, it's accomplished the tow key goals.
1) strangling it in the bathtub. There cannot be any socialist expansion during Obama because there simply is no way to finance it either with direct revenue or borrowing.
2) a movement towards corporatism. The Government will rise and fall with the value of the companies it holds options in. What's good for the US really is what's good for AIG and JPmorgan, and the rest. Even the people admisistering the hen house in both the SEC and Treasury came from Goldmann Sachs.
The 1930's was when Corporatism was invented and the country practicing it, italy, was consider a miracle. the rest of the world was reeling in the depression. Senators and congressmen hailed the Moussilini miracle and went on fact finding missions to figure out how to import this here. Adolf Hitler was swept into power in part by nationalism that awoke in the aftermath of WWI but also because he too offered the fascist miracle for germany.
THe trains did run on time. THe auobahns emerged. It was spring time for hitler and germany too.
SO we now have an odd time in the US. We are backing our way into fascism. We have all the ingredient. Cheney and his patriot acts have created police powers that are unprecendented in our history of civil liberties. Even our allies like britain have gone to a surveliance society and now ponder 2 days detenciton with charges.
THe second fork of facism is corporatism where the state manages for the good of the corporations and vica versa. (the reason corproatism was such a miracle was precisely because of the vica versa. The people were really better off in the rising economy of italy).
So while hitler managed to once and for all kill the term "facism" at one time, it's potential for being an ecomomic engine was admired.
I note I'm not triggering Godwins law here because I'm not comparing my oponent to Hitler. Instead I'm saying that we are indeed backing into something that is facism in everything but name only, both the good and the bad.
Some drink at the fountain of knowledge. Others just gargle.
There is plenty of blame to go around. Yes, the CEOs, but everyone else too.
First, all the people that thought houses were investments whose price could never go down. Wrong.
Second, all those people bought houses they couldn't afford at ludicrous interest rates, based on the idea that a bank would never give them a loan they couldn't afford. Wrong.
Third, the banks that gave these ludicrous loans in the first place. Stupid.
Fourth, the unscrupulous assholes who raced to find people to give these loans so they could sell the loans as investments.
Fifth, the federal reserve for keeping the interest rates so low that the global pool of money had to find themselves an investment other than government bonds.
Sixth, the global pool of money for investing in these loans without carefully looking at what they were buying.
Seventh, all the wall street banks that also invested in all these things heavily and not seeing that they weren't worth their price, and their CEOs.
Eighth, the government for not seeing this happening earlier and stopping it before it was too late.
Ninth, the previous government (Clinton, sorry) for trying to let every American own a home. Heart was in the right place, should have asked an economist first though.
How many times did you hear in the last ten years that property was a great investment that couldn't fail and that everyone should buy some as soon as possible? That was bad advice, every one of those people were wrong.
Basically we all did this for not looking more skeptically at what we were investing in, and living beyond our means. But the economy is not the financial industry, the financial industry is just the fiendishly complicated mechanism that loans the rest of the economy money so it can function. Letting the entire economy fail to teach Wall Street a lesson sounds stupid to me.
I lived within my means, I don't have any debt, and I'm pissed at everyone for screwing this all up so badly. But I want the economy keep going so that the means which I am capable of living within can continue coming, and here we are. Put me down for my share of the bailout, and do me a favor, keep wall street on a tighter leash. I lost a lot of faith in the free market over the last year, it was the market's mindless lemming me-too-ism that completely screwed the pooch here.
Everything seemed to be going so nice
'till the end of all beings punched right through the ice
To everybody who is screaming "scam!", have you read into how the great depression started and what the government did to sway the great depression? You will find out that there are many simularities in how the great depression started and to what is happening now. Back then, the government had a mentality that the people with bad investments should be punished by losing their money, instead of the government stepping in to help. It obviously trickled down to every faccet of the United States and sent the country into an economic tail spin. The only thing that the government actually did was raise interest rates, thinking that it would curb bad loans. History shows that it didn't help. Learning from the lessions of the great depression, the government is trying to be proactive in curbing what could be America's second great depression. Spending $700B hurts to think about it, especially with the national depicit. Think how much worse it could be though with 25% unemployeement and a non-existant credit market. What pisses me off more than anything though is that the government allowed it to get to this point by removing a lot of the regulations placed upon the financial markets and encouraging risky investments. It's coming back to bite everybody in the ass.
I agree with you on most of your writing. There are things fundamentally flawed in our western culture. However, I don't agree with the last sentence:
The sooner you all fall to pieces, the sooner we can start clearing your poisonous influence out of our nations.
You cannot hold America or Americans responsible for this influence. What the people in Europe choose to do is *their* responsibility, not any American's. People in Europe can refuse to participate, but they don't. Not because any American forces them, but simply because they're tempted by greed in much the same way.
No, free market capitalism is when private companies reap all the benefits and ordinary tax payers take all the risks.
Atleast that is what always seem to happen.