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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 greatest scam ever pulled off...and everyone thought Bush was done !
Why is it that really bad legislation always seems to pass on a Friday?
Go green: turn off your refrigerator.
Henry Paulson, the CEO of Goldman Sachs until 2006 and current U.S. Treasury Secretary succeeded in scaring the public and Congress into giving him a $700B blank check to bail out his friends. If you think that money will "trickle down" to you or small business owners, or anyone other than the people it's directly going to, you are mistaken.
...and our Congresspeople fell for it.
The DOW plummeted to 10,365 on Monday September 29th when the bailout bill failed to pass. Every proponent of the bailout screamed, "I told you so!" Then on Tuesday September 30th, even without the bailout bill the DOW rocketed up to 10,850. Then on Friday October 3rd when the bailout bill passed and was signed into law, the DOW dropped yet again to 10,325 (even lower than Monday when the bailout bill failed).
This bill will not help the credit markets, the debt markets, the equity markets or anyone reading this comment. It will help Goldman Sachs, Morgan Stanley and the rest of the former investment banks de-leverage from 60:1 leverage down to traditional 12:1 leverage on your dime while the economy goes down the tubes.
They pulled out all the steps - even threatening martial law:
http://www.youtube.com/watch?v=HaG9d_4zij8
I'm a big tall mofo.
How big of a check should I expect to get?
--
Blackshot
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.
I seem to remember reading the BBC and noting that countries overseas wanted this bill as much as some in the US.
Shai Schticks:"You don't make peace with friends, you make peace with enemies"
First, let's understand what caused this crisis. Then you'll understand why the bailout won't work.
Economist: Why Bankruptcy is better than bailout
The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities ( written EIGHT YEARS before this crisis, predicting everything down to the dollar amount)
Now, check out the $150 Billion in pork-barrel projects that were added by the Senate to the original 100-page bailout that failed in the House, turning it into a 450-page bailout:
- "Wooden arrows designed for use by children" (Sec 503)
- Wool Research (Sec. 325)
- Film and Television Productions (Sec. 502)
- Litigants in the 1989 Exxon-Valdez oil spill (Sec. 504)
- Virgin Island and Puerto Rican Rum (Section 308)
- American Samoa (Sec. 309)
- Mine Rescue Teams (Sec. 310)
- Mine Safety Equipment (Sec. 311)
- Domestic Production Activities in Puerto Rico (Sec. 312)
- Indian Tribes (Sec. 314, 315)
- Railroads (Sec. 316)
- Auto Racing Tracks (317)
- District of Columbia (Sec. 322)
This is the bill that senators are screaming about, saying "IT MUST BE PASSED OR DOOMSDAY!" Who believes them? And yet the bill easily breezed through Congress.
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.
There is also a provision extending IRS powers extending its immunity from a variety of laws.
Read more here: http://blog.bobbarr2008.com/2008/10/03/bailout-bill-invades-your-wallet-and-your-privacy/
Only this lifeboat had no "women and children" in it. This was no lifeboat. It's a helicopter to rescue the captain after he ran the tanker into an iceberg.
What?
"We owe it all to the bedrock of our economy: the ordinary hard-working taxpayer. You resisted the siren call of credit cards, lived within your means to save for a rainy day, never took out an interest-only mortgage, credit score to make Jesus cry. Without taking every penny you saved over the $100,000 guarantee, we'd never have made it. And the best bit is, we know you'll still vote Republican! God bless you all!"
By the way, your house is still worthless.
http://rocknerd.co.uk
Some good details on how the 700B will be raised
Then let private firms buy it up and make that money... why the panic?
Ryan T. Sammartino
"Ancora imparo"
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!
You need some serious perspective change.
Let me ask you this:
If you were to ask for, let's say a $10,000 loan with no plan on how to use it, would you expect to get the loan?
These people stated in no uncertain terms that they had no plan in dealing with the problem. The "problem" has been discussed and investigated for months... even years if you want to go back that far. "Experts" have been claiming everything is fine. And now these same "experts" want control of $700 billion and put the US tax payers on the hook for it. And they have NO PLAN on how to go about making things right and no plan on how to prevent it from happening again. NO PLAN.
Which should come first? The money or the plan?
The "panic" is unjustified. Banks have failed. We call that Darwinism. Let it be. Other institutions are restricting their lending practices... adding a little more sanity to their risk calculations. That is a good thing and what they should have been doing all this time! People seem to think this is a sign of the apocalypse. It's not. We should expect some trouble before things turn around again.
But if one thing can be clearly said about this is that these "experts" have caused this problem. These same "experts" claim they need $700 billion to fix it and they don't have a plan.
If this sounds eerily like the story of an addicted gambler, you'd be right to see it that way.
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.
I have had the chance to speak with other business owners and some executives of, let's just say, large, corporations. The general feeling is that while action was necessary there was a much better approach:
- ~500 billion USD given to the Fed
- Allow the Fed to disperse the money through the discount window with loans at 1% fixed for 18 months then reset to Prime-0.5%
- All mortgages that are currently in MBS tranches have their rates reset to Prime+1 for 24 months.
- Have the US AG seek felony charges for lenders that committed fraud.
The current bill is like trying to get fuel into a car through the tailpipe instead of filling up the gas tank.
Website Hosting
Youre a vice president in a bank ? Heres another recent comment by you:
I'm sorry, I don't think we've met. Yes, I don't like Vista. But it's not a religious stance against Microsoft. In fact, I hold 4 Microsoft certifications (MCSE, MCSD VB6, MCSD C#.Net, MCDBA) and work on Microsoft products all day every day. In fact, I did a 6 month contract programming job for Microsoft themselves as a side job.
Certainly a very busy man.
http://validator.w3.org/check?uri=http%3A%2F%2Fwww.slashdot.org Errors found while checking this document as HTML5!
If you want to check out all of details directly it's only 724 KB to get the PDF of HR1424, the full bill.
You can find an index to most of the tax break provisions starting around page 261.
Looks like they got the Republican tax agenda in there.
Some may also like to check out the wikipedia entry for HR1424.
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!)
Hahaha... I have worked for banks, perhaps even the same bank - and I can assure you that almost EVERYBODY is a "vice president". In fact, if your are note a "senior vp" or a "executive vp" or a "super duper vp" than I guess you are just the "entry level vp".
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.
Certainly a very busy man.
I work on programming and enhancing strategic investment platforms for both fixed income securities and equities.
So yes, you can be both a Vice President and a member of IT. I've even been a Vice President and Chief Technology Officer in the past.
I'm a big tall mofo.
Lesser civilized, also known as third-world nations would have taken to the streets for such outright bullshit.
"Thanks for all the money you paid to us. We've used it to buy off ISO among other things" -Microsoft
Yep
I read it too.
If you're in banking, you must have noticed the fact that the increased cap of FDIC insurance from $100k to $250k will only apply until December of 2009, after which it reverts back to the limit of $100k per named account holder per financial institution.
How many people might get suckered into longer term CD's (Certificates of Deposits, not the ISO-9660 type) that might go over the boundary of the TEMPORARILY raised FDIC insurance caps and end up either inadequately covered or stuck with early-withdrawal fees?
Either way, NONE of the articles I have read make any statement about the fact that the so-called increase in the FDIC insurance from $100-thousand to $250-thousand is only going to last the length of calendar year 2009. That's a sham and a disgrace.
Kris
So what is their strategy to deal with it? They have created a class of company (unlimited liability) which basically has to file almost no public accounts. A similar wheeze was used in Germany some years back in the KG & Co. in which one member of a partnership was a limited company. The object is to get US and other corporations to make their corporate HQs in Ireland, and so hide their profits in this offshore bank scheme. Look it up.
By getting US corporations to relocate to Ireland they hope to avoid recession in the economy and ensure the bank guarantees will never be called in. But clearly that will reduce the tax income from corporations in the US, and worsen the crisis there.
I am only just joking when I suggest that some of the pork should have been invested in invading Ireland. Saddam may not have had WMDs, but Ireland seems to be trying to develop WMEDs (weapons of mass economic destruction). Perhaps Osama Bin Laden hasn't been caught because he's actually been in a Dublin pub, plotting the downfall of the US.
From scarped cliff or quarried stone she cries "A thousand types are gone, I care for nothing, no not one."
Comment removed based on user account deletion
Dear American:
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transaction is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury Paulson
(Reference: http://bettybowers.com/betty4president/?p=132)
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
link to house roll call vote on the "billionaire's socialism bill of 2008"
Personally, I don't want to hear a peep out of any congress weasel who voted for it, or business goon who wanted it (or takes the cash), about "free markets" and "capitalism", because this bill is neither. Those people are big fat hypocritical liars.
Voting yes were 172 Democrats and 91 Republicans.
Voting no were 63 Democrats and 108 Republicans.
anyway, here is my state vote record
GEORGIA
Democrats - Barrow, N; Bishop, Y; Johnson, N; Lewis, Y; Marshall, Y; Scott, Y.
Republicans - Broun, N; Deal, N; Gingrey, N; Kingston, N; Linder, N; Price, N; Westmoreland, N.
across the board Nays by the Rs
It's all just part of the template for putting bad ideas into law.
Step 1: A bad idea is formed.
Someone has a bad idea for a bill. This could be a special interest group looking to get Congress to pass some horrible bill to have the government fleece the people for cash to enrich a select few. Sometimes it's the executive branch looking to grab some "emergency" powers by predicting doom and death if Congress doesn't just GIVE unchecked power to fight the terrorists allowed to flourish under their watch, the devastation wrought by a combination of natural disasters and fiddling while Rome burns, or the economic fallout of their fiscal policies.
Lucky us, we got both! Paulson's original proposal was only three pages long because what it basically said was, "Gimme some cash with no oversight, and we'll make the problem go away" -- just like the reconstruction of Iraq! But...
Step 2: Congress balks
Okay, so maybe Congress doesn't like the idea. Either Congress wakes up to the idea that "emergency" powers stick around for a long time and always reach further than Congress intended or maybe some central ideological point of principle keeps them from voting for it or, more likely, they don't see enough kickbacks for their campaign donors yet (more on that below).
So, a compromise plan is worked out. The big interest groups get to have a little say, and the leadership on both sides of the aisle crack their whips on members to vote in favor of a bill no one likes. The bill balloons up to over 100 pages as some semblance of balance is struck.
But people are still willing to stick up for their ideological principles, so we move onto step 3...
3) Sugar-coating with pork.
The one lesson the Senate has learned over 200 years of existence is that if you wrap a lump of dung in enough pork and sweeteners, you can get almost any politician to swallow it.
And so 300 pages of earmarks, tax cuts, and other pork projects are tacked onto the bill as it's welded with another "must pass" spending bill. We've seen the former tactic before when the energy bill that's been bandied about the presidential debates was passed, and we saw the latter tactic of welding horrible idea into the intelligence and war spending bills of the past few years. Nothing gets a Congressman to put aside principles quite like salty, salty pork and the fear of being called out for voting against something unrelated but necessary in the next election.
4) Bury it and hope the media forgets.
So, now you've got tax cuts for arrow & rum makers wedged into the bill and much needed subsidies to rural counties in western states that lost timber revenue that couldn't survive a normal floor vote into the bill. How do we sneak all this pork in without enraging already frothing at the mouth "plebes" who are upset at the fiscal irresponsibility of it all?
Well, we can pass it on a Friday. That worked this time. Other times, we might want to leave it to a voice vote so that no one's name can be attached to the bill and force them to take responsibility for their vote. This time, though, we *want* politician's names attached to the vote. This train wreck had to happen somehow, so we want the people who got the pork to be able to go home and thump their chest about how they fought for their constituents to get their piece of the pie -- their turn at the trough. So, we pass it on Friday and hope the weekend gives time for the outrage to move onto acceptance.
And this is what we call democracy! USA! USA! USA!
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
Thanks for the link. It's always entertaining to read the work of a grade A nutjob:
Shadowy figures in conspiracy behind the government.... Check.
Upcoming world war III and new world order.... Check.
One world government.... Check.
The only thing missing was that it forgets to blame the Jews. There are certain standards to keep up when writing this kind of trash.
Slashdot: where don knuth is an idiot because he cant grasp the awesome power of php
It's understandable that you don't want to lose the money you invested and the way it looks like you won't - at least not in the next few days. In the long term you *will* pay for that bailout, either by taxes, or by inflation. Most likely by both.
My biggest issue is that this bailout let's the people responsible for that mess get away with impunity. That's just not right, IMHO.
I have real doubts about the bailout "working". The underlying problems with the financial system are more fundamental. We have a sizable chunk of the financial system based on the assumption that real interest rates (after inflation) will remain negative.
Currently, US dollar inflation is around 5.4%. (9% to 11% if you use classical numbers, computed the way inflation was calculated prior to the 1980s.) Normally, the Fed funds rate is just above inflation, LIBOR and the prime rate run around 2% above inflation, and mortgages run about 6% above it. For the past year, the Fed has been flooding the financial system with cheap money, at 2%, in a failing attempt to avoid a recession. LIBOR is 3.88%. So we're currently in a situation where key real interest rates are well below inflation. LIBOR, in real terms, is about -1.5%. This is very unusual historically.
The problem is that 1) negative real interest rates can't last for long without producing runaway inflation; the money has to come from somewhere, and 2) there are sectors of the financial system that are addicted to those low, low rates. Last week, LIBOR briefly hit 6.88%, businesses were screaming "credit crunch", and AT&T and GE were having difficulties rolling over their commercial paper. (GE Credit borrowed short and lent long, which is a bet on low interest rates.)
The mortgage portion of the economy is heavily dependent on those low interest rates. A mortgage really should cost a good borrower about 11.5% right now; 6% as the cost of the mortgage, and 5.4% for inflation. The "bailout" is all about keeping those interest rates artificially low. For a while longer.
Probably not that much longer. Expect a "credit crunch" in 2009 as financial reality reasserts itself.
There's nothing wrong with a credit crunch. It just means that businesses have to finance more with equity and less with debt. (Because interest on debt is deductible by business borrowers, there's a systemic bias towards financing with debt.) Consumer credit rates, other than for autos, are already at credit-crunch levels. (Stop in at your local "payday loan" outlet and ask them what their APR is.) And besides, we might see worthwhile interest rates on savings accounts.
What's "normal?" 3% real interest on savings accounts, 6% on loans, and the median house costs 2.5 years median income. That multiplier got up to over 4 in the US nationally, and over 10 in some markets. That was two years ago; now those numbers are lower, but not low enough.
When bubbles burst, they burst all the way. Tokyo residential real estate dropped over 90% when their bubble burst in 1989, and never went that high again.
We told you this would happen. You didn't listen. Now suffer the consequences.
At last! Hallelujah! I'm European so this isn't my money that's involved, therefore a bailout is better for me and the world's economy than no bailout, and it doesn't cost me a thing anyways. Sorry you guys have to pay the cost, but look at the good side of things. Thanks to this whole thing happening at the right time it only makes you more likely to get a decent administration this time.
Seriously, I look at this chart as if it was the temperature curve of this election, and if you rely on it then this whole crisis made Obama's estimated odds of being elected skyrocket. All the Diebolds in the world couldn't save the day for John "I was a P.O.W. for 5.5 years" McCain and Sarah "I'll make you keep your foetus even if the father is your uncle" Palin.
You just got troll'd!
In related news, Zeitgeist: Addendum has been released to the public. Timing seems just perfect.
As most people have said "You're just jealous you aren't a banker." Yes... I am :(
In seriousness though, I do not think this was designed to work, but it's the last in a series of promises to the lobbyists and fatcats that got the Bush team into the whitehouse.
There is no reason for any politician to fear any backlash because they will be effectively retired in 2 months and will not care at all.
I just hope for my own selfish tendencies that in a few decades I can read about all the great exploits that this administration has accomplished.
Graft is exciting.
Don't make irresponsible bets. You know nothing about me.
.com... I worked in a legitimate position at an established company. But I left my job for legitimate and legal reasons: because I discovered that my boss was stealing from me. But right at that time the tech market took a tumble and I could not find another. Nobody was hiring programmers or technicians, anywhere. For several years! (Don't lecture me about having another job before I left the first one... until you have been through the experience of finding out that YOUR boss is stealing YOUR retirement and insurance money!) I had some savings, and the job market looked just fine at the time, but within a month took a nosedive.
My point was not that the market did not need some adjustment... only that there are many better ways to do it. This was fiscally irresponsible, will end up costing you A LOT in the long run, and helps those who do not need help while abandoning many of those who genuinely do.
Remember, too, that the people who made the loans are AT LEAST as responsible as those who took them... and probably a lot more, since they were supposed to be THE EXPERTS who knew better. Or should have. So... ethically, why should they get bailed out but the others not? Answer: an ethical reason does not exist. Remember that you are choosing to spend not just your own hard-earned money, but mine, too. And I am not so damned sure you should have the right to do that.
I have been a victim of economic downturn, so I know what it is like. I was making good money as a professional but got caught in the tech crunch that happened at the turn of the century. I was not working for some self-inflated
I got two other jobs, but they were low-paying, and even between the two of them they did not pay my mortgage (which was hardly excessive... it was a modest used home). Then, the person who was buying my house reneged on the contract, and I ended up being foreclosed because it was too late to find another buyer. So, I was one of those "defaulters", but not because I was defrauding anybody. On the contrary: two separate parties defrauded ME, and I was working my ass off in both a night and day job.
So don't lecture me about working hard. Been there, done that. Got shafted anyway.
I am back to making good money again in a better professional position than I had before. But that is beside the point. This bailout does not do ANYTHING real to solve the problems of the economy, and it will cost a lot of people who did not do anything wrong, while paying off a lot of people who did.
I will take the ethical choice, thank you very much.
I repeatedly emailed, faxed, and phoned both my House and Senate reps about my vehement opposition and that I'd vote them out if they supported the Paulson plan. Their staff dutifully took down my position and both of them approved the bailout, voting against the 100-to-1 opposition of their constituents to the plan.
They've both been notified that I'll be spending my time and money to remove them from office as soon as possible by any means necessary.
Vote them out of office. Every single Congressional member who supported this bailout bill should be voted out of office as soon as possible.
Moderation in everything, including moderation.
One myth about the current financial crises is that it is the fault of ordinary Americans, who imprudently took out loans they could to afford. This is simply not true.
The current crises is not the fault of ordinary Americans.
It is true that many Americans took out loans they could not afford. I don't know why people did this - some, with credit cards maxed out on vacations, took out a home loans , and instead of paying off the credit card, took another vacation. Others were optimistic, egged on by the relentless propaganda that home ownership is good. Others were, perhaps , elderly and confused, or lost their jobs, or had medical bills. I don't know how many people acted in different ways, but i do know this: every single solitary mortgage had to be approved. Every single mortgage had to be approved by underwriters and bankers. Now, if someone, asks for a loan they cannot possibly pay, who bears more responsibility: the person asking, or the banker who approves it.
I further know that many ordinary Americans are suffering as a result of their actions, and of the actions of their neighbors.
Another myth about the current crisis is that rather then resulting from too little govt regulation, ti was the result of liberals messing with the free market, by forcing banks, with a law known as CRA, to make loans to poor or minority applicants. This question has been studied again and again by the Federal Reserve; suffice it to say, CRA loans were not the problem.
However, the question of who or why these loans were made is a red herring; it was not the approval of imprudent loans that has made the current crisis so severe. All the bankers who approved these loans are not actually the main culprits.
The people who bear direct responsibility for the current crises are people like Paulson; as CEO of Goldman Sachs, he and people like him are directly responsible for the current problems; that he is sending our tax dollars to his buddies to fix the problem is only icing on the cake of gall. Not only are people like pauslon responsible for our current problems, they acted from the basest of motives - greed. It was the desire on the part of people like Henry Paulson for larger paychecks that led to reckless behavior on the part of wall street; this reckless behavior generated large profits, justifying large salary's, but this same reckless behavior has gotten us to where we are today.
Another myth about the financial crisis is that it is incredibly complicate. While the technical details of loans may be complicated, the behavior and actions that led to this state are not at all complicated, and are similar to what we do every day.
As an example, this week, the wall street journal examined why AIG, one of the largest and most respected financial institutions in the world, suddenly collapsed. Turns out, they had a unit in london writing insurance; while it sounds complicated its just insurance - someone pays you some money, the premium, and you promise to pay back a lot more if they have a problem. And what did AIG do with the huge premiums they recieved ? they did not put any money aside for a reserve.
LET me repeat that: they spent all the money on salarys. So when the mortgage market went south, all of sudden people said, hey, AIG owes, in theory, a gazillion dollars of insurance, and they don't have any money set aside to pay it.
When people heard this, you had the famed loss of confidence, and AIG went bankrupt.
I pinched this link off "The Economist" Website: http://www.buymyshitpile.com/
Hell, Paulson is going to save the economy by buying "distressed debt" and "toxic assets", which is financial talk for "worthless shit", so why not help him out? He has cash to piss away, and isn't quite sure right yet where to spend it.
Computer geeks are notorious for hoarding worthless shit. I just can't part myself from that IBM PCMCIA Token Ring adapter ... with an 8228 MAU ... but if Henry makes me a good offer ... I just might reconsider.
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
We are ALL hard for Obama, all around the world. It's like a worldwide Mexican wave of boners. We have a clue, that's why we hated Bush, were against the war in Iraq and started worrying about climate change a few years before you guys all jumped on the bandwagon. Heed our opinion for once.
You just got troll'd!
If you live your life the way you post on Slashdot, it's no wonder you don't have anything. How about instead of expecting the government to hand everything to you you get off your ass, study, get good grades, earn a free ride through college (or take some loans), work hard, get a good job, and then buy the shit you want?
Yeah, it does suck that certain special interests are able to use the government to make themselves richer. And we should definitely be spending our tax dollars helping out those on the bottom end of the economic scale who do work for a living with their health care costs.
But if you want more gas, or to go to college, get off your ass and work for it.
paintball
They can't accept the fact that the free market is what caused this mess.
Wait, what? What a stunning display of ignorance of how the whole subprime lending system worked. In a "free market" the government does not intervene. Fannie Mae and Freddie Mac, government sponsored enterprises (AKA, "ATMs"), are no more "free market" than the post office. In this "free market," both FMs artificially inflated both credit and housing markets (just as government student loan programs have done to tuition) by pouring money into the system, and representing to the banks "don't worry, we are backed by Uncle Sam, what could go wrong?". In a "free market", government regulations like mark-to-market, which caused massive bank paper losses, don't exist. In a "free market," you don't have a CRA telling lenders how they have to loan their money. In a "free market" you don't have corrupt senators like Chris Dodd and Barney Frank, who are on important congressional banking oversight committees (which themselves wouldn't exist in a "free market"), leaning on lenders to make subprime loans, and fighting attempts to reign in these out-of-control Government-Sponsored Monstrosities..
Here's what Chuck Schumer said back in 2003, when Republicans wanted more oversight of said Government-Sponsored Monstrosities:
Senate Banking Committee, Oct. 16, 2003:
Sen. Charles Schumer (D., N.Y.): And my worry is that we're using the recent safety and soundness concerns, particularly with Freddie, and with a poor regulator, as a straw man to curtail Fannie and Freddie's mission. And I don't think there is any doubt that there are some in the administration who don't believe in Fannie and Freddie altogether, say let the private sector do it. That would be sort of an ideological position.
Source.
So Schumer himself opposed reform on the grounds that the "free market" is the wrong approach. Massive government intervention and regulation was the status quo. But now it is the "free market's" fault? WTF?
Yeah, sounds like a "free market" alright. Just like public housing is a free market.
Slashdot "libertarians": Small government for me, big government for those I disagree with. -1, I disagree with you
Liberal policies that attempted to move everyone (read: the renting lower and lower-middle class) into homeownership en masse resulted in huge unsustainable upswings in real estate prices.
I'd call bullshit on this except that is far too mild a term. NOBODY was forcing banks to make interest only loans to speculators, or to give out loans to people without any sort of documentation whatsoever, or to buy bundles of loans from mortgage brokers who were originating loans from any breathing life form. Quite a few banks maintained sane loan origination practices during this time and are doing fine just thank you. Hear about any Credit Unions in trouble? They are closer to the mortgage market than anyone. There IS a reason Wells Fargo and Bank America are cleaning up now - they had good managers and had sound risk management processes and did not bite the poisoned apple of absurd leverage and the mirage of big profits.
Up until just a few months ago the architect of this bailout plan (total misnomer - it is neither a bailout or a plan) was issuing assurances that there was plenty of capital in the system and there would be no problem. Now there is a major panic with the possibility of the Last Trump at any second. Somehow he's sold Congress on a 700 billion crapshoot. My guess is that this will be completely and utterly useless and the private sector will work out a solution like they usually do. Will there be pain? Of course. But there is nothing that will stop it.
I have paid zero in income tax through various legitimate and less-than-legitimate methods over the last 4 years. .
I'll remember that while my neighbors are trying to survive an upstate New York Winter on HEAP, Food Stamps, a Medicaid HMO and SSI.
Perhaps you and Joe Biden need to read something...
""Anyone may arrange his affairs so that his taxes shall be as low as
possible; he is not bound to choose that pattern which best pays the
treasury. There is not even a patriotic duty to increase one's taxes.
Over and over again the Courts have said that there is nothing sinister
in so arranging affairs as to keep taxes as low as possible. Everyone
does it, rich and poor alike and all do right, for nobody owes any
public duty to pay more than the law demands." " - Judge Learned Hand
Life is hard, and the world is cruel
"This is the difference between conservatives and liberals. Conservatives think libs are well-meaning but horribly misguided. Liberals think conservatives are evil (and this gets modded as insightful rather than flamebait!). And it's the conservatives who are "intolerant."
Sorry, but you're an idiot. I consider myself more conservative than any Republican in the last 50 years. Both parties have become a joke - they're both pushing for a welfare-state. The words "Liberal" and "Conservative" have become synonymous. I won't be voting for either Obama or McCain, and certainly not some idiotic Libertarian candidate. They're all for the destruction of individual rights.
We HAD a perfectly good solution to that, but the anti-smokers ruined it.
I was off by a couple orders of magnitude.
That's more like two thousand dollars per person.
So never mind.
Well the bit about distributing the funds directly to the mortgage holders rather than buying the mortgages so the government now owns the toxic debts still makes sense.
ties to Fannie Mae and Freddie Mac, how those government sponsored enterprises acted as ATMs
A lie. Fannie Mae specifically didn't have any US backing on the paper it gave out. And probably the same for Freddie Mac.
But don't let the facts get in the way of a good story.
and how Dems forced banks to lend to those with bad credit
I keep hearing this. Show me one example where a bank was forced to loan out money to someone and where they instead couldn't have said "fuck this I am not lending any more money with these kind of unprofitable regulations."
"How, exactly, is my ideology tied to George W Bush's?"
Any time I've seen your idiotic use of labels, "those damn liberals", it's always a Republican or someone co-opting the word "conservative" to support their own big government pet programs. Are you for the abolition of the Federal Reserve, Fannie Mae, Freddy Mac, the Department of Education, making abortion legal, getting the church out of the state, reducing the role of the government down to its only proper role: to uphold and protect the rights of the citizenry, and that's it ? Are you for all this? That is a conservative. Subscribe to anything else, even a mixed system, and you're merely resorting to principles when it is convenient, and violating/disregarding those principles when it is not convenient - pragmatism, in short. Moral and political pragmatism.
"And how is linking to the LA Times and Wikipedia and the Wall Street Journal "sticking to Fox News Bullet points"?
Any time I see someone label someone else a Liberal or a Conservative, without having a clue about their political stance (in this case, you got me as completely wrong as possible), it's because that individual is a braindead Dem or Rep spewing talking points.
"random story about how Bush is not Reagan."
What does that mean? Reagan was just as big of a joke as Bush. They're both for big government, while paying lip service to capitalism and freedom when it is convenient and politically profitable. When you learn to stop fooling for this idiocy, you'll understand what it means to have inalienable rights.
You realize, of course, that you've left a lot out?
You realize, of course, that the CRA did not force banks to make loans to individuals who couldn't afford them? What it did do was say that you could not refuse credit based on location or area (redlining) and instead had to base your loan evaluation on the INDIVIDUAL, and upon the individual's ability to pay. (Try reading the bill and not the Wiki.)
You realize, of course, that the vast majority of the subprime loans that are going belly-up were made by financial institutions like CountryWide... which are not banks, and as such, WERE NOT COVERED BY THE CRA IN THE FIRST PLACE.
You realize, of course, that in early 2005, the Office of Thrift Supervision (under GW Bush) implemented new rules that substantially weakened the CRA, and as such, its impact on credit markets?
You realize, of course, that a good portion of our current crisis is caused by the Gramm-Leach-Bliley Act, introduced by Senator Phil Gramm (R-TX), which in 1999 repealed part of the Glass-Steagall Act, opening up "competition" among banks, securities companies and insurance companies. Which in turn lead to our current set of mega-institutions that are so large and intertwined they can't be allowed to fail?
The same Phil Gramm, BTW, that was John McCain's presidential campaign co-chair and his most senior economic adviser. The same Gramm that in July explained the nation was not in a recession, stating, "We have sort of become a nation of whiners."
I could continue, but suffice to say that there's a lot of information that your oh-so-insightful post left out.
Do you work for the Republican campaign? I only ask because such blatant cherry-picking of the facts to suit your own position is a party trademark.
Any sect, cult, or religion will legislate its creed into law if it acquires the political power to do so.
Who created Fannie Mae and Freddie Mac, the true "merger of state and corporate power" in this crisis? Democrats.
Bzzzt, thank you for playing. Freddie Mac was creating in 1970 under Nixon.
Of course, neither of them caused this problem at all. They did not fail, they were not mismanaged, they did not purchase loans that failed, almost all their loans are just fine.
Ihey were created to purchase and securitize home loans, and that is what they did. The fact that housing prices dropped and resulted in them not having enough assets to cover the loses was an intended point of them existing. If it hadn't been them, it would have been the banks.
The actual problem was the drop in housing prices, which was actually caused by the current Administration. No banking system that operates primarily on mortgaged houses can survived a sudden drop in housing prices, which is why you don't let housing bubbles get that big.
Who further extended this by creating the CRA [wikipedia.org]? Democrats. Who expanded its mission [wikipedia.org] into accusing bankers of racism ("redlining") and extorting them to make more bad loans, or else be investigated? Democrats
The CRA only covers banks, not independent mortgage companies, the people who made 75% of subprime loans. That is, only 25% of all subprime loans were given out by institutions that were governed at all by the CRA. And, on top of that, the CRA doesn't actually demand that many are in bad areas, so of that 25%, less than 10% of them were actually requirements of the CRA.
So you're talking about 2.5% of all subprimes loans being mandated by the CRA, and, ironically for you, those loans are failing at slightly less than other subprime loans. (Probably because they're loans given out in bad neighborhoods so are actually examined more. Duh.)
And your 'lawsuit' comment is bullshit. Even the banks covered by the CRA do not get sued for not making enough CRA loans. They cannot be sued for that, at least not via the CRA. In fact, there's almost no enforcement at all of the CRA.
(Of course, anyone can sue anyone for any reason, but people who cannot get bank loans are unlikely to be able to launch a lawsuit.)
And if you actually knew anything about loans, you'd see Obama got a perfectly normal loan. Of course he got better than an 'average rate'. No one gets the 'average rate' unless they have 'average credit'. He, OTOH, has excellent credit, a lot of savings, and no debt at all, and three points below average is a completely normal interest for that. (And 'jumbo loan' just means it's a non-conforming-because-it's-too-large loan that Fannie and Freddie won't buy.)
If corporations are people, aren't stockholders guilty of slavery?
There were plenty of alternatives proposed that were less intrusive, safer, and better targeted to unfreeze liquidity to buy us time to fix the real problem of reckless, unregulated trading in fraudulently valued housing derivatives.
All were all rounded rejected by Paulson and taken off the table without further debate. If you doubt this, do some research. The rush to pass this via fear-mongering is typical administration bullying at its worst.
The Paulson plan is a naked power grab. Stop trying to sugar-coat it. It's a last ditch effort to save investment bank cronies from getting crushed from the upcoming recession by buying their junk at prices way above market value.
Ooook... time for some ranting:
This has long since become much more than an attempt to save Investment bankers and corrupt mortgage banks. This crisis is now threatening banks that are quite solid, never behaved irresponsibly, were not exposed to the sub-prime mess and that are essential to the proper functioning of the USA's, Europe's, Asia's and generally the rest of the worlds economies. The banks this 'bail out' is meant to help are the ones that provide the capital for small and medium size businesses on Main Street America to function, the ones that pay people's salaries. One can only hope that it succeeds in protecting them, and the rest of us, fro what m the screw-ups of the Investment banks, the mortgage industry, the risk assessment companies and politicians (both Dems. and Reps.) who made some very poor decisions, failed to properly monitor the investment banks and the mortgage industry and didn't pull the emergency brake in time. The reason that people like you can make comments like the one above is that you yourself haven't felt the effects of is happening... YET! It will take a while for the this infection to eat it's way through the rest of the banking community, through the businesses and eventually to you yourself (think layoffs on a hitherto unknown scale) and by the time it finally does and you finally start to get it it will be to late to stop it. I think Frederic Mishkin (via NYT reporter David Leonhardt) summed this up rather nicely with his Meyer Mishkin story. Do I think it sucks that the profits of players on Wall Street always get privatized while their mistakes always get Nationalized? Yes! Do I think it sucks that these bozos get a golden... no, these days it's more like a jewel encrusted, gold engraved, platinum parachute even if they have totally screwed up? Yes! Do I want a rerun of 1929? NO! If this is the price to pay to prevent a rerun of 1929 then I'll pay it, very, very, grudgingly. One thing is for sure, I will do my best to support anybody willing to see to it that the people responsible for this mess pay for it. That being said I have no high hopes that more than a few of them will ever be punished.
And that concludes my rant...
Only to idiots, are orders laws.
-- Henning von Tresckow
While you seem to have all the answers and the rest of us that might even dare to argue with you must be complete liberal twits..could you possibly give this a look - Who Caused the Economic Crisis
Not that I'm trying to make a defense of the Democrats, they do share the blame for this. But I've been listing to my share of Fox News and the story seems to be that there are many people to blame for this, but lets get those dirty democrats and nail them to the wall as much as possible.
The world isn't run by weapons anymore, or energy, or money. It's run by little ones and zeroes, little bits of data.
There was an article in last Sunday's Washington Post that described one house on the market after a foreclosure. The article was very instructive about what was really going on. The entire financial mess is a result of the gambling casino mentality of the derivatives market moving over into housing and mortgages. The mentality of the derivatives market was allowed to exist and continue as a result of financial market deregulation.
Many financial experts, most notably Warren Buffett, the Sage of Omaha, have for years warned that there are derivatives nobody understands and that they will cause trouble. Based on the article, it is clear that we now have mortgages nobody understands and derivatives on those mortgages that nobody understands, either. Derivatives in the form of "portfolio insurance" caused the stock market crash of 1987. Since then there have been several occasions (such as Long Term Capital Management) in which derivatives threatened to collapse the world financial system. Well, they've done it again.
The article
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/27/AR2008092702587.html
describes how the homeowner was solicited to refinance her home and took the bait. The interest rate was a teaser. Over a year into the
mortgage she discovered that it was a "negative amortization loan" where the principal increases every month. The transaction probably came nowhere near compliance with Truth in Lending laws. It is shocking that such a piece of financial garbage exists. However, Wall Street wanted mortgages to feed the highly profitable derivatives market and there was a lot of pressure to produce the mortgages, no matter how.
The article doesn't cover what happened next, but the mortgage was likely bundled into a collateralized mortgage obligation that likely had
credit default swaps written on it. Here are some relevant Wikipedia links:
http://en.wikipedia.org/wiki/Collateralized_mortgage_obligation
http://en.wikipedia.org/wiki/Credit_default_swap
http://en.wikipedia.org/wiki/Derivative_(finance)
http://en.wikipedia.org/wiki/Negative_amortization
It turns out that many of the derivatives are really side bets on prices of financial securities, and that the total outstanding value of the derivatives often exceeds by huge factors the total outstanding value of the securities. Furthermore, the derivatives are highly leveraged.
According to a recent program on NPR's This American Life there are about 4 Trillion in bonds and about 60 Trillion in derivatives betting on whether the bonds will pay off.
In the absence of strict regulation, the "free market" becomes the Fraud Market. This mess can be laid squarely at the feet of financial deregulation and Fraud Market Conservatism. Adam Smith's "unseen hand" doesn't work. The financial markets are much more in keeping with Charles MacKay's book "Extraordinary Popular Delusions and the Madness of Crowds". This has been proven over and over, and is now being proven once again.
One part of the eventual cleanup will need to be a shutdown of the derivatives casino. Some of these financial instruments are valuable to
producers and users of real commodities, but most of them need to be eliminated. Whatever remain need to be understandable and should not be
side bets. Eventually, the tails will stop wagging the dogs.
After WWI, the German (Wiemar) government decided to
honor German Imperial War bonds despite advice to the
contrary.
Soon, Germans were converting their bonds into cash
since, as obligations of the German government, they
were the equivalent of cash, less a discount for
interest and time.
Soon Germans were pushing wheel barrows full of cash
to the store to buy a loaf of bread. (see:
http://en.wikipedia.org/wiki/Hyperinflation
It seems that the government simply printed money in ....
order to redeem the war bonds. There were other causes
such as the loss of the Ruhr and gold based reparations
but, in the final analysis, is was the printing press.
Soon the US Treasury will begin buying mortgage backed
securities from the banks. To do this, they will sell
bonds, backed by the full faith and credit of the US
government.
The Federal Reserve Bank will buy these bonds, either
directly at auction or indirectly through the open
market so that the flood of bonds doesn't cause a drop in
the price of bonds and, hence, a serious increase in
interest rates.
To buy the bonds, the Fed will print money, either the ....
funny looking paper stuff or a lot of electronic credits
sent to banks through FedWire. Either way, lots of new cash
will enter into the system
I suspect, however, that it won't be long before we'll
be using those old Weimar wheel barrows ourselves to
fetch our loaves of bread.
The moral? Yeah, right. What's morality got to do with
government?
Kevin O'Kane http://www.cs.uni.edu/~okane/
I have to wonder how a government who doesn't believe in hand-outs (no free health care etc.) can possibly approve of such a large bail-out to Wall Street of all organizations -- the place that is the most full of people who are usually against such things. All it does for me is prove that many of the people in Wall Street are just selfish hypocrites at the end of the day. By many of their own philosophies, if Wall Street crashes, it should be left to dye -- survival of the fittest and all that, right? Because that just as much applies to poor decisions as it does to being poor. I'm all for making sure the US economy doesn't collapse, even though I don't live there and I disapprove of it's military actions, but this whole thing still strikes me as repugnant.
>Do you work for the Republican campaign? I only ask because such blatant cherry-picking of the facts to suit your own position is a party trademark.
Hey, I found his post insightful.. It was full of real facts.
Is that impossible? I mean if OP is right, does that make you wrong? Because it seems you're right as well.
All his facts check out. I'm sure yours do too.
Between the two of you, we can plainly see it took a bipartisan effort to F up this country. INCONCEIVABLE!
Latewire
sourcewatch says this guy follows the austrian school of economics in trying to justify anarcho-capitalist (makes reaganite policies look tame) policies.
Unfortunately, the austrian school is heterodoxical, and has no statistical basis.
Instead it's based on "self-evident axioms".
One of these axioms in wikipedia "humans take conscious actions toward chosen goals", rather ignores problems like cognitive dissonance, incomplete information, etc.
I particularly like this quote from wikipedia:
" critics of the Austrian school contend that its methods consists of post-hoc analysis and do not generate testable implications, and so fails falsifiability.[2][3]"
It's on shaky ground, having more in line with the intelligent design movement than the chicago school and related statistically based economic theory on which central banks worldwide act.
I would trust their views on the great depression as much as I trust an intelligent design textbook.
VLC FOR MAC IS DYING! IF YOU DEVELOP, PLEASE SAVE IT!!
Torture camps? Check.
Oligarchy with fake elections? Check.
Getting ass kicked in Afghanistan? Check.
And now the state is nationalising corporations.
It's official, folks, the USA are the new Soviet Russia. Time to recycle all those jokes.
Nope. Like the national debt, it will simply be rolled over into bigger loans.
The idea that credit is not inflationary is laughable... It is ONLY non inflationary if you actually allow the bubble to deflate. If you allow the debt to consume the credit... The WHOLE point of this loan is to prevent precisely that happening...
New debt IS starting up the printing presses, but without all the hassle of paper and ink. Go take a look at exactly how the CPI figures are calculated for a good laugh about the true nature of capitalism and economic growth .
Americans are going to need an extra zero or two on their salaries in the coming years... But hey, look at the bright side, everyone gets to be a milionaire.
Deleted
Do a little more research. Obama was the #2 candidate of donations from Fannie.
So "Yes" It may be only .0000001% (exaggeration) of total funds, but when you look at it as he was the number two man "on the payroll" that is scary. It explains a lot about how he acted during this whole mess. By acted I mean his total lack of acting. It is painfully obvious to all but the most hardened Obama supporters that he is on the take. It is now apparent that McCain is also somehow involved in this mess as well. I am sure all the Obama supporters will be able to link us to the Fannie people that are McCains advisers...
In short we cannot EVER have another government supported entity again. This coupled with the fact that both parties wanted to give housing to people that couldn't afford it is what started this whole mess. No amount of regulation would EVER have solved this problem, Fannie and Freddie had and have too much power, and used that power to buy politicians. Obama was one of them and one can only assume that by "Change" he means more corporate buyouts.
The more I learn about science, the more my faith in God increases.