It's funny how I can totally disagree with MBBF & molson in the General Election thread and totally agree with them here. :D

I know. It seems like we are all crossing over here.

Step towards the white light! Just give in to your true calling! :D

FWIW.....I think more positive discussion is done in threads like these with a varied set of people than is ever done in Congress. They're too busy patting each other's backs and slipping in pet projects. I haven't seen any FOFC earmarks entered into the discussion thus far.

I've stated this question before...and perhaps it is uninformed, or just plain ignorant...but while I wouldnt classify myself as a socialist, if we are going to essentially create government-partially owned banks by buying bad assets in exchange for equity; why not create "FED Bank" tomorrow which is completely owned and operated by the government, and free of all the bad assets/high risks of these other FI's? You could then slowly begin privatizing it over time buy selling equity at differing stages...but at least you'd be starting clean.

Who loses out? Private investors? Other global FI's? Who else? And if we're on the verge of a global economic meltdown...should we even care?

Hey, I've already taken the first step and agreed with you in this thread. It's time for you to reciprocate and agree with me in the General Election thread. The Kool-Aid, you know it tastes good.... :D


Based on my (brief, sure) time working on Capitol Hill, it seemed to me that everything they said about it being an "echo chamber" is 100% true. It's the rare Congresscritter that really steps back and thinks about things, much less has a good back-and-forth discussion with someone with which they disagree. I'd say it's even more true today than it was just 10-15 years ago, but that's another thread....

I became (and still am) pretty good friends with a few guys that were lobbyists for some major government contractors during my 1 1/2 years living in Baltimore. My cynical nature towards anything that these Congressman say in public comes from finding out just how dirty Washington is on the inside. I think that congressmen spend more time talking with lobbyists than they do with their constituents or their fellow members in Congress. The general public doesn't have a clue in that regard.

So we've got this measure, which is entirely symbolic at best and actually harmful at worst, the M2M rules which are symbolic at best and harmful long term (not at worst, pretty much guaranteed). Let's go along with their $700b plan, I'm sure it's better thought out (and add another $150b of pork to get it passed. And no Molson, tax cuts are not the opposite of pork - cutting spending is. Tax cuts without a concurrent reduction in spending only exacerbate our long-term problems. Which is why I'm mostly unswayed by arguments we could make {up to} $1.2t back - we're just going to waste it anyways, and it will ratchet up government spending for that year, never to come back down again.)

The reasons behind this bailout are 90% psychological, and it annoys me to no end. "The American Public" would rather have stability than prosperity, Congress desperately wants to preserve stability and their cushy seats. The Banks aren't stabilizing themselves by unloading their securities at ~$.30/$1 in the private sector because they think a gov't bailout will buy them at $.50/$1. Overall, this is merly going to ensure it is more likely to be 20-years of stagnant growth rather than a sharp 1-2 year downturn and a recovery.

Right, and these politicans are motivated by their elections in the next 1-2 years, so their stance on this makes perfect sense.

Exactly. Status quo wins again, always. I'm literally nauseated/depressed right now.

Not entirely though, because it was pointed out in the partisan part of the thread, it was legislators not running for re-election who voted overwhelmingly for the bailout. Maybe as a favor to their fellow legislators, or maybe they really think it is a good/"necessary" thing.

Maybe more appropriate for that other thread about cool images and what not...funny though.

Or maybe they're the ones least likely to give a flying fark what the voters in their district think or want.

Check out this response from a Senator in Georgia.
From another board:

I sent both GA Senators emails regarding the bailout last week and again yesterday afternoon. I have not heard from Sen. Isakson but did receive this email from Sen. Chambliss today:


Dear Mr. XXXX :



Thank you for contacting me regarding the turmoil in our financial markets and the actions taken by the United States Treasury as they pertain to several leading financial institutions. It is good to hear from you.



This is the most serious and critical domestic issue I have dealt with in my 14 years in Congress. We have been betrayed by many people and by abuse of the system. Now we have two significant choices to make - do nothing or take action.



I strongly believe that doing nothing will destroy the financial security of millions of Americans and possibly lead us into a depression. I just as strongly believe the bill as now negotiated will arrest the crisis and begin to turn our economy around.



The bill that I voted for is not a bailout. H.R. 1424, "The Emergency Economic Stabilization Act," is crafted to address the crisis; restore security for the American taxpayer; and return our nation to the strongest economic power in the world. And in the process this bill enables us to root out and punish those who cheated us all.



I know that my vote in favor of this package was not the politically popular thing to do, but this is not a popularity contest. This is about the future of our country and the future that my children and grandchildren will inherit. I have absolutely no doubt in my mind or my heart that my vote in support of this measure was the right thing for our economy, for Georgians, and for our country.



My first reaction was one of anger and frustration. How could this happen in the strongest economy in the world? How could the best financial system in the world fail? After calming down, I realized the seriousness of the situation and the consequences of Congress failing to act.



The Treasury Department submitted a proposal to Congress requesting authority to purchase troubled assets from financial institutions. This program was intended to address the root cause of the market stresses by removing these assets from the financial system.



I did not support the original proposal submitted by the Administration because it did not address the critical needs of the American taxpayer, community banks, retirees, and small businesses and it concentrated too much power in a small group to administer the plan.



As the conversations in Washington and across the nation continued over how to address the challenge before us and as the details of the problems in our financial sector were revealed daily, I became convinced that something had to be done and done soon.



Moreover, when the House rejected the plan, the economy suffered a $1.2 trillion dollar blow in the stock market, which only made more apparent the impact this credit crunch is having on Main Street . Specifically, in some cases, Georgia community banks are unable to make auto loans.



Below are details of the legislation:



TAXPAYERS ARE PROTECTED. In its current form, the legislation before the Senate protects taxpayers in many ways. Accountability, safeguards, and oversight measures are numerous. There will be transparency, public reports, and triggers to end the program if, for some reason, it is not effective or end the program early if it is more successful. Moreover, I worked to negotiate a mechanism to stop all transfers of taxpayer funds if necessary. That said , I believe this legislation will be effective.



NOT A BLANK CHECK. I opposed the President's initial request to simply give a blank check to Secretary Paulson. I also opposed the second version submitted by the President and Congressional Democrats that would have given taxpayer money to liberal groups such as ACORN. Let me be clear - this current bill, the bill in the Senate, is not a blank check for anyone. First, it allows the release of $250 billion to purchase these toxic loans. Then, Congress can release another $100 billion but only with Presidential involvement and certification that it is necessary. And only if absolutely necessary and again with Presidential certification and Congressional approval, the remaining $350 billion could be released. However, I do not believe the entire $700 billion authorized will be necessary or used.



NO GOLDEN PARACHUTES. CEOs and other executive officers who drove their companies into the ground will not be able to walk away with millions leaving taxpayers holding the bill. Those companies that choose to participate in the program will be subject to strict compensation limits.



NO NEW GOVERNMENT SPENDING. The language is clear - all revenue generated through the repayment of any assets purchased and any sold must be used to pay down the national debt. No money will go to pork projects, new government spending, or liberal groups such as ACORN.



HELP FOR MAIN STREET . As this crisis continues, community banks are being affected more and more. Car loans and home loans, even to those with good credit, are drying up. People are losing their retirement savings. Small businesses are now having difficulty getting loans to make payroll or grow their business to create new jobs. If we allow this to continue, jobs will be lost, more retirement accounts will be impacted, and credit will get even tighter.



PUNISH CRIMINALS. The Federal Government is actively investigating cases of fraud and abuse. Where wrongdoing is found, the perpetrators, including, if implicated, members of Congress will be brought to justice. We have already seen subpoenas issued for records at Fannie Mae and Freddie Mac. This bill demands cooperation with the Federal Bureau of Investigation (FBI) and I expect we will see more subpoenas and criminal prosecution.



ADDRESS THE UNDERLYING CAUSE WHILE WE TREAT THE SYMPTOMS. We are seeing the symptoms now - lack of trust in the banking industry, daily tightening of the credit markets, losses in personal retirement accounts - and while this legislation addresses those issues, it also goes further to treat the cancer that got us here. This legislation authorizes the Securities and Exchange Commission (SEC) to modify the 'mark to market' accounting procedures that magnified this crisis by forcing banks to mark down the value of assets they had no intention of selling in the near future. This mark down of value caused a corresponding loss of value to the institutions. The SEC has already begun the process to modify this procedure.



RETURN TRUST IN THE BANKS. By increasing the Federal Deposit Insurance Corporation (FDIC) protection on bank accounts from the current $100,000 to $250,000, taxpayers and bank customers can once again trust that their money is safe in the bank of their choice.



DEBT REPAYMENT. Toxic loans will be purchased at a discount and 100% of the monies repaid to the government will go to reduce the debt we incur in this process. While we shouldn't expect full repayment, it is possible that all of the money expended will be repaid.



PROTECT OUR NATIONAL SECURITY. If we do not act and this crisis spreads like a cancer to every segment of our economy, it will destroy not only taxpayer savings but it will erode our ability to fund our military, supply our troops with the resources they need, and protect our homeland.



NO TIME FOR POLITICAL FINGER POINTING. There is plenty of blame to go around but now is not the time to throw stones, now is the time to address this crisis and get our economy moving again.



FOR THE COUNTRY; NOT POLITICAL POPULARITY. This is not a popularity contest, this is a crisis. And since this crisis began, I have had numerous conversations with economists, community bankers, small business owners, and taxpayers. I have weighed the costs of inaction versus the costs of unpopular action. I support this bill because it is good for the country, it is the right thing to do today for taxpayers and tomorrow for my children and grandchildren, and it is necessary to get our economy moving again.



Strong capital markets are vital to a prosperous U.S. economy and given the renewed focus of our regulators and market participants, I remain confident in our financial markets and our overall economy.



However, history warns us against inaction by hard lessons learned. Delaying to act would be a repeat of the mistakes of the 1920s, when thousands of banks failed before significant confidence was restored to our financial markets.



If you would like to receive timely email alerts regarding the latest congressional actions and my weekly e-newsletter, please sign up via my web site at: www.chambliss.senate.gov . Please let me know whenever I may be of assistance.
-----------------------------------------------------------------------------------

**The bolded part is funny. Uh..it's not a popularity contest? Well, if 80% of his constituents were against the bailout, and were willing to risk a "Depression" to let the market work itself out...??

....then he is a very brave man. Especially considering he IS up for election in a few weeks (and the challenger has started closing in on him the polls). If he is really voting because he believes it is nessecary (which I think he just might be in this case, because I know this isn't a popular vote here), then he is doing exactly what he was elected for. Shoot, I wasn't going to vote for him, but I just might now.

Dang, I said earlier I'd definitely be for if proceeds would go toward national debt. Doubly approved.

Fear not! Help is on the way!

Our chief investment officer has declared tomorrow "Park Backward and Wear a Rally Cap Day." This is a tried and true strategy, so you should see some market effects by, say, Tuesday at the latest.

They need a Rally Monkey.

Why were the Barney Franks, Maxine Waters and Chris Dodds put in control of our financial sector? And more importantly, why are they still in control of it?

Wiki is our friend ;)

Christopher John Dodd (born May 27, 1944) is an American lawyer and Democratic politician, who is currently serving as the senior U.S. Senator from Connecticut. Dodd served as a U.S. Representative from Connecticut from 1975 until 1981, when he became a Senator. He served as general chairman of the Democratic National Committee from 1995 to 1997. He is now the state's senior Senator. He currently serves as Chairman of the Senate Banking Committee.

Barnett "Barney" Frank (born March 31, 1940) is an American politician and a member of the United States House of Representatives. He is a Democrat and has represented Massachusetts's 4th congressional district since 1981. The district includes many of Boston's western and southern suburbs — such as Brookline, Newton, and Foxborough — as well as the South Coast. He is the chairman of the House Financial Services Committee.

Maxine Waters (born Maxine Moore Carr on August 15, 1938) has served as a Democratic member of the United States House of Representatives since 1991, representing the 35th District of California (map). Committee on Financial Services
* Subcommittee on Housing and Community Opportunity (Chair)
* Subcommittee on Financial Institutions and Consumer Credit

So, the answer to your question is:
1) Political affiliation & relationship to congressional control by party
2) Seniority
3) Committee Assignments

Yeah, I have to give Senator Chambliss some props for that. Too often we have politicians doing things because they'll help them win elections rather than what they think is right.

anyone know if they think they have the votes to pass this tomorrow?

If God willing, no.

If you see them call a vote, they think they've got 'em.
If you don't, they don't think so.

And your reason for Bush, McCain, Palin, the Senate Republicans and numerous Republican commentators supporting is .....

Think you folks are underestimating the power of parking backwards.

Oh, I've worked at the Massachusetts State House before :) (for a rep who attacked the Speaker Finneran publicly before he was finally indicted and forced out - into a private lobbying job paying 500k/yr); I know the why. I just don't get the bigger why if ya know what I mean. (And there I know all about the 11% Congressional approval rating, but 70%+ approval ratings of individual Congressmen.)

Sadly my firsthand knowledge of state-level politics tells me even decentralization wouldn't have that big an effect.

Harry Reid drops the pretense on talking down the economy:

Later in the same story, this was quoted:
Ladies and Gentlemen, your leader of the US Senate!

Insurers dive on Reid's 'bankrupt' quote - Oct. 2, 2008

Wasn't talking about "support", was commenting on the question about how those particular folks ended up in positions influencing the banking industry.
Try reading the post again & this time take note of the original question I quoted as replying to.

Ah, I didn't realise that it was just a statement of fact and did not mean to express an opinion in the debate in this thread ;)

But I would still be interested in your answer to the question as to why this collection of notable Republicans would support this bill. Incidentally you can to that list Gingrich and Rove.

Is it really pretense?

A politician carelessly makes a statement that causes a run on insurance stocks don't you think they'd come down on him like a ton of bricks to deny he made the statement in the hope the pressure would come off the stocks?

Wells Fargo says it is acquiring Wachovia for $15.1 billion, as Wachovia ends talks with rival suitor Citigroup.

Seems funny to me, given that Wachovia announced the sale to Citigroup on its website. In fact, its still there.

Yeah that it is odd. I just heard a radio ad from Wachovia on my way home saying something to the effect of "Wachovia is now a part of Citigroup..."

159K more jobs slashed last month and unemployment stays steady at 6.1%

SI

I got the impression that the Citigroup 'sale' was a firesale arranged by the goverment rather than one that Wachovia wanted or were involved in (similar to the WaMu break up).

The new offer looks more realistic in terms of pricing imho and shows just how badly the goverment institutions are paniced in terms of forcing sales through (still can't believe WaMu were dissolved so cheaply).

Interesting article on how the credit crunch is causing problems at the automakers:

Credit crisis sends auto sales plunging - Oct. 1, 2008

I wonder if Bill Heard was included in those that had their credit cut off? And I wonder how many cases similar to his are out there if so.

For those not familiar, that was one of the largest GM dealers in the country who shut down operations last week due to a combination of reasons. Among the reasons was having their credit cut off by GMAC because of concerns about the dealer's financial situation. And those concerns in part involved continuing investigations into unethical (and possibly illegal) business practices.

In other words, I wonder how much of the credit crunch in this sector may be self-inflicted to some degree.

So today we'll see if the pork loaded into the Senate bill is enough to get 13 Reps to change their vote. *sigh*

From an earmark perspective, this one is worse than the last one. I wasn't happy at all about it. I hope this bill doesn't pass either to make a clear signal that the junk won't be tolerated, but I probably shouldn't hold my breath.

I think it'll pass because:

1. The stock market swings this week scared enough of the population into submission.

2. Everyone in the House wants to get back to the campaign trail.


It is very disappointing that a bill of this importance has to get bogged down with earmarks. That's shameful.

It is likely to pass, but with even less Republican votes than before. Many democrats standing on the side last time will vote for it now. I know John Lewis has already said he'll vote for it this time, as well as most of the black caucus, because Obama is actively recruiting them to.

Well, to start, they don't have toxic mortgages, they have toxic derivatives, and those are becoming toxic because of default risk. A big part of that default risk is coming from the banks not doing the reasonable thing and reworking their network of mortgages, either because they do not own the base asset to rework it, they don't want to offend the holders of these toxic contracts, or they are just plain ignorant or set in their ways that they insist people pay a usury rate or default.

My thoughts on the matter are you go to the root of the bad bank statements, the actual mortgages that are about to default causing these contracts to go belly up... Repair those mortgages that can be repaired, and create a structure for disentangling the derivatives and restoring some proportion of value to those banks. We don't guess the market value of the toxic contracts, we make it a business to clean up the imaginary ties and claim some value on the contract (otherwise the contract is treated as worthless).

The reason I prefer this, is that it will establish some very clear equity in the program from the start... it cannot be undone by a stock market panic, because the government basically gets the mother of all bargin real estate deals. We still potentially lose a portion of the 750 billion investment, we still potentially have the ability to get all 750 billion repaid with interest, but we make the central actors in the drama operate out in the public eye, and don't give the gamblers who got us in the mess a new infusion of borrowed chips. I know that mindset too, some will get that money and try to chase their losses with the next big win, and they will bet wrong.

Problem with my plan, it does not have any big lobbyists pushing it. There are a lot of people with a lot of money who have a lot to gain from having all their bad decisions for the last 5-10 years erased, but keep all their good ones intact. If I was one of them and unethical I would push it too, and act like its the end of the world to sell it (unfortunately I'm middle class and ethical once in a while ;) ).

We don't necessarilly save the country by rewarding the banks bad behavior, I don't want banks to close, so maybe this means taking the contracts AND the mortgages off the books, and the banks get a net zero for the whole until it gets untangled (BTW that means that yes they need to give up some of the goodies along with the bad). Maybe we set up a short term liquidity fix with a FED bank as described earlier (although it would need a lot of controls to avoid inflation boom, it should handle day to day cash/credit conversion only, not loans)... Instead we are getting politicians saying "we must do this for the economy" while at the same time saying "I do not support this bill" since they think the double speak will help their election chances (like the honorably representitive of Georgia). All allusion to '1984' aside, its obvious the politicos are hedging their position in case this thing goes sour, which indicates that the stink is getting bad enough that even they are getting ready to bolt.

It'll pass, hopefully the world won't end, but don't be surprised when it doesn't magically get saved. Hedge your bets and don't get caught in the next bubble is all I can say.

From the looks of the early voting, looks like the Republicans will split down the middle on the new bill while the Democrats have switched to the 'Yea' side en masse.

The bill is passed - the financial world is saved!!!

Ok, not really. Hopefully this will at least give our country some time to look at how we got to this point and as so many congressional people promised in their speeches on the floor, to act to make sure that these types of problems do not happen again in the future.

It's also a relief to not look at the market and be watching the numbers to the down side go speeding through the roof. The market had a nice rally and the rally was sold as every talking head figured it would be. The next few months will surely be filled with ups and downs because at the end of the day here nothing is fixed. We do have a chance to fix it though and hopefully our leaders will not blow that opportunity. This bill was never a solution to the problem - hopefully it allows the credit markets to flow and lets things stabalize enough so we can solve the problems.

Yes, nothing a little pork couldn't solve!

Man, is it frustrating to hear of all the ancillary bullshit that got packed into this thing.

:mad:

My stocks are getting pooed on.

And the wooden toy arrow market and racetracks and black lung disability and Puerto Rican Rum and bikers that commute...

Good god....

Like Gary said this should unsqueeze the credit market over the next few weeks and give the Fed and treausury time to plan their next move....which should be rate cuts I'd imagine.

Selfish short-sightedness is on the above side of the argument.

They are making a desperate attempt to stave off a problem. They have unwittingly made it incredibly likely that the coming crash will be many times worse than this one would have been.

But no worries. We hopefully won't be in a good bit of economic hurt in the short-term if they get lucky and this works. But our children will be in a hell of a lot more trouble long-term. Yea for us.

Well...since this seems to be aimed at short-term (aka short-sighted) goals...hopefully this adds enough credit lending to get my damn house sold so I can get started with my new company. Ugh.

If there is anything the current generation of industry/economic and government leaders are good at, it is passing the buck.

Interesting to see that on the majority the Republicans in the house voted against the bill while Democrats were for it.

Stocks up 300 when the bill was passed, down ~500 to -157 at days end. Don't count your chickens.
Rate cuts? More cheap credit? That's what led to the last bubble, exacerbated into this bubble when it wasn't allowed to properly deflate, and now we're going down the same path again? Christ, look at the current accounts deficit with respect to foreign trade. I'm one who has played this down in the past bacause I felt eventually it would swing the other way - and it did. The US dollar fell precipitously against world currencies and suddenly imports were becoming expensive and our exports were competitive. But now Congress is working on short-sighted 2 year timelines and won't let the cycle bottom out so we can have positive trade surpluses and begin to recover before Social Security and Medicare balloon in 7-10 years when the baby boomers begin retiring.

We're doomed. Dooooooooooomed I say!

Indeed. It doesn't seem to add up so far.

Another email from Congressman John Campbell (48th district of CA).

Economist: Bailout Makes Little Economic Sense : NPR

Morning Edition, September 26, 2008 · One opponent to the $700 billion financial rescue plan is Allan Meltzer, a former Fed economist and a professor at Carnegie Mellon university in Pittsburgh, Pa.

Meltzer tells Steve Inskeep he's against the proposal because he thinks if Wall Street created the problem, then Wall Street should solve it.

So these Congressman are seriously claiming that this isn't a "bailout" because they're paying less than what the assets were worth 2 years ago?

Good news disguised as bad. The auto industry is so incredibly backwards, and in dire need of being shook up.

Yeah...thats the type of "details" you dont really hear about until after the fact. So...30-60% of the value from 2 years ago?? Shit...my house is only worth 60% of what it was 2 years ago.

I really dont think these people have any idea how deflated the assets these debts are tied to truly are. Sure...we'll sit on them and wait for them to increase in value.

I really hope I'm wrong...but how many times does the government miss obvious and glaring data that's in front of their faces...let alone actually having to dig a little.

St. Cronin - how do you see the auto industry as incredibly backward?

The problems that I see are primarily in design and marketing/sales. On both ends the industry leaves huge amount of profit lying on the floor.

Ok - I'm more apt to blame the consumer, but that's me. The auto industry can't help being a few years behind, really.

Detroit is completely trying to weasel out of the MPG guidelines.. I'd like to see a portion of any auto bailout mandating high MPG vehicles.

it's standard "buy on the rumor, sell on the news" behavior. nothing to worry about.

For investors we need a floor put in next week.

Ok so you would prefer that the world economy falls apart now and be willing to raise your children in that kind of environment for the next decade or two as opposed to doing something now to stave off and then have a chance to fix the problem so that our financial system doesn't end up failing at any point. Do any of you people who say you're willing to take on a deep, deep recession or even depression have any idea what living through that might be like? I hardly think it would be such a noble idea when you, your family or friends are among the 20%+ unemployed during such a time. If not wanting to experience that is "selfish short-sightedness" then sign me up for that camp.

For the billionth time - this bailout doesn't fix anything. The market did exactly what everyone knew it would do upon the bill passing and I'm sure it will continue to be volatile in the coming weeks and months. What the bailout needs to do is free up credit and give our lawmakers time to consult with people who truly understand the economy and figure out how to fix the problems that still exist today. And you know what, maybe its a massive failure and we head for a deep recession/depression anyway. Spending up to $700 billion isn't going to hurt any more than things like Freddie/Fannie, AIG, whatever we've spent on the war, the $400+ billion that was borrowed at the Fed discount window this week alone...I'm just happy at least they made an attempt to do something to inspire some confidence in our financial system. Now we can't really do anything but sit back and hope it works.

159,000 more people unemployed in one month, now 760,000 in the year, might well have something to do with the fall in the market.

I don't think that's quite how it works. Companies aren't doing well so they have to lay off people, similarly their stock prices go down. Stock prices don't have a causal effect on employment for the most part.

SI

Unemployment has a causal effect on the stock market - it illustrates that the economy is on a downward path and profits will follow so investors sell the stocks.

It's the worst figure for 5 years and released on the same day as the vote. The vote initially caused a rise on Wall St but then the unemployment figures took over and forced the stocks down. It's particularly bad because it's across all areas of the economy bar one.

You guys will love this one: the exception is government :)

No.

The term "bailout" was one used by the press not congress but it stuck. The press today understands that bad news sells and tends to report news with, at best, a bad spin. Also the press doesn't like to insult it's readers and so didn't want to present the problem as something they had some responsibility for. While the banks should not have lent money to those who couldn't make the repayments those who took out the loans are also responsible. They were aware they wouldn't be able to keep up the payments (the banks figured they could repossess and sell the house and recover their money - but they didn't figure on a house price downturn that meant the houses were worth less than the mortgage).

By calling it a "bailout" the press reported it as all the fault of the banks and not the individuals - their readers.

But it isn't just a bailout to banks, it's a rescue of a failing economy. You may have noticed banks, insurance companies, financial institutions going broke - big ones: AIG, Merryl Lynch, Lehman Brothers. Each time a bank goes bust other banks pick up further bad loans (in addition to any of the "toxic packages" they may have).

It snowballs, one bank's failure triggering another - on and on down further into recession and maybe depression.

Stopping it is like stopping a boulder rolling down a hill. When it's at the top and rolling slowly you can stop it but once it gets going it won't stop till it hits the bottom.

That's why this bill had to be done quickly even if it wasn't the best possible bill. That's why Gingrich backed it even though he thought it was a bad bill and railed against it a week earlier - the economy is so close to that tipping point it had become essential to act immediately.

And the unemployment figures illustrate that that tipping point is close. Unemployment indicates a failing economy. In the first 8 months of this year there were 600,000 lost jobs. So approximately 80,000 a month. It had gently accelerated to 105,000 in August. They were expecting 110,000.

It turned out to 159,000 - a 50% increase over expectations. In other words a big acceleration of the downturn. The boulder is beginning to accelerate down the hill.

So the "bailout" is in fact not the whole truth - it only refers to the banks. But in truth it's the economy that needs rescuing not just the banks. And with the economy the American people - their jobs, their savings in stocks, their pension schemes etc.

Just to put a number on that last. I was watching a financial advisor on tv after the Monday stock market fall. They pointed out that a pension scheme that had been worth $500,000 three weeks ago was now only worth $350,000.

In other words, some poor bugger who's been putting money into his pension plan all his life has just seen his retirement saving slashed by $150,000.

It's to avoid that sort of thing continuing to happen the "bailout" was necessary.

It may not work. It may be too late. It may be that the momentum of the recession is now too great to reverse. Let's hope not for all our sakes.

Not to get all survivalist here, but we have property off the beaten path a bit where we could self-sustain for many years if we had to. I'm not too worried about a bunch of greedy Wall St bastards ruining things. Those of you stuck in the big cities might have a rough go for a while, but those of us with the means to get off the grid could end up doing just fine with a simpler life for a while.

Whether that survival plan has to be put into operation or not, just about everything that has been fed to us via FUD (fear, uncertainty, and doubt) during this administration has ended up being a bad idea that many had regrets about. So, given that track record, I'll take my chances with the free market over another FUD-driven government response to a problem.

I was in favor of some sort of 'bailout' scheme that brought the money to individuals on Main Street, or put caps in place to stop the madness on Wall Street (mainly the top dogs running off with all the money and leaving everyone else with the problems). Absent of that, they can all just go fuck themselves. Every time that a manufacturing plant closed here and the work went to Mexico, or somewhere in South America, we heard lots of talk about the 'free market', 'free enterprise', and all that jazz. It's well and good to hold those ideals when times are good, or when it is good for big business to say such things. It takes real belief in that as an economic system to stand by it when times are bad, and when big business is in a death spiral. Anybody who voted for, or supported at all, this bailout scheme has surrendered their right to use the 'free market' argument from this day forward. They demonstrated, when times were tough, that they really preferred a different approach. The real test of bravery is not when everything is wonderful and the roses are in full bloom. It's when you don't know what tomorrow brings, but are willing to stand by your principles nonetheless.

Past 2 weeks has been a roller coaster, so much has happened. For a recap of what we've been going through, check out the 20 days of pain ...

The crisis: A timeline - Sunday, Sept. 14 - Trouble brews (1) - CNNMoney.com

Sure, this constitutes an emergency situation because the government/big business has sold the 401k, IRA, etc, as vastly superior and reliable retirement offerings than the pensions of the past. When that system comes tumbling down, driven by the very financial institutions at the heart of the system, it will be a very hard sell. Imagine if people had bought the idea that even "Social Security" was to be put into this system. They might be worse off with it right now than they are with the current system.

I agree with this. Better to try do something now. I suspect it would not just be a depression but a global depression.

It's just disgusting that Congress couldn't even restrain itself when it came to this bill, which is under the greatest of scrutiny -- "sweetened" with all kinds of giveaways. Even our new "agents of change" didn't raise a fuss. Hard to believe they're going to come in and "put the people's interest ahead of special interests."

Beyond that, it's discouraging to see Congressional watch groups BEGGING our lawmakers to take at least 72 hours to actually read the bill. They had an online petition, but it was obviously all for naught.

Why bother taking the time to actually read a $700B "Troubled Asset Relief Program?" I know, what a naive question.

Somewhat a tangent, but am interested in this (enjoy post acopolytic novels). Could you detail your setup? It would imply some farm land, fresh water, electric generator?

Didn't we (and them) learn anything from the way the PATRIOT Act went down? Apparently not. The Executive Branch runs to you with a truckload of FUD, and we're left to learn about, and deal with, the (supposedly) unintended consequences.

Not in an open thread. Perhaps via PM...

As much as I don't like the feeling, this is a case where I find myself more in agreement with Mac.

I'm personally familiar with several instances in the past few years where there was a pretty direct relationship between RIF's and stock price. The indirect element in each case was that no one said "we have to cut personnel because the stock price is down" but rather "we've got to do something to make investors happier, let's cut expenses" and in each case the first place cut was labor cost - without hesitation and without much thought to anything else. IMO that's sort of "indirectly direct" to coin a phrase.

For the billionth time, you're STILL obsessed with this assumption that this makes things better and not worse. That's an opinion and it's fine, but don't you see that we DON'T AGREE WITH THAT...

The arrogance of the supporters are still here, especially when you say things like "Do any of you people who say you're willing to take on a deep, deep recession or even depression have any idea what living through that might be like?"...YES AND THAT'S WHY WE'RE AGAINST THIS, BECAUSE WE BELIEVE THE FALL BE WILL BE GREATER WITH THIS BILL THAN WITHOUT IT.

You can disagree and that's fine, but don't assume that anyone who has concerns about just don't give a shit what happens to economy, it's insulting. I've glad you've stopped the whole "anyone against this doesn't care about people" angle but this isn't much better.

Did you miss the quotes from the two Congressman?

"The assets will be bought from companies at probably 30%-60% of what they paid just a year or two ago. If I offered to buy your house that you bought 2 years ago for half what you paid for it, would I be bailing you out? I don't think you would look at it that way."

When you buy shit that nobody else will buy, at a cost it's not worth, it's a bailout, I don't care how it's spun.

The Congressman is clearly trying to make the case that it's not a bailout because they're paying less than what something is worth TWO YEARS ago, which is just dumb.

I agree that it's not merely a bailout of the banks, but I don't think anyone really thinks that. Your debut in this thread was to helpfully explain to us all that the intention of this bill was to bail-out the whole economy. We get that. Still do. Doesn't make it a good idea. I'd be against a massive bailout of individual regular mortgage lenders as well. They SHOULD lose their houses, and rent if they can't afford ownership (like some of us have been doing all along). They SHOULD lose their privileges for easy credit and home ownership in the future, that's how the system works. And yes, I realize their (and the banks') stupidity effects us all. But artificially propping them, and all of us, does us no good in the long run.

German bank announces collapse of 35 billion euro rescue - Yahoo! News

And I am glad to see that Molson is for a redistribution of wealth model and that is not meant with any sarcasm at all. When taxes are proposed to go up on those who can afford to weather an increase in taxes so that the average standard of living in this country isnt dipping below an acceptable threshold, he will be supportive of such a measure. Im on board with you in that regard.

LOL who the hell is this guy? David Koresh? Oh, and...

GET OFF MAH LAND!!!!

Nope. Just somebody whose plan for a total collapse of the economy involves more than begging the government to spend hundreds of billions of dollars to only pass the buck to a future generation.

Ok do me a favor and lay out for me what you see happening if the bill does make things worse and what you felt would have happened had the bill not been passed.

That's easy - the banks, financial institutions continue to collapse due to a lack of credit movement, except now the currency is diluted and national debt is increased by $700 billion.

Plus interest, as tax revenues continue to drop that will only be a bigger problem.

It was probably silly to put numbers to it because no one knows the intrinsic value of these assets but they're not "shit" - many of these mortgages at the base of the packages are alive and well, others that have defaulted are still worth the value of the house even if it is below the money borrowed. It's because they have a high risk potential that they have little appeal to traditional financial institutions and therefore little market value - what someone will pay.


He's illustrating the idea that they're being bought at a knockdown price in a way that people can understand. Perhaps it's clumsy but the idea he's expressing is sound.


I'm very much in agreement with that. If you think that the part you said I "don't get" is that most Americans believe it is a bailout of the banks then let me disabuse you of that. I understand fully that the vast majority of Americans are not impressed at all by these arguments.


That would be cutting off your nose to spite your face. The cost to the average American (and citizens of the world, which is why I'm so interested) would be enormous. The acceleration of the unemployment numbers, the 35% drop in Ford sales in just one month (not the stuff of recessions but the stuff of depressions) indicate that the recession is accelerating. Failing banks are not like failing companies that have only limited affect on others. When a large bank fails millions of companies are hit. They can't get the money to pay their workers, they can't restock on materials, they can't maintain their equipment and so on. That's the current "credit crunch".

The whole thing spirals down.

By taking these "toxic assets" off the balance sheets of the financial institutions they stand a better chance of survival and the economy a better chance of avoiding a much deeper recession. Credit is restored and businesses start functioning again.

Punishing those who have caused this will come from the much greater supervision and regulation of their activities which has to follow this. The "free market" ideologues will oppose it -the truth is the only thing 'free" about free markets is the freedom of individuals to manipulate the markets to their own ends. Only governments are prevented from interfering but commercial interests are not. It's a self-serving philosophy from the top end of town. The increased oversight and regulation must occur.

Fortunately even McCain realises this (despite his previous belief in deregulation) and the next President, whoever it is, will hopefully institute significant changes even if they're not done before.

It may not be very satisfying to see the perpetrators not more deservedly "punished" but there is considerable danger in this.


You may have noticed that most recessions - the dot com crash for example - don't involve this sort of intervention. That's because banks are not involved - the market corrects itself without too much pain.

But when banks are involved it's a different matter. The last time banks went belly up was 1929. The reaction then was precisely what you are asking for - punish those who brought it about. The perpetrators were certainly punished but so was everyone else. Unfortunately this brought about the greatest crash in modern economic societies outside of the two world wars. There was absolute misery for all for 4 years. Unbelievable misery! And in the end it was government spending - Roosevelt's New Deal - that brought America and the rest of the world out of the economic dark ages and back to growth.

The danger now is that that could be repeated.

It won't of course, because we now know far more than then and what we do know is that only government can make available the funds needed to avoid this situation. And that it is best done early because far more will be needed if it's delayed.

That's why it became so necessary to pass the bill even though it was not necessarily what anyone wanted. Delay would have been worse than the flaws in the bill.

We now wait to see if it's enough and early enough. There's no guarantee it is.

I think a lot of people believe that it was the war that actually brought America out of the depression.

If you'd still been in a depression by 1941 you'd have never been able to get into the war.

My understanding is that the depression was brought to an end (the beginning of the recovery) in 1933 with with the New Deal but others may correct me on that (I'm an Australian and this is American history ;) .

Wiki:

I'm not super knowledgeable about ... well, about anything. :) I don't know what actually brought us out of The Great Depression, but I've heard people argue that it was the war and other people argue that it was the New Deal.

Also from Wikipedia:

My big fear is the devaluation of our currency, inflation, and infinite economic stagnation surrounded by deeper and deeper recessions. If my view, a recession is a 100% certainty, and this kind of stuff just drags it out longer, at a great expense which adds to the economic collapse even more.

If the bill hadn't been passed (and this overall policy of bad-market appeasement continues), I'd expect a much briefer (though harsh) recession, a total correction of the housing/credit market and then sharp recovery.

As briefly as I can put it...And like I said, that's just an opinion, I certainly wouldn't bet on anything, and there's plenty of people much smarter than me that are on both sides of this, so my opinion is pretty much worthless. And the bill isn't the the end of anything - like Iraq, now that it's done, how things actually play out is the important thing. To me though, it seemed very much like we're barreling towards a disaster when I hear people willing to support ANYTHING. When the flaws are pointed out, it's "well, that's all we have". The supporters of this can't even acknowledge the possibility that Congress could in any way do ANYTHING to make this worse - if our Congress was doing it, it MUST be OK. It's a dangerous state of affairs.

It's not anything it's anything that takes these assets out of the banks' balance sheets. That's probably an overstatement but whatever is done it must prevent these "toxic assets" from driving down the credit market.

What you may not be aware of is that world banks have been pouring money into the credit market for around 14 months now without affect. On the 18th September world banks poured $180 billion into the international credit markets, I read today that the Australian fed has introduced $11 billion (that's equivalent to nearly $200 billion by American standards) into the Australian banking system to replace the money they can't get from the international credit system.

So this is not the first attempt to solve the problem. But pumping money into the system - similar to the House Republican's suggestion of a loan - simply hasn't worked. The problem is that the banks are frozen like rabbits in the headlights because they're afraid to do business with other banks because of these "toxic assets". There is a complete lack of trust between banks that is freezng up the system. I understand there isn't even a shortage of money - just a shortage of willingness to trade.

Any solution simply has to take these things out of the system to bring confidence back to the market. Only government is big enough to absorb these - all private entities would fold under the weight.

I think you'll find there are very few people who argue this action will worsen the situation outside of "free market" ideologues who, like left wing ideologues who denied that the collapse of the Soviet Union was caused by socialism, are desperate to convince themselves that their ideology could not be the cause of this. That is the nature of ideology - its supporters are always the last to recognise the flaws.

I think you'll find most commentators would agree that reduced supervision and regulation, which is what these argue for, would be pouring petrol on the fire. It comes out of this idea that leaving market forces to themselves will fix anything. As I said early on that's like allowing the bubonic plague to run its course because in the end it will reduce the population down to a level where the plague is no longer sustained and everything will be ok again. Economic recession/depression is the market's solution to this sort of problem.

Natural forces, including market forces, are not always benign to humanity and sometimes we have to oppose them. In this case it means regulating the financial system so that some humans can't manipulate the markets for their own gain or amusement.

It's my understanding it was the war and the massive amounts of weaponry the US sold to the rest of the world.

What gets me is the House. First, the bailout isn't good enough, but once pork is added, those chosen few say, "now this is something I can get behind!" So, preventing a worldwide economic collapse isn't enough to get them to vote, but once $192m for rum producers in the Virgin Islands is added that bill is "A-OK!"

Disgraceful.

leaving out some important stuff that was added too but I get it that that wouldnt help prop up the anti-argument.

AMT extension
FDIC elevation

But would it have passed without the pork? That's the point. If it's really so important couldn't congress have decided enough is enough and actually do something for the country as opposed to their own backyard? Nope, not even when it comes to Armageddon, 2nd Great Depression, End of the World as We Know It, etc.

It's pathetic.

And oddly, doesn't that only help the rich? Correct me if I'm wrong. I thought this was all about Mr. Main Street.

In terms of taxes generally, liberals don't believe in any kind of trickle down theory, but here, it apparently suddenly makes sense to them.