I would rather pay $700 billion for bank stock than $700 billion in voodoo paper. Unfortunately, there may be better investments at the moment, still there should be no excuse for the market having no liquidity, it would merely be full of people who no longer wanna play nice with each other (no amount of government handouts will change that really).

Automakers don't have a plan, its time to allow some competition in the market. Small automakers making U.S. designed luxury cars could probably build themselves up... plenty of cheap empty plants laying around, more coming soon to the market.

Perhaps a low cost economy car would be an idea too. Put everyone in a model T-2, if you can afford to be different from anyone else, then buy from some fancy pants luxury carmaker.

No need to lose 1 in 10 jobs, liquidate all the crap out of the industry, and use the ashes to subsidize diversification of the industry. Even the Big Three will probably survive, just as much smaller automakers probably running one or two of their valuable lines and killing the mass duplication.

It's not really 700 billion though... $2.5 Trillion is the estimated final price... :)

Thought people would find this interesting, coming out of my agency:

Regulators nix credit card debt forgiveness plan - Yahoo! Finance

Yep, lets bail out the big corporations, but by God, no mercy for the average joe's who have been doing on a personal level, what the fed govt. does.

it even more pisses me off that they pushed through such punitive bankruptcy measures just a few years ago.

You do realize that they are not bailing out the banks in this situation right?

Who are they bailing out by buying billions of dollars of preferred stock from? Not me. They are helping banks in their time of need. Where's the help in this time of need for individuals? Still off somewhere else...because we believe in helping out big business entities in this country, not individuals.

Are we back to this same debate? I'm supposed to have compassion for people who have gotten way over their head in credit card debt and can't pay?

separate issue. The CC companies made this bed a few years ago and now want a bail out while not unmaking the bed.

I agree with that argument, though I also fault the credit card companies for giving high levels of credit to people who have no way of covering those kinds of limits. The limits are supposed to be there to cut those people off before it gets out of control.

I don't disagree. I was just pointing out that in this case, the government said they won't be let off the hook.

This whole credit thing pisses me off. If you can't afford something, don't buy it. If you decide to lend out money to a dude that is leveraged to the hilt, suck it up when the guy defaults.

I say no bailouts for anyone, I don't care what it does to the economy, I'm sick of this crap.

I can't remember if it's Democrats or Republicans that are supposed to be for corporate welfare.

Or maybe now it's "everyone except Ron Paul and Ralph Nader".

I just can't fathom how baseball teams and the like can look at the direction our economy is headed and continue to offer eleventy billion dollar contracts to players.

If things get worse (and I sure hope they don't), I'd assume teams are going to eventually see a gradual dropoff in attendance and revenue.

I have to believe that our pro leagues and teams are eventually going to be in some financial hardship.

THE DALLAS COWBOYS ARE TOO BIG TO FAIL!

*signs cheque*

+ $1,000,000,000


You just know that in a few years there is going to be the discovery that billions of dollars from this bailout, instead of going to the intended parties, actually went to friends, family, ex-lover-interns, shady business partners, insane executive severence packages, hookers, drugs, terrorists, losing-bets-on-the-Lions, or all of the above. Then there will be the outrage, finger-pointing, fruitless congressional hearings, and finally a massive nationwide *shurg*.

Attendance cratered in the thirties. Several major league teams almost went under. I wonder how broadcast contracts will affect that this time around?

Major US sports franchises all have a NAICS classification of TooBigToFail, and therefore fall under the protection of the US Bailout Program.

If any business is "too big to fail", it is simply too big.

I'm not saying anybody has to have compassion for anyone or anything. You can reconcile that within your own self. However, if the government is going to get into the rescue business, then we need to stop trying to hold individuals to a different standard.

Advertising revenue will plummet and that will hurt.

I think attendance will be fine at the highest levels of sports. Live events are for the well-off anyway.

And TV ratings might improve, as more people look for cheaper entertainment.

They'll be impacted, but not as much as lot of other industries.

Fuck Paulson and all of his millionaire welfare clients.

I agree 100% with this statement. The problem is that these businesses needed to be "trust busted" 5 years before they got too big to fail and we haven't had any president in my lifetime interested in doing that (well, I can't speak for Carter as I was alive about a half year of his presidency but I meant Reagan, Bush, Clinton, and Bush).

SI

In the end, did ANYONE on any side of the political spectrum here actually think this bailout was going to be a good idea?

Bueller?

I'd say 90% of the posters in this thread thought it was a great idea. (And a couple told the dissenters that they just "didn't understand" that the bailout was for the "people", not for the banks).

We had to do SOMETHING, ANYTHING, it didn't matter what.

I'm terribly confused about what's happening. Is it too early for a summary?

Summary: The economy is currently screwed, with or without anywhere from $250b to $2.1t worth of government bailout.

Please try your recovery again later or check to see if you have the correct number.

This is a recording.

I thought it was a good idea. At that time I was concerned about widespread panic globally leading to 'someplace more severe than a US recession'. Although I fault Paulson/Bernanke for not stabilizing the markets better after 2+ months of this agony, I do think the announced bailout prevented a worse outcome.

If anything, it gave us time to work through the problem.

I dunno- it took me the week of learning about it for me to go from "good idea" to "horrible idea". You'll see a lot of that in this thread as people were educating themselves about this whole mess as it was happening.

SI

Sounds like the PR arm of the Democratic congress did its job.

We didn't do anything with the bailout other than delay the inevitable. I was openly critical of this plan from the very start. It's blatently obvious the effect it had. Company after company is now playing the role of 'corporation in need'. They're outstretching their hand and hoping for a few billion to revive their business. They don't need a handout, they need a dose of reality. Meanwhile the lobbyists and the politicians will continue to run their 'sky is falling' argument out there in the hopes that people like Edward will continue to scoop it up and eat it whole and hand them more corporate welfare dollars.

This just in: the sky is falling either way. The only difference is that we'd be much better off taking our medicine now to right the ship and straighten out our economy's future.

I disagree 100% with that- you can't just go "we'll let the chips fall where they may". The $700B was basically to stop a panic and it did that. We're still screwed because the economy was already headed into the crapper.

The problem with the bailout is mainly twofold in my eyes. One, it could have been done for a lot cheaper to stop the panic- someone needed to do something but you throw the number $100B out there and people probably still go "wow, that's a lot of money, something is being done".

Two, it didn't address the problems that got us in here in the first place. No, unfettered capitalism is not the answer to the mess as it was pretty much what got us into it. There needs to be regulation so that this doesn't happen again and so that we don't have every ma and pa giant corporation lining up in the bread line for a handout now, or, just as importantly, 10 years from now.

Greenspan's fundamental flaw of "Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself especially, are in a state of shock and disbelief" completely ignores the reality of the situation. You base your whole economic belief system on the idea that people will do what is right for themselves and completely miss that these companies are run by management from the bottom all the way up to the top by people who have interests that are divergent from the company's. The company is not a thinking entity, it's run by a CEO who makes more and more money based on short term goals at the expense of long term gains since he won't be there by that time.

By that same sentiment- anyone saying "let capitalism take its course" fails to grasp what isn't a very complex sentiment of the previous paragraph. No, magically saying "let everyone do what is best for themselves" usually ends up screwing us all, not helping us.

SI

The only way that these corporations learn to stop making stupid, self-motivated mistakes is to let them fall flat on their face. They aren't learning anything other than to get a handout under the current political setup. They're heavily overexaggerating the effect that a failure would have on the company to secure sympathy from the politicians. There's far too many Pollyanna's in corporate America.

Prime example is the auto industry. They shouldn't give a dime to those companies. How many years have people been saying that those corporations are letting the unions bleed them dry? Now we have union auto workers making $100-150K per year and we're left wondering why they're losing money? That's a joke.

They aren't losing money because of the economy. They're losing money because they're poorly managed and failed to make good business decisions when times were good. As a result, when things go bad, their past decisions come back to haunt them.

No, but I do have a problem with "bail out" money going to pay obscene bonuses and frills for executives who have been the ones running these corporations into the ground.

If a company is cutting work force, giving 1-2% cost-of-living increases in wages, or asking workers to accept wage freezes or cuts, the last thing its CEO should be doing is taking a six or seven figure bonus.

I think the salary figure you cite is actually based on total labor costs per hour, which include current and legacy benefits. The best rescue plan for the auto companies would be single payer health care. That change would save them well more than a 25 bil bailout.

Unless of course reducing a bloated work force & adjusting wages back in line with the value of the workers is precisely what said company needed. Not always the case naturally, but in some instances that's precisely what a good CEO be doing.

Isn't this a strawman argument at best? I'm not sure there's a person in this thread that thinks that a CEO of a failing business should receive a bonus.

With that said, I totally agree with the argument that the people that put themselves into a credit mess should find a way to get out of it through conventional means.

But if the CEO does that well, the company will eventually return to profitability and then the bonus will be restored. FWIW, I don't know many CEO's that would be homeless without their bonus.

Which has nothing to do with anything.

Make no mistake, there's countless billions thrown away on guys who aren't worth a bucket of warm spit. I've seen more than my fair share of that type up close & personal over the past 10-15 years and can only shake my head sadly when I know how much money is wasted on people who could justifiably be replaced with no decrease in performance by picking someone from a random pool from monster.com

At the same time, given the lack of damned good management that's out there today, I have no problem at all with compensating them extremely well.

Where are they at right now? I have every reason to expect that the good managers are at companies that we don't hear about in the news. So how did the bad ones end up at many of the biggest names in the business world and pull down tens of millions of dollars in the process?

Sometimes the top skill someone possesses is the ability to sell themselves.

To agree with Jon(imga), a great CEO is worth their compensation easily.

As a shareholder group I would eagerly pay a one billion dollar bonus to someone who comes in and turns an automaker from a giant mess to a strong company in say five years. It would make me billions I wouldn't get without their brilliance, so sure, shave off a billion and give it to the genius.


The problem currently is the entire economy of shareholders has propped up a system of low checks on CEO performance (the whole incestuous board of directors argument), ultra-critical hype of short term performance, and ignorant chasing of the latest hot dollar rather than building something to last and grow.

Many of these craptacular CEOs looked great in the days where the more you pumped up your companies leverage, the better you looked because you turned the year one return from 5% to 50% (using 10 times leverage on top of your existing leverage). Everyone looks at the 50% and shouts their praises, everyone wants to give the CEO millions for their 'brilliance', and the CEO bails out a winner to let the next guy handle the deleveraging.

We have been encouraging these bad CEOs because they were the wunderkids of yesterday. They talked and PLAYED a big game when the game they were told to play had nothing to do with reality, and all to do with spot price on the computer screen.

I don't thing regulation is the answer, we need strong investors to realize that the sure money is in steady growth, and that flash in the pan speculation is really just a gambling based sporting event, or outright depending on someone being very stupid. Regulate things that make sense, like transparency, enforce fraud law, remove unnecessary barriers that are just giant props to these 'corporations that are too big to fail'.... there is no law that can be formed that makes a CEO perform well. You can only restrict evil actions, you cannot create creativity.

No arguments with this. One of the things that drives me crazy is when they cut staffing to the bare bone so they can improve the company's bottom line (employee compensation is the NO. 1 expense for most corps) and get their nice juicy bonus based on those numbers. Unfortunately, in the long run, it usually hurts the company because the quality of service just isn't the same, which causes customers to walk away, which negatively impacts revenue, which leads to even more reductions. This is especially true when important functions that should be handled inhouse are outsourced.

And, in the first few words, you completely missed what might have been the most important line in everything I said: "The company is not a thinking entity, it's run by a CEO who makes more and more money based on short term goals at the expense of long term gains since he won't be there by that time." If a company were a thinking entity, yes, it would most likely try to survive as long as possible and make good long term decisions.

However, it's run by a CEO and management who have their worth tied to short term goals so why would any CEO/manager who is guided solely by their own personal interest work towards long term goals unless it was completely in-line with their short term goals, which is very rarely the case.

So, how is allowing this non-thinking "company" entity to fall flat on its face going to make anyone learn anything?

SI

I don't necessarily disagree but this also goes back to what I have said previously. The majority of investors are not strong investors so unless you bar all but the strongest, this is what will happen. Think about it- the retirements of millions of people, containing trillions of dollars, are managed by people who aren't the cream of the investing crop to begin with- otherwise they wouldn't be a low level grunt at Fidelity (or wherever), making trades for people's 401K's.

By that same token, if there's money to be made by gaming the system, the system will be gamed. This is the financial business, not charity. These are people who value money as much as anything in their life, for the most part. So, if there is money to be made by artificially inflating the price of X, regardless of the consequences, then the price of X will be inflated unless there is a disincentive to do so (illegality or risk of monetary loss that is greater than likely gain).

SI

I think regulation is important in specific industries; that is ones which:

* Are fundamentally positioned to exploit people in weak positions. For instance the cost of America's private health system which only covers a fraction of its population is actually higher than if America had a nationalised health care system like in Europe (which would cover ALL citizens).
* Industries which ae central to society itself, there is an essential infrastructure within any country without which that country cannot function.
Leaving this in the hands of private individuals with short-term goals is not compatible with the best interests of a society imho unless there is sufficient regulation to ensure they are run safely.

here here

Interesting story on why GM CAN'T go into Chapter 11 bankruptcy (if they do, it's, according to this article, to Chapter 7, which is dissolve the company time.

THE NEW REPUBLIC | Article

You know what we need more of? People going into foreclosure who sell their house to someone not intelligent enough to make sure they get a deed of some kind so that way the people run off with the cash from the 'buyer' and then let their house go into foreclosure, totally screwing someone out of their money and what they thought was their home.

Have come across this twice in the last month or so.

Interesting read and makes sense. It says basically that the credit that companies under bankruptcy (ie. the credit the airlines used to survive while in chapter 13) doesn't exist right now. So, chapter 13 is not an option, since GM could not operate without credit. It also points out that if GM fails, then most American parts suppliers would fail, so then would Ford and Chrysler, because without parts they cannot operate.

Also interesting in the article is the fact that UAW has already helped the auto industry with one of its biggest hurdles when it took over retirement benefits from the big three and created a separate fund. It sounds as if this credit crunch along with the huge gas-price fluctuation hadn't have happened, that GM was well on its way to a rebound.

I think it would be a big mistake to let the American auto industry fail. It would not be "allow the market to correct itself," but more a cutting off your nose to despite your face. Instead of delaying the inevitable, it would be creating a much deeper recession (heck, quite possibly a depression at that point) than would be necessary. If anything, we shouldn't have bailed out the banks and instead have propped up GM and Ford in the first place.

I've seen this a couple times on this board recently (I don't know if both were by you GD), but the phrase is supposed to be "cut off your nose to spite your face". Sorry to be a grammar nazi, but once it happens a couple times it no longer seems to be a typo but a misunderstanding.

Commie European ;)