There are no easy solutions. What bugs me are those who say there are and insist they know exactly what the solutions are. In the end we need to react to what happens and try to learn from it so as to avoid seeing it repeated.

Like others have said what good would this do? Do you really want $2300 + Great Depression II? At least with the bailout you are not only hopefully avoiding a global economic collapse but because the taxpayers are going to be contributing the money for it we're investors in the rebuilding of Wall St. That way the profits get spread around all the taxpayers rather than one massive bank and its shareholders. Look at the sweet deals JPM got on WaMu and Buffett got on Goldman. Those deals are to be had on some of these other banks and hopefully we'll be able to look back at this period in time 5 years from now and say that there were some great, great bargains on Wall St. for investors.

nikkei's down 0.50% and hang seng is down 2% -- going to be an interesting day today (monday)

Wachovia is no more. Sounds like they failed and were bought out by Citi at the same time. Citi takes some liability, but FDIC takes a bunch and gets some Citi preferred stock.

From TheStreet.com

"The FDIC in a press release stressed that Wachovia did not fail. Citi will take the hit for up to $42 billion of losses on a $312 billion pool of Wachovia loans, while the FDIC will take responsibilities for additional losses. Citi granted the FDIC $12 billion in preferred stock and warrants for assuming the risk.

Wachovia will continue to own brokerage AG Edwards and asset manager Evergreen Investments. Other terms of the deal were not disclosed."

Jeez, figure out which bank to short next and you could get rich....oh yeah, cant short :)

You could always buy puts :)

If anyone wants to read this thing, you know, so in future arguments, you can say, "hey, have you even READ the bailout plan?", here it is:

http://graphics8.nytimes.com/package...ilout_text.pdf

good point :)


brutal day today.

brutal indeed - they haven't even opened Wachovia, Apple's been getting crushed and who knows when/if the bailout will get passed. If anyone's interested you can listen to the House debate the bill at cnbc.com

This is why I shouldn't have gotten involved in the market at all... I'm so worried my mutual fund will just keep dropping now. :(

You can't beat yourself up over investing - especially in something like a mutual fund. I mean its one thing to sink a bunch of money into some long shot company expecting to become a millionaire but what we're seeing today are truly extraordinary circumstances. I think that over a long period of time there are few if any asset classes that have outperformed the market as a whole.

Try this on for size:

According to the propaganda presented to me when I first started, a 20 year-old who invested $2000 a year in mutual funds for 10 years, then just left it until retirement at 65 (so 20k total invested), would come out ahead of someone who put nothing into mutual funds until age 30, then put $2000 a year away until retirement (70k total invested). This was based on compounding and dollar-cost averaging and a 8% yearly return and all the other crap the bankers spew out as being pretty much guaranteed. I believe they estimated that your money would double every 7 years or so.

I've been working for 10 years now, and have been putting money into mutual funds (RRSP) the entire time (with the exception of a 6-month or so period when I moved and wasn't sure of my finances). In fact I think I started back when I was in college, so it's likely been more than just the 10 years. I've put into several different funds during that time, but I've never sold anything, always just taken the long-term view and hold like I was told to. Over time I have slowly increased my monthly contributions from $25 up to $700.

I am now 30 years old. As of today, My book value (the amount of actual money I've invested, so essentially what I'd have under my mattress if I avoided banks at all) is over $5000 higher than the actual value (what I'd get if I sold everything right now). In 10+ years of investing prudently, I have lost money. I will never get those 10 years back. I will never be able to have my money compound the way it was supposed to. I could have put that money in my mattress, taken a trip to Europe, and been in the exact same position.

I no longer know what to believe. I know the worst thing you can do is panic and sell low, but how much longer can I sit and watch my life savings do nothing for me? Sure, I'm still only 30 years old, and when they show you all those lovely charts with the ever-rising line, it spans out over 40+ years. But do I wait another 10 years before acting? What happens if I'm in the same position when I'm 40? At that point I'd almost be screwed.

It's becoming increasingly clear that all these supposed financial experts don't have a fucking clue. I am not impressed.

At least oil has fallen back to just under $100/barrel.

How do they propose Wall Street fix itself?

Wow. You'll never hear this story in one of those Edward Jones IRA pamphlets.

This goes back to my point about delaying recessions. Over 40 years, an economy will rise and fall, have moments of growth and recession. UNLESS you screw around with it too much. If a government makes huge sacrifices to merely delay a recession for a few years, you might as well tear up all these 40-year projections.

That sucks Fidatelo! It makes me want to get out of this thing completely!

Wow that's terrible Fidatelo - what kinds of funds were you invested in? Were you diversified? I know of people who had major portions of their 401k funds wiped out because they were nearly 100% invested in tech type funds during the dot com bubble. Plus we had 9/11 and now this massive drop in the market - it has not been a good ten years for the market on the whole and I think that the people who tell you to just invest and forget about it are doing customers a major disservice. Sure if you started in 1958 - yeah 40 years later you've got a nice chart to show. In that time the dow has gone from 601 to 10,900 (today) and as high as about 13,500 as opposed to about 10 years ago when the dow was at 9,000. I believe that over time my investments and 401k contributions will appreciate significantly but I am less certain of that now than I was say a year or so ago.

Yeah, Fidatelo, you and I are in similar situations. My outlook is still very long term. I am quite diversified, and still have taken a bath over the last couple of years. Still, I think that I am buying at pretty good prices, and when things rebound, they will rebound better than 8% and hopefully can bring that overall curve back up a little. Especially that I will own more stock right now, than if the market would have started to go up on that nice line that we were looking at. Even in our 30's there is a lot of time for things to change.

Here are all of the funds I own units of, with the average unit cost and current price in brackets:

RBC Canadian Dividend (avg: 45.181 | cur: 44.125)
RBC Canadian Equity (avg: 17.216 | cur: 23.934)
RBC Canadian Index (avg: 21.700 | cur: 22.710)
O'Shaughnessy Cdn. Equity (avg: 15.907 | cur: 14.603)
O'Shaughnessy U.S. Growth (avg: 18.251 | cur: 13.038)
RBC Life Science & Technology (avg: 9.919 | cur: 4.878)
O'Shaughnessy Intl Equity (avg: 11.652 | cur: 8.783)
Non-redeemable GIC (n/a)

The amount I've put into each has changed over time, with Life Science & Technology being one that I put into a lot early but gave up on adding to a few years ago, and contributes about $2000 of my losses. My 'big 3' of O'Shaughnessy Cdn Equity, RBC Canadian Equity, and O'Shaugnessy Intl Equity equate for about 65-70% of my portfolio.

Obviously I am fairly equity heavy, but for my age that is supposed to be the case as I understand it. I'm also less exposed to the US than my advisor would like, but so far that gut-instinct of mine to stay more within Canada has actually kept me ahead.

I'm sure with enough detail people could pick it apart and point out each area that I screwed up, but the point is that I have followed all of the basic rules that were explained to me from the start: invest early and often, to benefit from dollar cost averages; don't panic and sell at the first sign of trouble (dot-com bust for example); don't over-manage (buy and hold); diversify (own several different funds); be aggressive (because I'm young). The handful of times I have ignored the advisors I have actually been rewarded for it.

In the last couple years I have started to think that I'd be better off just getting a few market indexed funds, so that I'm always in line with the market (as I believe that fund managers that can beat the market are pretty few and far between, and most probably lose). But now I'm thinking that maybe the market itself will never produce the results I need. Especially when you consider that life spans are increasing. If I live to be 100+ years old, and the market takes another 5-10 years just to get back to the historical high point (which is essentially where a large part of my money went in), there is no way I'll be able to retire at 55 or maybe even 65.

I know it is toxic to ask about the past but I am going to do it anyway. I keep hearing that the bailout plan has to be done right now or else we are going into a depression. With the benefit of hindsight, what could have been done before this point? I noticed that this thread started back in March. Could we have done say a hundred billion dollar plan in March that would have kept us from this point? Could there have been more regulations passed? Forced sales? More printed money? Maneuver interest rates up or down more? I ask because it seems that this whole situation jumped from everything is great to everything is okay to the sky is falling in a matter of months. This, in spite of, what now seems to be overwhelming evidence that we were heading to this point.

I'm certainly no financial manager (and have zero knowledge of the Canadian market) so I wouldn't know if you're in good funds or bad funds but at least you've got different funds and you don't have your eggs all in one basket. You seem to have good knowledge of what you are doing and what you were told is pretty much the standard line that financial managers seem to give out. I think you're also right not to just go with what the advisor says simply because he or she says it. They're sales people at the end of the day and it seems that unless you're putting a massive amount of money to work with them that they're really not going to spend the time caring about people with average portfolios. At the end of the day you're the only one who will be 100% guaranteed to look out for your money and the fact that you know what you own and put some thought into it is a good sign that you will find a way to grow that money over time.

I also don't think that the market can produce the historical results that it did. You have to think about how much our economy has grown in the past 50 years. Is it really possible to continue that growth for the next 50? I'm not saying there won't be growth but look at the numbers on the dow I posted. It's 18 times higher today than it was in 1958. There's no way it can continue on like that in the next 50 years. I still think in the end money can be made in the market but I think its alot harder now especially if you're looking for the returns they show on those charts.

Alright, the idiots in the House have decided to crash the economy by not passing the bill and playing politics.

Or perhaps, they've inadvertendly saved the economy (for now). Time will tell.

Could be. It's just too political (what else is new?) and this is something that shouldn't be played around with.

House rejected the bill - dow was down 600 at one point here

So, why are Republicans voting against it?

Not sure - now cnbc has changed the story to say it appears they have rejected it but voting is still going

the vote can remain open and votes can switch sides until they close it.

BTW WTF did McCain accomplish exactly?

It's back up quite a bit. Sanity has been restored from a 15 minute panic fit. There's a bunch of investors that just made a killing with a quick buy-up of stock.

What the hell, is that how voting works? I want to be in this House. I'd flip my vote back and forth a million times.

McCain? Are you in the right thread?

The bill that was considered before McCain showed up had even less of a chance of passing. Democrats can look within their own party for the failure of this bill. The Republicans had no way to stop it if party lines held.

sorry wrong thread but im pissed and shooting off a shotgun. Ignore the McCain stuff.

WTF. We are loaning money to the Automakers now too...?

Congress Approves $25 Billion In Loans For Automakers...

I was wondering where McCain came from. :)

its over.

down 600+ again - this is scary stuff

There were a few earmarks in there in addition to that one. I wouldn't have been shocked to see it pass if they would have taken that junk out.

I see that.
The Associated Press: Senate sends big spending bill to Bush to sign

No chance in passing this bill at all... according to CNBC.

It will be relatively volatile. The investment firms have triggers for buying and selling if the market goes up or down a certain amount. That's one of the main reasons you'll see so much change. It tends to overexaggerate the changes if you watch from minute to minute, but it evens out in the end.

Voting was closed several minutes ago and there's more than enough votes to kill it.

Wasn't that in the budget bill (not the bail out one)?

Well this is what an article I found on it say.

so now what? We just continue to do nothing and hope things change? As much as some of these congressmen and women think they're punishing Wall St for being stupid and greedy its not going to be such a great lesson as that punishment spills over to Main St.

That's what I people don't understand. While it's direct to help Wall Street, it is about Main Street. It is about our investments, our jobs, and our credit. Pass the bill, and work out new regulation to fix the problems in a future bill so this doesn't happen again. At least get credit available. Paulson and the bill supporters have done a shitty job on explaining this to Main Street, and why they need this to pass.

I pray Ive been wrong, for all of our sake.

I think you're exactly correct here, and this is what worries me. If my money has not grown at all in 10 years, and if we can all pretty much agree that it's not going to be growing much for the next 1 or 2, and then we agree it will take some time to get back up to where it was, and then finally we agree that there is no way our market can possibly grow at rates similar to the last 50 years... how the heck does a person get the necessary returns to ever retire? And yet more and more people have their entire future sitting in the market, pension plans are slowly becoming a thing of the past, and who knows about social security/old age/whatever... ugh.

I hope this doesn't come off like whining. I'm young, I have a good job, and am probably going to be fine. It's just kind of frustrating that everything we've been lead to believe seems to just be a bunch of bullshit, and that the so-called experts don't really have a clue. I guess I just feel like I've been scammed (along with a few hundred million other people).

Yeah, people who are pissed at the "giveaway" don't realize that if these institutions fail, it's going to hurt them FAR more than extra taxes will. FAR more.

I think that the general population has reached the point where they want the new regulations in place when $700B is going out the door. Congress can blame their previous spending habits on this backlash.

I honestly can't say I can blame you for feeling like you've been scammed. All I can say is that I feel really, really bad for the people who are close to retirement age and watching this happen. Hopefully they've moved into less risky investments but I know some of them don't have any idea what they are invested in and will be horrified to see their 401k or IRA statements.

That's what our brilliant lawmakers either can't figure out or don't care about figuring out. Yeah, people on Wall Street screwed up. Mortgages companies duped people into buying houses they couldn't afford - they didn't care because they just had to close the deal and sell it to some bank and yeah people should have known better but they were out right lied to in some cases. It just is horrible that the people that will be hurt the most are the ones who had nothing at all to do with this nonsense. The people who are losing their homes, savings, investments, retirement accounts...they don't deserve to be punished for Wall St's greed and stupidity.

Agreed, the people in the 45-55 age bracket are going to be hit the worst. Hopefully they made enough when they were younger to offset it, but in many cases I doubt it.

So the Republicans basically didn't vote and the Democrats did. So, does anyone know exactly what the Repubs problem was with this bailout? Wwas it about the new taxes or more because they didn't like the added regulation proposed. CNN was saying that alot of the Republican constituents were against this (who wasn't?) and they were afraid of the the voters fallout back in there districts. I am not even all that sure why the Democrats were so for it with the golden parachutes for executives? Wwere those still in the bailout or did they get taken out?

Or they might just disagree that it's the best course of action to take.

It's not just the direct effect of "extra taxes" that people are worried about.

That they have to get re-elected. Public support for this plan was/is running at just about zero. It's a minor miracle this trash legislation wasn't actually passed. Were there not an election in 40 days it certainly would have been.

Not to single you out, MBBF, but I wanted to nitpick here for a second.

These people you refer to are not investors, they are speculators. It annoys me to no end when the news says things like "investors got panicked and dropped the DOW 300 points today". Investors are people who invest in companies, putting money into them for the long, or at least medium-term.

These people are gamblers, speculators, hoping to make a quick buck off of short-term changes.

This is just election year politics. With most of the population against this bill the most prudent course of action for anyone up for election was to vote against it. Even if you supported the bill in principle the ideal outcome was to vote against it and hope everyone else voted to pass it.

The democrats couldn't force it through on their own because that would have given the republicans too an huge advantage. It had to be a bipartisan effort.

I don't see any problem with speculators as long as they aren't allowed to buy and sell without actually using their own money. I believe that short-selling is currently off-limits, so these people are actually risking their own money on these bets.

I totally agree with you about short-selling.

*settling in with my martini to watch the end of the world*

Are Americans against it because they don't understand "Wall Street" and the credit market, but because they are bailing out "Wall Street billionaires" (seems to be a common card the Dems like to trump out) with taxpayer money? Do they understand what could happen if it doesn't pass?

Best I can tell, the reasons for not supporting the bill varies -- from "my constituents don't like it" to "too much money, not enough oversight" to "we shouldn't be bailing out private companies" to "doesn't go far enough, particularly in allowing restructuring of mortgages".

The phrase "deeply flawed" comes to mind, seems as though there were quite a few things to choose from when looking for reasons not to vote for it and it wasn't hard to find one or more problems that fit depending upon your point of view.

edit to add: here's a snippet from a cnn.com piece that illustrates the variety of opposition

But the bill did draw some opposition during the morning debate.

Rep. John Culberson, R-Texas, said the measure would leave a huge burden on taxpayers. "This legislation is giving us a choice between bankrupting our children and bankrupting a few of these big financial institutions on Wall Street that made bad decisions," he said.

Other conservative Republicans argued the bill would be a blow against economic freedom.

Thaddeus McCotter, R-Mich., said the bill posed a choice between the loss of prosperity in the short term or economic freedom in the long term. He said once the federal government enters the financial market place, it will not leave. "The choice is stark," he said.

But there were also Democrats who opposed the bill for not doing enough to help those who taxpayers facing foreclosure or needing unemployment benefits extended, or taxing Wall Street to pay for the rescue package.

"Like the Iraq war and patriot act, this bill is fueled by fear and haste," said Lloyd Doggett, D-Texas.

For those of you here who oppose the bailout how do you handle the situation now? Do you simply let these institutions fail and see what's left standing in the end? Do we forclose on whatever % of the population cannot pay their mortgage and definitely won't be able to do so if they lose their job? Is there a way to stop the bleeding or do we just wait and see where the bottom is?

I'm thinking they may change their mind when the banks start failing and they can't get loans for the "cheap" houses out on the market.

this is fucking awesome, in a train-wreck, hypothetical kind of way.

although it sucks for my parents, and for anyone else with exposure to the market. from a "disaster watching" standpoint it's historic.

One theory I read somewhere is that because the bill is polling at toxic levels, no one wants to own it. And, because no one wants to own it, no one is stepping up to spin it (by, for instance, calling it a "recovery plan" instead of a "bailout")

In fact, because most pols want to get milage out of opposing it, you have a lot of people spinning the bill negative and no one spinning it up.

For starters, see my answer just above about reasons politicians failed to pass it. I imagine those could apply to the voters as well. And not on that list might be the biggest one of all: I've seen little beyond vague predictions of dire consequences in the way of making a case that this is necessary and/or desirable.

And even though I've given this relatively limited attention since last week, I'd say it's a safe bet that I still understand it better than the average man on the street (which isn't meant to say much for me or them mind you).

One thing that seems relatively certain to me, if the man on the street was supportive of the plan it would have had a much better chance of passing today. Maybe those in favor of it were lobbying the wrong people.

okay i just want to emphasize: i'm not glad that the markets are cratering and people here are stressing and losing money and what-not.

but it's like being given a ticket on a time machine trip to watch the titanic...it's amazing

Those scientists should've just collided the protons or whatever already.

The LACK of short sellers is why the dow was down 700 points earlier today!!!!!!! Short selling stablizes markets. Roughly 1/7 of all the companies on the NYSE are on the can't short list.

What about the thought of the quick plunge to -700 today for the dow as being a warning of what could happen should there be no action taken? I think there is still some hope out there that now that everyone has had their chance to grandstand and put their no vote on the record maybe a bill could squeak through and that could be keeping the market only down as far as it is right now.

I realize that there's just speculation or predictions of what could happen but we saw the market drop hundreds of points in less than a minute as soon as news broke that the bill likely had failed. Don't you think that's cause to think something much, much worse can happen if there's no hope whatsoever of something getting done?

That's just like a sports betting line basically. It's not what speculators think will happen, it's what speculators think others will think will happen.

What you don't hear is how exactly inaction will bring about The Great Depression, except that "credit won't be available". I think it's closer to "credit will be more difficult to get", which is exactly the correct free market response to all this.

A decision this key to the markets is obviously going to cause some serious action in said markets. Investors have been staring at screens and the news all day waiting for that exact moment to make a move. You can't judge the repercussions of NOT passing this bailout by looking at 10 minutes of market action.

Exactly. The credit market is ridiculously out of whack. We need a correction. I'd rather take a hit now than delay the inevitable.

MBBF

Care to look again at the markets there bud?

Also that's just the face of it. the credit market is whack but this correction you want will be much much more than a 'correction.'

Damn it, so there will be a period of time where it might more difficult (or even impossible) for people to overextend themselves and live beyond their means??

My grandfather paid cash for his small Philadephia row house in the 1950s (he was a factory worker and saved up his cash for a few years). Not saying the path from here to there would be pleasant or even necessarily desirable, but the housing market MUST collapse. It deserves to collapase. It SHOULD collapse. There will be winners and losers, both long and short term to such a collapse, but trying to prop it up will just delay the inevitable.

I'm not saying some kind of a bailout isn't a good idea (I haven't read the proposal, and probably wouldn't understand it fully if I did). This just seems like one of those acts historians will look back at in 50 years and say, "why the hell did they think THAT would work?"

wrong.

How can banks lend money if they don't have enough money? How many banks will be left standing? Three? Four? Will anyone be left other than JPMorgan, Bank of America and Wells Fargo? If there's only a couple of banks and even if they do have the ability to lend who will they lend to? Certainly only the companies with the cleanest of balance sheets - which means that all of the companies that are good down to the ones that are awful will no longer have access to funds they need to run their businesses. Not being able to run their business means defaulting on payments to other businesses and the loss of jobs. People who have lost their job will not be able to pay for their homes, cars or anything else thereby defaulting more things for the banks. And if there are only a few banks left who's to say they will make credit affordable? If you don't have the competition where is the incentive to make good rates? If all these banks fail then why are the people who have the most money going to have faith in the few remaining to deposit their money there so it can be loaned out?

That's what we need now - we need to be calmed down and we need to temper the fear in the market. The bad financial institutions are going to fail - but the fear is going to take down good ones and alot of other companies and thereby individual people along with it.

How about it'll be almost impossible for responsible people to get loans to purchase houses or cars? Which will, of course, tank the economy, lead to massive layoffs and potentially begin the 2nd Great Depression.

But, as long as it teaches people a lesson, that's ok.

Dow down 6%. S and P down 8%.

I think that was over on fivethirtyeight.com

SI

You're right, this decision is going to cause great effect to the markets. We're down more than 700 now again, the VIX is spiking to levels the market hasn't seen in years. This doesn't seem to be some kind of temporary bump in the road and its not just taking down the financials - everyone's going down with it. These are real companies with real employees who could end up losing their jobs - its much more than some traders/investors/speculators making or losing money "playing the market".

It is not the housing market that is collapsing, it is the stock market.
Lots of responsible people who had nothing to do with the housing boom/bust are loosing their life savings.


Federalization of Fannie Mae and Freddie Mac
Merrill Lynch sold to Bank of America amidst fears of collapse
Lehman Brothers files for bankruptcy.
Federalization of American International Group.
Washington Mutual was seized by the FDIC.
etc...

No one knows what will happen, but we have had a historic run of bank failures.
It is not just a market correction.

Yup, though I am feeling sorry for all the older people who are watching their retirements dwindle before their eyes I can't help but smile at the fact a couple fo my very very well off relatives who have done better than they deserve for themselves and have flaunted there money with bigger and bigger house and cars had evryhting in the market and our losing there shirts.

Maybe the government should just print money and hand it out.

It's not about "teaching people a lesson". Propping up a system that can't be sustained is just silly. We might as well have the discussion for the next bailout now - would you be in favor of another $700 billion next year? And the year after?

Regular people can't afford housing without borrowing obscene amounts of money. That's the problem. That will still be the problem after the bailout. That will still be the problem until the housing market hits rock bottom.

I don't know where I come out on the bailout.

But I don't think that your statement is really that far off from the position of the people against it. I am afraid of loaning the Chinese $700 billion of our grandchildren's money and not learning anything from the experience.

Maybe the thinking is if we have to land hard one way or the other, maybe it is better to do it now and in a way that gets people to change the destructive behavior than postpone the fall for a generation while we continue to dig a deeper and deeper hole.

It's not about printing out money to hand out - you've got a majority of businesses and people who rely on access to credit to survive. Maybe you've done well and saved a boatload of cash in case of emergency but most people have not and certainly most businesses don't have it. Think about a typical small business - they rely on a line of credit from the bank to buy supplies and pay their employees which they pay back when they get paid for their goods and services. If that credit gets cut or taken out how do they pay their supplier or employees? They won't be getting paid for their goods/services since their customer won't have credit either.

Something has to be done - maybe the bailout, maybe not. Maybe something like raising the FDIC insurance to 2-3 million instead of 100,000. Something has to be done by the government. They are supposed to be the leaders of this country - we need our leaders to do something to show they have 100% faith in our country. We don't need them to just print money - we need some show of confidence to stabilize things.

Well, I've always kind of had a problem with stock market speculation. Maybe I'm an old fogey, but the way I see it, the purpose of the stock market, originally, was to allow people to invest in corporations and corporations to raise needed extra capital by allowing people to invest in them. There was a direct relationship between how well a company did and the return on investment people saw when they invested in a company. It was an actual relationship.

Nowadays you've got guys like Jim Cramer who treat the whole thing like one big game. A game played by people with ADD. It's always about the next quarter's earnings, no one cares about the long-term, and we'll find more and more escoteric ways to make money off of any movement in the market.

So much so that Wall Street has failed to mirror the "real" economy for, how long? But since so much money is tied up in there, we all get hurt when the "players" over-reach with their little game.

That's why I say these people aren't investors. They're playing a game, and they could care less what happens to the companies in which they briefly own stock.

Unwillingness to spin or inability to explain? There is an easy story to tell if you oppose the bill...$700B cost to tax payers. It is harder to explain why the bill is a good thing. You quickly devolve into a discussion of credit markets and liquidity that almost no one can follow.

Well the latest bill had it in installments and if things were getting better, then you'd only be on the hook for a bit of the total. One can learn a lesson by doing a bailout, but also attaching some stronger regulation or laws upon the banking industry, such as making sure they keep more money and preventing leveraging to such an extent.

Wouldn't a massive bailout be the opposite of showing faith in the country?

What happens when the Chinese decide our credit is worthless? Who pays for the next bailout if we succesfully avoid market correction?

At some point, the money just becomes completely pretend. THAT'S when the economy really collapases, when the currency is worthless. Having less access to credit isn't as scary as having full access to credit for a worthless currency.

You absolutely, positively, cannot prop up such a fucked up industry indefinately. One way or another, there WILL be a sharp drop.

A blank check from the government at best postpones the inevitable and dumps a vat of taxpayer money into a black hole, causing a short term period of stability/business as usual, followed by a sickening crunch of doom.

No, I don't have an answer as to how to lessen the blow. While I'd love to just say fuck'em and let them die in the graves they dug for themselves, I am aware that SOMETHING has to be done.

I am, however, of the opinion that allowing some of our largest financial institutions to fall under the lunatic whims of the government is madness.

Well Maria Bartiromo says, "We're going to get this bailout package" maybe not today, "but we're going to get it." Here's hoping she's right.

I think, politically, this needs to be done the right way rather than the rush way. People want their pound of flesh, not just from the CEOs and board members but from Wall Street itself.

So use that political capital to force through the needed banking regulations as part of the bill. That's something that would sway a lot more voters toward the bill. "Here, I know we screwed up. Here's how we're going to fix it" and add the important "And here's how we're not going to let this happen again".

People just figure this will happen again just like S&L in the 80's or the tech bubble in the 90's. And, guess what, it will happen again, but at least let's clean up one of the most important industries we have and let something else fail in the future.

SI

I'm curious if supporters of a blank check bailout disagree with this. Does anyone really think that this will "fix" ANYTHING for more a very short period of time?

The government can and should soften the landing and set us up for success down the line, of course. But a panic bailout is dangerous territory, especially where people are freaked out, really only because SOMETHING was rejected. It doesn't really matter what it was, whether it was too big, etc. People aren't looking at with clear heads.

No, I think the bailout temporarily stabilizes things in the short term and gives us a chance to figure out how to fix the mess (assuming they do that - if they do the bailout and then think everything's fixed then we're definitely screwed)

I really do think that the end consequence of the financial system imploding is going to be a massive jump in unemployment. People who have done everything the right way - worked hard, got a good mortgage, made their payments - some of those people will lose their jobs because of this. Why should they be punished along with the greedy and incompetent people running these failed financial firms?

Of course people fail to realize that the US government made good money from the S&L takeovers.

And everyone seems to think the US is going to make a good deal of the $700 billion back, if not MORE (A WSJ article said this could make the US government $1.2 trillion!)

Yeah, I saw that one. Again, the economy is too big to wrap my head around but if that's true- make the deal in a heartbeat and help us wipe out some of that debt :D

I don't want money coming back to taxpayers- just put us back to the rate we were at before this happened. And then use that spare to pay off the debt. We're going to have to do it at some point so sooner is better than later.

SI

I think this is a critical point. I wonder if even the most astute economists fully understand the economy. Things are just so incredibly complex given all the variables involved. That's why it's baffled me how some praise a president for a growing economy or criticize a president for an economy that isn't doing so well. It seems ludicrous to suggest that one person is responsible for what the economy is or isn't doing, yet so many people point fingers at the president (and by extension his party, whoever that might be during that period) and vote accordingly.

Cramer, and others like him, would not seem to help this mentality given their tendency toward short-sightedness.

They shouldn't be punished. Don't make this about those who are for the little guy v. those who are against him. NOBODY wants regular people to lose their homes, or their jobs. But is it worth it to save a house today to lose thousands tomorrow?

There's room for difference of opinion, of course, in terms of how many houses are lost today v. tomorrow under varying plans. All I'm saying is that just because someone's a little concerned about a massive panicked government handout that feeds directly into the problems that brought us here in the first place, it doesn't mean that they take glee in people's present-day economic misfortune.