I read that article, too...but there was still a question there as to whether the mortgages the gov't would buy could be valued at a few pennies on the dollar or whether they were truly worthless (big difference). I'd be in favor of using a $700b check in order to get a bigger return at a later date, but other that that article, I haven't seen anyone explore that angle to such a depth that it would convince me that a "blank check" would benefit the country and leave us less exposed than a $700b loan would.

From fivethirtyeight.com, here is the breakdown of the vote based on the incumbent 's election status:

Status	Yea	Nay	% Yea
Vulberable	8	30	21.1%
Not vulnerable	174	196	47.0%
Not running	23	2	92.0%

Vulnerable indicates incumbent congressmen in races rated as "toss-up" or "lean" by Swing State Project. Not running indicates incumbent congressmen not running for re-election (nearly all republicans). Not vulnerable is everyone else.

only a bank going out of business affects the avg person. one bank being bought by another bank doesn't affect the people with savings in the aquired bank. of all the examples you gave above, i would say the Lehman one is the most dire since it wasn't bailed out. only the people actually investing in those particular companies were hit the hardest since the price per share declined in most cased 90%-95%. otherwise it's been business as usual for those other entities you cited.

I was trying to point out that the string of failures (they would have failed if not bought) was not something that happens during a normal "market correction."

MSNBC is reporting as breaking news that they won't take another whack at it till Thursday.

Tommorrow's probably a good day to buy.

jeezus -- not till Thurs? they should close the fucking markets till then, or there won't be much to save...although tbh i think if that's true then today was the worst of it and tues/weds will be lesser drops (~200pts)

interesting viewpoint

Commentary: Bankruptcy, not bailout, is the right answer - CNN.com

this part for sure i agree with

Is it still because of the jewish holiday?

[quote=DaddyTorgo;1847060]interesting viewpoint

Commentary: Bankruptcy, not bailout, is the right answer - CNN.com



I am not sure I follow the logic.
1. The government is responsible because of "implicitly promises"
2. The lenders trusted the government backing.
3. Lenders should be punished for the government's mistake?

[quote=Surtt;1847078]
It's more like:

1. The government is responsible.
2. The lenders trusted the government backing
3. The government should learn from prior mistakes and not punish lenders by over-meddling and
screwing the economy up even more.

Which why it is really an investment plan, not a bailout plan.

It's an investment into a company whose assets are of questionable value (if any value at all), purchased by a "company" (USGov) whose record in managing money is, to say the least, shit, in a deal written up by political hacks whose 1) primary concern is getting re-elected and 2) know next to nothing about economics.

What could possibly go wrong?

Did you mean for (2) - know next to nothing about economics?

Seriously, these hacks putting together something like this - in a panicked rush - is just terrifying.

Yeah, I corrected myself...apparently slightly too late for you. :)

< cyncism >

Yeah but the media get more interest and excitement by making it appear its a waste of tax payers money then they would actually reporting what the intent is ...

Of course the fact that their scaremongering has terrified the public (who largely can't be bothered to find out details themselves) and thus scared congress out of supporting the bill and thus further fubaring the economy doesn't bother the media in the slightest .... I hate the fact that the media report the bills as being a bail out of fat cats when the intent is actually for the good of the economy as a whole imho.

After all they'll probably get good ratings as even more economic turmoil unfolds.

< end cyncism >

I agree that the initial give Paulson $700bn and he promises to be good plan was a tad ludicrous, however the idea of the goverment getting equity in companies seems largely sensible to me to be honest and isn't that far from nationalising the banks (which I know is a 'dirty' concept to some people). The institutions run correctly will make comfortable profits as they have in the past, yes initially they may not but in the long term it'd not just be good for the economy but by owning a profit making corporation the goverment would have higher income in the future*.

*Allowing them to be more fiscally balanced or to give a windfall tax or similar should the companies be floated and returned to the public sector.

Perhaps if this money could only be used to pay off debts and/or deposit into a bank (raising their assets). If you limit it to taxpayers alone, the payout would be significantly larger than $2300 and could still accomplish a lot. You put restrictions on how this special money can be spent. Heck, you can call it a credit that gets applied to credit cards, mortgages, or can be put into long term CDs. That way it is put into the system, but it is done by individuals and the populace in a way that they might be more likely to support.



Perhaps. We will see what happens. Given the news of the afternoon, it looks like we may end up with a different solution.

US Government and correctly managed institutions are two terms that rarely, if ever, go together. Especially with a LOT of money to be made.

a GOP member came out and said he expects a bill to pass late Thursday or Friday and basically scoffed at the idea that things are on the precipice. HE stated that as a fiscal conservative he cant spend this money without the things the GOP house needs, for example, a reduction in the Capital Gains Tax....you shouldve seen Dylan Ratigan's reaction on CNBC and Jeff Mackey almost wanted to jump through the camera and choke the Congressman.

This is the equivalent of hiring Dusty Baker to be your manager when you have 5 young arms who've never thrown over 150 innings. Disaster.

Which private parties have the money though? Especially without leveraging?

Bush kept saying the economy was fine until the past few weeks. That could be major reason why nothing was likely to happen. Despite all available evidence, people like Bush and McCain were insisting that all was well until very recently.

The ABC news Capitol correspondent was saying that he still expected a deal by Thursday/Friday as well. Looks like the Senate could take up the matter on Wednesday, and if it passes get it to the House on Thursday.

that's true. Unbridled Capitalism works until it doesn't.

We've found a winner for most generic statement ever. "insert blank" works until doesn't! Instant epiphany!!

I'm not sure you could point to a time in American history when we've had "unbridled capitalism". There's always been some level of government interference and regulation.

right we've had great regulation and rules that have been enforced. Worked great. Go back to page 1 and start again.

Would the government, aside from oversight, be running the "fund" (so to say), or would it Paulson and a group of business-minded people be running it?

I like Mark Cuban's idea: My BailOut Solution - I’m In For At Least $50mm « blog maverick

And how is that going to help the economy and get the financial sector flowing again? It's the Refund scheme, Part II, from this summer all over again, expect your going to restrict people what they can their money (which they gave to the government in the first place) on. I would rather have jobs and credit flowing, instead of a few $1,000s in a refund.

This seems rediculous to me. Betting on a company/stock to fail is good for the market? There has to be a better way to stabilize the damn market. Come on, people that are shorting stocks make money off of other shareholders losses. Short selling stocks reeks of organized crime IMO. Make no mistake, some bastards made millions off of our failing 401k's. I mean, isn't banning short selling of those 799 companies implying that short selling will crush a stock? Maybe if they ban short selling across the board, the market willl stabilize?

BTW, I'm no friend of the Republicans (as I've long said), but today pisses me off. Either they're spinning the fact that it failed and don't want to look like they were playing politics with the economy (which is crap, if you can't support it, come out and say so).. or they're telling the truth and they're so butthurt by someone's meaningless statement that they're willing to cut off their nose to spite their face..

Especially with at least some of the members of the GOP trying to sneak capital gains tax cuts in there.. WHAT. THE. FUCK.

It's just an absolute debacle, an embarrassing time to be an American, really.

I didn't hear about that CGT part. Both sides are pathetic (see the spending bill passed earlier that gave the automakers $25 billion in nice loans this weekend.

The first thing that comes to mind is most of the public have been told or believe that govt is evil and the private sector should be left alone to succeed and fail on its own. All of a sudden, the "evil" govt wants to give tax dollars (that Joe Public doesn't believe should be there anyway) to banks that the public can't get money from now.

I agree with all those who have said that the supporters of this bill have done a horrible job of explaining what it does. I personally have learned a hell of a lot more reading this thread over the last week than anything that I have listening to most of the experts.

See post 719 above for the details.

If you require it be used in the financial industry, how is it different? It must be used to pay credit card debt, loan/mortgage debt, or put into long term CDs. All of these put money into the financial industry. The total is the same, plus it frees taxpayers of the debts they owe to these institutions, which removes that strain on their own resources. It accomplishes the double play of putting capital back into the banks while freeing up discretionary income for individual taxpayers.

Oh, no doubt. There is much more info in this thread than in say "Newsweek." But a lot of comments show how little the average joe understand about how businesses run. Most businesses of any size run on some line of credit to pay payroll, buy supplies, etc. and get paid back when receipts come in. Lock down credit, and many people will not be seeing a paycheck.

Is this about the claim that Nancy Pelosi suddenly has tremendous influence in the way the GOP votes on critical issues facing this nation?

Yeah. "We would have saved America, but twelve of us couldn't stand our beloved policies being questioned, so we're going to let America rot. Nyah! (sticks out tounge)."

Didn't the Democrats have about 90-some members vote against it? If so, why did they vote against it?

The problem is home loans that are bad and need to be written off not credit accounts in good standing.

If some one owes you $500 and is paying it off slowly. If he pays it off sooner it doesn't really mater. You will get your money either way.

But if some one owes you $500 and skips town, you are sol. Having some one else pay it off makes a big difference. It is the difference from getting paid or not.

Politics. Share the blame. That was the whole point of this. The agreement was both parties would vote 50-50 or something close to it so that it is not one party's plan.

because:

See the votes are mostly counted in the back hallways before the actual vote occurs. SOOOOOO, the ones who are in heated elections coming up would vote "no" while people who are comfortable in their races or are not in races at all vote "yeah." Same on the GOP side. Then add in variances and you get the results today.

Another good take:

Let Risk-Taking Financial Institutions Fail - TIME

Also, the voice of reason, Ron Paul:

YouTube - Bailout Fails!

what he said

Lawmakers quickly point fingers after bailout fails - CNN.com

Confirmed that the earliest a bill will come up is Thursday.

The House will not be in session Tuesday and Wednesday, but behind-the-scenes work will continue until it reconvenes on Thursday.

Yup: From the link in my last post

"They lost 2-1 on their own side, voting against their president, their presidential candidate and against every leader in their own party," one Democratic source said.

Pelosi said the Democrats lived up their side of the bargain. "We've entered into those conversations in a spirit of bipartisanship, with the understanding that each side would have half of our votes to pass the bill," she said.

"When the legislation came to the floor, the Democratic side more than lived up to its side of the bargain," she added. "While the legislation may have failed, the crisis is still with us."

Biggest problem:

"Let financial institutions fail, merge or be bought out. The faltering institutions will see their shares devalued and will be likely to be taken over by stronger institutions — as has already started happening. This consolidation of the financial sector is both efficient and inevitable; government action can only delay the adjustment."

Other banks can't buy them out if they don't have the credit or money to do so. Healthier banks, who aren't exactly "strong" as it is, are buying other assets with help from the government.

If the government bought out actual mortgages, does that mean people that had these mortgages get free homes? What if, which would include a lot of them, can't make mortgages payments even when the government's bailout? People seem to think that Wall Street and Main Street (like the idiots in the picture on that page) are separate. They are tied at the hip.

Ah, thanks.

I will take a buyout as long as I get to erase some debt in the process. I'll take that over the government having an equity stake. It's not like I will ever see a penny from those transactions, even if it does come out positively. The government will just create some new bullshit to blow the money on and continue trying to destroy their credit rating and devalue the currency.

Which taxpayers got their share of the S&L assets the government apparently made a profit on? Did you get dividends on your ownership share? Get a payment when your ownership stake was sold? That may be why many people don't know the government made money on that deal. It might very well be because the government didn't let them share in the proceeds.

No, it just means that the gov't would have more flexibility in changing the terms of their loan than a private institution could offer. Let's say that if those mortgages are being valued at a 5% recovery rate (the actual value is the big question mark), the gov't could make money by altering the terms in order to get a 15%-20% recovery rate. Pretty good investment for the country. The 80% that are still unrecoverable would still lose their house though...can't save everyone.

However, if these mortgages are valued at 5%, but are actually more like 0%-2%, then taxpayers are on the hook for the difference. Bad investment for the country and not worth the effort in the first place.

I think most investment advisers would tell you that the intrinsic value of these assets exceeds their current market value. That begs the question as to why folks in the market aren't buying them, of course. That's a more complicated issue related to the lack of liquidity, no institutional buyers (who wants to say they made a bet on subprime assets at this point), leaving you with vulture buyers (hedge funds, for instance) and huge bid-ask spreads.

when they sell the assets back to the market, once the markets unfreeze and get liquified and confident, they will be worth more than they buy them for today. this actually could take a HUGE bite out of our debt.

A good day to be a libertarian and one that has never put much faith into the financial investment markets. A libertarian commentary posted on cnn.com

That's kind of funny, in a sad way.

99% of the effort of this bill (and probably every bill) is political.

1% of the effort, of an already inept group, is being put towards the actual merits of this ridiculously overreaching bailout. So why does almost everyone here have so much confidence in it?

There's something odd about Pelosi blabbing about "the spirit of bipartisanship" when she's criticizing an entire party for not voting exactly per the plan. There's nothing bipartisan about a scheme like this. What's the gain in having a majority of the House when you're too wrapped up in politics to take advantage of it?

This display, more than anything else, damns both sides, and shows more than anything else that GOVERNMENT IS BAD. They cannot save the economy, they absolutely WILL make it worse if given the chance. Bucc's right, it's a good day to be a libertarian.

That, in a nutshell, is what I have found so sad about today. More people concerned about the politics of this vote than the actual contents of the bill.

And yet you have zero problem supporting WHATEVER they came up with in the few seconds they had to spare between the vote swapping.

You're assuming that a worthwhile percentage of these assets are viable.

You're assuming that management of the viable assets will be done properly, if the government has influence in said management.

I have doubts in the former, and complete doubt in the latter.

If this goes through, and my doubts are correct, we're 1000 times more fucked than we are right now.

the bill couldnt change.

you're right that we are on the opposite side in our assumptions.

I'm sure there's PLENTY of quotes/clips of Republicans saying the same kind of stuff, but I wonder if it's as entertainingly feisty as these:

Government oversight + an appointed board/commitee/whatever. They'll get their say.

And government appointees are rarely given their gigs based on merit, especially if we're talking money in the trillions. They'll play ball.

What is the Judges and Stewards Commissioner for the International Arabian Horse Association, (IAHA), doing these days?

I digress.

Of course it could. Not today, under this vote, but it's not this today or nothing forever.

I tend to avoid most of the political threads on here like the plague, so I'm not up to full speed on everyone's overall views on various subjects. That said...

I'm extremely curious as to why you have so much faith in our government, especially in regards to money management.

I very seriously doubt this. This may not be a guarantee "fix," but I doubt it will kill us either.

If taxpayers are on the hook for some 700 billion and mismanagement/screwups/overestimations of assets/corruption put us right back where we are now in a couple years, I don't see how we're NOT fucked.

Well, in this case because theyre hiring experts to run it from outside the gov't. so consider them civilian contractors. I have faith they'll do better than actual Gov't employees.

Actually, the treasury plan included hiring a number of outside investment managers to run the fund.

Exactly - our government leaders are pretty much useless. The guy from Texas who appeared on CNBC just kept saying that the Dems could have passed it if they wanted to because they have the majority - his mission isn't to save the country from economic disaster - its to make sure we blame the Dems and the same holds true on the other side. Nobody cares about fixing the problems - they just want us to know that the other guy isn't fixing it. This is why elections now for office are "pick the guy you hate less that you think won't screw things up more than the other inept guy".

I'll say this again - SOMETHING needs to happen. If nothing is done today's almost 800 point drop won't be anywhere near the end. I can't even believe that the market fell almost 800 points in one session - like someone mentioned - this is no correction. You don't lose 800 points in one session in a "correction". Raise the FDIC guarantees, change the mark to market, reinstate the uptick rule on short selling - these things can be done immediately without waiting for our inept congressmen and women to continue their grandstanding to get reelected in a couple of weeks.

Right, which I understand.

However, I am rather of the opinion they'll be hiring outside help who know exactly which people to help a little more than others. The opportunities for greasing palms here has got to be on epic scale, and the politicians are salivating to have these folks in their back pocket.

I realize you're not Mr. Potter here but I'm just pointing out that this problem requires intervention immediately. I personally do not want to see the fallout of letting the chips fall where they may on this one. I'm not in favor of bailing out any company but I'm less in favor of letting our economic system collapse in the immediate future. You're definitely right - this problem should have been handled long before now and I have little confidence that the people in Washington are capable of getting anything right let alone doing it in a weekend but time has run out. The market needs stabilty now before its destroyed further.

Cramer (and I'm no fanboy of his) wrote a piece a few days ago about the worst case scenario being the dow at 8400 and I thought how could we possibly lose 25% of the value of the market. Seeing a quarter of that drop happen in one day even with the possibilty of the bailout eventually happening is downright frightening.

winner

and crazy as it sounds, Kramer's been right and the harbinger of bad things to come has been Oppenheimer's Meredith Whitney who has been looked at as crazy until she started beomcing the allstar for her predictions of dire dire circumstances.

Hey, we agree on something. :)

The bailout should focus on fixing the root cause of the problems (which is different than not doing anything). Fix those and you are assured of a better future; otherwise, we are still facing downhill.

I'm just afraid the stock market will REALLY take a beating after the 2nd or 3rd massive bailout, when the sentiment seems to be "let's trust our lawmakers to figure it out in the meantime", at the same time everyone agrees that they're useless.

that needs to be in addition to, but the ball keeps getting further and further away from us.

Really? So now you're in favor of doing things short of a bailout?

Asian markets are getting destroyed.

There is nothing else on the table and something needs to be done yesterday....so the 'bailout' as youre calling it, needs to happen. Now.

BTW, youre not going to be convinced otherwise, so be it. Im backed up by the facts on the field, market action, number of foreclosures, Statements by experts (Buffet, etc), bankruptcies of huge banks, credit swaps, rates, etc. So stand over there and watch the blood.

If this country faces a major crisis, does the fact that it's a holiday matter? I'm not saying you have to vote on the other bills and such, but this is such a lame excuse.

You're absolutely right - and to do that takes time and thought. Time is up. We need stability immediately to buy the time to figure out how to fix it.

yup

If they were to bailout the system now and not fix the problems then yes - subsequent bailouts will mean further destruction of wealth and massive beat downs of the market. But I'm telling you that there is the potential to lose so much right here, right now that something has to happen to stop it. There's more options than the bailout but nobody is willing to do anything apparently. What happened to the days when down 100 was cause for a little worry? Now we're down close to 800 in a day and we're still not concerned enough to do anything about it?

So you acknowledge that the bailout merely delays the inevitable unless further change is made? What should the further change be? Do you trust Congress to do it?

Actually, here are a couple hundred economists who disagree with Paulson's plan.

http://faculty.chicagogsb.edu/john.c...ge_protest.htm

Of course, that was according to how the bill stood a few days ago, but as far as I can tell, nothing much has changed about the bill since then. All they did this weekend was argue politics.

if you mean 'inevitable' to mean additional fixes to the system, than yes. I'll leave add'l moves to the experts to come up with ideas, theyre smarter than me, hence my trust in Paulson and Bernanke on the need for this bill....now. I trust Congress to get this through, yes. I think it'll happen on Friday but hopefully it wont be too late for a bunch of the regional banks and hopefully we dont lose another big house.

and VPI I can find tons who do subscribe to the need for the bill to gain us some time. Your point is taken that there are always people on both sides and we can find facts to defend ours til we keel over...unfortunately my facts are going to bear fruit very very soon.

Nikkei already down 477pts (4%)

This is no longer a valid question - I don't think anyone trusts Congress to have been able to wrap their heads around this problem in a weekend when they've had over a year with it staring them in the face. We're out of time and the only people who can stop this bleeding, like it or not, is the SEC and Congress. Believe me, I could come up with a LONG, LONG list of people I would like to see fixing the problem before I got to either Congress or Christopher Cox but time's up and they're the ones who have the power to do something now.

The difference is that you're talking about politicians and I'm talking about actual experts in the economy.

In '87, the market went down 22% and the world didn't end. Just because it's down 7% now doesn't mean we should throw $700b into the biggest money pit this country has ever seen.

I'm curious. To those that are strongly advocating immediate actions, are you heavily vested in financial markets for personal net worth? I am trying to understand the difference in attitudes of those that are vs. not.

Gary, what line of work are you in?

We need surgery, not a band-aid.

I think a bailout is a huge mistake. But I work in a recession proof industry and do not have much invested in my 401(k) yet.

There's going to be a deal though, there's no question about that. I'm not particularly concerned about the stock market long-term, because it's been ridiculously overvalued for a while, and still will be after this mess. It, like the housing market WILL come down to earth, hard, there's absolutely nothing Congress can do about that. The point of the bill, as I understand it, is to ensure that credit will be available. That object isn't hindered by another week or two. Credit is available today, and it will be next week. The stock market is fickle. If the media didn't hype up today as THE DAY everything had to happen, the losses wouldn't have been as great. Once there's a deal, the stock market will quickly recover (and then it will continue it's inevitable decline once again).

But if you're right, we'll all know soon, because there will be a deal this week. You'll probably try to prove how correct you are by the stock market's increase that day, but nothing will be fixed, that money will be burned through in no time, and then we'll back here in no time (except that we'll have way more debt.).

molson, some housing markets have and will fall hard, some are still doing ok. I also think "fickle" is an understatement. With the markets (financial, oil, etc.) becoming the domain of short-term speculative interests, it takes almost nothing to have major swings that up to a few years ago were unthinkable.

Funny you should ask...I make computer games :) Well that and I do some accounting/financial analysis - but just until my games make it big ;)

I'm not a financial manager nor do I even play one on TV. I'm not heavily invested in the market (although if I did have piles of extra money I would be and I wouldn't be working two jobs) - I've always just liked the market alot and followed it and bought a few shares of stock here and there (plus having a 401k). And above all I pray that I'm very, very, very wrong about what I think could happen. I'm concerned about the greater global economical impact of what might happen as opposed to whether or not my couple shares of stock in a company get wiped out (not that I would be crazy about that either)

Why do you ask?

You need to stabilize the patient before you do invasive surgery.

Jeffery Miron, the libertarian Harvard economist of the commentary I posted above, is on the list.

hmmm, I'd say the people that are experts giving congress advice are, well, experts.

Bucc, I am not heavily invested but have a 401K and some stocks. I sell homes so I am on the front lines and see the people everyday that are being touched on 'main street'. Good question though.

trust me when I say I want to be proven wrong and credit as you know it may be available but the credit Im talking about is NOT available today, and wont be tomorrow or the next day unless we do something fast. Either way Im with gary and hope Im way wrong.