700 Billion and 11.3 Trillion Dollars

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panthera

panthera

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Goodness, the Bush administration (not the congressional democrats) just authorized 700 billion to help the fat cats on Wallstreet and raising the debt to 11.3 trillion dollars.
Please, tell me again about the 'marxist', socialist, tax and spend democrats?
This literally means that for the MBAs and the young-dynamic-managers who have tanked the US economy, there will be no day of reckoning (I know, I know, I am an unrepentant capitalist).
At this point, I'd really, really love to hear why the republicans are such a better choice than the democrats?
 
i call it Welfare for the Wealthy. the folks who will benefit the most will try to promote the "bailout" as saving the system/country from ruin. just another way to funnel public money into the pockets of the well connected.
 
All this for $700 billion - But wait - there's more! We&

$700B rescue plan may not save some troubled banks

By STEVENSON JACOBS
The Associated Press
Saturday, September 20, 2008; 7:25 PM

NEW YORK -- A sweeping government plan to buy up to $700 billion in bad mortgages may not be enough to save some banks, which experts say may be forced to absorb big losses if they sell their troubled assets.

The proposal for the government to soak up the mortgage-backed securities would be the biggest bailout plan since the Great Depression, but experts say a critical issue will be how much it actually pays for the troubled assets.

How the government might acquire banks' toxic debt is still being ironed out, but one approach suggested by Treasury Secretary Henry Paulson involves a process under which financial institutions would propose a price for their mortgage-backed securities and the government would choose the lowest bids.

If banks sell at the proposed price _ say 50 cents on the dollar _ accounting rules would require firms to take the losses on their balance sheets before getting the damaged assets off their books. For weaker banks buffeted by the deepening credit crisis, the losses may hinder their ability to go out raise capital, make loans and ultimately stay afloat, according to industry experts.

"There is a risk that there will be bank failures to come," said Vincent R. Reinhart, former director of the Federal Reserve's monetary affairs division.

While the reverse auctions could help banks set a clearing price for mortgage-related assets, Reinhart said, that "price doesn't mean that every financial firm will be solvent" after those assets are sold.

Another risk is that if the auctions set too low a price for mortgage-related assets, other institutions with bad debt may be forced to take the distressed valuation onto their books under mark-to-market accounting rules, Reinhart said. Mark-to-market rules involve adjusting the price of an asset to reflect its current market value.

"If the auctions don't go well, it will drag down everybody's balance sheet who marks to market," Reinhart said.

The financial system has been battered by $500 billion in losses from the mortgage mess, and the International Monetary Fund has estimated the price tag could ultimately top $1 trillion.

The crisis has forced 11 federally insured banks and thrifts into failure this year. Another 117 banks and thrifts were considered to be in trouble in the second quarter _ the highest level since 2003 _ with the total assets of troubled banks tripling to $78 billion, according to the Federal Deposit Insurance Corp. The agency does not disclose which institutions are on its list, but on average, 13 percent of banks that make the list fail.

Christopher Whalen, senior vice president and managing director of Institutional Risk Analytics, has predicted that 110 banks with assets worth $850 billion are in danger of failing by next summer. He said the Treasury Department's rescue plan hasn't given him reason to be more optimistic.

"If the government comes in and buys these assets at a discount and you're a strong bank, you don't care because you're getting cash and you go off and do business. If you're a weak bank and you take a big hit, you may not have that option," Whalen said.

He said the government may decide that the only option to save some banks is to pay full price for the assets in exchange for equity, which could be sold later.

But that could be risky because if the government pays too high a price, it will be difficult if not impossible to go out and sell the assets for a profit in the future, meaning any losses incurred would be absorbed by taxpayers. But paying too little also is problematic because banks will be forced to take steeper losses that they may not be able to recover from.

"The government should be able to arrange to pick a price that helps the banks but also that allow the government to turn around and make a profit down the line," said Marvin Goodfriend, professor of economics at Carnegie Mellon University.
© 2008 The Associated Press
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http://www.washingtonpost.com/wp-dyn/content/article/2008/09/19/AR2008091902808.html?tid=informbox
 
Only minutes ago...

Goldman Sachs and Morgan Stanley have changed their status to commercial bank holding companies which will allow them to accept deposits, helping to raise capital and investments as well as FDIC protection and the guarantee of emergency loans from the Fed if needed. They will come under much more regulation, not all bad.

http://www.nytimes.com/2008/09/22/business/22bank.html?_r=1&hp&oref=slogin
 
I'd like to whack all those "greed is good" MBA twerps that took over the financial sector. They and only they are responsible for this mess. The thing that makes me the maddest is that they will feel little if any pain, they will just move on to the next sector of the market that's up for grabs.

I hope the D's have some balls and put some teeth into the bailout plan. It sounds lit Paulson ONLY wants a blank check, no strings, if the R's get their way there will be no oversight.
 
now the

Republicans - not the democrats - are talking about bailing out foreign investments and demanding from congress that there be NO oversight or controls on how the money is spent.
Still waiting for the conservatives to explain to me why we have to vote republican, 'cause the democrats can't be trusted with money...
 
Even Jim Henley gets this one right...

This is scary, but worth reading.
All of this is really beginning to remind me of March 1933, a lot.
I don't agree with Jim Henley on lots and lots and lots of things...but here, I fear, he is right:
Liberaltarianism’s New Groove
Who imagined that the great opportunity for joint progressive and libertarian advocacy and activism would end up being economic? But that’s where we are. This loathsome bailout plan is a slap in the face to anyone who believes in either free-market principles or social justice. William Greider calls it “a historic swindle.” Paul Krugman says, “No Deal.” Radley Balko decries it. Arnold Kling says, dueting with Luigi Zingales (pdf), “the government officials making these decisions are seeing things from the perspective of Wall Street, which is kind of like seeing the auto industry from a Detroit viewpoint or seeing the movie industry from a Hollywood viewpoint or seeing elections from a Washington viewpoint.”

What we have here is a soul test of several tendencies in American politics - progressivism, libertarianism, limited-government conservatism, principled defenders of managerial liberalism generally. This is as naked a case as we could imagine seeing of the state working to enrich the already wealthy at the expense of the many. The only theoretical defense of it would be a belief that the well-being of America’s wealthy as a class is necessary to the well-being of the country as a whole, and that this transcends any merit its members possess. That is, the business of America isn’t business, but businessmen. This is not an argument anyone is going to want to make in so many words.

If libertarians fail to oppose this bailout, they stand revealed as the hypocritical apologists for corporate power their detractors have always accused them of being. If Democratic leaders fail to oppose this bailout, they will prove to be the phonies and weaklings of stereotype. If managerialists go along with it, then every argument against the State as guardian of the general welfare will bear out. Right now a corrupt and spent corporate class is on the brink of getting a corrupt and spent governing class to perpetuate its privilege by almost dumbfoundingly transparent means. Anyone with a soul needs to oppose them.

http://highclearing.com/index.php/archives/2008/09/20/8720
 
Last time I checked, greed wasn't a partisan quality. People (both republican and democrat, maybe even a few independents) created a large part of the current fiscal crisis...living way above their means, leveraging home equity to buy and spend as if the money would never run out, not really understanding that it has to be paid back. Banks and developers responded to a perceived need, like any free market would, with speculators driving prices up, up, up. As long as there was money (equity) to be had, properties moved. Of course, all good things come to an end when the money supply starts to dwindle and folks get desperate.

I'm sick and tired of people blaming Washington for problems they created themselves. What's left is a mess that someone has to clean up because it's certainly going to affect everyone, including those who are financially responsible.

If you haven't got the credit, and you haven't got the money, or you haven't got the sense to understandn the loan documents that you are signing (or the sense to have an attorney review them FIRST) then RENT. You have no business owning a house. Yeah, I hear all the stories...great American dream bullshit and what have you. There is a responsibility that comes with borrowing money, whether from a bank, a friend, or from wherever. You don't get to say, oh sorry, I can't pay you back you see, because that nice _______ (fill in the blank - house, car, diamond ring) isn't quite worth what I paid for it. BULLSHIT already.

People want to be "bailed out"? Guess what folks....the banks are getting the bail out because these folks who borrowed the money are not fulfiling their obligations. So, where does it end? At what point does everyone say tough, you borrowed it, you owe it, and the rest of the world isn't paying your debts for you.

Sound harsh...yeah, maybe. But this is the reality. If you give someone a cash advance off of a credit card for $10,000, and that person promises to pay you $500 a month towards that debt, then decides, oh, sorry, don't have it to give you, what happens then? You think the bank is going to say, that's ok, we understand. Bullshit. They're gonna want their money and whether you have it or not isn't going to matter. So, what do you do then? Yes, look for a bailout, or you may be going under too.
 
Well, Andrew

I certainly won't argue your points. What bothers me is this absurd rush to do something.
When in doubt, run in circles, scream and shout.
Not quite the solution I would have chosen.
We need to take a deep breath and think this one through.
(I do find it amusing that the hard-core republicans on this site will justify anything shrub has screwed up by blaming us.)
 
It's hardly an absurd rush. It's a necessary evil, and now is the time to act, unless we'd like to see Depression Era bank failures hit home. We have not just a responsibility to the American public, but also to the global markets and economies with which we do business every single day. Suffice it to say, the world economy teeters on what America does next, and that's a pretty damned big responsibility to handle. Why would folks want to invest in US currency based commodities, securities, etc, (including our own citizens), when the dollar is completely unstable??? Hardly an absurd rush at all.......
 
Andrew,

I am talking about taking a few days to sit down and think this out.
Announcing that we take it seriously and will take concrete action on, say, Friday will go down much better with everyone than the republicans trying to force this stupid plan down congress' throats.
When you have dug yourself a hole, you stop digging. There is not one bit of evidence that, should we choose to go down this road, the 700 billion dollars are enough - and one hell of a lot of evidence that they aren't.
Also, the way things are planned now, the taxpayers end up footing the bill and the assholes who caused this go Scott-free.
That is what I mean by absurd rush.
 
Come on, Peter, Neal Boortz?? A shrieking pundit with almost no credibility is your source for evidence? National Review Online propaganda and a blog posting on GayPatriot??

Let's try to stick to facts rather than hand any of the candidates a bill for a trillion dollars and let the blame rest solely on their shoulders. I think most people in this country are sick to death of these Karl Rove tactics and aren't buying it anymore.

If you do want to talk about candidates qualifications to handle the mess remember that McCain has claimed (and demonstrated) repeatedly that he has very little knowledge or experience in Economics and "Ms.I can see Russia from my house" got a D- in Macro Economics in one of the six colleges she attended before earning her degree in Communications. Republicans have been in control of Congress since before Dubya but I guess that fact is moot when someone tries to present the facts.
 
Keven, they are taking a few days to hash this out. It's just a proposal right now, but the real partisan horseshit hasn't even begun to be flung just yet! I think we all probably know the final product may bear little resemblence to the original proposal once both parties have had the chance to have their say.

Right now, it is imperative that the government appear to be in the forefront of offering a solution. As you can see from the results of just today's market, the weakening dollar has caused oil to skyrocket, the indices to drop, and the dollar to weaken further due to "uncertainty" about the government's plan. While no proposal will cover all bases and make everyone happy, there is no time like the present. We cannot afford to have Wall Street banks go under...that would totally shake the confidence of both domestic and foreign investors away from American markets. The appearance that Washington is tackling the problem is essential to stability. Of course, there is no guarantee the final proposal will solve the crisis completely, once partisan politics takes over.
 
I saw an article indicating the bailout, on the low end will cost EVERY man, woman and child about $2500. I think the actual figure will be double that.

I'm hearing people laying the blame on consumers who bought houses, who gave them the money? Back in the day banks where tight with their money, you had to prove you could pay it back. With the loss of regulations and with the fast and loose attitude no one cared if the money ever got paid back. The original lender sold the note in days or weeks to someone else, who quickly sold it again. The originator was long out of the picture when the crap hit the fan.

Now what gets me mad is the fact that my property is now worth less because of the combined actions of buyers and lenders. I want the govt. to step in and shore up the value of my home. I'm being penalized for something I had nothing to do with. Stabilize the housing market and make me whole and I'll be more inclined to support a freebie for the jerks on Wall Street.
 
Watched, Lou Dobbs tonight, the buzz is, some of these $, bails out foreign banks. umm, i don't understand this. alr2903
 
Matt, I totally understand your anger. But in this case, it's not our government who is stepping in and trying to shore up the value of your home. It's Communist China's.

Our trade deficit with China as been running $750-800 billion every year, and with this money the Chinese have been buying up U.S. Treasury bills to the tune of $200,000,000 every business day. This same People's Bank of China also buys $50,000,000 in Fannie Mae/Freddie Mac mortgage-backed bonds every business day.

If asked, Henry Paulson would be obliged to lie about where his orders (to nationalize America's housing and financial services industries) are coming from, but everyone knows where these orders are coming from. He doesn't have $800 billion to loan, but China has ten times that amount -- IN CASH.

http://www.jsonline.com/story/index.aspx?id=195898
 
alr2903,

The shrub plan bails out every fat cat on the planet and leaves the American tax-payers to pay the cost.
Except for those top 5% earners, of course.
Nearly all modern economies trade and exchange with foreign countries, there is nothing unusual about that. The tremendous energies and efforts of the American people have made it possible for this administration to waste money profligately. America buys oil and goods from other countries. Relatively speaking, this country does not export very much. This leads to a massive trade deficit. If those foreign banks weren't willing to keep buying, holding and lending US dollars, the US economy would sink into a very bad depression, at once. Overnight.
Personally, I am troubled by the way this bail-out was written to screw the middle-class taxpayers, reward the young-dynamic-managers and MBA whack-jobs who caused the problem, and do nothing to help those Americans in distress.
People do stupid things, yes. But we can't afford an economy which punishes every horse which fails to cross the finish line first by shooting it.
If things weren't so bad, I'd dig out Regan's comments on the Carter bail-out of Chrysler. Republicans, back then, actually had coherent thought processes on economics.
 
"a flustered rookie playing in a league too high...&quo

McCain Loses His Head

By George F. Will
Tuesday, September 23, 2008; A21

"The queen had only one way of settling all difficulties, great or small. 'Off with his head!' she said without even looking around."

-- "Alice's Adventures in Wonderland"

Under the pressure of the financial crisis, one presidential candidate is behaving like a flustered rookie playing in a league too high. It is not Barack Obama.

Channeling his inner Queen of Hearts, John McCain furiously, and apparently without even looking around at facts, said Chris Cox, chairman of the Securities and Exchange Commission, should be decapitated. This childish reflex provoked the Wall Street Journal to editorialize that "McCain untethered" -- disconnected from knowledge and principle -- had made a "false and deeply unfair" attack on Cox that was "unpresidential" and demonstrated that McCain "doesn't understand what's happening on Wall Street any better than Barack Obama does."

To read the Journal's details about the depths of McCain's shallowness on the subject of Cox's chairmanship, see "McCain's Scapegoat" (Sept. 19, Page A22). Then consider McCain's characteristic accusation that Cox "has betrayed the public's trust."

Perhaps an old antagonism is involved in McCain's fact-free slander. His most conspicuous economic adviser is Douglas Holtz-Eakin, who previously headed the Congressional Budget Office. There he was an impediment to conservatives, including then-Rep. Cox, who, as chairman of the Republican Policy Committee, persistently tried and generally failed to enlist CBO support for "dynamic scoring" that would estimate the economic growth effects of proposed tax cuts.

In any case, McCain's smear -- that Cox "betrayed the public's trust" -- is a harbinger of a McCain presidency. For McCain, politics is always operatic, pitting people who agree with him against those who are "corrupt" or "betray the public's trust," two categories that seem to be exhaustive -- there are no other people. McCain's Manichaean worldview drove him to his signature legislative achievement, the McCain-Feingold law's restrictions on campaigning. Today, his campaign is creatively finding interstices in laws intended to restrict campaign giving and spending. (For details, see The Post of Sept. 17, Page A4; and the New York Times of Sept. 20, Page One.)

By a Gresham's Law of political discourse, McCain's Queen of Hearts intervention in the opaque financial crisis overshadowed a solid conservative complaint from the Republican Study Committee, chaired by Rep. Jeb Hensarling of Texas. In a letter to Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke, the RSC decried the improvised torrent of bailouts as a "dangerous and unmistakable precedent for the federal government both to be looked to and indeed relied upon to save private sector companies from the consequences of their poor economic decisions." This letter, listing just $650 billion of the perhaps more than $1 trillion in new federal exposures to risk, was sent while McCain's campaign, characteristically substituting vehemence for coherence, was airing an ad warning that Obama favors "massive government, billions in spending increases."

The political left always aims to expand the permeation of economic life by politics. Today, the efficient means to that end is government control of capital. So, is not McCain's party now conducting the most leftist administration in American history? The New Deal never acted so precipitously on such a scale. Treasury Secretary Paulson, asked about conservative complaints that his rescue program amounts to socialism, said, essentially: This is not socialism, this is necessary. That non sequitur might be politically necessary, but remember that government control of capital is government control of capitalism. Does McCain have qualms about this, or only quarrels?

On "60 Minutes" Sunday evening, McCain, saying "this may sound a little unusual," said that he would like to replace Cox with Andrew Cuomo, the Democratic attorney general of New York who is the son of former governor Mario Cuomo. McCain explained that Cuomo has "respect" and "prestige" and could "lend some bipartisanship." Conservatives have been warned.

Conservatives who insist that electing McCain is crucial usually start, and increasingly end, by saying he would make excellent judicial selections. But the more one sees of his impulsive, intensely personal reactions to people and events, the less confidence one has that he would select judges by calm reflection and clear principles, having neither patience nor aptitude for either.

It is arguable that, because of his inexperience, Obama is not ready for the presidency. It is arguable that McCain, because of his boiling moralism and bottomless reservoir of certitudes, is not suited to the presidency. Unreadiness can be corrected, although perhaps at great cost, by experience. Can a dismaying temperament be fixed?

9-23-2008-08-52-17--gansky1.jpg
 
I love watching Reagan diehards squirm in embarrassment. How many years has George Will been singing the praises of outsourcing, reminding us how wonderful our economy is, and telling us everything will be just fine if we just keep cutting his, er, I mean wealthy people's taxes?

And now, just as Reagan/Bush Sr. managed to quadruple our national debt in 12 years, another trillion dollar consequence of "supply-side" economics is being dumped on the backs of all Americans, rich and poor. And three more generations of our kids and grandkids are being plunged into debt. So instead of working four months out of every year just to pay interest on the national debt, they (and we) are now going to work six to eight months every year to pay this interest.

This isn't a bailout, it's a rearranging of deck chairs on the Titanic.
 
I'm confused...

Howis this bail-out going to help the housing market? There's an abundance of available property in St. Louis city that's been foreclosed on.

Unfortunately, it all had a higher value before most of it got trashed by the foreclosed party or broken into by a thief to gut the copper plumbing. There's a cute little house down the street from me for $19,900! I bet it doesn't have plumbing and few that have the money to do the work are going to live there. You can't get a loan buy, rehab, and insure a piece of crap house. I tried and had to resort to family. I'm sure this isn't just a problem in St. Louis.

Why not pay market rate for these properties to these banks and move forward? This loss has to be absorbed by many parties, not just the taxpayer.
 
I also don't see how this bailout will help the average person. OK, it might prevent a recession, but I thought we were already in one. My bad.

Personally, I'm against most credit. If people could lower their expectations and consumption, they wouldn't need so much credit. The one exception is housing - where the price tag is so high that some sort of loan is usually needed. But cars etc... one should save up and buy those for cash (IMHO). But then I've never bought a new car... just a new motorcycle. A one or two year old used car is a much better deal than a new one, anyway. Credit helps mostly the loan companies, anyway. And I think credit is intrinsically inflationary.

Many years ago, when I was in my late teens, I was convinced that another Great Depression was not only possible but unavoidable. Experience since then has shown that an exact repeat of that disaster is unlikely. However, I do think this country is in for even hard economic times until we as a people wake up and devote our energies to constructive employment, not exploitative schemes. And I think our huge national debt and huge imbalance of trade is the ticking time bomb that more than anything else will shake our economy to its foundations. We may see more and more foreign ownership of our real estate and industries... with a resultant stranglehold on our economic power as profits flow increasingly abroad.

Think banana republic. What goes around, comes around.

Not a pretty picture, but it's been a long time developing.
 

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