Opposing the bailout plan — from the Right
posted at 12:00 pm on September 22, 2008 by Ed Morrissey
Share on Facebook | regular view
Two voices have arisen in opposition to the Bush administration’s bailout plan for the credit markets. William Kristol and Rep. Mike Pence have voiced early opposition to the nearly $1 trillion plan that Congress will hastily address this week. While both see the need for action, Pence especially argues that the proposal will extend the same bad practices that led to the meltdown in the first place:
“The administration’s request amounts to the largest corporate bailout in American history,” Pence said. “Congress should act, but should act in a way that protects the integrity of our free market and protects the American taxpayer from more debt and higher taxes.”
Pence offered a number of alternatives, from suspending capital gains taxes to passing a comprehensive energy bill to establishing a commission to overhaul entitlement spending, but nothing that would give the markets the financial security Treasury Secretary Henry Paulson and others believe they desperately need.
“Congress must not hastily embrace a cure that may do more harm to our economy than the disease of bad debt,” Pence said.
The Indiana Republican also stokes an ongoing call to overhaul of Fannie Mae and Freddie Mac, the two government-sponsored mortgage giants that act as a backdrop for most Americans’ home loans. The Treasury Department could use Fannie and Freddie as financial vehicles to purchase some of the bad debt before Congress grants it broader authority.
Kristol has the same concerns. He argues for a different solution, not out of a sense of “ideological purity”, but because government intervention has already proven disastrous in this crisis:
A huge speculative housing bubble has collapsed. We’re going to have a recession. Unemployment will go up. Credit is going to be tighter. The challenge is to contain the damage to a “normal” recession — and to prevent a devastating series of bank runs, a collapse of the credit markets and a full-bore depression.
Everyone seems to agree on the need for a big and comprehensive plan, and that the markets have to have some confidence that help is on the way. Funds need to be supplied, trading markets need to be stabilized, solvent institutions needs to be protected, and insolvent institutions need to be put on the path to a deliberate liquidation or reorganization.
But is the administration’s proposal the right way to do this? It would enable the Treasury, without Congressionally approved guidelines as to pricing or procedure, to purchase hundreds of billions of dollars of financial assets, and hire private firms to manage and sell them, presumably at their discretion There are no provisions for — or even promises of — disclosure, accountability or transparency. Surely Congress can at least ask some hard questions about such an open-ended commitment.
The crux of the skepticism over the plan comes from an absurd protocol at the heart of it. It makes Henry Paulson a de facto financial czar, in charge of potentially a trillion dollars in taxpayer money with no accountability whatsoever for his actions. Here’s the relevant proviso in the legislation:
“Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”
We don’t allow this kind of free agency from elected officials, let alone political appointees. Not even in his role of Commander-in-Chief does a President have a mandate that is completely unreviewable. Henry Paulson may or may not be the most brilliant thinker in high finance, but even if he was, why would Americans want to give him literally a carte blanche with the equivalent of one-third of our annual budget? With no review possible?
It’s absurd, and at its heart, it’s un-American, in the sense that America exists precisely because of our desire to rein in government and make it accountable to the people. We gave up on the monarchy in 1776. We certainly didn’t do that to trade in King George for Czar Henry. Only in a panic, in which Congressional leadership abdicates its role to keep executive power in check, would any American Congress agree to surrender its Constitutional mandate for oversight. And that panic may be taking place now.
Barack Obama has decided to wait a few days to study the matter before determining whether to offer his support. His only impulse in opposition thus far has been to demand a partnering stimulus package, in which government would spend even more money as it prepared to buy a trillion dollars of debt. John McCain seems to be thinking more clearly. He has called for an oversight board to run the bailout rather than a single appointee, and today expressed his misgivings:
I am greatly concerned that the plan gives a single individual the unprecedented power to spend $1 trillion – trillion – dollars without any meaningful accountability. Never before in the history of our nation has so much power and money been concentrated in the hands of one person. This arrangement makes me deeply uncomfortable. When we are talking about a trillion dollars of taxpayer money “trust me” just isn’t good enough.
We will not solve a problem caused by poor oversight with a plan that has no oversight. Part of the reason we are facing this crisis is an antiquated regulatory system of uncoordinated agencies that haven’t been doing the job.
I believe we need a high level oversight board to impose accountability and establish concrete criteria for who gets help and who does not. They must ensure that throughout this crisis, the government is a careful steward of the taxpayer’s dollars. The oversight board should be bipartisan and have qualified citizens who have no agenda but the protection of taxpayers and the financial markets. People like: Warren Buffet, who supports my opponent, Governor Romney, who supports me, or Mayor Bloomberg, an independent.
The firms we help need accountability too. We cannot have taxpayers footing the bill for bloated golden parachutes like we see in the Lehman Brothers bankruptcy, where the top executives are asking for $2.5 billion in bonuses after they ran the company into the ground. The senior executives of any firm that is bailed out by treasury should not be making more than the highest paid government official.
I would also urge transparency throughout this process. The American people have the right to know which firms will be helped, what that selection will be based on and how much that help will cost. The details of the process and the transaction itself should all be made available online for public scrutiny.
We got into this crisis through a curious blend of government intervention and lack of oversight. Democrats and Republicans both tried manipulating the credit market for political purposes, demanding lower standards for lending while not supervising the accounting practices that resulted. At first blush, this plan looks like more of the same, only this time we’ll spend massive amounts of taxpayer money directly and have absolutely no oversight on how it will be spent.
Given the government’s blame in creating this crisis, I understand the necessity in the government taking action to defuse it before it creates a global financial meltdown. However, we need to correct the problems we created in the first place, not by giving $1 trillion to a single person with no accountability whatsoever, but by dismantling the machinery of government interference that gave birth to the credit crisis. In the short run, we need a lot more accountability in government, not less, in order to ensure that the long-term goal of getting Washington out of private lending policy reaches success. This plan goes in the wrong direction.
You must be logged in to post a comment.
Blowback
Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.
Trackbacks/Pings
Trackback URL
Comments
Comment pages: « Previous 1 2 3 4 Next »
The maddening truth in one sentence. Goes to the heart of non-leftist discontent with all things Bush.
Feedie on September 22, 2008 at 5:47 PM
Let them fail. If they fail, in 5 years we’ll be better off. If we bail them out now we’ll be bailing something out from now on. Its gotta stop somewhere.
genso on September 22, 2008 at 5:33 PM
No if they fail in 5 years we will be a socialist country run by a dictator. look at hitler and FDR and Putin and Sadamn and the Iranian clerics. all came to power during hard economic times. Hard economic times brings socialism and communism because the avg person can not handle hunger, poverty, and hopelessness. they cry out for a savior and sure enough one comes along. We may not be lucky enough to get one like FDR again (even though FDR ordered more americians to their deaths than any other president) history says depressions bring dictators. Obama has already shown his character in this regard. fairness doctrine, muzzleing of radio station, action alerts, “grassroots” smear campaigns.
unseen on September 22, 2008 at 5:49 PM
The money disappeared when FASB 157 rules were applied to all mortgages (subprime, alt A, etc). Since 5% of these mortgages are in default, the firms were required to treat the others in the same way, and cut their value, irrespective of whether they will be paid in a timely fashion or not.
Vashta.Nerada on September 22, 2008 at 5:49 PM
Romeo13. A follow-up thought. There are a lot of people, both in this country and globally, who would benefit or like to see the economy of the US in the tank. The Dems and all their supporters in an election year to name some.
genso on September 22, 2008 at 5:49 PM
a capella:
I disagree. The money from this socalled bailout is a drop in the bucket to the money the global markets lost in a day. The idea that they would risk losing trillions in assets in the hopes that they could receive some bailout that required they give up more assets…well I just don’t see that happening.
Besides, the taxpayers will be the ones to lose if the economy gets any shakier.
Terrye on September 22, 2008 at 5:50 PM
Until this weekend, these were not banks.
These were mortgage companies and brokerage houses…
BIG difference.
And I have to repeat one thing people forget… once money is in the system is DOES NOT GET DESTROYED, it only changes hands.
Can someone please explain to me just where in the heck all this money is?
Romeo13 on September 22, 2008 at 5:36 PM
so citbank, wells fargo, washington mutal, jp morgan chase, bank of america, wachovia where not banks? News to me.
Money does get destroyed…It’s called deflation. The sinking of value of assets. Most of the vaule is not represented by actual paper money but by electrons.
unseen on September 22, 2008 at 5:52 PM
And Bill Kristol can stand on principle all he wants, he is not the one people will blame. Pence is really conservative, he is an honest man and I have a lot of respect for him and I count on people like him to try and keep this thing from being anymore costly than it absolutely necessary…but I think it would be a mistake to just let it all fall apart.
Terrye on September 22, 2008 at 5:52 PM
Actually, I am seeing socialism now in this bailout. I’d rather fight it when I see it than accept parts of it because I’m worried it might get worse.
genso on September 22, 2008 at 5:52 PM
unseen:
A lot of those companies were investment banks, now they are commercial banks. That is something of a comedown for them. It is a new world and they have new rules.
Terrye on September 22, 2008 at 5:53 PM
And then there is this one.
http://www.theaustralian.news.com.au/story/0,25197,23583376-7583,00.html
MB4 on September 22, 2008 at 5:19 PM
yes I have been worried since the sunpsots haven’t started. The little ice age in the 1700’s caused widespread fammine and chaos. It will be again. On a plus the liberal bastions of Vermont, Maine, Ny will be under ice.
unseen on September 22, 2008 at 5:55 PM
genso:
This is not socialism.
Terrye on September 22, 2008 at 5:55 PM
Besides if the banks fail, the government will just have to create a new bank. Run and owned and controlled by them.
Terrye on September 22, 2008 at 5:57 PM
genso on September 22, 2008 at 5:52 PM
that’s your right however socialism gets a lot worse than this bailout. Like mass killings (stalin) world wars 9hitler,lenin,FDR) massive poverty (great depression, Dickens) revolutions (france) etc. history is a very easy book to read. Hard economic times brings many many bad things for the human population and one the the worse things it brings is the death of democracy and capitalism)
unseen on September 22, 2008 at 5:59 PM
You’re correct. Government ownership of private companies is communism, not socialism. Note the Dems in Congress want to have warrants in the companies that take advantage of the bailouts.
genso on September 22, 2008 at 6:00 PM
unseen:
A lot of those companies were investment banks, now they are commercial banks. That is something of a comedown for them. It is a new world and they have new rules.
Terrye on September 22, 2008 at 5:53 PM
no they were all banks or savings and loans. the 5 investment banks were Goldman, Lehman brothers, Bear Streans, Merril, and Morgan. out of the 5 Bear stearns was swalloed by the Bank of chase, Lehman went broke and most of its assets were bought up by the bank of Barclay’s, Merril was bought by the bank of America. Goldman and Morgan morphed into banks as of yesterday. Investment banks have already been destroyed and failed. So those saying let they go broke have already got their wish.
The only ones left to fail our banks backed by FDIc insurance.
unseen on September 22, 2008 at 6:02 PM
Fear is a harsh mistress. It will often keep one from doing what is right hoping that things will work out in the end. Lets not put out the fire in the back yard because we might need that water in case the fire spreads to the house?
genso on September 22, 2008 at 6:06 PM
Besides if the banks fail, the government will just have to create a new bank. Run and owned and controlled by them.
Terrye on September 22, 2008 at 5:57 PM
governments do not create banks. banks are a foundation of free enterprise. Banks take money keep a small portion of it save give the people a small return on their money and invest the rest. banks allow the redisturbution of capital in the economy from one of low risk to one of higher risk. Banks also allow the pooling of small amounts into a big amount. Banks have always been around. the Federal reserve was invented to watchover the banks and to provide even more capital and to start the process of inflation. the ability for banks to tap into the government taxpayer money as it were. Banks are not and can not be created by the gov because the gov has no need of a bank It simply steals the money it needs from citizens in the form of taxes and redistrubes that money as it sees fit with no thought of profit or max gains. Or prudent use of the investors money.
unseen on September 22, 2008 at 6:08 PM
And these banks were bailed out? Gee, musta missed them, I thought it was Fannie Freddie, AIG, Bear… and such…
As to money… NO… money does not get destroyed, its still in the system. Net Worth… actual Value? sure, that can get destroyed… but the money itself still exists somewhere in the system.
Problem is that the FED keeps saying this bailout is needed for Liquidity reasons. To keep the lending industry going… my question is where is all the stinking Capital itself? Someone has won big in this, I’d just like to figure out who it is.
Romeo13 on September 22, 2008 at 6:14 PM
Fear is a harsh mistress. It will often keep one from doing what is right hoping that things will work out in the end. Lets not put out the fire in the back yard because we might need that water in case the fire spreads to the house?
genso on September 22, 2008 at 6:06 PM
Fear also stops one from doing anything. Let’s not put out that fire at all because I would rather have a small fire than a large one. failure to deal with threats as they come in the HOPEs that they will not impact you is as good as burying your head in the sand.
the fact is that there is a major problem that is impacting our entire economy and way of live. that is a fact. That is real. We can either deal with that problem or we can like you not deal with and HOPE and Pray we avoid the ramifications of said problem when every historical fact tells you otherwise.
Hoover thought the same way you are thinking He believed that no gov intervention was needed. He was wrong and we got a 4 term president with unlimted power, that set gold prices by how he felt in the morning, that placed millions of his countrymen in indentured servant postions, that tried to usurp democratic tradtions by trying to stack the Supreme Court, that failed to release his grip on power until the day he died, that activly pushed us into a waorld war to fight another dicator that rose to power due to the same conditions. FDr confiscated large amounts of the private sector including outlawing the owning of gold and silver. He placed programs in which we are still paying for today infact 15% of my paycheck goes to pay for just one of his programs. His unemployment insurance, his welfare and his make work programs are still in effect to this day in large part. That is real socialism and that was enabled to strive and grow because Hoover believed like you in letting the capitalistic system to run its course. In this day and age with already heavy amounts of socialism in the system, the effects of a depression will be 10 times worse for captialism. It will simply cease to exist. Never to rise again in my life time and possibly in my child’s life time. that is not FEAR. that is hard cold stone FACT.
unseen on September 22, 2008 at 6:17 PM
Romeo13 on September 22, 2008 at 6:14 PM
Yes and Yes. money is destroyed. Capital is destroyed. Vaule is destroyed. Economics is not a zero sum game. the pie can grow and it can contract. It is called deflation and inflation. The money was not printed in the first place it was created by electronic dots.
As far as bailing out the banks that I mentioned. Yes the gov has. the fed has cut rates to 2.05 that is a bailout to the banks, the fed has injected 100’s of billions into the system (the sytem in this case are the banks) the Fed has agreed to take bad loans and MBS from the BANKS as assets agains tthose injects of liquidity. several banks have failed and been taken over by the FED and FDIC. Indymac being one prime example. every friday brings new banks to the insolvent windo of the FED and FDIC.
unseen on September 22, 2008 at 6:22 PM
You mis-understand me. I think we need to face the fire now. But I do believe there are better ways than to sell our soul to the government once again. This bailout is not putting the fire out, it is throwing fuel on it. Let banks merge, change regulations and laws, let the government do what they are designed to do and let the free-market work it out. That said, government has no business taking stakes in private business. Period.
genso on September 22, 2008 at 6:27 PM
Nope. Dollars are not destroyed… they can loose value, but don’t go away.
Dollars are a way of keeping score. Assets can devalue. Assets can be used. Assets can even be destroyed. But dollars, once in the system, stay in the system. A single entity or even country may not have use of those dollars, but they don’t go away.
When you buy an asset, the dollars you use to do so go to someone else. Even if your asset is destroyed, those dollars are still in the system.
Every Dollar ever put into the system by the Federal Government is still in the system somewhere, even if its only in electronic form. In fact its a FEDERAL CRIME to destroy money. Even when you turn in worn money, it get replaced… and is thus still in the system.
WEALTH can be created or destroyed… and constantly is as we use resources… but the Dollars that run the system are not destroyed.
Romeo13 on September 22, 2008 at 6:36 PM
You are panicking and over reacting..
Lower the Corporate tax, and capitol gains tax.
Get back to business, that will invite MORE money and investment into our market.
(Having the highest Corporate tax in the world isn’t helping us attract ANY investment from home or abroad)
Chakra Hammer on September 22, 2008 at 6:41 PM
You mis-understand me. I think we need to face the fire now. But I do believe there are better ways than to sell our soul to the government once again. This bailout is not putting the fire out, it is throwing fuel on it. Let banks merge, change regulations and laws, let the government do what they are designed to do and let the free-market work it out. That said, government has no business taking stakes in private business. Period.
genso on September 22, 2008 at 6:27 PM
I agree with all that and all of what you suggest is occurring as we speak. the banks are merging, the regulations are changing as investment banks come under FEd oversight. The problem (i.e the fire) is that those are reactionary events. they do not deal with the cause of it. the cause is forclosures. the inability of people to pay their notes. Be it from getting bad loans, unemployment, speculation etc. the forclosure rates are climbing. Since the great powers that be (government, fannie mae and freddie mac, the rating acengies, and yes wall street) decided to even out the risk by including these high risk loans in with very safe loans and bundling the entire package into a MBS then selling that security to pension funds, forgeign wealth funds, banks, union plans, corparations, and even local governemnt the MBds are in every part of the system.
The scheme has had the oppiste effect than what was intended. The goal was to reduce risk but because of sloppy accounting no one knows where the bad loans are. So ALL MBS are suspected to be bad loans. since 95% of home loans are being paid on time this suspicion is not true but as home vaules continue to retreat the risk of not knowing where the homes are located, which loans are in the MBS, etc make no one wnats these MBS. Thus banks , pension plans etc have to sell these are reduced prices which further increase the risk of oewning them. Last week it got to the point that no one was willing to buy anything from anybody.
So since these loans or MBs are now no mans’ land ofr investors they need to be purged from the system. However, if they are purged at the present prices allbanks, pension plans, unions plans and forgiegn funds like China will become insolvent making a run not only on our banks but also on our dollar. So the only solution is to have someone (gov) buy these loans not at full vaule but not at zero vaule either to be able to the banks and others with enough capital to continue to do its normal day to day business.
unseen on September 22, 2008 at 6:44 PM
Chakra Hammer on September 22, 2008 at 6:41 PM
Thank you.
genso on September 22, 2008 at 6:45 PM
unseen on September 22, 2008 at 6:44 PM
Someone suggested that the laws be amended so that these loan packages could be offered on the open market. Perhaps that might be a free-market way to handle this without the government buying into it. Personally, I think there is much more value in these mortgage packages than they are currently valued and, if not for the liquidity issue, the holders of them would have made huge profits on them in a few years. I’d take shares in a fund that held these packages.
genso on September 22, 2008 at 6:51 PM
Romeo13 on September 22, 2008 at 6:36 PM
You are not hearing what I am saying. The 180 billion that was put in the system last week was not 180 billion dollars. It was an electron. do you think the FEd printed 180 billion dollars before injecting it into the system. they made that electron out of thin air. It was used against a balance sheet of the fed that was again made out of thin air by using assets, federal funding etc that was again made out of thin air. The government does not print $trillions od dollars a day. while the actuall money as far as balance sheets are still floating around the system the physical dollars do not and never have existed. Not since the advent of computers any way and before that it was simple made up by pen and paper. It is why the gov no longer releases the M3 numbers from the treasury. When gov’s go into debt it just says we owe you more. It is an iou not actual printed money.
unseen on September 22, 2008 at 6:52 PM
genso on September 22, 2008 at 6:51 PM
I also think there is a huge vaule in most of these loans. that is why I am not that concerned with the bailout. I think in the end the taxpayers will make billions off of this. I am concerned with the power given to the treasury and I am also concerned with moral hazzard but as far as the taxpayer being on the hook for 700 billion I am not concerned.
As far as opening it up to the public. I see no problem with that but again you come back to the bad record keeping and not knowing what you atre buying. I would have no problem buying a MBS from North Caroline say but I would have a problem buying one from south Fl or central CA. etc. The problem is if you open MBS to the public the market will price them according to the risk which is very high so the MBS will sell for pennies on the dollar which would cause the capital problems of the banks and insolvency of the system still. I wouldn’t have a problem with say the gov buying them for a certain amount. Doing the research of each loan and then acutioning them off to the highest bidder. That way the banks get enough to keep them alfoat, the capitalistic society stay healthy, taxpayers can get a good deal, and gov gets out of the home loan business quickly.
unseen on September 22, 2008 at 6:59 PM
let me clarify. The entire problem is one of price for MBS. If the banks sell them at present prices due to the high risk of these loans they become insolvent. Someone needs to unpackage each and every MBS and sell off the unferlying loans. It is really that simple but would require massive accounting on a scale never seen before to trace all these loans back to the orginal. That is what is needed to be done.
unseen on September 22, 2008 at 7:02 PM
oh yeah and for those that believe that 100% pure capitalism is a great thing read this:
http://news.bbc.co.uk/2/hi/asia-pacific/7626575.stm
unseen on September 22, 2008 at 7:04 PM
unseen on September 22, 2008 at 6:59 PM
Now we are beginning to agree. Still, I’d rather see that process with the government giving loans to the holders of these packages until capital is raised. Short-term loans. My problem with the bailout is that it is too open-ended and too much control in the hands of too few. Plus, now, Congress is going to bastardize it even more. There is no cap on it and in my mind, we are giving more money to the people who have caused the problem. I don’t ever invest that way and I don’t like the government doing it for me.
genso on September 22, 2008 at 7:07 PM
Absolutely. First, you’ll need to sit down.
The “money” you are looking for never existed. It is all equity-based. Not cash, not goods, not natural resources. Fake value is all it ever was.
The “banks” bought and sold debt instruments that were based on the future market value of the properties. Well guess what…the future value disappeared. So did the “money” that was steamrolling through the economy just a few years ago. It was fake.
Now, the question is why did the equity disappear? I use this example to explain it:
Start two games of Monopoly. After playing some period of time, start handing money from one game to the other. After a while, the game that is giving money to the game will roll to a stop simply because there isn’t any money left on the board or the bank. You can’t pay rent, you can’t mortgage, you can’t pay taxes.
That’s what we’re doing by handing almost a trillion dollars a year away in energy costs. It’s cash, not a resource or manufactured good. We don’t have any cash left. Those dollars don’t come back in goods or services. They come back as a consumable which has a value of Zero the instant it is used, unlike a washing machine which you can use for years (value). So we buy more. And more. And then more.
BobMbx on September 22, 2008 at 7:07 PM
I agree, but the problem here is that a single mortgage may be the/an underlying security on an infinite number of MBS packages. You would only be able to sell it (a specific mortgage) once. All other MBS “owners” take the loss, and we’re right back where we started.
BobMbx on September 22, 2008 at 7:14 PM
newflash: China is not a capitalist country..they are run by COMMUNISTS…they’re a fascist country, where the government has its hand in every bit of industry. your analogy is laughable!
given this bailout, we’re heading in that direction…
right4life on September 22, 2008 at 7:15 PM
genso on September 22, 2008 at 7:07 PM
yeah I agree too open ended and too much power to too few. the basic concept is good but it needs some work. the end result should be to protect taxpayers while cleaning out the system. crimes and courts should enter the picture also after the crisis is over.
unseen on September 22, 2008 at 7:27 PM
newflash: China is not a capitalist country..they are run by COMMUNISTS…they’re a fascist country, where the government has its hand in every bit of industry. your analogy is laughable!
given this bailout, we’re heading in that direction…
right4life on September 22, 2008 at 7:15 PM
NEWSFLASH.
China is the most capitalistic society on earth right now.
unseen on September 22, 2008 at 7:28 PM
I just heard that AIG my not accept bailout. Stockholders may do this themselves.
JellyToast on September 22, 2008 at 7:30 PM
another newsflash. Capitalism and democracy do not go hand in hand. Russia is another example of capitalism working in a undemocratic country.
unseen on September 22, 2008 at 7:31 PM
I just heard that AIG my not accept bailout. Stockholders may do this themselves.
JellyToast on September 22, 2008 at 7:30 PM
I wouldn’t be surprised. the deal was a very bad deal for AIG. taxpayers basically bought AIG for 8.5 cents on the dollar.
unseen on September 22, 2008 at 7:32 PM
given this bailout, we’re heading in that direction…
right4life on September 22, 2008 at 7:15 PM
The chineese gov of today is more like a Mafia family than communists.
unseen on September 22, 2008 at 7:33 PM
The same is true for Russia
unseen on September 22, 2008 at 7:34 PM
The mafia is a purer form of capitalism than a democracy where everyone gets an equal vote. I agree with your point above about fundamental tensions existing between democracy and capitalism, though ultimately they contribute to the health of one another.
dedalus on September 22, 2008 at 7:38 PM
Given how tough Paulson has been on common and preferred shareholders with Bear and the GSE’s, the AIG shareholders would do well outside of the government program if possible.
dedalus on September 22, 2008 at 7:40 PM
dedalus on September 22, 2008 at 7:38 PM
Yes capitalism and democracy are good together but are not needed for each to coexist.
unseen on September 22, 2008 at 7:41 PM
Some amazing posts,,, for 225 years America has risen to become the strongest, greatest nation on the face of this earth. 225 years of prosperity,, untold and never before seen prosperity all with freedom and yes, capitalism,, and now suddenly,, in 2008, some banks and institutions start to fail and some are so quickly ready the throw out the nation and run to communism and socialism.
This is incredible. Are so many people this stupid??
There are Democrats, socialists and Marxists right now thinking to themselves,,, “like taking candy from a baby!”
JellyToast on September 22, 2008 at 7:43 PM
dedalus on September 22, 2008 at 7:40 PM
Simply a matter of capital. If the shreholders want to dilute their shares enough they can raise the capital. This in th eera of management being paid in stock options goes agaisnt their interests. Therefore Management is more concerned about their golden pensions than shareholders rights. They could probably raise the capital needed at a step price but it would IMO be better than what the gov is offering. another reason I like the bailout. The gov is making it very tough to get bailed out.
unseen on September 22, 2008 at 7:44 PM
Actually, China is in a funny position now. They have their own problems with Muslims and they don’t want a strong Russia to have to deal with. They are trying to make inroads into Africa but it is costing them dearly. They really need our economy to feed theirs so you may see them stepping up to help. I still think they would like to dominate us, but the timing is lousy for them now.
genso on September 22, 2008 at 7:45 PM
The bail out is a bunch of BS.
They have been pedaling this bunk since the early 80’s starting with Chrysler bailout. With every bailout they even use the same language “if we don’t do this now the whole system will collapse”.
Worse still the public buys it as most politicians cheer with the government set to get even bigger. They are drooling with the lard they are trotting out. Listen to some of the comments above–if we don’t this it will be worse. Oh really, how do you know that? You only believe it because the people that caused the problem in the first place are telling you that.
Sooner or later you have to ask yourself, are you a capitalist and a believer in the free market. Yes or no. Do you trust the secret hand of the free market to resolve imbalances? There’s no semi pregnant free market. That’s socialism which leads to fascism/communism.
Every time there has been a bailout, however small, the warnings were there that ultimately they will get bigger and bigger until finally the marketplace collapses from the moral hazards we have created.
Every home owner were told/warned by folks such as myself we were living in a bubble. A bubble that was going to explode exactly like the tech bubble and the ongoing commodity/crude oil bubble. But we didn’t care because we were on our way to imagined millions with no effort as housing went up every year 10-20%. Year in year out defying economic gravity.
Well the party is over but 69% of the US that owns a house wants a do over. They/we love, or pretend to, capitalism and the free market until it smacks us with reality.
Sadly we will get our bail out only to make matters worse for our children. Tell me how much you love them again.
I’ll repeat what I said a few days ago:
As to the market it has not frozen up. What has happened is the banks did not like the prices they were being offered for the junk they are carrying on their books. Because of the 30-1 leverage they use, at our expense I might add, a 3% decline in any asset wipes out the underlying capital. Virtually every brokerage firm and many banks are technically insolvent and rightly so. When Paulson’s Goldman Sachs was thrown on the heap on Thursday this grand bailout came into existence. It was that 30-1 leverage in the good times that put billions in bonuses in his and others pockets every year on Wall Street.
We are being had once again…..
You can get a peice of the bailout for yourself here
http://www.buymyshitpile.com/
patrick neid on September 22, 2008 at 7:46 PM
JellyToast on September 22, 2008 at 7:43 PM
Those 225 years have been marked with many depressions and bank failures. Each time the pain has been great the citizens always run towards socialism. Did you miss the New Deal? The trick here is to not go into a depression so we do not run into socialism. If it takes a bailout to get this result I’m all for it. Better a spoonful of medicine then the whole bottle.
unseen on September 22, 2008 at 7:47 PM
The mafia is a purer form of capitalism
Uh,,, wow,, hard to respond to that one,,, let me see,, well, if I go to Burger King,, I usually don’t have to look over my shoulder and wonder if Ronald McDonald saw me,, uhh, the mafia is not a pure form of capitalism,, the choices they give me are, submit or die. Chevy or Buick tries to get me to submit with rebates and other offers, the mob will try to get me to submit by breaking my kneecaps.
JellyToast on September 22, 2008 at 7:49 PM
BobMbx on September 22, 2008 at 7:14 PM
good points. If I wanted a way to destroy America I could not come up with a better one than the MBS.
unseen on September 22, 2008 at 7:50 PM
JellyToast on September 22, 2008 at 7:49 PM
But if the Mafia owns both Burger King and MCd’s? And chevy and buick? They could care less what you buy. The % of the cut comes back to them.
unseen on September 22, 2008 at 7:52 PM
Those 225 years have been marked with many depressions and bank failures
And some how we have prospered all along the way. We got through them didn’t we? And as for the new deals,, the new deal prolonged the depression.
The word “bailout” can mean many things. Who the heck is going to bailout this government when it collapses from it’s own weight??? This money does not rain down from heaven!!!!!
JellyToast on September 22, 2008 at 7:54 PM
patrick neid on September 22, 2008 at 7:46 PM
History shows you are wrong. Hoover said the same thing. It didn’t work out the way he thought it would.
unseen on September 22, 2008 at 7:55 PM
JellyToast on September 22, 2008 at 7:54 PM
yes we got through those tough patches but each one was marked by a run towards socialism. It always happens like Rain. depressions bring socialism, choas, revolutions, revolts, communism, war etc. Depressions are bad. Not something to get thru but something that changes everything on a subatomic level. Anything we can do to aviod one is worth it IMO.
unseen on September 22, 2008 at 7:58 PM
The bank panic of 1907 was the 4th large panic following the Civil War. The panic was bad enough that it led to the creation of the Federal Reserve.
Government’s relationship with banking has always been an are of contention even among the founders–famously with Jefferson and Hamilton on opposite sides of the issue.
dedalus on September 22, 2008 at 8:00 PM
But if the Mafia owns both Burger King and MCd’s? And chevy and buick? They could care less what you buy. The % of the cut comes back to them.
Are you being serious or are you just playing me??? If they owned them all they would not let me leave town! I would be forced to buy their burgers and cars far above the normal price. And if i were forced to buy the products because I had no choice,, there would be no incentive on their part to make a quality product!!!!
A prison is not capitalism! The prison owns everything in the prison as well. The cafeteria,, the doctors office, the laundramat and the housing space,,, hey,, sounds like a nice place to live and I am sure the prices are just right!!!
JellyToast on September 22, 2008 at 8:01 PM
The mafia’s capitalism is more unfettered than the “mixed economy” that the United States and Europe have where capitalism is combined with government programs and regulations.
You could also look to Medieval Europe or the 19th century American West for other forms of capitalism that were less encumbered by government regulation.
dedalus on September 22, 2008 at 8:07 PM
First laugh of the day. Thanks, Pat.
BobMbx on September 22, 2008 at 8:21 PM
I saw an interesting post on this subject at ” Big Lizards .
I posted a part of what he wrote on the subject over in the other thread on this topic, but I hated to use that much space again. According to the post if this plans works the way it is supposed to it could end up in the black in the long run, actually net a return of sorts.
However, Dafydd also points out that if the Democrats tack a lot of stuff on the thing and change it from its original form, the costs would go up..so would the government involvement.
Terrye on September 22, 2008 at 8:22 PM
JellyToast on September 22, 2008 at 8:01 PM
you don’t thing there is capitalism in Prision I wonder what the going rate is for a carton of cigs?
china doesn’t allow it people to leave. but they do in most cases allow them to buy what they want and they allow business to do what it wants to achieve profit.
Pure capitalism means no regulation on pollutions, no workers rights, no safety check and if the country does not have consumer friendly courts safety becomes a secondary thought. the bottom line ia all important. thus pure capitalism is not a real good thing for the masses. Regulated capitalism is the greatest thing on the planet. Pure capitalism is not.
unseen on September 22, 2008 at 8:26 PM
Dude, “Dickens” (I assume you mean industrial England) and the French Revolution weren’t Socialist. The Bolshevik Revolution and Stalin weren’t Socialist (Communism is a somewhat different bird), and Hitler was fascist, again, slightly different than this situation. History really isn’t that hard to read. And none of those places were free, democratic, or capitalist before their revolutions. So what’s your point?
Yes, FDR sucked. But we had worse depressions in the 1790s, 1810s, 1860s, and 1890s without wholesale collapse of the American system.
This bailout is Socialism, it is an abandonment of our principles and our way of life, and it’s disturbing to me how many people are willing to justify it out of ignorance and fear. It will fail, anyway, and we’ll be worse off for it. Weakness is never a virtue.
elladeon on September 22, 2008 at 8:27 PM
dedalus on September 22, 2008 at 8:00 PM
yes once again history shows depressions bring on socialism. Like sunshine leads to rain.
unseen on September 22, 2008 at 8:27 PM
yeah sure because you say so. please, the government is involved in every aspect of business. its a fascist state
let me guess, you’re a liberal!! laughable!!
right4life on September 22, 2008 at 8:27 PM
If they had a monopoly, they could do that. If they had a monopoly with cable TV access they could keep increasing rates and provide lousy service or with a monopoly on software they could charge you for upgrades that did little other than make your machine run slower.
Monopolies can be a natural outgrowth of capitalism. Markets work better and consumers get better products when governments keep monopolies in check. A hundred years ago Teddy Roosevelt wrestled with the first titans of the industrial age like Rockefeller and Carnegie to limit the power of monopolies and trusts.
dedalus on September 22, 2008 at 8:28 PM
I wrote to my senators this morning expressing my concern over no oversight. Not one branch of government can work slone without the checks and balances of the other two. To let one man make such huge decisions regarding astronomical amounts of tax payer money is ridiculous. McCain makes sense in having a small group of at least three with true business savvy be consulted and ask questions and hopefully be able to forsee consequences to actions that one man alone may fail to see.
Pat in NC on September 22, 2008 at 8:28 PM
You need to get a better education. Hoover started the government intervening that FDR thought he was improving on that led to a depression that only ended with the advent of WWII.
“A dedicated Progressive and Reformer, Hoover saw the presidency as a vehicle for improving the conditions of all Americans by regulation and by encouraging volunteerism. Long before he entered politics he denounced laissez-faire thinking.[10] As Commerce Secretary he had taken an active pro-regulation stance. As President he helped push tariff and farm support bills through Congress.”
http://en.wikipedia.org/wiki/Herbert_Hoover
But leave Hoover out of this. I read your link about “pure Capitalism”. As it turns out it was about China! If that is your idea about capitalism, despite what may be your other fine qualities, you are clueless when it comes to economics.
patrick neid on September 22, 2008 at 8:29 PM
elladeon on September 22, 2008 at 8:27 PM
Hitler was from the National Socialist party. those panics in the 1700’s and 1800’s did change our country at the time they occurred just not has bad as the great drepression. And does it matter they were not “free” societites. every society changes duirng bad times. almost 100% towrads more governmental control or revolution one or the other in our case would be bad.
unseen on September 22, 2008 at 8:34 PM
Throwing 700 Billion down a government-created rat hole is not going to solve anything.
Fannie Mae and Freddie Mac were converted to Democrat piggy banks. They failed because Democrats were forcing them to make bad loans to people they knew could not pay. And what money they had was siphoned off by politicians (mostly Democrat: mainly Chris Dodd and Barack Obama in recent years) for their own purposes. If you reward this corrupt behavior, the result will be more corrupt behavior!!!
Applicable time-tested advice for those looking for a solution:
1. Never throw good money after bad.
2. Don’t just do something, stand there!!!
Since Fannie Mae and Freddie Mac were being propped up by dishonest accounting, why not let them fail? We don’t need a housing industry which only exists to perpetrate fraud. And where are the prosecutors who should be pursuing massive Sarbanes-Oxley violations and other criminal fraud???
And don’t worry about liquidity of the housing market: good loans will always be liquid. If loans are high-quality loans, they can be bundled and financed by bonds in order to provide market liquidity…without expenditure of any government funds!!!
landlines on September 22, 2008 at 8:47 PM
Now let me understand this. Fail out wants $700 Billion to $1 Trillion dollars.
That’s one thousand Billion dollars. A Billion dollars one thousand times.
Where’s it going to come from? Don’t you dare let this happen. The minute the money printing presses start cranking out one thousand billion dollars, the dollar in your wallet is going to be worth, maybe, 5 cents.
The more money that gets cranked out into circulation, the less each dollar will be worth. Got $10.00. You’ll have maybe 50 cents. It will be inflation on STEROIDS! Let’s NOT let it happen!
It will be a very cold day in hell when the federal government decides to help Mr. John Smith with his failing family business.
Why should the government help Morgan Stanley,Goldman Sachs, Bear Sterns, Lehman Brothers, AIG or any other failing businesses? The government is NOT in the business of doing business or owning businesses — unless, of course, you agree to a bit of fascism.
Perhaps a little socialism? I say NO.
And, the failed businesses are scaring the public with the threat of no more loan money if they don’t get their way. Sounds like a Mexican kidnapping and hostage taking with ransom demand — muscle-style. Just say NO!
Let those who have made miscalculations and bad judgments face the music. The guys who handle the oil are NOT giving us any breaks at all. Why should we give them anything?
After all they’re just a few, right? And, how did they all happen to fail at the same time; along with Freddie and Fannie. Talk about choreographing and orchestrating the Ponzi scheme.
Let them fail. Remember AMC motor cars? Remember Gulf+Western oil? Remember CompUSA? When businesses run out of money and ideas; it’s time for someone else to take the place of those failing businesses.
It’s called Capitalism.
Fight the bail-out. Let them fail-out!
AdrianS on September 22, 2008 at 9:13 PM
Sigh, no acutaly, thats EXACTLY what the Fed did, they created more money, and pumped it into the system.
Whether its an electron, or a piece of paper is immaterial, they pumped Dollars into the system, which is why the dollar dropped.
Romeo13 on September 22, 2008 at 9:16 PM
Nope, what you are confusing is Net Worth, with Dollars… they are not the same thing UNLESS you have a large amount of liquid capital on hand.
Net Worth is MEASURED in dollars… but it is NOT the dollars themselves… and its the availability of the Dollar itself that keeps liquidity in the system.
Has Net Worth decreased? Sure? but the dollars that measure wealth have not gone away, they have just changed hands to someone else…
Romeo13 on September 22, 2008 at 9:19 PM
$1.8 TRILLION
http://globaleconomicanalysis.blogspot.com/2008/09/how-congress-intends-to-waste-18.html
What is worse is that this is the MINIMUM figure in play.
No one knows how bad the damage is. No one.
AIG’s exposure alone could be as high at $1 Tril. That $85 billion will melt like butter on a hot griddle.
Sorry to disagree with Newt, but mark to market is the capitalist cure for this problem.
These banks deserve to go under.
Those who violated the laws must be punished in accordance with the law.
This includes Henry Paulson -there is no way his hands are clean from this crisis. None. All the investment banks played the game – turning sewage into wine with the connivance of the “ratings” agencies and selling it to pension funds and the rest of the world.
The way to restart the credit markets is to create new players, and give them the opportunity to arise, not to reward banks who take on stupid levels of risk knowing that the gov’t will bail them out.
A new RTC may be needed, but remember the RTC disposed of assets after the S&Ls failed not before.
Paulson should resign now, immediately. His hands are unclean and by protecting the banks, he is protecting his own fortune. By rights Paulson should be one of the ones under investigation. You can be sure he will be as soon as he leaves office.
Romeo13:
A lot of the dollars you refer to were wasted economic activity – building houses, in some cases, literally upon the sand. Houses are not wealth producing assets – they don’t contribute to economic growth after you buy them the way tools or machinery or computers can. A lot of time, steel, wood and wire went build houses that now sit vacant or seat vagrants.
olddeadmeat on September 22, 2008 at 9:34 PM
Romeo said:
Equity is included in net worth.
BobMbx on September 22, 2008 at 9:50 PM
olddeadmeat: I cannot say that I disagree with you regarding Paulson. Do you have any thoughts about Dodd, Franks, Schumer, Raines, Johnson, etal?
onlineanalyst on September 22, 2008 at 10:14 PM
The financial institutions are failing. Many have had their shares driven down in the market–Merrill sold itself for less than half of what it was worth a year ago. In the case of Bear, the GSE’s and Lehman the common shareholders were either decimated or wiped out. Paulson saw to it that even the preferred shareholders were clobbered in the case of the GSE’s.
The issue isn’t about saving individual companies–ask Lehman employees who now report to work elsewhere. The issue is about the failure of the commercial paper market and markets more generally. The government should let companies fail, but it can’t let the market itself cease to function.
dedalus on September 22, 2008 at 10:18 PM
Public risk + private profit – ethics == graft + fragile economy
No amount of government regulation or oversight can fix this. The same greed that everyone decries on Wall Street is institutionalized in Washington. Your choice is greedy businessmen or greedy regulators. Or both, if this “play” goes through.
I can’t help but wonder whether this is not just one more step towards the fulfillment of Hamilton’s dream of a nationalized banking system.
spmat on September 22, 2008 at 11:21 PM
onlineanalyst:
Specifically, no. Democrats and Republicans each had their reasons to close their eyes to what was going on. In too many cases, that does appear to be $$$$. Maybe you don’t like McCain-Feingold. Fine, how would you fix that problem? (Maybe that discussion belongs on another post).
I could commend John McCain for urging more government regulation of Fannie/Freddie, and could condemn those you name and many others for opposing or ignoring him.
I am less irritated at them and Democrats in general just because this is the sort of mess I would have expected them to create. I used to expect competence from the GOP.
In fact, my real beef is not with the need for more gov’t regulation, but the lack of gov’t enforcement.
The GOP drive for small gov’t was, to my mind, a shade too fanatic and uncritical in its thinking for my taste – at least as reflected in the Bush administration.
Where laws exist but there is insufficient enforcement, then law burdens honest competitors but shields the corrupt. Banks that played by the rules and didn’t pull stunts with their balance sheets saw their comparative returns a distant second to firms that played fast and lose with the rules. So the market dictated – stretch the rules or lose.
Result: everyone kept stretching and stretching the rules. I have heard and seen reports of Lehman and other employees at these banks wondering when the regulators were going to blow the whistle and tell everyone to get out of the pool. They never did. So more junk loans were made to be sold, until finally the music stopped.
To succeed, small gov’t has to be rooted in small regulation. Before bureaucracy can shrink, it’s regulatory scheme has to. Otherwise, market forces will push towards breaking the rules. We could cut the IRS size in half, but if we don’t adjust the tax code to match, corrupt corporations and citizens would profit, while the most honest ones of each would be at a comparative disadvantage.
To my mind, a case in point is the Consumer Product Safety Commission. If you are going to have it at all, it has to be tough, merciless, just and incorruptible. Right now, it’s a lapdog that gives the illusion of protection. If you are going to shield corporations from product liability lawsuit damages, then the CPSC needs real teeth and a real budget. But if you are going to weaken it, then you need to leave the doors open at the courthouse. Democrats should hate product liability lawyers, the GOP should love them as the market mechanism of choice.
I am wandering a bit far afield, but it is necessary. If the GOP wants to regain the high ground, it should live up to its ideals – let the market work by keeping regulation small. This means NOT letting corporations profit from corrupt behavior. Either hire professionals to act as regulators, and pay them very well, or let private actors have access thru the court system. This means the GOP should love private ambulance chasers – they are the non-gov’t actor that will punish the worst corruption and keep bad actors in check.
YOU HAVE TO HAVE A SYSTEM IN PLACE TO PUNISH CORRUPTION OR YOU WILL HAVE A CORRUPTED MARKET.
MAKE NO MISTAKE – THIS WHOLE MESS IS ABOUT CORRUPTION AND DISHONESTY – from homebuyers to realtors to brokers to banks to investment banks to ratings agencies. All the cops were asleep, so the crooks ran wild. In fact, I would not be surprised to find out that some of the cops were corrupted too. How many of them left jobs to go work in Wall Street and get rich, I wonder?
And yes, I know lots of people will say it wasn’t illegal, what they were doing. Too bad. The whole process became deceptive and it was wrong. Whether it was legal won’t cut the bailout cost any less.
Instead of Congress bailing out the bad actors, we should be asking how to create some good actors who can clean up the mess.
So onlineanalyst, back to your question: I condemn Dodd and the rest because they should have known what was going on. They had the power to call attention to the problem and they did bupkis.
At least McCain tried on a tiny piece of it. I have more respect for him in that regard than I do for Bush or all his fanatic cronies.
Hey GOP, if you want to do the right thing, put Eliot Ness on the beat and not Barney Frank, oops, Barney Fife.
olddeadmeat on September 22, 2008 at 11:24 PM
The more I think about this bail out the more i’m against it..
the more money they print, they lower the Dollar will go..
When the Dollar goes lower Oil will go higher(Oil is based off of the Dollar)
Oil drives EVERYTHING in our economy..
Looks like Energy and OIL, OUR Oil Just got pumped into this election BIGTIME…
Chakra Hammer on September 22, 2008 at 11:45 PM
More Nuclear power, Clean Coal, Off Shore Drilling, ANWR, Wind, Solar, New Technologies, More refineries, ALL OF IT.
Chakra Hammer on September 22, 2008 at 11:47 PM
I disagree with both quotes.
Socialism happens when the brown stains appear on the Constitution when it’s used for toilet paper.
This is EXACTLY what happens when you have collusion (deliberate, direct or not) between the three branches of government and we move from a constitutional republic to a democracy.
The wants of the majority are infinite and there is no protection for the minority when there is legal mob rule called a democracy.
The constitution was there to protect us. It is no where to be found in this entire mess.
This morning I read this “The Federal Reserve granted permission for Goldman Sachs and Morgan Stanley to become bank holding companies in order to stay in business.”
Who in the hell elected anyone on the Federal Reserve?
Last weekend there were a bunch of limousines pulling up to the Fed Res in NY. And there wasn’t a single elected official there watching out for you or me. Not one.
And come Monday morning, the deal-she is done.
Bye, bye republic. And BTW, Mr. and Mrs. Citizen: as GWB put it so eloquently “The taxpayers dollars are at risk.”
Ya’ think?
But fear not, oh intrepid voter. Who is really responsible for this?
You are. All of you who voted for all the these clowns over all these decades, you are responsible. You’ve sent these people to Congress. You sent them to the White House. And there is blame all around for both parties.
And especially these trusty SCOTUS and Fed justice appointments where IF (now WHEN) the Congress and president went unconstitutional on us (like McCain/Feingold!!) they were there to be a firewall. Looks like a firewall of flammable material doesn’t protect quite as well as I’d hope.
Unfortunately, all you bozos are also going to take constitutionalists like me over the edge also.
Happy landings!
Oh, by the way: the happy landing that’s coming up will be on the sharp spikes called Social Security/Medicare.
Amendment X on September 22, 2008 at 11:59 PM
The Difference Between a Million and a Trillion
I had a hard time understanding what 3 trillion dollars (Annual Federal Budget) looked like is so I took the time to research a few facts, then do the math, so I could develop model for some fun conversation.
So I’ll share it with you:
Take an imaginary stack of $100 bills totaling 1 million dollars and lay that stack on the highway on the dotted yellow line, so that the stack is placed horizontally in the direction of travel.
Then imagine travelling down the road in your little red sportscar at a casual 60 miles per hour.
When you pass that stack of bills, you cannot blink you’re eye fast enough before you’ve passed that million dollar stack of Benjamin Franklins. In fact, most humans would have needed a stack eight times bigger to equal the time it would take to blink they’re eye.
Pack your bags ’cause we’re going on a road trip this time.
Now let’s stack 3 trillion dollars worth of $100 bills and lay them on the road in the same fashion.
Let’s start in Vancouver, British Columbia. You would have to drive all the way to San Diego, CA…and then up to Salt Lake City, UT before you finished passing all that cash.
Or, it’s like driving from Portland, ME to San Antonio, TX.
Saltysam on September 23, 2008 at 12:06 AM
Or, a trillion is to a million like 200 miles is to a foot.
MB4 on September 23, 2008 at 12:50 AM
Someone needs to tell them “That’s Too Much!”
http://en.wikipedia.org/wiki/That%27s_Too_Much!
>:D
Chakra Hammer on September 23, 2008 at 1:24 AM
I thought this was interesting. Over at Instapundit I saw this, he has a link:
MORE: How you respond is up to you, but the folks at International A.N.S.W.E.R. email me that they’ve set up a site called VoteNoBailout.org to oppose the bailout plan. That doesn’t guarantee that the bailout is a good idea, of course . . . .
Terrye on September 23, 2008 at 6:45 AM
One of the biggest dangers here is allowing this precedent. Who will be next to play God? Government of the people, for the people and by the people depends on the people keeping things straight.
Paulson has to work for us or he’s out. Where’s my torch and pitchfork…
rishika on September 23, 2008 at 7:38 AM
The solution to this “crises” is simple:
1) Stop dictating to individuals and institutions who they must loan money to and under what conditions. Nothing justifies the notion that government has a right to dictate who must be granted a loan and on what terms.
2) Stop bailing out firms that make stupid loan decisions and get into trouble as a result. Allow them to go under.
A “bailout” is simply a means of transferring the losses from those who made the stupid loan decisions to the rest of us, the taxpayers. Of course, the transfer won’t be direct in the form of some extra, special new tax we are all forced to pay. That would make the issue too clear and the American people wouldn’t stand for it.
No, the transfer will be in the form of the Federal Reserve creating massive new amounts of paper money to give to these institutions. This new money will then — over time — devalue YOUR money proportionally. So you will pay for the bailout in the form of higher prices for a vast array of goods and services. That will keep the issue cloudy so the American people do not understand what’s been done to them.
MichaelWSmith on September 23, 2008 at 8:12 AM
I urge all of you to read Henry Hazlitt’s classic book,”Economics in One Lesson”. It is easy to read and contains very little in the way of math and statistics. It’s just common sense and logic that anyone can follow.
And after you finish it, you will know more about economics than any politician in Washington and more than all the columnists at the New York Times, the Boston Globe, the Los Angeles Times and the Chicago Tribune.
MichaelWSmith on September 23, 2008 at 8:27 AM
Just wondering:
Is the Senate Banking Committee the repository of every freaking retard in the Senate? Judging by the roster….yes.
Calm Before the Storm on September 23, 2008 at 10:15 AM
What about US dollars that leave the US markets?
China
Or Debt?
Debt holders
How is the US financial situation effecting the global economy?
How is this liquidity issue the fed hopes to fix by the bailout going to effect the US dollar long term in the global markets?
cryptojunkie on September 23, 2008 at 11:55 AM
Point of clarification, I’m not asking rhetorical questions. I really would like to know.
cryptojunkie on September 23, 2008 at 12:00 PM
Yep, and thats my point.
We are just putting a bandaid on the situation, while not taking care of the Root cause, which is the outpouring of American wealth to other countries due to our own stupid Energy, economic, and Environmental policies….
Romeo13 on September 23, 2008 at 12:10 PM
By adding about 15% more debt to the National Debt with this bailout? (1.6 Trillion to the 9.5 Trillion we already have..).
Dollar is going to fall… it has to.
Only chance we have to save the American economy IMO is to become a Net Energy EXPORTER… which we could do if we had the will…
Romeo13 on September 23, 2008 at 12:12 PM
Comment pages: « Previous 1 2 3 4 Next »