It’s shameless politics, all of it. Now you’ve got Ed Morrissey at Hot Air, a site with headlines such as “How the Democrats caused the financial crisis,” spouting about limitations on executive power. However, here’s the …

The US Government is talking about bailing out financial companies who are in the business of making money by purchasing the risk of loaning money. They normally make a considerable profit in doing this and have become huge companies. The bailout would…

“This post from Ed Morrissey, a full-fledged advocate of every last expansion of unfettered executive power over the last few years — is just so exquisite, so perfectly constructed, so unbearably hilarious, that it really expands the definition of “self-satire”.”

Check out which members of Congress are affected and how they have a personal stake in the bailouts: http://www.rep-am.com/articles/2008/09/23/opinion/367686.txt

1. The federal government has nationalized Bear Stearns, Fannie Mae, Freddie Mac, and AIG
2. The federal government is proposing to nationalize, what regulators consider now, many, many banks with ‘bad’ loans and resulting low capital.
3. The premise is the banks, even with the fed window will fail and put pressure on FDIC and Treasury.

The fallacy: Given that the banks got most all of their money back from selling the loans to Freddie Mac and Fannie Mae, their capital on ‘bad’ mortgages was replenished and foisted off on Mac and Mae. So the ‘bad’ is not relevant to this discussion of capital. They got it back.

The dirty secret: The banks, out of greed, at least in this area, turned around and loaned all their capital to real estate developers and construction loans, that have all gone bad, and they continue to hold. There is no secondary market for these ‘bad’ loans.

Let them fail. Why should bankers inject their own money, or raise money for capital requirements when the Fed will ‘ease the pain’.This is a Bank Preservation Bill for very poor decisions. Now, despite the Fed window, they won’t loan to anybody; homeowners, etc. How nice.

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

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…

cryptojunkie on September 23, 2008 at 11:55 AM

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….

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.

Romeo13 on September 22, 2008 at 6:36 PM

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?

Is the Senate Banking Committee the repository of every freaking retard in the Senate? Judging by the roster….yes.

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.

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.

“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.”

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…

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 . . . .

http://en.wikipedia.org/wiki/That%27s_Too_Much!

>:D

Saltysam on September 23, 2008 at 12:06 AM

Or, a trillion is to a million like 200 miles is to a foot.

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.

Poor people have been around for a long time. Socialism usually happens when they get guns or enough votes

I disagree.
Socialism (tries) rear its ugly head when enough wool is pulled over the eyes of enough targeted Democrat constituents who are foolish enough to buy into the class envy and class warfare game that the Dems are selling.
seanrobins on September 21, 2008 at 9:12 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.

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…

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.