Open thread: Bush pitches the Paulson plan to America; Update: Paulson reaches deal with Democrats?
posted at 8:38 pm on September 24, 2008 by Allahpundit
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9 p.m. ET all across the dial. Here’s your thread to sound off. Video later is possible but unlikely unless he really ratchets up the doomsday rhetoric and I can’t resist. While you wait, a tidbit that’s just crossing the wires. Did Dubya do his pal McCain a solid by dragging Obama to D.C.?
With extraordinary stakes on the line, President Bush has invited both presidential candidates and the leaders of the House and Senate to the White House on Thursday in hopes of securing a bill to rescue the economy.
Bush took the unusual step Wednesday night of calling Democratic Sen. Barack Obama directly to invite him to the meeting, White House press secretary Dana Perino said. An Obama spokesman said the senator would attend. The White House has also invited Republican Sen. John McCain.
Update: Here’s the joint McCain/Obama statement on the need to come together in this trying time in the spirit of etc etc etc.
Update: A “fragile” deal has been struck with the Democrats at least. Durbin expects a bill as early as tomorrow but debate through the weekend; where that leaves McCain vis-a-vis Friday night is anyone’s guess.
Senators described a very somber, serious meeting, with Paulson describing the risk of inaction and working hard to sell the plan to skeptical Democrats during the closed-door caucus meeting. Paulson said unemployment rates could approach 10 percent if the plan was not adopted, senators said, although he did indicate possible receptiveness to the idea of implementing it in stages. Such a plan, Paulson told senators, has worked in countries like Japan, where financial rescue plans were done in stages.
“He talked about the risks in the markets, the risk of the financial system locking up, the risk of companies not being able to borrow money, the risk of major firms failing, the risk of a substantial increase in unemployment,” said Conrad.
Update: Is Jim Johnson going to help prep The One before his meeting with Bush? He’s still advising the campaign, apparently.
Update: The GOP is balking and the Dems won’t jump alone:
Frank added that he believes Pelosi has a minimum threshold of Republican votes necessary to bring the bill forward, but he said he did not know what that number was.
“They’re not even close to having enough votes,” said Rep. Jason Altmire (D-Pa.), a freshman facing a tough reelection. “This has to be bipartisan.”
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Not sure which part of my comment you are responding to; therefore, I’m not sure whether we are in agreement or disagreement?
Pianobuff on September 24, 2008 at 9:54 PM
Bush ought to invite Phil Gramm to the bailout koolaid party. Just for grins, old times sake and keeping the circle unbroken.
Fletch54 on September 24, 2008 at 9:54 PM
gee wiz, I’m so bummed. Allah if you’re ever going to post another palate cleanser or humping robot post, now would be a good time, good gravy…
superdave on September 24, 2008 at 9:54 PM
dmann:
I have no idea what you are talking about. None.
Terrye on September 24, 2008 at 9:54 PM
OK not too bad I hope? Rivalries aside :)
RushBaby on September 24, 2008 at 9:54 PM
pianobuff:
My point is that you can not save up enough money to start a business of any size. It takes a lot of capitol to do that. There are exceptions to every rule, but just saving up and doing everything cash is usually not very realistic.
Terrye on September 24, 2008 at 9:57 PM
O.K., I’m turning this off. It’s making me sick. Bush is a huge disappointment- he should have let Obama twist in the wind, I don’t get his inclusion- at all. McCain is going to get screwed in all this and it will eventually send us all down the road to socialism. Talk about “hump day”.
anniekc on September 24, 2008 at 9:57 PM
Mortgages are one thing. Not many people have that kind of liquidity. But there is absolutely no way I would take an ARM. I’d move in with the inlaws first. 30 year fixed is the only way to go on a mortgage.
Vehicle payments I’m wavering on. Right now I have a truck payment and I am SERIOUSLY considering getting out from under that albatross either by selling it or getting a third job to pay it off.
No use for credit cards what so ever. A very hard lesson there that I’m still digging myself out of. Save for what you want. Cash is King.
Pilgrim on September 24, 2008 at 9:58 PM
He didn’t. READ the transcript. He implied instead that the markets took on risky assets they thought weren’t as risky as they were. He focused on crappy assumptions that were made in the markets, not greed.
People, please READ the TRANSCRIPT of what W said. Here’s what I took from his speech:
-This is not to bail out specific companies. It’s to buy assets that TODAY are at fire sale price, only around 5% are going to default, and LATER when their fair market value increases again as the economy rights itself, sell them to PROFIT the taxpayer or at leat break even. He called it an INVESTMENT NOT A HAND-OUT to companies that don’t deserve it. It’s buying troubled ASSETS, not paying off derelict Wall Streeters.
-I agree with you. Regulatory rules need changing so that people who apply for car loans, student loans, business loans…and most of all, MORTGAGES…ONLY the ones who clearly CAN afford them would be approved.
Shirotayama on September 24, 2008 at 9:58 PM
Weight of Glory: did my eyes deceive me or are you a newly minted “hatchling”?
RushBaby on September 24, 2008 at 9:59 PM
Lets bring in Tony Rezko and Frank Raines have them stand next to Obama, and make it look like a Sell out of America..
Chakra Hammer on September 24, 2008 at 9:59 PM
Annie, you need to lay off the damn frickin’ pessimism.
Bush did exactly what McCain wanted, and Obama HAS to come back. The press may spin it one way, but the public will know better.
McCain wins. Flat out.
Sakaki on September 24, 2008 at 10:00 PM
Yeah, and to keep the grins going, then pull out the cat’o'ninetails to flog the hell outta Gramm worse than Mel Gibson flogged Jesus in The Passion of the Christ, since Gramm is the bastard who pushed hard to get the Glass-Steagall Act repealed. Had that repeal not happened, we wouldn’t be IN this mess at all.
Shirotayama on September 24, 2008 at 10:01 PM
Eh – yeah – at least it’s an easy drive to Dallas or even just over the Texas State Line!
Plan to retire back there – that is IF we ever retire now with this horsecrap happening…
God Bless Texas :)
tru2tx on September 24, 2008 at 10:01 PM
Hopefully they remove Dodd’s hands from this. He seems to want to add more government power to buy anything and everything.
aikidoka on September 24, 2008 at 10:02 PM
Shirotayama on September 24, 2008 at 9:58 PM
the question I have and everyone should have is what price do we buy them for. Buy them to cheap and everyone goes out of business buy them for too much the CEO and shareholders get basilout and the taxpayers get stuck with the bill. the figure of $700b suggest we are going to pay full price for them and only get interest on those that pay.
unseen on September 24, 2008 at 10:02 PM
This all so very sad. I think we take our bitter pill, the on coming recession, and not add another trillion or more to the national debt with the stroke of a pen.
paulsur on September 24, 2008 at 10:03 PM
Nothing about sub-prime mortgages to Illegal Aliens??? Shocking…
DfDeportation on September 24, 2008 at 10:03 PM
Yea. But leverage is the King’s mother.
BacaDog on September 24, 2008 at 10:04 PM
The housing mortgage meltdown,has a lot to do with
Janet Rino threatening financial institutions to
be lending money to individuals that don’t even
have incomes!
And guess what!,
Now Chris and Barny wants the federal government
to bail out the same home owners,who couldn’t afford
the houses to begin with!,
In a side deal,if you help the banks,ya gotta bailout
the home owners!
With the strong arming in social engineering,that every
American has a right to a home,the American dream,Barney
and his accomplis in crime Dodd forced the banks to lend
money for houses,with zero down,zero collateral,to risky
individuals!
And again,its the Liberals mess!!!!!
And again,Liberals are getting what they want,for the
goverment to pay for homes,even when your not even working,
and the American tax payers are buying homes for the poor!!!
Nice,more “Buying of Votes”!
canopfor on September 24, 2008 at 10:04 PM
Unseen,
If you buy at 10 cents on the dollar and sell at 40 cents on the dollar, you’ve still quadruped your investment.
THAT’S the idea behind this plan. On balance, expectation is that the taxpayer’s money is paid back and the rest helps go toward other needs (payment toward the national debt, keeping medicare & social security solvent, etc., etc.)
Shirotayama on September 24, 2008 at 10:05 PM
annie:
I am not disappointed in Bush. I am disappointed in people on both sides of the aisle who seem to think this is all about them and the campaign. Everything is partisan. Bush asked Obama to be there because Obama is a candidate and as such has a responsibility to be in on this and part of the problem solving. That is the whole thing, both McCain and Obama are going to be there. If it was only McCain, it would just be about Bush and McCain. This way it is about the country as a whole. I am amazed that people can not see that. I honestly do not think that people are aware of how potentially serious this could be.
If people do not want to do this, or get behind it, then they had better be prepared for the consequences of inaction. Complaining about who is and is not at fault won’t mean much if things get half as bad as some people are saying they could.
I don’t know the answers, but I don’t want to just blow this off either.
Terrye on September 24, 2008 at 10:05 PM
Bacadog,
Leverage is a double-edged sword: EXTREMELY profitable when prices are going up…and leaving you BEYOND BROKE when prices collapse.
Shirotayama on September 24, 2008 at 10:06 PM
Screw the media.
We need to hit the steps of the Capitol with pitchforks and torches and not leave until Dodd, Franks and the other f**kers responsible are dragged out of there and into a prison cell… by legal action if possible, by the business end of a pitchfork if necessary.
Also, I still refuse to believe that the sky is falling to the degree folks are saying. Yes, it’s bad and yes I am missing some things. Here’s my problem- the people who caused the sky to fall are still there, one of them is within striking distance of the Presidency and all of them are screaming the loudest while doing the least to address the problem.
Want any end to the financial crisis? Simple- stop telling everyone that the sky is falling and start burning some of these SOBs at the stake. If we have to do a bail out, fine. Get the f**kers that caused it away from the table.
Damiano on September 24, 2008 at 10:07 PM
Ok – I see. I was asking pilgrim how he felt about this. Personally, I think there are a lot of appropriate uses of credit (as well as some pretty stupid ones) so we have similar thoughts.
Pianobuff on September 24, 2008 at 10:07 PM
OK – thanks for clarifying. I appreciate it.
Pianobuff on September 24, 2008 at 10:08 PM
No, it sounds more like Bush said that he needs Obama there.
I agree with others. He should have left Obama twisting in the wind.
Tomrrow, obama is in clearwater watching cspan.
Republicans balk at the deal; McCain arrives – does his whole insane maverick yelling thing – and they all sign onto the bill.
McCain wins.
Because of Bush, it’s a wash or looks pretty bad for McCain. He looks like he panicked – canceled the debates, ran screaming to washington.
ABC headline is case in point.
lorien1973 on September 24, 2008 at 10:09 PM
Damn right from a margin perspective on securities.
I meant leverage in the sense of prudent borrowing for mortgages, working capital, etc. Not speculation on market movements.
BacaDog on September 24, 2008 at 10:10 PM
I have wondered how much high oil prices had to do with this. I think there would have been problems in any case, but if the price of gas had not gone up so much so fast people would not have been so strapped for cash. That sucked a lot of money out of the economy very quickly. I am sure there would have been a bubble bursting anyway, but it might have been more gradual and easier to absorb.
Terrye on September 24, 2008 at 10:10 PM
Paulsur,
Are you ready to LOSE YOUR JOB WITHIN THE NEXT MONTH???
Jeezus, I must be talkin’ to people mainly 30 to 35 and below…whose parents were early baby-boomers.
I’m 48 and was raised by parents who struggled hand to mouth during the Great Depression and clearly remember the stories they told me as I was coming up.
PEOPLE: WE’VE ALREADY SPENT AROUND 1 TRILLION ON LIBERATING AND TRYING TO STABILIZE IRAQ. IF WE CAN ABSORB THAT, WE CAN ABSORB THIS.
Shirotayama on September 24, 2008 at 10:10 PM
Terrye on September 24, 2008 at 9:54 PM
An attempt to defend lorien for having the political insight to agree with my point!
dmann on September 24, 2008 at 10:13 PM
People don’t seem to realize we’re on the brink of Great Depression II.
The financial markets totally FROZE last week. If that happens again, THOUSANDS of companies large & small will go out of business, MILLIONS of Americans will be out of work.
Look yourselves in the mirror, folks. ARE YOU READY TO LOSE YOUR JOBS TODAY?
Get real.
I’m a conservative but there are times when purist conservatism are appropriate and there are national emergencies when what has to be done, has to be done.
We’re in one just such emergency.
Shirotayama on September 24, 2008 at 10:13 PM
lorien:
When did Bush say he needed Obama anywhere? He said this was an important issue that both parties had to deal with and because of that he asked both candidates to come to the White House.
Why do people have to second guess everything and create all sorts of meanings for all sorts of things?
If he had not done it this way, people would have just said it was all a poltical stunt. By asking that both candidates be there he is underscoring the seriousness of the situation.
Terrye on September 24, 2008 at 10:13 PM
Shirotayama on September 24, 2008 at 10:05 PM
yes I understand but no one is saying they are going to buy at 10cents on the dollar. what i’m hearing from Paulson and Bernake is they are going to buy at full price. (i.E 100cents on the dollar)
unseen on September 24, 2008 at 10:14 PM
I agree with you 100%, BacaDog.
Shirotayama on September 24, 2008 at 10:14 PM
I agree with the problem that there are many people still in office that are responsible for the mess in the first place. We need to vote them out of office and send some to jail.
But even if you refuse to believe that the sky is falling, when credit dries up the entire economy will stop. You may not realize this but even the dollars that you save up to buy something or start a business with are a CREDIT INSTRUMENT. If credit dries up or is severely hampered across the economy your actual dollars become worthless. The only way to repair a credit problem is with a credit fix.
JonPrichard on September 24, 2008 at 10:14 PM
dmann:
Huh?
Terrye on September 24, 2008 at 10:14 PM
Unseen,
Full Price RIGHT NOW = fire sale price.
Full Price a few years down the road = MUCH HIGHER.
Are people here not understanding that?
Read Bernanke’s testimony in front of the legis-losers yesterday please, folks.
Shirotayama on September 24, 2008 at 10:15 PM
Shirotayama on September 24, 2008 at 10:13 PM
they are frozen again today
http://www.ft.com/cms/s/0/a68e789e-8a68-11dd-a76a-0000779fd18c.html?nclick_check=1
unseen on September 24, 2008 at 10:16 PM
Shirotayama on September 24, 2008 at 10:15 PM
I’ll admit i might be misunderstanding it. but full price right now is zero. they are not going to buy them at zero.
unseen on September 24, 2008 at 10:17 PM
I’m not Neil Cavuto, but I think oil only added a burden on to consumers which was mostly integrated. The housing bubble and the subsequent credit crisis has been brewing for a longtime, and is a product of faulty policy and not a product of just supply/demand.
Spirit of 1776 on September 24, 2008 at 10:18 PM
Shiro:
I grew up in Oklahoma. I hear horror stories about the Great Depression all my life. It was not just a recession that came and went in a few months. It was years of no money. Years of people being homeless and hungry. Soup lines. Shanty towns. Okies going to California to live in migrant camps {like my grandparents} cities with no jobs, no money, no hope that things would get better for years.
That is why those old folks were so tight, they never forgot it.
Terrye on September 24, 2008 at 10:18 PM
JonPrichard, THANK YOU. Could not have expressed it better myself.
Folks, W wasn’t lyin’. Last thursday there was a run on money market mutual funds (supposedly safe csah funds), they stopped redeeming withdrawal orders to hoard cash for an expected run, and the commercial paper market COLLAPSED. If that continued, business would over time simply STOP expanding, and come to a halt when their cash became worthless.
This is serious S**T we’re in. In a way, the sky IS falling. At least, the value of any money we have left…for a long, long time.
Shirotayama on September 24, 2008 at 10:19 PM
JonPrichard on September 24, 2008 at 10:14 PM
or do what Argentina did and default on all its obligations and rebuild. took about 20 years of painstaking poverty but….that is what it sounds like the majority of people want so who are we to stand in their way…
unseen on September 24, 2008 at 10:19 PM
Spirit:
I think it had been brewing for a long time too, I just think it might have been easier to deal with if we had not been dealing with high energy prices too.
Terrye on September 24, 2008 at 10:20 PM
I haven’t seen a single member of the house or senate being blamed. Not a single one. So throw that your bag of wishes that’ll never come true.
lorien1973 on September 24, 2008 at 10:21 PM
ROFL! I say we fire up some hot tar and feathers, and resurrect an age old American custom…
dominigan on September 24, 2008 at 10:21 PM
Jesus. That Dumbass Barney Frank actually just said that the lack of regulation has led to the problem.
If Greta had kept Cavuto on the show, he’d have asked him how Congressional regulation via the Community Reinvestment Act has worked out for us.
BacaDog on September 24, 2008 at 10:21 PM
Unseen,
They froze again today? Awwww…..greaaat.
(Shudders.)
Full price today is not ZERO. It’s mighty damn close…but not zero. Depends on the asset, some ARE zero and aren’t saleable. Others aren’t that bad off.
Estimate I’m hearing is that 5% will be worthless, the rest can recover if given leeway and time. Another reason behind the “Bailey Mac” plan, as I jokingly call it.
Shirotayama on September 24, 2008 at 10:21 PM
Lorien, you’re a friggin’ Obama supporter. You can go to hell and die.
Get off the boards. I know what’s going on, and you don’t.
Sakaki on September 24, 2008 at 10:22 PM
Shiro:
I read that it almost collapsed. Literally collapsed. But people will not believe it. If you had told them the market was going to crash in 1929 the day before it crashed, they would not have believed that either.
Terrye on September 24, 2008 at 10:22 PM
Terrye,
Your folks soundalot like my folks.
Except mine were New Yawkers who moved south.
Shirotayama on September 24, 2008 at 10:22 PM
Spirit of 1776 on September 24, 2008 at 10:18 PM
the energy issue is a product of faulty policy also. and yes I think it added to the fall in home vaules. Yes housing was a bubble but the people that took out the loans took as much as they could afford. When their food, fuel went up and paychecks didn’t somethinghad to give and the home was one thing that gave. there are alot of reasons. It was kind of like a perfect storm.
unseen on September 24, 2008 at 10:22 PM
They’re going to spin it that way regardless. McCain should take the “Meatballs” philosophy as regards the media–remember when the Camp Northstar basketball team was getting creamed by the Mohawks and Bill Murray gives them his pep talk and he begins to yell, “It just doesn’t matter! It just doesn’t matter! IT JUST DOESN’T MATTER!” The media’s not going to play fair…”Bugs” Obama sure as heck isn’t going to play fair! So, McCain should just let it all hang out, do what he thinks is right, do everything he can to go directly to the people about what’s going on and let the voters and the fates sort it all out on election day.
Might work…might not…
Matt Helm on September 24, 2008 at 10:23 PM
I don’t think that’s the plan exactly. They are going to buy at depressed prices but they but they aren’t buying at the fire sale price, as that would force the sellers into insolvency. I tried to detail it to my understanding here. The only addition is that they might try to use some sort of reverse-auction process rather than security analysis to find its current held-to-maturity value.
phronesis on September 24, 2008 at 10:23 PM
It’s the meaning the MSM will assign to it. I realize that you may not think it’s important, but it is.
And they will anyways. Better, if you want this bill to pass -and- you want McCain to win, that McCain comes out a hero here. Now, at best its a wash for both, and at worst McCain looks like a panicking non-leader.
Imagine a headline similar to:
McCain’s intervention saves the bailout package
to
Congress passes bailout package
I think I prefer the first one. Even though I oppose than bailout, itself – in the forms I’ve seen it
lorien1973 on September 24, 2008 at 10:24 PM
BacaDog,
Barney-pooh is only partially correct. It wasn’t LACK of regulation…it was ANTIQUATED regulation, something else W mentioned tonight.
If folks want to ask me about this, I’ve spent some time studying it for my current job…actually just finished reviewing the “Blueprint” for financial regulatory modernization that W referred to tonight.
I’ll be here online a little while longer….if people have questions abou this…fire away, I’ll do my best.
Shirotayama on September 24, 2008 at 10:25 PM
Indeed. I agree.
RushBaby on September 24, 2008 at 10:25 PM
Has anyone noticed the following ad in the middle of msn.com home page? It’s been on their all this week.
Offer: Bush signs housing rescue bill. $300,000 for $1,727/mo Fixed. NO SSN REQUIRED
Guess the lenders still aren’t concerned about the financial crisis we are in………or the problem of giving loans to illegals! ..but we are going to save their asses at the cost of us and our families.
unaffiliated on September 24, 2008 at 10:25 PM
Terrye I think we’re seeing history repeat itself in the raging debate going on here during the past couple of days.
Shirotayama on September 24, 2008 at 10:26 PM
Awesome.
lorien1973 on September 24, 2008 at 10:26 PM
re: perfect storm, I agree.
But I also am very inclined to think the credit crisis comes with or without the energy crisis. Therefore I don’t connect them. Perhaps I’m wrong, but I don’t really see it that way. I think if the fundamentals of the credit system are functioning without negative interference, energy ups and down should be absorbable. My own opinion is that the energy crisis has made people feel the pinch and thus engaged more attention on the whole economic issue. So in a way it’s contributed to a willingness to have a governmental response of this magnitude.
Spirit of 1776 on September 24, 2008 at 10:27 PM
Phronesis: BINGO!!! Ya hit the explanation squarely on its head.
Shirotayama on September 24, 2008 at 10:27 PM
Shirotayama on September 24, 2008 at 10:21 PM
yes but here is where it gets confusing. the $700 billion figure is to buy 5% of the home loans. you just said that 5% are worthless. therefore it is my belief that the gov is going to buy those 5% of worhtless loans. So all the loans the gov is going to buy are worhtless. The banks, and wall street get to pick the loans they want to sell us. They are not going to be the good ones. the taxpayer will get stuck with all the bad loans period. We will be lucky to get our money back with Paulson’s plan. I doubt if there will ever be a windfall. still it is worth it to me. Just saying don’t expect to see a major cash influx to taxpayers from the deal
unseen on September 24, 2008 at 10:27 PM
Barney Frank is still pushing these same loans that caused the problem. In a few years, this is gonna happen again. This is just the foot in the door – if it passes – because congress will not fix the underlying cause.
lorien1973 on September 24, 2008 at 10:27 PM
Heh. I think you’re being facetious. Right? Right?!
If not well, the US could not do what Argentina or Brazil or any other third world second rate country can do with their currency because the US wouldn’t have the US to prop up the money supply. All of Europe couldn’t do it.
JonPrichard on September 24, 2008 at 10:28 PM
Shirotayama:
My inlaws were from Ohio. My father in law sold newspapers at a street corner in Cinicinatti to help feed the family when his Dad lost his business. He was just a kid himself, but everyone had to what they could. He carried a knife, because someone would kill you for a good corner he told me. He said he would go down to the tracks when the coal trucks went through and jump up on the cars and throw clumps of coal off to kids with wagons to take home. People could not afford coal. They were freezing.
People today think they are doing without if they have to give up cable, they can not even imagine what those people went through back then.
Terrye on September 24, 2008 at 10:29 PM
Maybe we should switch from the Dollar to the newly minted Obama coin.
JonPrichard on September 24, 2008 at 10:29 PM
Right.
The problem is noone knows how to value the instruments. That’s part of the reason we are where we are. The markets are utterly paralyzed. If a seller can’t assign a value to something, or if a buyer can’t assign a risk premium for discounting value, there is no market.
The only way out is for the government (because they are the only entity with enough capital) to attempt to buy the damn things. Remember, there is no requirement for anyone to sell them, but the government is offering to be the buyer on reasonable terms if they wish to sell.
BacaDog on September 24, 2008 at 10:30 PM
Terrye on September 24, 2008 at 10:14 PM
Follow the yellow brick road, Heres the list of comments on this subject, not a big deal, just want to see if we can coordinate our discourse….
dmann on September 24, 2008 at 9:38 PM
lorien1973 on September 24, 2008 at 9:40 PM
Terrye on September 24, 2008 at 9:42 PM
dmann on September 24, 2008 at 9:49 PM
dmann on September 24, 2008 at 10:13 PM
dmann on September 24, 2008 at 10:30 PM
lorien:
No, I do not think this is going to happen again in a few years. In fact right now, you can not get that sort of loan that easily. That is one reason houses are not selling.
Terrye on September 24, 2008 at 10:30 PM
That’s funny, the FoxNews panel consensus was that McCain will either come out as a stronger leader, or at worst, it will be a tie for both Obama and McCain.
FiveWays on September 24, 2008 at 10:31 PM
lorien – you are correct of course…truly frightening what our government is doing…
unaffiliated on September 24, 2008 at 10:31 PM
That’s something I intellectually understand but just flat out refuse to accept. That dollar is based on my PERSONAL ability to provide value for it through hardwork. That little piece of paper with Washington’s picture on it replaced the house I might clean for trade for a place to stay one night.
I’m not a finance guy and don’t claim to comprehend what all goes on in the big markets. I do know what I can do for others and what the value of that work is. THAT is the very foundation of our economy. The rest just expands on that basic premise.
Pilgrim on September 24, 2008 at 10:31 PM
dmann:
I don’t care.
Terrye on September 24, 2008 at 10:31 PM
I disagree. In Washington state real-estate prices have a long way to fall yet. A long, LONG way. Any attempt to prop up the present high cost of real-estate, which is only as high as it is based on these irresponsible sub prime loans, will only enable this mess to continue for a while longer at our expense, and when the toll finally comes due we will be in an even more precarious situation with still more government debt already under our belts.
This, IMO, is why the government hasn’t been talking about repealing Sarbanes/Oxley and the other catalysts which have led to this problem. The cost of real-estate has grown dependent on irresponsible lending practices and unless they are allowed to continue real-estate is going to continue to fall.
FloatingRock on September 24, 2008 at 10:31 PM
Pilgrim:
That has nothing to do with the value of the dollar. How you feel about your work, you get paid because your work is worth something to someone else. If they don’t have any money, they can not pay you. In which case there is no dollar.
Terrye on September 24, 2008 at 10:33 PM
Terry – Barney Frank is still pushing for these types of loans. Once the credit is free again – after the bailout – it’s going to start again if companies are still allowed to write loans with 0 down, no SSN, or making up their income. If that isn’t fixed, this boat is still sinking.
lorien1973 on September 24, 2008 at 10:34 PM
Good attempt to poke a hole in the argument, but my understanding is that the banks/mortgage lenders who the assets will be bought from WON’T get to pick and choose…nor would they be able to make that distinction.
Why?
A big part of the problem is that the mortgage lenders are having a rough time actually figuring out the risk of these assets since so many of them are MBS (mortgage backed securities) W mentioned tonight. These derivative products got so complex that the risk couldn’t be easily determined…hence why W stated that the markets invested in assets they thought would be safe but later turned out weren’t once the underlying assumption that home prices would always be going up (naturally) turned out to be false.
So, the 5% is of all the assets, and it’s an estimate. Still, 5% of 700B is “only” 3.5B…peanuts when compared to what the IRS, TTB and FMS rake in in revenue from income taxes, estate taxes, excise takes, etc. every year…not to mention other collected monies such as customs duties, etc.
Does this make it any clearer?
Shirotayama on September 24, 2008 at 10:34 PM
And in the process of falling more sub prime mortgages will be foreclosed, leading to the same problem all over again. But if these lending practices are allowed to continue then the precipice our economy is standing on will just get higher and higher.
FloatingRock on September 24, 2008 at 10:35 PM
Flotaing Rock:
When the government bailed out the S&L industry, it stabilized the market and they turned a profit. It turned out to be a net positive. The same could not have been said for just letting it all go to hell.
And my brother tells me that the market in the southwest is not dead yet either. Fine, but the banks do not just operate in Washington or the Southwest.
Terrye on September 24, 2008 at 10:36 PM
FloatingRock,
HOW does Sarbanes-Oxley (referred commonly to as “SOX”) fit into this? Pls explain.
Shirotayama on September 24, 2008 at 10:36 PM
but they can trade my work for something I need. Food. Shelter.
If this thing goes nuts and we are in another 1929 kind of scenario or worse, the number of bills I have in my pocket won’t matter except for kindling. You get back to the very basics.
Pilgrim on September 24, 2008 at 10:36 PM
JonPrichard on September 24, 2008 at 10:28 PM
yes was being /scar. but also wanted people to know what is in store if the bailout doesn’t pass. I say throw every bum out elect McCain/Palin and start anew. I would love to see every congressman thrown out come nov. every last one. and all 33 senators up for relection. every last one
unseen on September 24, 2008 at 10:37 PM
Pilgrim,
And if business was SO bad that nobody WANTED that hard work you offer?
What then?
THIS kind of situation is EXACTLY what millions will face if the markets collapse.
Shirotayama on September 24, 2008 at 10:37 PM
Floating rock:
Who says these practices are going to continue? Many of the companies who started this are gone, their managers are bankrupt, some of them have ceased to exist altogether. They are not riding high.
Terrye on September 24, 2008 at 10:39 PM
Terrye,
AGREE AGREE AGREE AGREE!!!
These young’uns have NO idea what they’re inviting into our collective society. I truly hope we don’t have to live thru what our ‘rents did. God forbid.
Shirotayama on September 24, 2008 at 10:39 PM
I’m not an expert on the S&L bailout, but I’m pretty sure it wasn’t the same thing, and at any rate, it wasn’t of the same magnitude. I doubt that the nations entire economy grew dependent on irresponsible, risky loans. I suspect your comparing apples to oranges.
FloatingRock on September 24, 2008 at 10:39 PM
Shiro:
I heard that the securities will have to be scrubbed so that their value can be ascertained.
Terrye on September 24, 2008 at 10:40 PM
BacaDog, again, You’re RIGHT ON TARGET.
Shirotayama on September 24, 2008 at 10:40 PM
You know, maybe we should just go ahead and let the economy tank. The last time that happened, we got some great Hollywood movies out of the deal (”King Kong”, “The Wizard of Oz”), some of the best baseball seasons ever, and we got to whip the Nazis, too. That’s like a win-win-win scenario for the US.
Oh, and I’d bet coal mines and railroads would be back open soon, too. Nothing like a Depression to underline the value of any real job, and we could toss worthless concepts like “carbon footprint,” “Barak Obama,” and “leveraged buyout” into the garbage bin.
Maybe an economic enema is what this country needs. Seeing the CEOs of Lehman, or GM, or the Democrat Partei standing in a soup line, or trekking cross country as hobos would be worth the pain.
creekspecter on September 24, 2008 at 10:41 PM
Terrye,
Pls define “Scrubbed”?
Shirotayama on September 24, 2008 at 10:41 PM
Shirotayama on September 24, 2008 at 10:34 PM
no 5% of 14 trliion the present amount of MBS is $700 billion. thus the $700billion price tag. the gov is buying the bad flushing the toxic crap out of the system. The taxpayers are getting the bad loans. Call it a write off I’m fine with that but don’t call this an investment. consider the $700b gone as soon as the Treasury borrows it at 5% interest. So not only are we buying the $700b we will have to pay 5% interest on it every year.
but like i said it is better than 20 years of poverty.
unseen on September 24, 2008 at 10:42 PM
Oh good lord. We’re totally F***ED if this kind of idealistic attitude is prevalent.
Creekspecter PLEASE tell me that you were joking.
(sigh of despair)
Shirotayama on September 24, 2008 at 10:43 PM
That’s the problem. If these practices don’t continue then there still wont be enough buyers to stabilize the market, because they won’t be able to get free money with few questions asked anymore, and the market will continue to fall, IMO. This goes back to Unseen’s point about the government not paying full price. Real-estate hasn’t stopped falling, IMO, and it won’t be back at these level for a long time, perhaps several decades, I hope. If they do then we’ll be right back were we started, standing on the edge of an economic precipice, (they claim), only next time it will be higher.
FloatingRock on September 24, 2008 at 10:44 PM
Pilgrim:
Yeah, right. You can trade your labor. You bet. Fine, but I don’t think the average American wants to back to basics. I think they are clueless as to what basics even are.
I have raised food, canned it, dried it, froze it, milked cows, raised chickens, made my own clothes, lived on very little money and most folks thought I was nuts. They certainly did not want that life. And neither did I once I hit 40.
Terrye on September 24, 2008 at 10:44 PM
I’m talking about the real-estate market.
FloatingRock on September 24, 2008 at 10:44 PM
Unseen,
Yeah WHOOPS got my math wrong…happens when I’m overworked and spend too much damn time on blogs!
$700B * 5% = $35B.
OK, not chump change, but still peanuts compared from a US Federal budgeting perspective.
Shirotayama on September 24, 2008 at 10:45 PM
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