The market’s ability to make swift adjustments without much drama was vividly illustrated only a few weeks ago when the very large investment bank, Lehman Brothers, was allowed to go belly up. The world did not come to an end. Instead, this was a healthy development. A money loser was eliminated from the market. This freed up resources to promote growth.

One could have made the case that when Lehman was on the brink it was too big to fail — assets of $639 billion and employing over 26,000 people. Yet in a few days the market, once allowed to do the job, reallocated the good pieces of Lehman to various buyers and the bad parts have vanished. It was poetry.

No.

Real individuals accomplished these things. The gubmint didn’t use its magical lawmaking powers.

LimeyGeek on October 1, 2008 at 2:31 PM

In WWII it incurred massive debt and and essentially nationalized some manufacturing. American mass production was key in fighting and defeating two foes. Having multiple private military corporations with shareholders probably wouldn’t be as effective as what we have now.

Here’s what I posted on the legislation. It’s time to solve the credit crunch. Follow the link to find out why.

LFRGary on October 1, 2008 at 2:39 PM

Let me get this straight LFRGary. We must allow foreign investors into this bailout because our investment banks sold them bad paper? You’re not saying that it was government issued bonds that soaked foreign investors, but instead private companies with no connection to the government that sold them bad paper. These foreign powers are now having a temper tantrum and threatening to dump dollars and destroy our economy because they got soaked in their investments by private entities. I’m sorry but I have no sympathy for these foreign investors, and if they have to power to sink our economy then that is the true failing of our government.

This move helps banks maintain their ( too low ) capital requirements. It also reduces the size and urgency of the crisis and the need for the bailout.

Gov’t action should now be geared to tightening up loan standards, determining the maximum amount of MBS a firm can carry as a percent of assets and loading up the bailout with pork so that they can maintain their sense of self importance.

Like force us to give them money at gunpoint?

Dark-Star on October 1, 2008 at 2:31 PM

Private-sector criminals have been robbing us at gunpoint in dark alleys since forever….and they don’t require a gargantuan INS agency to get the job done either.

The government did win a few wars and put a man on the moon.

No.

Real individuals accomplished these things. The gubmint didn’t use its magical lawmaking powers.

but there are some things that the government can do that private industry can’t efficiently do

Name one. Other than “fail”, of course ;)

dedalus on October 1, 2008 at 2:20 PM

Fair points. Although I must point out that as soon as the space race was over, the government-run NASA began going downhill.

I wish the government were half its current size, but there are some things that the government can do that private industry can’t efficiently do.

Like force us to give them money at gunpoint?

And you want them involved in our economy on a massive scale???

Dark-Star on October 1, 2008 at 2:11 PM

The government did win a few wars and put a man on the moon.

The S&L bailout was probably better than the alternative. More recently, handling WaMu and Wachovia before their failure created a panic was in the best interest of the country.

I wish the government were half its current size, but there are some things that the government can do that private industry can’t efficiently do.

Fixed.

Those of you who oppose the bailout do not understand it. Period. End of story.

If you SUPPORT this taxpayer-funded, forced bailout, you’re are either willfully ignorant or mind-bogglingly stupid.

Skipping the financial reasons – which are obviously beyond your comprehension – here’s a fact that should in itself stop the bailout in its tracks:

Everything our federal government is responsible for, they have fumbled in epic fasion.

From emergency management to public ‘education’ Washington has been soundly proven to be incredibly incompetent.

And you want them involved in our economy on a massive scale???

Those of you who oppose the bailout do not understand it. Period. End of story.

hicsuget on October 1, 2008 at 12:20 PM

Yes, just like all of us who deny the end of the world is nigh due to anthropological global warming are just getting in the way of saving the world.

Maybe the folks who were so arrogant to believe that their positions and their fear mongering alone would move this legislation failed to convince not only Congress but the people they represent. If we don’t understand, then the proponents failed to make their case and we shouldn’t sign on to something we don’t understand.

End. Of. Story.

Yesterday, a conservative banker friend, who is quite sensible about these things, referred to the bailout as economic terrorism. I am now wondering just who the terrorists are.

flyfisher on October 1, 2008 at 1:49 PM

Indeed. There’s so much FUD being slung around, the public must be quite punch-drunk. Not conducive to making smart decisions.

Some retarded wench from FBC was screeching about “160 million jobs on the line!”. Fire her dumb ass.

The original and the latest version that got voted down in the house didn’t do that.They didn’t address the underlying reasons why we’re here, they just injected money so the party could continue through the night. They would have allowed foreign investors to dump their bad paper in our bailout. Fix these problems and I can support a bailout, but until then I support the house Republicans resistance to the plan.

DerKrieger on October 1, 2008 at 12:21 PM”

Great point! We should be addressing the root cause of the problem at the same time the rescue is being addressed.

A hummina, hummina, hummina type non-admission admission on CNBC that traders are trying to crash the market to convince Senators of the need to pass this bill… Economic blackmail!

TheBigOldDog on October 1, 2008 at 1:42 PM

Yesterday, a conservative banker friend, who is quite sensible about these things, referred to the bailout as economic terrorism. I am now wondering just who the terrorists are.

traders are trying to crash the market to convince Senators of the need to pass this bill… Economic blackmail!

TheBigOldDog on October 1, 2008 at 1:42 PM

If that passes your smell test, get a nose transplant.

becki51758 on October 1, 2008 at 1:09 PM

Read through the comments to that video here.

Who knows who those people are, but there are truly frightening comments. One of them, from another site, says this:

Why is the passing of this bailout bill so important to European central banks? Here are my thoughts.

The bill provides for the US Treasury to stick the US taxpayer with toxic waste from foreign central banks. Why would the Treasury swap US treasuries for worthless paper from these foreign investors?

Because that worthless paper was originally sold to those foreign banks by US crooks from investment banks like Goldman Sachs. So it’s actually worthless US MBS (mortgage backed securities) coming back home to the country of its origination.

Yeah, but just because crooks from the US private sector stuck those foreign banks with this toxic waste, why should the US taxpayers have to pay for it?

Because the toxic waste is forcing the foreign banks to implode. They are not happy with this outcome, so, unless the US swaps them back out of it, they will no longer buy or accept US debt, private or public (corporates, agencies or treasuries).

But why stick the Treasury with this toxic paper return, when it came from the US private sector, and was originated from investment banks like Goldman Sachs?

Because the former CEO of Goldman Sachs, Henry Paulson, is the genesis of this financial asbestos, and he is being held accountable by these foreign banks for defrauding them. Since he is now Secretary of the Treasury, it makes perfect sense that his new organization, the US Treasury, should take the hit. It works well for Henry, because he gets to keep the $700 million he received for defrauding the foreign banks, and gets to stick the taxpayer with having to pay for his crimes.

What happens if the house doesn’t pass the bailout bill that allows Henry Paulson to reimburse the foreign banks, with taxpayer money, for his MBS/CDW fraud?

One of two things. The US Government can no longer fund its debts, which would make US treasuries worthless and put the whole country into default, or, the Fed, using its new Suplimentary Financing Account (shadow bank) could create the credit to cover it all, like it did a few days ago when it created $620 billion out of thin air to swap for currency from foreign banks in order to keep the USD from crashing.

Will Congress pass this bill?

You can count on it. The FDIC, which doesn’t have the money to insure US bank depositors for $100,000, will agree to insure the depositors for $250,000, as a provision of this bill. It would take a brave Congress member to vote down something that would be so popular with his/her constituents.

That’s probably tinhat territory, but something, somewhere isn’t right about all this.

Not to mention, we are supposed to expect Obama’s treasury secretary to be responsible with the petty cash they are giving him to buy whatever he wants. Let’s just say a lot of blue state mortgage deadbeats are going to be off the hook come January.

Someone show me where that scenario is not possible in the langauge of this bill. Democrat President – Democrat House – Democrat Senate. Who will provide the oversight? Republicans who have spent the past decade trying to out spend Democrats?

grdred944 on October 1, 2008 at 1:25 PM

you just made Halloween come early for me