41 replies to this topic

[Mixter]

Hi. The bailout interpretation below makes a lot of sense as long as you're austrian economist or
generally free-market oriented, and would mean immediate action is required by everyone in the US:

http://www.campaignf...com/blog/?p=597

Letter from Ron: Time is running out
Dear Friends,

Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike.

The events of the past week are no exception.

The bailout package that is about to be rammed down Congress’ throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder. Two weeks ago, financial analyst Jim Rogers said the bailout of Fannie Mae and Freddie Mac made America more communist than China! “This is welfare for the rich,” he said. “This is socialism for the rich. It’s bailing out the financiers, the banks, the Wall Streeters.”

That describes the current bailout package to a T. And we’re being told it’s unavoidable.

The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences - predictable, that is, to those who understand sound, Austrian economics - are being let off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!

• The Treasury Secretary is authorized to purchase up to $700 billion in mortgage-related assets at any one time. That means $700 billion is only the very beginning of what will hit us.

• Financial institutions are “designated as financial agents of the Government.” This is the New Deal to end all New Deals.

• Then there’s this: “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.“ Translation: the Secretary can buy up whatever junk debt he wants to, burden the American people with it, and be subject to no one in the process.

There goes your country.

Even some so-called free-market economists are calling all this “sadly necessary.” Sad, yes. Necessary? Don’t make me laugh.

Our one-party system is complicit in yet another crime against the American people. The two major party candidates for president themselves initially indicated their strong support for bailouts of this kind - another example of the big choice we’re supposedly presented with this November: yes or yes. Now, with a backlash brewing, they’re not quite sure what their views are. A sad display, really.

Although the present bailout package is almost certainly not the end of the political atrocities we’ll witness in connection with the crisis, time is short. Congress may vote as soon as tomorrow. With a Rasmussen poll finding support for the bailout at an anemic seven percent, some members of Congress are afraid to vote for it. Call them! Let them hear from you! Tell them you will never vote for anyone who supports this atrocity.

The issue boils down to this: do we care about freedom? Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for? Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care?

When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media?

Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.

In liberty,

Ron Paul

P.S. All week long, Scott Horton’s excellent Antiwar Radio program, which I highly recommend, will devote its first hour (12:00-1:00pm ET) to the financial crisis. Today, my former economic adviser, Peter Schiff, will be on the program. We’ll stream these programs at the Campaign for Liberty website. Listen in!

Congress.org
Capitol Hill Switchboard: (202) 224-3121

“Dear Senator/Representative:

You MUST reject the Paulson/Bernanke plan for bailing out and propping up reckless banks at taxpayer expense. This is madness to ask us, the taxpayers, to cover the liabilities of Wall Street. We are tired of being fleeced. If you vote to support this plan, I will do everything in my power to remove you from office before you can give away any more of our money to failed businessmen.

Edited by mixter, 26 September 2008 - 03:09 PM.

[biknut]

I don't pretend to understand this bailout plan, but my instincts are against it.

Who's for the plan?

Bush, Paulson, Obama, Pelosi, Reid, Frank, most of the Democrats in congress???

Who's against the plan?

100 to 1 the American people, 99% of Republicans

The Democrats have the votes to pass the plan now, but they won't. Why? Because none of the Republicans support the plan, and they're afraid of passing the plan without having any Republicans to blaime later, so now they don't seem to be able to act.

Ron Paul Says "Call Them"

Here's some interesting reading on the subject,

http://globaleconomi...ck-america.html

If you have not yet done so, please read Ron Paul Says "Call Them!" Well don't just read it, Call Them! Let them know you are mad as hell and if they vote for this boondoggle you will vote them out of office.

[luv2increase]

This is a typical example of a disastrous Catch-22 situation. A dilemma such as this had years in the making and can't be undone without any severe consequences.



Who is to blame for this; Bill Clinton and the Democrats. The proof is in the pudding as you will see.

The LA Times blames Bill Clinton for the economic crisis. No, really. It does. Of course, when they printed this article in 1999, they were bragging about it. Under Clinton, bank regulators have breathed the first real life into enforcement of the...

This is long but a must read. It is history and the cause of this problem we have in America at this very dire moment in time!

c.1992, Bill Clinton's Minority Home Ownership Push Was Democrats Definition of "Affordable Housing"

An L.A.Times article from May 31, 1999 by Ron Brownstein will shed some light on the backstory of the real time nightmare unfolding in Washinton at this hour. Read as the Times wonk crows about all the good Bill Clinton is ....well...enforcing.

Clinton legacy building with a Ponzi scheme strong armed by Janet Reno brought to you by Liberals defining "affordable housing" as homeownership to unqualified buyers, underwritten by you and me, fellow taxpayer. But of course, not until it all crashes, in say, 2008...

Remember, these are words from 1999...

It’s one of the hidden success stories of the Clinton era. In the great housing boom of the 1990s, black and Latino homeownership has surged to the highest level ever recorded.

{snip}

As HUD Secretary Andrew Cuomo says: “There have been points in the past when the economy has done well but minority homeownership has not increased proportionally.”

[JANE INTERJECTS: Andrew Cuomo is supposedly a top choice by John McCain for a cabinet post in his White House. Scary.]

{snip}

All of this suggests that Clinton’s efforts to increase minority access to loans and capital also have spurred this decade’s gains. Under Clinton, bank regulators have breathed the first real life into enforcement of the Community Reinvestment Act, a 20-year-old statute meant to combat “redlining” by requiring banks to serve their low-income communities. The administration also has sent a clear message by stiffening enforcement of the fair housing and fair lending laws. The bottom line: Between 1993 and 1997, home loans grew by 72% to blacks and by 45% to Latinos, far faster than the total growth rate.

Lenders also have opened the door wider to minorities because of new initiatives at Fannie Mae and Freddie Mac–the giant federally chartered corporations that play critical, if obscure, roles in the home finance system. Fannie Mae and Freddie Mac buy mortgages from lenders and bundle them into securities; that provides lenders the funds to lend more.

In 1992, Congress mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. (emphasis mine)

{snip}

And who controlled Congress in 1992?

That's right, boys and girls. THE DEMOCRATS.

And America will deserve the reaming it will get if we keep these corrupt thieves in office this November. This is not a bail out, Janiacs. This is a backdoor TAX. A transfer payment. Nothing more. What Liberals couldn't get approved legislatively, they mandated behind closed doors.

And it is up to you to communicate to all your terrified friends that this...what are they calling it now... "rescue" is no life preserver, but rather a flaming tire necklace.

If you are wise, while this useless band-aid is pretending to stanch the blood (for the next few weeks), you will get your personal affairs in order, once and for all. Buy some antique gold coins that can't be confiscated, get a few thousand bucks out of the bank to hold for when they shut down the ATMS around Christmas, and don't buy a thing on credit.

Lastly, strap in tight. The ride will be long, bumpy, and because we are no longer on the Gold Standard (which helped us pull out of The Great Depression) it may well last for the remainder of our lives.

This isn't good yet quite the contrary. It is a serious disaster. China, our biggest creditor, has said yesterday to their banks not to be lending money to the USA! The credit rating, just like you and I have one, of the USA is going down! This, in turn, will cost the USA more money to lend money just like you or I would if we tried to buy a car with bad credit! The worst part of this is, is that we don't have the money to pay for this....


source: http://www.thekidalo...-bill-clin.html

Edited by luv2increase, 26 September 2008 - 06:43 PM.

[Mixter]

Btw, here is the full text of the current bailout proposal: http://www.nytimes.c...21draftcnd.html

Sec. 2. Purchases of Mortgage-Related Assets. [...]
(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:
[...]
Sec. 6. Maximum Amount of Authorized Purchases.
The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

This is not a 700 billion deal, but a blank cheque. "at any one time" means they can do any amount
of purchases of mortgages, dictatorship-like. Other reports seem to be controlled desinformation, nice.

This also means that they could arbitrarily raise taxes (since there is no other funding option, as nobody
is willing to buy billions in state bonds). In the worst case, this could be a legalization of indirect expropriations
by the state by means of taxes and inflation. If I were a US citizen, I would call and fax congress
immediately and voice my sharpest objections, perhaps look out for a legal class-action campaign.

Fully letting the market sit this one out will mean a huge crash, unemployment and huge shrinking mostly limited to the
financial sector in the short- to mid-term, and then getting out of recession. It will mean huge tax losses for the state
and shrinking state spending to a minimum, so yes, there may be short-term crisis, too, but ultimately smaller government.

"Bailout" legislation with an arbitrary amount of taxpayer/inflation money can mean stealthy, indirect expropriation
with subsequent decline of consumer spending leading into a Depression for many years to come, even though
there won't directly be a deflation, this still looks like a 1930-like scenario. Disclaimer: all IMO and $.02

[luv2increase]

Btw, here is the full text of the current bailout proposal: http://www.nytimes.c...21draftcnd.html

Sec. 2. Purchases of Mortgage-Related Assets. [...]
(b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:
[...]
Sec. 6. Maximum Amount of Authorized Purchases.
The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time

This is not a 700 billion deal, but a blank cheque. "at any one time" means they can do any amount
of purchases of mortgages, dictatorship-like. Other reports seem to be controlled desinformation, nice.

This also means that they could arbitrarily raise taxes (since there is no other funding option, as nobody
is willing to buy billions in state bonds). In the worst case, this could be a legalization of indirect expropriations
by the state by means of taxes and inflation. If I were a US citizen, I would call and fax congress
immediately and voice my sharpest objections, perhaps look out for a legal class-action campaign.

Fully letting the market sit this one out will mean a huge crash, unemployment and huge shrinking mostly limited to the
financial sector in the short- to mid-term, and then getting out of recession. It will mean huge tax losses for the state
and shrinking state spending to a minimum, so yes, there may be short-term crisis, too, but ultimately smaller government.

"Bailout" legislation with an arbitrary amount of taxpayer/inflation money can mean stealthy, indirect expropriation
with subsequent decline of consumer spending leading into a Depression for many years to come, even though
there won't directly be a deflation, this still looks like a 1930-like scenario. Disclaimer: all IMO and $.02

Geeezzz, and the Dems are blaming the Republicans on not getting this put through.... I hope this shows the American people what the Democrats are all about when it comes to spending the tax-payers money however they please without limitation. Absolutely incredible those Democratic politicians are. I'm not one for President Bush either; he is a Socialist/Republican IMHO.

[niner]

Do you guys have any idea of the consequences of NOT doing the bailout? Believe me, I don't like it any more than you do, but the damage is already done. You can pay now or you can pay later, and later looks to be a lot worse.

I'll say one thing, if we do manage to not do the bailout, and the economy grinds to a halt, maybe that will finally drive a stake through the heart of Right Wing Deregulatory Ideology.

[niner]

Who is to blame for this; Bill Clinton and the Democrats. The proof is in the pudding as you will see.
This is long but a must read. It is history and the cause of this problem we have in America at this very dire moment in time!
[screed blaming mortgage crisis on CRA deleted.]

The first time this story popped up, I was honestly shocked at the audacity of it. If you're going to tell a lie, tell a big one, right? This one is perfect because it fits into all the preconceptions of the Right: Democrats are evil socialists bent on the destruction of our nation, Black and Brown people are the good-for-nothing beneficiaries of evil Democratic schemes, and it has something to do with mortgages and housing. Bingo! It's Clinton's fault.

The Community Reinvestment Act was aimed at stopping Redlining, the practice of refusing to write loans even to qualified borrowers if they lived in certain zip codes or neighborhoods. The CRA forced lenders to write loans to qualified borrowers in these neighborhoods, but it had NOTHING to do with the absurd No-Doc loans or "Liars Loans" written to people who in no way could afford them. It had NOTHING to do with exploding loans that would detonate with a huge balloon payment, or loans that tricked people with very low interest rates that would switch to insanely high rates after a few years. The CRA had NOTHING to do with the CDOs that were full of junk debt, but made to look clean by the use of CDS insurance. The CRA had NOTHING to do with the "Ratings Shopping" that Wall Street engaged in, where if they didn't like Moody's ratings on one of their CDOs, they'd go down the street to S&P to see how they would rate it. The CRA sounds like it could have been the cause of this problem, but only if you know little or nothing about how this financial crisis came about. No one who knows what he's talking about, and is telling the truth, would blame the crisis on the CRA. The other day, Ben Bernanke himself said that long standing policies to encourage home ownership in minority neighborhoods had nothing to do with the crisis. It's just a lie, and a vile one at that.

[luv2increase]

If you're going to tell a lie, tell a big one, right?

A lie? Are you saying this didn't happen? Are you saying that it is right to give multi thousand dollar loans to families who cannot possibly pay it and/or have not so good of credit? Americans need to strive to get their credit up by paying their bills on-time etc... It isn't an issue of race; it is an issue of credibility to pay the loans back. Unfortunately, a lot of African Americans and Latinos don't have the best of jobs and have a very high school drop-out rate. This isn't America's fault.

It is common sense that money shouldn't be loaned to people that won't be able to pay it back........ niner, do you doubt the high foreclosure rate today? Do you not know what a foreclosure is? Do you not know that a home gets foreclosed because the loan mortgage borrower can't pay the lender back. The lenders were lending out money to people they shouldn't have been. This is why we have this crisis today. Get with the program.

[inawe]

Do you guys have any idea of the consequences of NOT doing the bailout?

Ideas?
It's becoming impossible to try to discuss ideas. We are witnessing something akin to the denial of service attacks on servers. Here a few
guys can pour so much ignorant garbage that it'll choke up the forum.
Anybody with some self respect for his her intelligence will hesitate in participating.

[Connor MacLeod]

Do you guys have any idea of the consequences of NOT doing the bailout?

Ideas?
It's becoming impossible to try to discuss ideas. We are witnessing something akin to the denial of service attacks on servers. Here a few
guys can pour so much ignorant garbage that it'll choke up the forum.

You don't like other people playing your game? I thought you'd enjoy some company after going at it pretty much alone for the past few months.

Anybody with some self respect for his her intelligence will hesitate in participating.

Indeed. Your move.

[luv2increase]

ignorant garbage

It is factual history; anything but garbage. You call it what you want; the truth hurts doesn't it.

[niner]

If you're going to tell a lie, tell a big one, right?

A lie? Are you saying this didn't happen? Are you saying that it is right to give multi thousand dollar loans to families who cannot possibly pay it and/or have not so good of credit? Americans need to strive to get their credit up by paying their bills on-time etc... It isn't an issue of race; it is an issue of credibility to pay the loans back. Unfortunately, a lot of African Americans and Latinos don't have the best of jobs and have a very high school drop-out rate. This isn't America's fault.

It is common sense that money shouldn't be loaned to people that won't be able to pay it back........ niner, do you doubt the high foreclosure rate today? Do you not know what a foreclosure is? Do you not know that a home gets foreclosed because the loan mortgage borrower can't pay the lender back. The lenders were lending out money to people they shouldn't have been. This is why we have this crisis today. Get with the program.

Did you even read what I wrote? Do you understand the terms? It certainly doesn't appear to be the case.

[luv2increase]

Did you even read what I wrote? Do you understand the terms? It certainly doesn't appear to be the case.

No, explain it for me please. Thank you.

Edited by luv2increase, 27 September 2008 - 03:09 AM.

[Ben]

The way the U.S. is going if they government doesn't start immediately spending then things will start slipping.

The bail out plan is a trying to keep America out of a deep recession. Why would anyone be against that?

Don't think of it as a bail out plan for a select group of people, like they're stealing your money or something, the economy works as a whole and eventually you might see some of that 700bil yourself as an American.

So stop f'ing whining you crybabies and keep producing.

[eternaltraveler]

The way the U.S. is going if they government doesn't start immediately spending then things will start slipping.

The bail out plan is a trying to keep America out of a deep recession. Why would anyone be against that?

Don't think of it as a bail out plan for a select group of people, like they're stealing your money or something, the economy works as a whole and eventually you might see some of that 700bil yourself as an American.

So stop f'ing whining you crybabies and keep producing.

the reason we are in the situation where they are looking at a bail out of this magnitude is because people who had no business in a million years obtaining a loan, did so. The purpose of the bail out plan is to make banks continue to give bad loans. It would both put off the recession, and make it worse when it does happen. Banks have already been getting massive free money from the government for quite a long time because they are able to borrow from the government at below the rate of inflation (doing a great deal to drive inflation itself). These banks need to go out of business, and all the people that have no business having a loan need to be foreclosed on. Actions have consequences for individuals and organizations. Removing those consequences merely passes them to someone else, and the bad behavior is reinforced, creating a spiral. We have been spiraling for awhile, it's time to take our licks and learn our lesson.

No I do not expect the above to happen. I expect short term thinking to continue to dominate. I say this even though I personally would benefit a great deal from the massive inflamitory pressure such a plan would exert. I have quite a lot in loans myself, and inflation makes that debt evaporate (though I actually do pay my debt).

[niner]

The way the U.S. is going if they government doesn't start immediately spending then things will start slipping.

The bail out plan is a trying to keep America out of a deep recession. Why would anyone be against that?

Don't think of it as a bail out plan for a select group of people, like they're stealing your money or something, the economy works as a whole and eventually you might see some of that 700bil yourself as an American.

So stop f'ing whining you crybabies and keep producing.

the reason we are in the situation where they are looking at a bail out of this magnitude is because people who had no business in a million years obtaining a loan, did so. The purpose of the bail out plan is to make banks continue to give bad loans. It would both put off the recession, and make it worse when it does happen. Banks have already been getting massive free money from the government for quite a long time because they are able to borrow from the government at below the rate of inflation (doing a great deal to drive inflation itself). These banks need to go out of business, and all the people that have no business having a loan need to be foreclosed on. Actions have consequences for individuals and organizations. Removing those consequences merely passes them to someone else, and the bad behavior is reinforced, creating a spiral. We have been spiraling for awhile, it's time to take our licks and learn our lesson.

No I do not expect the above to happen. I expect short term thinking to continue to dominate. I say this even though I personally would benefit a great deal from the massive inflamitory pressure such a plan would exert. I have quite a lot in loans myself, and inflation makes that debt evaporate (though I actually do pay my debt).

As they say, be careful what you wish for. The credit freeze that is likely to occur in the event we don't do the bailout could result in an inflationary OR a deflationary depression. In the latter case, debtors would be screwed. So would stock owners. It's not the purpose of the bailout to make banks continue to make bad loans. The purpose is to get them to make any loans at all, and at that it will probably only be to credit-worthy customers. The danger is that they will make no loans at all, and we would all be fairly well screwed. I hate the idea of bailing out the very institutions that made the mistakes as much as anyone here, but it looks like something needs to be done. I would like it not to be a simple bailout, but a fairly tough pill to swallow, like the "bailout" of Bear Stearns. That should at least address the moral hazard issue, finally. Also, we should definitely be getting a piece of the action in the form of stock warrants, so in the end it should be a loan paid back with interest, not a giveaway. And I hope to god we can finally reign in out of control executive compensation. It's just gone too far. I think it's a market failure.

[eternaltraveler]

It's not the purpose of the bailout to make banks continue to make bad loans. The purpose is to get them to make any loans at all, and at that it will probably only be to credit-worthy customers

with government assurances that it will buy up bad loans (which is what the few drafts of the bail out plan I have read say they will do), banks will make as many loans as possible of course. Just like they have been.

deflationary depression

you do realize we have an incredibly high rate of inflation right now, right? I'm earning money on my 5% interest loans presently. I don't think that's the purpose of them.

Also, we should definitely be getting a piece of the action in the form of stock warrants, so in the end it should be a loan paid back with interest, not a giveaway.

wonderful. Government run financial institutions. Soviet union anyone? (I assume what you mean by "we" get a peice of the non-action (these places are bankrupt, there is no action), you mean the government get the stock. Yes that is part of the "plan".

This plan was vomited up by George Bush's posse in fifteen minutes. It is already the subject of ridicule the whole world over. It is a bad bad bad plan.

Edited by elrond, 27 September 2008 - 06:12 AM.

[eternaltraveler]

And I hope to god we can finally reign in out of control executive compensation.

simple. Let bad business models fail. When they do their executives cease to be compensated.

If they don't fail, but survive and thrive, perhaps the executives are actually earning their pay.

All of these failed business models with inflated executive compensation are only allowed to exist through artificial means. Remove those means and the problem vanishes.

Edited by elrond, 27 September 2008 - 06:24 AM.

[niner]

And I hope to god we can finally reign in out of control executive compensation.

simple. Let bad business models fail. When they do their executives cease to be compensated.

If they don't fail, but survive and thrive, perhaps the executives are actually earning their pay.

All of these failed business models with inflated executive compensation are only allowed to exist through artificial means. Remove those means and the problem vanishes.

What are the artificial means by which the executive compensation remains high?

[niner]

deflationary depression

you do realize we have an incredibly high rate of inflation right now, right? I'm earning money on my 5% interest loans presently. I don't think that's the purpose of them.

yes, I realize this. I'm just saying that deflation is a possible outcome of a credit freeze, and it isn't pretty either.

Also, we should definitely be getting a piece of the action in the form of stock warrants, so in the end it should be a loan paid back with interest, not a giveaway.

wonderful. Government run financial institutions. Soviet union anyone? (I assume what you mean by "we" get a peice of the non-action (these places are bankrupt, there is no action), you mean the government get the stock. Yes that is part of the "plan".

Do you want to just give them money, or do you want to give them money and get something back? I prefer the latter. Yes, it's a bizarre new form of communism; privatization of profit and socialization of risk. I don't like it. I also don't like the consequences of a credit freeze. The damage has been done and we are going to have to pay for it. We either pay a lot now, or even more later. That's my read at the moment, anyway.

As long as "too big to fail" means that bailouts will happen, then we either need to break up the "too big" institutions, or regulate them so they don't behave recklessly. I don't care which we do, but "too big to fail" is an unacceptable risk, and bailouts are an unacceptable outcome. We're stuck with the ones we have now, but we don't have to have them in the future.

[eternaltraveler]

What are the artificial means by which the executive compensation remains high?

you misunderstand.

high relative to what?

They should be compensated as the market dictates in exchange for the services they provide. Just like athletes and movie stars. There is a high demand for a few people. Saying otherwise is ridiculous. You may as well put a cap of 1 dollar a gallon on gasoline and then be surprised why gas stations stop selling gas.

If it really is too high and there is a free market it is inevitable that a business model will emerge where executives are not so highly compensated, and the old model will crumble simply by being out competed. This is not the case when their businesses collapse but the government props them up anyway, in these cases any executive pay is completely inappropriate (as is pay for any random employee for that matter). It's inappropriate because that business shouldn't exist at all. This is a symptom of the problem not the cause.

[eternaltraveler]

We either pay a lot now, or even more later.

"too big to fail"

what you mean by too big to fail is that we will take some lumps now if they fail. We will. We deserve them. I agree we should pay now as you say and learn our lesson. The lesson we need to learn is that you can't run a country on nothing but debt, and every individual person can't spend money they don't have, and aren't going to get.

The only reason these financial institutes are the size they are is because the government has been giving them free money at below the rate of inflation from the fed for decades. Every cent below the rate of inflation translates into more inflation for the rest of us while giving it to the bank. And hey, it's ill gotten gains anyway at the expense of everyone stupid enough to hold onto fiat currency as anything other than a high transitory way to turn one hard asset into another, why not take your piece of the pie if you are on the executive staff.

Edited by elrond, 27 September 2008 - 06:55 AM.

[suspire]

I don't pretend to understand this bailout plan, but my instincts are against it.

Who's for the plan?

Bush, Paulson, Obama, Pelosi, Reid, Frank, most of the Democrats in congress???

Who's against the plan?

100 to 1 the American people, 99% of Republicans

The Democrats have the votes to pass the plan now, but they won't. Why? Because none of the Republicans support the plan, and they're afraid of passing the plan without having any Republicans to blaime later, so now they don't seem to be able to act.

Ron Paul Says "Call Them"

Here's some interesting reading on the subject,

http://globaleconomi...ck-america.html

If you have not yet done so, please read Ron Paul Says "Call Them!" Well don't just read it, Call Them! Let them know you are mad as hell and if they vote for this boondoggle you will vote them out of office.

biknut, at your best, you come off as a sane, rational conservative--you admit you don't understand the bailout plan, but you say you have misgivings. Fair enough. I do, too. However, you lose ground when you blame the Democrats for the crisis and say the Republicans are against the bailout, as if they are against it because it may harm the American people--reservations on the bailout plan stem more, in most cases (though not all) due to fear of political fallout with the electorate and because they dislike certain concessions (such as salary caps on CEOs--one egregious example being Alan Fishman potentially walking away with 18 million after just three weeks of work). That said, the Republicans are knee-deep in this mess; the guilty are from both parties, politicians in general of all creeds and colors, as well as a number of the so called titans of Wall Street.

It is important to recognize that the blame is equally shared across the aisle and that both parties have vested interested and ties to the financial sector--Bernanke, Paulson, etc. They see through a narrow lens and are far from objective. But try and be objective--don't simply blame the Democrats. At least an equal amount, if not more of the blame can be levied on Republicans.

Regardless, I too have reservations on the bailout. I'd suggest a more moderate proposal: Why doesn't Congress pass legislation fixing interest rates at the point of initial lending (so in the case of a predatory loan that went from 6% to 10%, return the rate to the initial 6%--people began to default not at the start of the loan, because they could pay those rates, but when rates jumped over the course of time). Sure, this will effect the value of some paper--these repackaged loans will be worth 60 cents on the dollar, but right now, they are worth 0 cents on the dollar, which is part of why things are falling apart. The other part is simply people are just defaulting en masse. If need be, if the government wants to do some sort of bailout (and I stress that this is only if it is absolutely necessary), they can cover the spread on a temporary basis, acting as a lending institution directly to the segment of the population impacted by these loans with some sort of gradual, long-term repayment plan.

I think this suggestion would prevent firms from going under and restore at least a measure of confidence--these loans would be worth something, as opposed to nothing as they are now. And just as importantly, we won't have mass foreclosures and huge swaths of the population suddenly homeless. 700 billion is actually just the tip of the iceberg, since there is possibly another 700 billion out there in sub-prime/predatory loans of various sorts. I fear, with the bailout as currently structured, we may float some of these institutions in the short term, but we'll return to the problem in another 6 to 12 months. Moreover, a lot more people will lose their homes.

In any case, biknut, please, for the love of all that is decent, just don't blame the Democrats. You seem to dislike politicians in general, and with good cause, so do be fair and lay the blame appropriately. There is much of it to go around.

[RighteousReason]

20% of all profits from the bailout into the Housing Trust Fund — a boondoggle that Democrats in Congress has used to fund political-action groups like ACORN and the National Council of La Raza.

One of the primary goals of ACORN is to get loans and mortgages for no down payment and for people who do not actually have the ability to pay their mortgage-- one of the primary causes of this economic fiasco.

ACORN is a group that Barack Obama has long standing connections with.

This whole thing smacks of Democratic foolishness. What will they do about the next 700 billion dollar bailout?

Did you know John McCain proposed legislation to regulate Fannie Mae and Freddie Mac and warned about this potential meltdown for years, but was stopped by a purely party-line vote by the Democratic Congress?

http://hotair.com/ar...-acorn-bailout/

Edited by Savage, 28 September 2008 - 02:28 AM.

[luv2increase]

20% of all profits from the bailout into the Housing Trust Fund — a boondoggle that Democrats in Congress has used to fund political-action groups like ACORN and the National Council of La Raza.

One of the primary goals of ACORN is to get loans and mortgages for no down payment and for people who do not actually have the ability to pay their mortgage-- one of the primary causes of this economic fiasco.

ACORN is a group that Barack Obama has long standing connections with.

This whole thing smacks of Democratic foolishness. What will they do about the next 700 billion dollar bailout?

Did you know John McCain proposed legislation to regulate Fannie Mae and Freddie Mac and warned about this potential meltdown for years, but was stopped by a purely part-line vote by the Democratic Congress?

http://hotair.com/ar...-acorn-bailout/

Well said. Too bad it will go in one ear and out the other in a horribly blind fashion amongst the Obama crowd within these here forums.

[RighteousReason]

From Congressman Pence's Office
WASHINGTON, DC – U.S. Congressman Mike Pence sent the following letter to his colleagues today in opposition to the deal struck last night on the bailout of the financial services sector:

Dear Colleagues:

Our nation has been confronted by a serious crisis in our financial markets. The President and this Congress were right to act with all deliberate speed in addressing this crisis.

We now have a deal that promises to bring near-term stability to our financial turmoil, but at what price?

Economic freedom means the freedom to succeed and the freedom to fail.

The decision to give the federal government the ability to nationalize almost every bad mortgage in America interrupts this basic truth of our free market economy.

Republicans improved this bill but it remains the largest corporate bailout in American history, forever changes the relationship between government and the financial sector, and passes the cost along to the American people. I cannot support it.

Before you vote, ask yourself why you came here and vote with courage and integrity to those principals.

If you came here because you believe in limited government and the freedom of the American marketplace, vote in accordance with those convictions.

Duty is ours, outcomes belong to God.

We have fought the good fight. Now we need to finish the race and make sure that posterity and the American people know there were conservatives who opposed the leviathan state in this dark hour.

And if you do this I promise you, I will stand with you and, I believe with all my heart, the American people will stand with you as well.

MIKE PENCE

[Mind]

I hate the idea of bailing out the very institutions that made the mistakes as much as anyone here, but it looks like something needs to be done

George, what should really scare you is that so much of the economy is run "check-to-check" and thus is susceptible to a credit freeze. It is not EVERY business though, it is mostly the big banks and large companies that live "at the margin". My TV station did a story on local banks and businesses here and they all had plenty of cash and could operate without credit for weeks if not months. The local banks had no trouble loaning money to people with collateral and/or good credit. The problem is that a significant portion of the economy is running "check-to check", just like the irresponsible people who bought houses that were too big, new cars, and big screen TVs. They are living/operating beyond their means assisted by inflation. In my view, Elrond is spot on here. The bailout plan just postpones the heartache, at which time it will be worse.

The American economy is overvalued. A lot of the prior assets were "inflated paper". This infected other parts of the world as well. It needs to be re-valued upon real labor, IP, and raw material. We might be getting close to that point, but I don't think we are there yet. Passing the bailout only keeps things artificially inflated - and at a HUGE cost as well. Not only is the FED printing and loaning more money than ever before (breaking all kinds of historic records) and now the bailout proposes that they should buy bad bad loans and worthless financial instruments created during the housing bubble. Sometimes you just have to "take your medicine" before you can start healing.

Of course, I am probably spitting into the wind here. It seems a lot of the younger generations in the U.S. have been taught to accept government as the solution to most things (libertarians are a tiny minority). I am unsure what it will take to return to sound financial principles and a "free-er" market. Maybe some economics education in high school would help.

As far as pinning the blame, there is plenty to go around, but as for the Fannie/Freddie portion, I am sorry to say, but from the historical record, the Dems should be shouldering this one, as they consistently opposed any reform or oversight. Credit is due where credit is due. Republicans warned year after year that Fannie/Freddie were disasters waiting to happen. Again, it is only a small part of the mess, and there is plenty of other blame to go around.

[forever freedom]

Wow, bailout plan rejected, stocks plummeting all around the world, IBOVESPA (Brazil's equivalent of the US' Nasdaq or Dow Jones indexes) fell 12% today. HA!!


I wish i was sitting in a lot of cash, i would get rich in the next years as the markets recover.

[luv2increase]

Wow, bailout plan rejected, stocks plummeting all around the world, IBOVESPA (Brazil's equivalent of the US' Nasdaq or Dow Jones indexes) fell 12% today. HA!!


I wish i was sitting in a lot of cash, i would get rich in the next years as the markets recover.

I'm taking a good portion of my money and buying gold coins right away. This is insane; I feel sick...

[RighteousReason]

I called both of my two Senate representatives and my House representative and told them all that I would not vote for their re-election if they vote to pass this bill.

I encourage everybody else to do the same.