Discomfort With The Bailout

[dapokerbum 0]

This discussion has gone a little out of hand. But I am going to address what I find wrong with the bailout. First of all it is the government getting involved with private companies. I am all for securing loans to the retarded banks and mortgage companies that are getting hammered because the high risk notes they were approving just proved how high risk they were, but to actually have ownership of this debt is retarded. Are they going to watch the profits and as it unfolds and the government starts making money WITH OUR TAXPAYERS MONEY are they going to then turn around and give that profit back to the people that funded this in the firstplace. Of course they're not, they are going to try to apply this towards the national debt, which for us is already in trillions.No, what we need to do is let the recession take place. Let people understand that when you make 30K a year you CANNOT afford a mercedes. America needs to get out of it's current debt induced coma. American people have lived too long on credit and it is time we faced the music on this. Just because some things are going to fail is not the END OF THE WORLD as Bernake (sp) has put it. Yes there will be stress and yes we will go into a recession, but the bailout is not the answer. I sincerely hope that this does not pass. It will be tough, but america will come through it. Look at WAMU, it has gone under and is now under JP Morgan Chase. The governement didn't have to step in. And the other company .. can't remember now but Buffet put 5 billion dollars into it. They will still be looking for ways to make money. The whole financial system will not completely collapse because there will always be someone with money that will lend out the money to the highest bidder. This is kind of jumbled but i think i got out most of what i was trying to say.

[Pot Odds RAC 23]

This discussion has gone a little out of hand. But I am going to address what I find wrong with the bailout. First of all it is the government getting involved with private companies. I am all for securing loans to the retarded banks and mortgage companies that are getting hammered because the high risk notes they were approving just proved how high risk they were, but to actually have ownership of this debt is retarded. Are they going to watch the profits and as it unfolds and the government starts making money WITH OUR TAXPAYERS MONEY are they going to then turn around and give that profit back to the people that funded this in the firstplace. Of course they're not, they are going to try to apply this towards the national debt, which for us is already in trillions.No, what we need to do is let the recession take place. Let people understand that when you make 30K a year you CANNOT afford a mercedes. America needs to get out of it's current debt induced coma. American people have lived too long on credit and it is time we faced the music on this. Just because some things are going to fail is not the END OF THE WORLD as Bernake (sp) has put it. Yes there will be stress and yes we will go into a recession, but the bailout is not the answer. I sincerely hope that this does not pass. It will be tough, but america will come through it. Look at WAMU, it has gone under and is now under JP Morgan Chase. The governement didn't have to step in. And the other company .. can't remember now but Buffet put 5 billion dollars into it. They will still be looking for ways to make money. The whole financial system will not completely collapse because there will always be someone with money that will lend out the money to the highest bidder. This is kind of jumbled but i think i got out most of what i was trying to say.

Good job.

[copernicus 0]

This discussion has gone a little out of hand. But I am going to address what I find wrong with the bailout. First of all it is the government getting involved with private companies. I am all for securing loans to the retarded banks and mortgage companies that are getting hammered because the high risk notes they were approving just proved how high risk they were, but to actually have ownership of this debt is retarded. That was the role of FNMA/FRE. It didnt work. I dont like it, but pulling things closer in by temporarily managing the debt is the safer route right now.Are they going to watch the profits and as it unfolds and the government starts making money WITH OUR TAXPAYERS MONEY are they going to then turn around and give that profit back to the people that funded this in the firstplace. Of course they're not, they are going to try to apply this towards the national debt, which for us is already in trillions.This may well be part of the negotiations. If not it should be.No, what we need to do is let the recession take place. Let people understand that when you make 30K a year you CANNOT afford a mercedes. America needs to get out of it's current debt induced coma. American people have lived too long on credit and it is time we faced the music on this. Just because some things are going to fail is not the END OF THE WORLD as Bernake (sp) has put it. Yes there will be stress and yes we will go into a recession, but the bailout is not the answer. I sincerely hope that this does not pass. It will be tough, but america will come through it. If recession were the worst consequence I agree. Unfortunately our economy is so dependent on home ownershp and liquidity of the mortgage markets, recession is the least that would happen.Look at WAMU, it has gone under and is now under JP Morgan Chase. The governement didn't have to step in. Well, the FDIC did step in briefly. And the other company .. can't remember now but Buffet put 5 billion dollars into it. Goldman Sachs and the attraction for WB is their possbilities as a commerical bank. They will still be looking for ways to make money. The whole financial system will not completely collapse because there will always be someone with money that will lend out the money to the highest bidder. If theres money to lend.This is kind of jumbled but i think i got out most of what i was trying to say.

Despite all the red we pretty much agree.

[Loismustdie 0]

This discussion has gone a little out of hand. But I am going to address what I find wrong with the bailout. First of all it is the government getting involved with private companies. I am all for securing loans to the retarded banks and mortgage companies that are getting hammered because the high risk notes they were approving just proved how high risk they were, but to actually have ownership of this debt is retarded. Are they going to watch the profits and as it unfolds and the government starts making money WITH OUR TAXPAYERS MONEY are they going to then turn around and give that profit back to the people that funded this in the firstplace. Of course they're not, they are going to try to apply this towards the national debt, which for us is already in trillions.No, what we need to do is let the recession take place. Let people understand that when you make 30K a year you CANNOT afford a mercedes. America needs to get out of it's current debt induced coma. American people have lived too long on credit and it is time we faced the music on this. Just because some things are going to fail is not the END OF THE WORLD as Bernake (sp) has put it. Yes there will be stress and yes we will go into a recession, but the bailout is not the answer. I sincerely hope that this does not pass. It will be tough, but america will come through it. Look at WAMU, it has gone under and is now under JP Morgan Chase. The governement didn't have to step in. And the other company .. can't remember now but Buffet put 5 billion dollars into it. They will still be looking for ways to make money. The whole financial system will not completely collapse because there will always be someone with money that will lend out the money to the highest bidder. This is kind of jumbled but i think i got out most of what i was trying to say.

Once again, a big piece is being missed here. It's about percentage of assets and leverage more than it is the assets themselves.

[FCP Bob 1,312]

A few points.1. Kurt, as others have pointed out increasing the minimum wage the way that you're suggesting would be a disaster since it would result in a huge amount of unemployment and a large spike in inflation. It's possible that the minimum wage should go up to match inflation but you do that in small increments and not in a massive increase.2. The entire financial system is based on a willingness to lend money and if firms aren't willing to lend each other money then the system basically will collapse and that is the ultimate danger. Yes it would be nice if Main Street didn't have to bail out Wall Street but everybody will feel it if there is a major collapse.3. Those of you who work in the financial services industry can maybe answer this one for me. What have been the consequences for the bond rating agencies ? You had all these crappy high risk mortgages bundled together and sold off and rated as investment grade by the rating agencies. Have they been sued left and right and will they be put out of business as a result of their negligence in this ?

[El Guapo 8]

Simple answer: CDS were not looked at by anyone. Completely unregulated and not scrutinized.

[gobears 0]

If recession were the worst consequence I agree. Unfortunately our economy is so dependent on home ownershp and liquidity of the mortgage markets, recession is the least that would happen.

If it wasn't for this part, I would be against the $700B bailout. A recession would be ok but something like the Great Depression would be a disaster.Mr. Practical (yes that is what he writes under on Minyanville) says that the bailout plan should have as its major points:Minimal and staggered funding, full transparency and accountability, and dilution of equity from failed institutions.He basically says that it is ok to let the banks fail as long as the savings are protected. Let the equity holders lose their shirts. I don't see a problem with doing that at all.

[Suited_Up 2]

What about the option I didn't bring up before...Kill everyone on welfare, and kill everyone approx. 70 or older.That would do wonders for not only the economy, but just general happiness in general.Both sides just suck money out of the economy. I say genocide is the best plan of action.

[FCP Bob 1,312]

What about the option I didn't bring up before...Kill everyone on welfare, and kill everyone approx. 70 or older.That would do wonders for not only the economy, but just general happiness in general.Both sides just suck money out of the economy. I say genocide is the best plan of action.

Well the way things are going we may all be eating Solent Green some day.

[Suited_Up 2]

Well the way things are going we may all be eating Solent Green some day.

I don't really doubt too much that there will be a point where things revert quite a bit. Not sure if it'll be in this lifetime though. But I bet it happens. Would probably help quite a bit. I think stuff has just gotten too complex for it's own good.

[BaseJester 1]

Because that is what he is worth in the market.

But if the feds bail out his company, then the market isn't setting his worth. The people who think the CEO is worth $x million dollars want to pay him with my money. Well, **** off. That's not really a market.

[copernicus 0]

Well the way things are going we may all be eating Soylent Green some day.

misspellings do so ruin a decent joke.

[FCP Bob 1,312]

misspellings do so ruin a decent joke.

Dammit, I do love Chuck Heston in his sci fi phase although I did read Harry Harrison's book before I saw the movie.

[vbnautilus 48]

Mmmmmm soylent green.

[Sal Paradise 57]

ok, I just couldn't read any further than this due to pure frustration, but:

Unfortunately, it seems that the people smart enough to run the country are also smart enough to not get into politics.

this is completely correct. if you can understand why, then you should be able to understand what everybody else is trying to tell you more accurately.

[Sheiky 0]

Can someone tell me exactly where this money is going to come from?And if, as I think i'm right in saying, it is loaned money, who is loaning it to us, and how are we going to pay it back?I think the pay-issues being worked into the bill are going to be distorted by gaining vengence on the system to please the public. Personally, I don't think the issue is necessarily the total size of the incomes of executive bankers, I think it's the incentive basis on which the money is handed out, which by all accounts has lead to myopic decision making that can have monumental consequences in the long run.

[gobears 0]

Can someone tell me exactly where this money is going to come from?And if, as I think i'm right in saying, it is loaned money, who is loaning it to us, and how are we going to pay it back?

From the taxpayer - my belief is that the US will pay more for these assets then their market rate. Now in the future when things improve, could the US see some actual positive return from their purchase - maybe.More likely, the result will be a loss of some amount funded by the US Taxpayer

[Suited_Up 2]

ok, I just couldn't read any further than this due to pure frustration, but:this is completely correct. if you can understand why, then you should be able to understand what everybody else is trying to tell you more accurately.

I'm satisfied that I was at least right about something :)Thing is, I feel that the more I learn, the more frustrated I become, which might be why I avoid getting to deep into it all. I get frustrated just hearing stories from my girlfriend who works for UBS. Some of the rules she needs to follow for the SEC sound crazy to me.

[Sheiky 0]

From the taxpayer - my belief is that the US will pay more for these assets then their market rate. Now in the future when things improve, could the US see some actual positive return from their purchase - maybe.More likely, the result will be a loss of some amount funded by the US Taxpayer

Ok this is where I get confused.I'm right in thinking the US government is already heavily in debt? And if that's the case, surely there are no more 'taxpayer dollars' left in the kitty to spend?

[El Guapo 8]

Ok this is where I get confused.I'm right in thinking the US government is already heavily in debt? And if that's the case, surely there are no more 'taxpayer dollars' left in the kitty to spend?

The federal reserve uses the US treasury to control the money supply. They will sell more US treasuries to increase the money supply. Treasuries are debt instruments backed by the full faith and credit of the US government.

[Suited_Up 2]

Can't we just be a cash only society? :)No banks, no muss, no fuss.

[BaseJester 1]

The federal reserve uses the US treasury to control the money supply. They will sell more US treasuries to increase the money supply. Treasuries are debt instruments backed by the full faith and credit of the US government.

In other words, they'll take it from people who are holding cash.

[Sheiky 0]

The federal reserve uses the US treasury to control the money supply. They will sell more US treasuries to increase the money supply. Treasuries are debt instruments backed by the full faith and credit of the US government.

I thought as much. Now, I read somewhere that to pay these back, the Federal Reserve creates new money, is this true?

[Suited_Up 2]

I thought as much. Now, I read somewhere that to pay these back, the Federal Reserve creates new money, is this true?

They should just make enough money for us all to be rich. Print that shit nonstop.Foreign exchange rates are overrated.(kidding obv, but it'd be super.)

[El Guapo 8]

I thought as much. Now, I read somewhere that to pay these back, the Federal Reserve creates new money, is this true?

No. Its paid paid with revenues from taxes. And floating more treasuries in the future. We also loan money to other nations, unfortunately we don't always 'collect'.Its not like Ben Bernake makes a call to the treasury and says; "fire up presses 1, 2, and 3 we need 200 Billion by tomorrow. Were working overtime tonight guys!"We have the largest Deficit dollars wise we have ever had, but as a % of GDP (which is the more telling number) it is not that bad. Copernicus quoted is some where earlier, I believe it is in the 40% range:http://zfacts.com/metaPage/lib/OMB-2004-Na...ebt-History.pdf