$700 BILLION bailout?

[Msterbeau]

Are they fucking insane? Consumers are already paying the price for their own mistakes and for banks predatory business practices and THEIR management's bad decisions. This should come out of their pockets, not ours.

"UPDATED AT 4:30 P.M.: WASHINGTON -- The Bush administration insisted today that Congress must move quickly to approve what one lawmaker called the “mother of all bailouts” -- a $700-billion proposal to buy a mountain of bad mortgage debt in an effort to unfreeze the nation’s credit markets.

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However, Democrats said that the administration’s spare three-page plan must be expanded to include help for people on Main Street as well as the big Wall Street financial firms who have lost billions of dollars through their bad investment decisions.

Treasury Secretary Henry Paulson stressed that time was critical to get the proposal passed and that changes to the administration’s measure, which was sent to lawmakers on Saturday, could delay that approval, further unsettling global financial markets, which have already seen a number of stomach-churning days as the result of the biggest upheaval on Wall Street since the Great Depression.

In the past two weeks, the government has taken over the country’s two biggest mortgage companies, Fannie Mae and Freddie Mac, and its biggest insurance company, American International Group Inc., and stood by while the nation’s fourth-largest investment bank, Lehman Brothers, was forced to declare bankruptcy and another investment giant, Merrill Lynch, was forced to sell itself to Bank of America.

Paulson and Federal Reserve Chairman Ben Bernanke made the joint decision last week that the only way to stop the carnage was to deal with the root cause of all the troubles, billions of dollars of bad mortgage debt sitting on the books of major financial companies.

This debt has triggered the worst credit crisis in decades, causing credit markets to essentially freeze up last week despite the fact that the Fed joined with major central banks around the world to pump billions of dollars of reserves into the financial system.

The plan the administration has developed with support from the Fed would have the government buy up to $700 billion of the bad loans, taking them off the books of financial firms with the hope that this will allow those companies to resume normal lending operations. Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee, said the government’s efforts would be the “mother of all bailouts” that could well cost $1 trillion when the cost of the government takeovers of Fannie, Freddie and AIG were included.

Paulson, appearing on four of the five Sunday morning talks shows to sell the plan, insisted that the administration had no choice.

The cost of doing nothing would have been far more severe because the clogged credit markets would make it harder for businesses to get the loans they need to keep operating, he said. Doing nothing also would make it harder for consumers to get the credit they need for car loans and other purchases, the Treasury secretary said. Consumer spending accounts for two-thirds of total economic activity.

“We need to look at what is going on in the credit markets and they are still very fragile right now and frozen,” Paulson said on NBC’s “Meet the Press.”

In addition to what is happening in the United States, Paulson said he was confident that other major countries would take similar actions to support their financial systems, helping to avert a global meltdown.

“We have a global financial system and we are talking very aggressively with other countries around the world and encouraging them to do similar things and I believe a number of them will,” Paulson said on ABC’s “This Week.” He refused to name the countries that he expected would act.

Democrats said they understood the need for urgency but insisted that the measure needed to provide help for homeowners threatened with losing their homes.

One possible approach, they said, would be changes in bankruptcy laws to allow for mortgages to be modified, something financial companies have strongly opposed, and by capping benefit packages for executives at the huge Wall Street firms that will be selling their bad debt to the government.

“It would be a grave mistake to say that we’re going to buy up a bad debt that resulted from bad decisions of these people and then allow them to get millions of dollars on the way out,” said House Financial Services Chairman Barney Frank, D-Mass. “The American people don’t want that to happen and it shouldn’t happen.”

Senate Banking Committee Chairman Christopher Dodd, D-Conn., told reporters at a Capitol Hill news conference on Sunday that while he hoped Congress could pass the legislation this week “if it takes a little longer, then so be it.”

He said financial markets should be reassured that Congress was moving toward a significant response and a few more days to “get it right” should not trigger a renewed nosedive on Wall Street.

While Paulson gave no indication during the interview shows of what changes the administration would be willing to accept, the administration did modify an early draft obtained by the Associated Press in a significant way.

A later version expands the definition of the financial firms that would qualify to sell their bad debt to the government to include not just U.S. firms but also foreign firms doing business in the United States if the government decides debt purchases from those firms are needed to stabilize the financial system.

Sen. Charles Schumer, D-N.Y., said that he believed there would be changes to Paulson’s plan and that agreement could still be reached quickly.

Schumer said that he was pushing to get a provision where the government would receive stock warrants in return for the bailout relief and for creation of a government oversight board to supervise the huge operation, which under Paulson’s plan would be run out of the Treasury Department. He said Paulson seemed receptive to changes when he had discussed his ideas with him.

“We need changes in it relating to housing ... we need to put the taxpayer first ahead of bondholders, shareholders, executives” Schumer said on “Fox News Sunday.”

However, Republican lawmakers said that the Democratic efforts risks slowing down a measure that was urgently needed.

“This would be the most serious financial crisis that the world has ever dealt with. It is not a time to be playing games,” said House Republican Leader John Boehner.

Paulson said in his round of interviews that the nation’s outdated regulatory system for financial markets must be overhauled but the first job is to get the rescue package through Congress and then deal with a comprehensive regulatory overhaul next year.

The administration’s proposal seeks an increase in the limit on the national debt from $10.6 trillion to $11.3 trillion to make room for the massive rescue. But Paulson said that the government would recoup a part of the $700 billion when the housing market recovers and the mortgage assets rebound in value."

[Simon Bar Sinister]

It's not enough, it's probably too late, and it's aimed at the wrong targets.

http://bellaciao.org/en/spip.php?article17405 ...probably the best explanation in the fewest words of the underlying problem. This isn't a be-all end-all on the topic of derivatives by any means , just the best way in that I could find.

[Troy Spiral (13)]

I was pondering it earlier today (although the use of crossover of public and private interest in economics has long been a subject of study for me). This is another good example of why we need more than two parties. Both parties are (loosely) for this type welfare in one way or another, they just differ in the details.

Its easy to evoke emotional responses to "people losing their jobs" and "economic crisis" but free market economies need to run on bad business practices causing business to go out of business. Not, in a sense creating an legal (which should be illegal) tax on the rest of us by pulling money out of thin air (or worse) in essence making all the rest of "our" capital and government worth less.

The argument that says this is just a temporary problem and this is just help for them to get through the hard times is not accurate. Bad business and poor management needs to go out of business. The short term hardship should not outweigh the long term waste, rewarding poor management causes. Now if the government was giving them a loan, that they were expected to pay back, with interest, and it was seen as a good investment, that would be a different animal all together. And, should come from the private sector not the government. (If anyone thought this was worth the investment.)

[TitsMcGee]

The only thing I'm saying on this topic is that if the Banks didn't give out loans and shit to some of the people they did, we wouldn't be in this mess. I don't see why it should be up to the tax payers to bail businesses out because they were stupid.

[Msterbeau]

I was pondering it earlier today (although the use of crossover of public and private interest in economics has long been a subject of study for me). This is another good example of why we need more than two parties. Both parties are (loosely) for this type welfare in one way or another, they just differ in the details.

Its easy to evoke emotional responses to "people losing their jobs" and "economic crisis" but free market economies need to run on bad business practices causing business to go out of business. Not, in a sense creating an legal (which should be illegal) tax on the rest of us by pulling money out of thin air (or worse) in essence making all the rest of "our" capital and government worth less.

The argument that says this is just a temporary problem and this is just help for them to get through the hard times is not accurate. Bad business and poor management needs to go out of business. The short term hardship should not outweigh the long term waste, rewarding poor management causes. Now if the government was giving them a loan, that they were expected to pay back, with interest, and it was seen as a good investment, that would be a different animal all together. And, should come from the private sector not the government. (If anyone thought this was worth the investment.)

Agreed. This is one case in which capitalism and free markets should be allowed to (largely) run without interference. Nobody learns if there are no consequences for making mistakes. I don't mind the government assisting people in starting a small business. if they have brains and work hard, they become successful and contribute back into the tax base. If not... well it didn't cost much to find out. But large established businesses pushing the limits of the law and ethical business practices can bail their own damn selves out.

[Msterbeau]

It's not enough, it's probably too late, and it's aimed at the wrong targets.

http://bellaciao.org/en/spip.php?article17405 ...probably the best explanation in the fewest words of the underlying problem. This isn't a be-all end-all on the topic of derivatives by any means , just the best way in that I could find.

Unbelievable what greed does....

[Hellion]

This country has gone to hell,wonder how much longer it will exist.been reading about this alot

[sass_in_the_pants]

However, Democrats said that the administration’s spare three-page plan must be expanded to include help for people on Main Street as well as the big Wall Street financial firms who have lost billions of dollars through their bad investment decisions.

So, let me get this straight...Bush here has a very, very bad plan.

Very bad plan.

And the Democrats want to glom ANOTHER bad plan on top of the FIRST bad plan?

Who's running this show?

Ugh.

[Gaf The Horse With Tears]

I just hope they come to a good agreement and get it implemented quickly. I really don't want to watch the world economy collapse.

[Enishi]

Yet more socialism for the rich, don't you know those poor old bankers and speculators need our money so they dont lose their mansions and private jets?

[creatureofthenyte]

I definitely don't think my tax dollars should be used for fixing someone elses' fuck up.

[Enishi]

I just read this article about the whole mess. I'm increasingly worried about the future...

http://www.lewrockwell.com/murphy/murphy137.html

[Rev.Reverence]

Are they fucking insane?

As it takes one to know one...I'll answer this one...YES..evidence points to INSANITY...

[savageminstrel]

Has anyone suggested that the CEOs of these investment firms and their executives who are responsible for the sorry-assed state of their companies forego their million dollar-plus salaries and bonuses?? No... of course not, the guys who have consistantly raped and pillaged this economy are being allowed to take even more. It is blatant robbery on a huge scale, and is going to be allowed because this country stupidly elected two corporate whores as president and vp.

Meanwhile we are told we have to pay for it, while our liberties are abrogated for us bit by bit. Our country has been handed over to multinational corporations that aren't even loyal to the US.

The real pirates are alive and well, and operating in 1000 dollar Armani suits.

Who were the idiots that decided that corporate CEOs make good leaders....oops, that was us wasn't it? And have we learned? It sure doesn't look that way.

*ok... rant over for now*

P.S. .... and dont fall back on that old "I didnt vote for the republicans" bullshit, the great hero Clinton signed NAFTA, after swearing on a stack of bibles that he would veto it... in fact it was his first official act as president and one of the largest coffin nails in this country's economy. If you think Obama will make ANY fundamental changes in it, I fear you are fooling yourself. Just my 2 cents worth.

[SaGa]

well there goes the middle-class, as i said in tent cities post. they are just taking out of the us dollar, spending it. and then the dollar goes down right after. amarica has no money. did our taxes pay for this shit. NOPE! this isnt tax money being used to pay all this. this is fed pulling it out of there portal of limitless cash. i can see some huge inflation coming from this.

fiat currency can kiss my ass.

[sass_in_the_pants]

Has anyone suggested that the CEOs of these investment firms and their executives who are responsible for the sorry-assed state of their companies forego their million dollar-plus salaries and bonuses?? No... of course not,

Actually, yes. Some in Congress are suggesting that if the bailout goes through that none of the executives of those companies bailed out get the 'golden parachute' so to speak.

Now, will THAT component pass? that's another question altogether, but at least some people are suggesting it.

[Gaf The Horse With Tears]

Has anyone suggested that the CEOs of these investment firms and their executives who are responsible for the sorry-assed state of their companies forego their million dollar-plus salaries and bonuses?? No... of course not, the guys who have consistantly raped and pillaged this economy are being allowed to take even more. It is blatant robbery on a huge scale, and is going to be allowed because this country stupidly elected two corporate whores as president and vp.

Meanwhile we are told we have to pay for it, while our liberties are abrogated for us bit by bit. Our country has been handed over to multinational corporations that aren't even loyal to the US.

The real pirates are alive and well, and operating in 1000 dollar Armani suits.

Who were the idiots that decided that corporate CEOs make good leaders....oops, that was us wasn't it? And have we learned? It sure doesn't look that way.

*ok... rant over for now*

P.S. .... and dont fall back on that old "I didnt vote for the republicans" bullshit, the great hero Clinton signed NAFTA, after swearing on a stack of bibles that he would veto it... in fact it was his first official act as president and one of the largest coffin nails in this country's economy. If you think Obama will make ANY fundamental changes in it, I fear you are fooling yourself. Just my 2 cents worth.

McCain, in a speech this morning, said he wants legislation that limits corporate exec salaries and bonuses if the company is loosing money or filing bankruptcy.

[Rev.Reverence]

McCain, in a speech this morning, said he wants legislation that limits corporate exec salaries and bonuses if the company is loosing money or filing bankruptcy.

His handlers WOULD add that just now...instead of 3 months ago..

[SaGa]

McCain, in a speech this morning, said he wants legislation that limits corporate exec salaries and bonuses if the company is loosing money or filing bankruptcy.

obamas speech

"The era of greed and irresponsibility on Wall Street and in Washington has led us to a perilous moment. They said they wanted to let the market run free but instead they let it run wild, and in doing so, they trampled our core values of fairness, balance, and responsibility to one another. As a result, we are facing a financial crisis as profound as any we have faced since the Great Depression. As a result, your jobs, your savings, and your economic security are now at risk ...

We did not arrive at this moment by some accident of history. We are in this mess because of a bankrupt philosophy that says we should give more and more to those with the most and hope that prosperity trickles down to the rest of us. We’re here because for too long, the doors of Washington have been thrown open to an army of lobbyists and special interests who’ve turned our government into a game only they can afford to play -– who have shredded consumer protections, fought against common-sense regulations and rules of the road, and distorted our economy so that it works for them instead of you ..."

im sure you heard this piece of shit today...

[violentivy]

I am bipolar,

I have mentioned that on this board several times. I overspend sometimes in a fit of mania...

No one bails my ass out. I have to claw my way out. Why should it be any different for a mortgage firm?

Now, I'm all for helping folks. I'm all for helping agencies. Banks that overspend, sorry. I don't get help in a fit of mania, neither do they.

[Destroit]

Imo...those people that fucked up should be homeless because of this.

Oh wait...maybe that statement should go into the "Tent Cities" thread.

[Hellion]

I will say one thing it is never the persons fault if they were laid off,anyone who honestly works,pays their bills on time,and had an excellent work history are not to blame.(unless they bought a shit load of luxury toys,boats,Lincolns,etc etc.)

Its people who decided to buy bs with money they never had in the first place. without first having a budget,yes some of them maybe hard workers and made a few mistakes,some people should have never gotten into credit cards in the first place,thats whos at fault.no one asks to get laid off.happy my bills are in order.then again alot of people should have never bought 5000 square ft houses that were half a million dollars.

If you don't have the money to buy something,guess what you have to wait.

[Destroit]

I will say one thing it is never the persons fault if they were laid off,anyone who honestly works,pays their bills on time,and had an excellent work history are not to blame.(unless they bought a shit load of luxury toys,boats,Lincolns,etc etc.)

Its people who decided to buy bs with money they never had in the first place. without first having a budget,yes some of them maybe hard workers and made a few mistakes,some people should have never gotten into credit cards in the first place,thats whos at fault.no one asks to get laid off.happy my bills are in order.then again alot of people should have never bought 5000 square ft houses that were half a million dollars.

If you don't have the money to buy something,guess what you have to wait.

TRUTH!

And you shouldn't be buying tons of toys if you don't have at least a year's worth of wages saved up and put aside for well...times like this. BUT...Americans don't listen to logic, they listen to greed and their own selfishness. What I don't understand is why those incompetent assholes are being rescued...LET THEM SINK AND SUFFER.

[Hellion]

And you can thank the energy companies and speculators(assholes) for the cost of living skyrocketing.

And yes I still could never understand why some ppl still buy those mansions.

[Rev.Reverence]

TRUTH!

And you shouldn't be buying tons of toys if you don't have at least a year's worth of wages saved up and put aside for well...times like this. BUT...Americans don't listen to logic, they listen to greed and their own selfishness. What I don't understand is why those incompetent assholes are being rescued...LET THEM SINK AND SUFFER.

Because they are freinds with those who are in power.