Wall St Bailout? "We should not be rushed into this!"

vanshnookenraggen

vanshnookenraggen

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I'm sure most of you, like me, are completely confused by what is really going on with Wall St and the bailouts. Since this directly effects development I figure it is something that needs to be better understood. This video doesn't describe the problem but it does point out that the proposed solution by the Treasury secretary is very dangerous.

http://www.youtube.com/watch?v=ANGsBNMY1_c

Basically, lets all take a deep breath and not be tricked into further fucking this country. Bush has been collecting power for 8 years and giving the Treasury secretary a blank check and unlimited powers is just another dangerous step.
 
The current mess started in 1995 with the Community Reinvestment Act and has been slowly snowballing through the ineptitude of the legislative and executive branch, and greed of short term CEO's since then. We have two presidents, hundreds of CEO's, and several congresses to blame.

Sadly the only people capable of fixing the problem, and the ones in charge of fixing it, are the same ones who made the mess to begin with. There wouldn't be enough members of congress to hold a quorum at the current hearings if they were required to recuse themselves for involvement in the matters at hand. Dodd and Frank should be embarrassed to be on TV talking about the issue at hand, given how they are majorly responsible for current policy. Bush is in near hiding because had six years as president with control of congress, complained about problem and didn't have the stones to tell congress to fix it. The Democrats have had two years controlling congress,heading all the key committees to halt the impending disaster, and did nothing but take money from Wall Street whilist pointing fingers at Republicans.

Lot's of pie in the sky policies (let's make it legal to give out loans like candy to unqualified poor people because it feels good), greedy bastards (let's make pretend to grow our companies by giving out or accepting lots of loans and quit for the severance bonus before the ponzi scheme collapses), and do nothings (yay campaign contributions!!!!) got us this disaster, and now the blame game begins.
 
Hey, Lurker, this is like one of those old Pravda stories about "panic in New York, London and Paris..."
 
Having known people who worked in strategic misinformation, any real bad news, or freebie misinformation from the decadent western media or pseudo intellectuals (Noam Chomsky was the gift that kept on giving) was cause for drinks. Actually anything was cause for drinks...but that was a different problem.

Expect every semi-communist/socialist organization to come crawling out like cockroaches and astro-turfing like crazy to promote their agenda amongst a perceived panic. All those fraudsters that got rich selling people survival junk or financial schemes during the Y2k nonsense will probably make the rounds again as well.

I'm quite glad I own properties free and clear without mortgages right now. This isn't going to be pretty the next few years.
 
I'm no economist, but I have a question regarding the situation.

This money is supposed to go to the banks (and as a result, bail them out of their crisis), right? If that's the case (and again, I'm not sure of the details), would it make more sense to use the 700 billion directly on the people suffering from the mortgage and debt problems so that they can directly pay off their debt (thus infusing the banks with the money people are defaulting on)?

From what I gathered it seems like we're investing 700 billion in banks that were irresponsible in their lending practices to help bail them out trouble, yet the people who are struggling to pay off mortgages and other debts are still going to be in debt and struggling.

Action needs to be taken, (taking no action, or letting the budget "balance out" was part of the reason for the magnitude and length of the Great Depression), but I have a very uneasy feeling about throwing so much money at these banks who were irresponsible to begin with (then again, many of the people in debt aren't innocent either).

Could someone please tell me I'm way off the mark so I can feel better? or at least tell me why giving directly to the banks is a better idea than giving directly to the individuals struggling with debts?
 
The problem with giving money directly to the borrowers is that many of them were fraudulent. Lots of people who had no intention of paying the money back took the money and ran. Entire real estate companies are car dealerships made fortunes selling at inflated prices to illegals or identity thieves on 100% credit. Many businesses took out lots of loans they couldn't repay in an attempt to outgrow their problems similar to the Dot Bombs.

Government aided and to some extent forced lenders to offer credit to the chronically poor, 'community' developers, action groups, etc for feel good or vote buying reasons. These were people that otherwise couldn't get credit, FOR THE GOOD REASON THEY WERE UNLIKELY TO PAY ANYONE BACK!

Crooked lenders gave out money they knew wouldn't be repaid because to investors the projected profits from the interest on loans looked great on paper. Legit lenders still got stuck carrying lots of bad loans they knew were worthless and tried to hide that fact from investors. This is why investment banks spent a lot of money lobbying congress to not require transparency.

Giving money to the borrowers that already took money and ran is a bad idea. So is giving money to crooked lenders. We aren't so much in a credit crisis as we are in a credibility crisis. Until it is clear what assets actually exists, what their value is, and who is acting responsibly in lending to people with the proven means of repaying, we are screwed.
 
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This crisis is 60 years in the making and the real culprit is fractional reserve banking coupled with compound interest.

Nothing can really be done to prevent a hyperdeflationary implosion this late in the game. Maybe 10 or 20 years ago, but not now. It is folly.

They only thing they can do is to try and delay the inevitable for a bit longer...i.e., until after the election. That is why they are trying to ram this "bailout" legislation through in such a hurry.

The total money supply of the USA is 51 Trillion dollars...of debt. The system is collapsing because consumers have been unable to continue requesting enough debt to service the previously created debt at a fast enough rate. The US money supply has been growing slower for months and the economy is short over 1 Trillion dollars compared to last year. Consumers are $5 billion/day short of what needs to be created in order to sustain the system.

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Actually, that graph also charts the growth of my income since 1983.

Go, me!
 
If there's a meltdown, all incumbents are at risk. After all, this is the most unpopular Congress in history. Congress will make something happen. for better or worse. because of that.
 
Washington Mutual gobbled up by JP Morgan yesterday.

Wachovia today...maybe by Citigroup?
 
Since JP Morgan took all of WaMu's deposits, with no FDIC funding required, this seems like a fairly unremarkable event. Nobody will lose any money.
 
^I had discussed with various persons with particular economic backgrounds and interests the 700b figure and many felt that after the banks were acquired and assets exchanged hands the actual cost of the bailout could be under 200 or even 150 billion. They also agreed 700 wasn't based on any particular research or estimate, that it was a scare tactic of sorts.
 
Is it really a good idea to combine large banks into even larger ones? I'd rather go the totally opposite way and break the large banks into lots of small pieces, so that nothing is ever again considered 'too big to fail'.
 
Well the bill just failed the first round of voting.... and the stock market is down 500 points.

Honestly I hope this doesn't pass. Giving the Treasury secretary unlimited power and $700 billion of our money to spend is a horrible idea.
 
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