[lvwirelessguy]

These bailouts are bullshit

Let the market sort things out, we need this 700 Billion to fund W's war on terror

[scottwww]

link
In conclusion, there are three good reasons why Congress should reject this legislation:

a. It is immoral - Dumping bad debt on the innocent taxpayers is an act of theft and is wrong.

b. It is unconstitutional - There is no constitutional authority to use government power to serve special interests.

c. It is bad economic policy - By refusing to address the monetary system while continuing to place the burdens of the bailout on the dollar, we can be certain that in time, we will be faced with another, more severe crisis when the market figures out that there is no magic government bailout or regulation that can make a fraudulent monetary system work.

[Icedog_16]

Originally Posted by kosseg

The bill is essentially there to reinstill confidence in the credit markets by setting a floor and stimulating banks to continue to lend. If credit freezes, say goodbye to growth. Many small businesses will no longer be able to tap their lines of credit at their respective banks, and they will no longer be able to access credit at any favourable terms. This will trickle down to the individual american whose boss can no longer meet payroll because they don't have access to the bank credit that they usually use to pay their employees.

Wall Street effed up big timed, but it wasn't just the big commercial/investment banks that are at fault; it's a whole slew of groups ranging from the bond rating agencies, to the mortgage brokers, to the individuals themselves who spread themselves way too thin trying to "keep up with the Joneses" (completely cliche term obv.).

With the proper left of centre amendments (including reduced CEO compensation, equity stake, etc.) this plan is a hell of a lot better for Main street than most people have been led to believe.

This is a good read:

http://seekingalpha.com/article/9787...not-completely

+1 Well said. This is pretty much my understanding as well. I don't like the idea of a bailout, but I do understand its function and why it's necessary.

[scottwww]

“If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.” - Thomas Jefferson

[scottwww]

“Of all the contrivances for cheating the laboring classes of mankind, none has been more effectual than that which deludes them with paper money.” -Daniel Webster

“We are in danger of being overwhelmed with irredeemable paper, mere paper, representing not gold nor silver; no, Sir, representing nothing but broken promises, bad faith, bankrupt corporations, cheated creditors, and a ruined people.” -Daniel Webster

[dth656]

fairly lucid article on why the bailout wont do much (by joseph stiglitz-- hopefully they don't hand out the nobel in econ to just anyone):

http://www.guardian.co.uk/commentisf...oil.wallstreet

[Voltigeur]

Bailout is a lousy term.

We need to address the capitalization / solvency issues of the banks, to free up the credit system before we get an economy that enters a deeper and more protracted recession.

We could be looking at injecting funds into the banks to re-build their capital so that they will trust one another enough to free up the interbank markets. Commercial paper rates at over 6% for A1/P1 paper for good borrowers (read, wider economy) and LIBOR - a critical benchmark lending rate at all time highs - is sending a clear signal that intervention is needed - too late to let the markets just sort this shit out.

I don't like it that we are needing to step-in here, but the blame goes wider than the banks: it runs from hard-core mortgage brokers pushing bad products that were too complex for people to understand (or just plain fraudulent) to unrealistic real estate valuations and financial innovation that became too complex for accurate credit risk to be assessed... many parties.

Buying distressed assets and marking them up / holding until maturity is not the only solution. Other options should also be considered including various injection of funds' swaps (for preferred, for common, for debt), purchase of bank liabilities, outright cash - and some of these methods offer upside over a cycle to the people providing the capital, the taxpayer.

[scottwww]

“Paper money has had the effect in your State that it ever will have, to ruin commerce–oppress the honest, and open the door to every species of fraud and injustice.” - George Washington

[dth656]

agree that the 'bailout' plan as it stands is absolutely necessary to address credit/liquidity issues that are immediate... (as evidenced by the spiking LIBOR)

but what about the underlying economic issues (just off the top of my head)
-glut of real estate w/ rapidly declining value
-consumer spending declining (the joke 'stimulus' checks have all been spent now)
-massive debt for the war (and the resultant problems that will cause when the chinese stop buying tbills)
-add more here, ha ha

[GT3 Tim]

I do not think they should of passed it.

The plan has basically no accountability. It is up the to Treasurer to decide who gets help...basically, no other criteria. Total joke...I can see lots of politicing and bribery going on.

Business made bad loans, took higher risks, etc. TOO BAD. If I ran my business like that and went in the red, would I expect the govt to help me? Hell no. Would they consider it? Hell no.

This is a total joke. There are plenty of businesses that are NOT in the red.....there are plenty that did NOT make poor decisions....there are many that ARE financially solid.

This plan just bails out the businesses that made poor decisions. They should NOT be rewarded for it. They should not get our tax dollars for phucking up. Period.

Yes, if these businesses fail, the credit crunch will increase, etc, etc, etc. Rates will go higher, etc, etc, etc..........tough shit. That is Capitolism....... The bailout is more akin to Solcialism, where the govt has control. I am against the "bailout" 100%.

I will stop now...but that's my $0.02 worth.

[Voltigeur]

Originally Posted by dth656

agree that the 'bailout' plan as it stands is absolutely necessary to address credit/liquidity issues that are immediate... (as evidenced by the spiking LIBOR)

but what about the underlying economic issues (just off the top of my head)
-glut of real estate w/ rapidly declining value
-consumer spending declining (the joke 'stimulus' checks have all been spent now)
-massive debt for the war (and the resultant problems that will cause when the chinese stop buying tbills)
-add more here, ha ha

Agree w/ all those. Which is why I'm really worried that if credit dries up even further then:

* excess real estate inventories won't normalize fast enough
* consumer spending contracting even more for lack of liquidity
* corporate world has a funding gap (ie needs access to funds) at reasonable rates, to the extent they don't get it that means less jobs, less capex ... economy contracts even more (@ GT3 Tim - that means even responsible firms and small businesses get dinged, access to less funds than they need to grow and employ Americans)

And one key point: banks are not like normal businesses. In a crisis of confidence they can bring down the economy, it's not analogous to "making widgets" and selling them above cost and not being overleveraged. Banks are leveraged as a matter of structure. And by touching the entire economy they can make it worse for the responsible firms that make widgets etc.

Wow, the market is acting today as if something will get done ...

[kevinbahnz]

the plan will be approved if we like it or not. its just a matter of when its profitable for the federal reserves to jump in. they've already printed the paper money. when they do agree on it. i think it'll be more than 700billion.

[scottwww]

“Gentlemen, I have had men watching you for a long time, and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out.” - Andrew Jackson

This is the president who vetoed the third implementation of the Bank of the United States. I think it wasn't until eighty years later with the Federal Reserve Act that we had the government in this role again. The Federal Reserve System is largely responsible for the great depression and each recession we have experienced in the last 95 years.

What we need is a president who would take a stand like Andrew Jackson did it. But instead, we have a lame duck who was complicit in this fiasco, and two like-minded big government politicians vying to replace him.

[kevinbahnz]

we're screwed no matter who becomes president

[Voltigeur]

All these quotes are by men before we had a modern financial system. We are way past going back to those simpler days as a nation - and globally. We have been in a debt supercycle since WW II.

Well one can start: pay-off the mortgage & HELOC, cut up the credit cards, pay off any car / boat loans and resolve to live outside the banking system. And ask all your customers to pay cash only .. and on it goes.

And yes: the incoming President (who would want to assume office into this mess!?) is not going to "fix" this.

[kosseg]

Originally Posted by scottwww

“Of all the contrivances for cheating the laboring classes of mankind, none has been more effectual than that which deludes them with paper money.” -Daniel Webster

“We are in danger of being overwhelmed with irredeemable paper, mere paper, representing not gold nor silver; no, Sir, representing nothing but broken promises, bad faith, bankrupt corporations, cheated creditors, and a ruined people.” -Daniel Webster

A little bit of fear mongering in my opinion. To each his own though sir.

Do you propose that we go back to the Gold standard? Or possibly one of Grignon's communist-esque monetary proposals. Faith of repayment is what allows the credit markets to work, and allows growth. It allows bmw to have access to money not brought in through pure net income. It allows for creative destruction, research and development, etc.

I think (I may be mistaken) that these quotes were taken from this video:
http://video.google.com/videoplay?do...74362583451279

Very informative, but goes off on a whole Zeitgiest tangent near the end. With proposals that are more socialist than giving Paulson a $700B cheque.

[Voltigeur]

-

We are so past a return to the gold standard. Nixon had to go off it when we had our last protracted war and built up a deficit: external governments were lining up to exchange for $35 / oz.

[kosseg]

Originally Posted by Voltigeur

Agree w/ all those. Which is why I'm really worried that if credit dries up even further then:

* excess real estate inventories won't normalize fast enough
* consumer spending contracting even more for lack of liquidity
* corporate world has a funding gap (ie needs access to funds) at reasonable rates, to the extent they don't get it that means less jobs, less capex ... economy contracts even more (@ GT3 Tim - that means even responsible firms and small businesses get dinged, access to less funds than they need to grow and employ Americans)

And one key point: banks are not like normal businesses. In a crisis of confidence they can bring down the economy, it's not analogous to "making widgets" and selling them above cost and not being overleveraged. Banks are leveraged as a matter of structure. And by touching the entire economy they can make it worse for the responsible firms that make widgets etc.

Wow, the market is acting today as if something will get done ...

QFT

[scottwww]

Originally Posted by kosseg

A little bit of fear mongering in my opinion. To each his own though sir.

Do you propose that we go back to the Gold standard? Or possibly one of Grignon's communist-esque monetary proposals. Faith of repayment is what allows the credit markets to work, and allows growth. It allows bmw to have access to money not brought in through pure net income. It allows for creative destruction, research and development, etc.

I think (I may be mistaken) that these quotes were taken from this video:
http://video.google.com/videoplay?do...74362583451279

Very informative, but goes off on a whole Zeitgiest tangent near the end. With proposals that are more socialist than giving Paulson a $700B cheque.

link

WEBSTER, Daniel, (1782 - 1852)
Senate Years of Service: 1827-41; 1845-1850
Party: Adams; Anti-Jacksonian; Whig

Chicago Historical Society
WEBSTER, Daniel, a Representative from New Hampshire and a Representative and a Senator from Massachusetts; born in Salisbury, N.H., January 18, 1782; attended district schools and Phillips Exeter Academy, Exeter, N.H.; graduated from Dartmouth College, Hanover, N.H., in 1801; principal of an academy at Fryeburg, Maine, in 1802; studied law; admitted to the bar in 1805 and commenced practice in Boscawen, near Salisbury, N.H.; moved to Portsmouth, N.H., in 1807 and continued the practice of law; elected as a Federalist from New Hampshire to the Thirteenth and Fourteenth Congresses (March 4, 1813-March 3, 1817); was not a candidate for reelection in 1816 to the Fifteenth Congress; moved to Boston, Mass., in 1816; achieved national fame as counsel representing Dartmouth College before the United States Supreme Court in the Dartmouth College case 1816-1819; delegate to the Massachusetts State constitutional convention in 1820; elected from Massachusetts to the Eighteenth, Nineteenth, and Twentieth Congresses and served from March 4, 1823, to May 30, 1827; chairman, Committee on the Judiciary (Eighteenth and Nineteenth Congresses); elected as Adams (later Anti-Jacksonian) on June 8, 1827, to the United States Senate for the term beginning March 4, 1827, credentials presented on December 3, 1827, and took oath of office on December 17, 1827; reelected as a Whig in 1833 and 1839 and served until his resignation, effective February 22, 1841; chairman, Committee on Finance (Twenty-third and Twenty-fourth Congresses); unsuccessful Whig candidate for president in 1836; appointed Secretary of State by President William Henry Harrison and again by President John Tyler and served from 1841 to 1843; again elected as a Whig to the United States Senate and served from March 4, 1845, to July 22, 1850, when he resigned; appointed Secretary of State by President Millard Fillmore and served from July 22, 1850, until his death in Marshfield, Mass., October 24, 1852; interment in the Winslow Cemetery.

That's quite a resume.

As for the video, I can't access them at work. Where I found the quotes was in a piece written by Chuck Baldwin. I placed the full context in this thread: Gold Standard post #39

You might find something of interest in these three threads: Our Changing Financial System, Our liberties are hanging by a thread, and Your money to bailout Fannie Mae and Freddie Mac?.

[scottwww]

Originally Posted by Voltigeur

All these quotes are by men before we had a modern financial system.

How many centuries (or millennia) have banks and credit been great financial forces?

[dth656]

well, if its socialist to dramatically increase regulation of this stuff, then i'm for it. doesnt anyone remember Long Term Capital Management and how that ended??

[Voltigeur]

Originally Posted by scottwww

How many centuries (or millennia) have banks and credit been great financial forces?

Oh it's centuries in terms of credit (Italians were great innovators as were the Fuggers), but that's not to be extrapolated to a globally-integrated financial system that transmits data (interconnectedness) almost instantaneously.

And we have a monetary system that's so much more complex.