Bailout plan
Originally Posted By: NtroducingMyself
Russel Crowe said something last night on Leno that I thought was rather interesting. Basically he said instead of spending $700 Billion dollars to help the economy, how about give everyone in America $1 million dollars, that's a lot less than $700 Billion and would surely boost the economy.
I don't know about finance, as I've stated, but wouldn't that cause runaway inflation?
The problem is that it's going to pass, with major modifications, but it will pass. Look at the war in Iraq, no sensible person in America was for it, but it went ahead anyway. When there's an arrogant bastard such as Bush as our "leader" - shit hits the fan and splatters on all of us.
Why is USA closer than ever to electing a black prez? Because America is failing hard, and what better time to give it to a black and blame him for all the woes of the country.
Originally Posted By: SexpertThe problem is that it's going to pass, with major modifications, but it will pass. Look at the war in Iraq, no sensible person in America was for it, but it went ahead anyway. When there's an arrogant bastard such as Bush as our "leader" - shit hits the fan and splatters on all of us.Why is USA closer than ever to electing a black prez? Because America is failing hard, and what better time to give it to a black and blame him for all the woes of the country. Have you been paying attention to what's been going on? It looks like the main reason it didn't pass is because the average Joe (collectively) stood up and said "Hell no!" Several who were supporting the bill actually voted against it do to the grass roots uproar against it.It's easy to get all snarky and blame that evil horrible no good Bush, but reality points elsewhere.
Originally Posted By: damienIt's easy to get all snarky and blame that evil horrible no good Bush, but reality points elsewhere. If you read at the bottom of the link you posted, you'll see something called "The Community Reinvestment Act". This was initiated and pushed through under the Clinton administration...by democrats. It pressures (actually forces) banks into sub-prime lending. Yes, Bush should have done away with this stupidity, but look who started it. McCain oposed it and tried to get the Act cancelled...but his voice was in the minority. Obama stood by and did nothing. Then look at the companies (or the CEOs that worked for them) that got fat on it (until the bottom fell out). Their financial officers (Fannie Maes/Freddy Macs) gave big contributions (kick-backs) to both Clinton...and...you guessed it, Obama. Coincidence? I don't think so. Then consider these same financial officers both work for Obama now.Blame Bush? Heh...by the time you passed out the blame where it truly belonged, Bush wouldn't have much left to get hit with.
Do you think the "average Joe" has any understanding that the vast majority of business run on borrowed capital and that if the credit market is not lending many business will either cease to function or be cut way back, and that will effect them?I scraped by economics 101 with a D, so I'm way out of my understanding, but one thing I do remember from that class was a company should always run on borrowed money a.) for tax reasons b.) cause if the venture doesn't pan out it's not their money that's lost. Long and short we (as business ventures) don't use our own money to invest. We use other peoples money, i.e. the credit markets.Don't get me wrong I'm absolutely no fan of a bailout, the idea rather sickens me. However, it's the laissez faire attitude toward economics and lack of regulation enforcement, since we came out of the S&L crisis, that got us here. I'm not to confident that the same laissez faire attitude will get us out. If history is any guild, and it may not be, things have changed substantially, in times of economic hardship people with capital tend to hold on to that capital. It's historically not been until those bargain hunters see measurable turn around in the economy (they know it's bottomed out and on it's way back up) that they begin to re-invest their capital. Whether Keynesian economics still apply to the world of today I have no idea, but I've seen nothing to suggest that it doesn't.I have no hard, learned, opinion on this. I'm curious what the counter view is.
I too will admit to being nowhere near an expert on this stuff.That being said...the choice isn't merely between bailout or laissez fair/no regulations. You can have regulations without a bailout and you can have bailout without regulations. I'm all for accountability and consequences when these greedy suits start acting like greedy suits. So let's put that in place, without a bailout that they don't deserve. Over the past few years I've learned an important lesson about human behavior. In most cases, a person will continue negative behavior until it costs them something. In this case, these suits will not stop this greed and mismanagement until it costs them something personally. The bailout plan is one way to make sure it doesn't.
true. if everyone received a million bucks, then $1M would become the new zero.The bail out is not a simple concept by any means. It's easy to see how the "average Joe" doesn't see how it could benifit him. The question that no one seems to agree uppon is how long that benifit will last. It could get things movong again but it won't fix the issues. Also, the government's and, therefore the taxpayers' return on investment is far from clear.
"That being said...the choice isn't merely between bailout or laissez fair/no regulations. You can have regulations without a bailout and you can have bailout without regulations. I'm all for accountability and consequences when these greedy suits start acting like greedy suits. So let's put that in place, without a bailout that they don't deserve."I wonder do you think the "average Joe" bares some or any responsibility in this? I'm thinking of all the people who speculated in real estate and made cash and those that went out and bought things there is no way they could afford? Do you think that they are deserving of some reticule and complicity in this crisis? I don't think anyone would go as far to claim that all of this is do to predatory lending. A lot of "average Joe" taxpayers thought they would make a quick buck flipping a house or could finally live in that dream home with little or no thought about the reality of their income and what future stress might do to their situation. Beyond that what most people have in their houses isn't paid for. Their living off of credit just like these big firms, just at a different scale. Further still it's the "average Joe" that cried for greater and greater deregulation when times where good. Isn't this to some degree the chickens coming home to roost, for that popular policy mantra?I think it's an oversimplification to narrow this down to a few "greedy suits" on Wall Street. I think if anything those "greedy suits" where a reflection of popular American sentiment. Maybe those suits brought-up and sold deregulation but it was the American taxpayer who pushed lawmakers to head it. I feel that this was something everybody wanted when times where good and now that the proverbial shit has hit the fan it's time to find anyone but ourselves to blame.>>>"a person will continue negative behavior until it costs them something. In this case, these suits will not stop this greed and mismanagement until it costs them something personally."I agree with that but where I disagree is I don't think punishment is much of a deterrent to anyone not yet caught. What's the evidence that most of these big shots knew at the time things where going to run into the ground? What drove their business choices, I would think, where pleasing their investors by making those investors stock worth more. These people, less the predatory lenders, where making a lot of people a lot of money. No one was questioning this as long as their 401K was on the upturn.Is it just the fault of those big dogs or do you think the "average Joe" bares some responsibility for cheering them on and championing their causes as long as he was making money also.I don't know I'm just thinking out loud.
Originally Posted By: OldFolksIs it just the fault of those big dogs or do you think the "average Joe" bares some responsibility for cheering them on and championing their causes as long as he was making money also.I don't know I'm just thinking out loud. Yeah...I think you're right to a point. People did buy things on credit they couldn't afford. But the "suits" were largely responsible for creating that culture...they weren't just a part of it to the same degree the average Joe was. But should the average Joe, who didn't buy what he couldn't afford, pay the price for the rest of them? That's what this "bailout" would do...shoulder the burden of financial mismanagement on the shoulders of the taxpayer. Corporate welfare. No thank you.
We can blame capitalism, but who wants socialism, or communism. The grass is always greener on the other side, but they've got weeds too.I, in my 35 years of life, have never owned a credit card. It's a concept I can't deal with; owing money. It says so in my Ox zodiac, we do not like owing anyone anything. I always thought it dangerous. Plus I want to have the freedom to up and move to a different country at any given moment (without the CIA after me). That's why I'll never own a house, have kids, or get married.
"But the "suits" were largely responsible for creating that culture..."But we (as Americans, not me personally) played along. It's as if a Satanic proselytizer comes along and converts you to Satanism with promises of earthly delights, sex and money, is it still not your responsibility to say no, regardless how good it looks? Are you still not going to have to pay by going to hell?The proselytizer of the satanic message didn't force us to desire these things. He merely held 'em in front of us and we went willingly along.That's why I think a more accurate statement of the situation is that the "suits" took advantage of the culture of greed. They didn't create anything. There was not a need to. It was already there.I despise the idea of bailing out Wall Street and those who got in over their heads as well. However, I can not divorce myself from the choices we as a society made even though I didn't agree with them. I have always opposed lacks regulation of markets but we, as a society, didn't want regulation. Now we, as a society, have to pay for our choice in not regulating or watching these markets more closely.
I'm not blaming capitalism. I'm saying we have to take the good with the bad and that admonishing ourselves of responsibility and culpability get us no where.
Actually I don't really have a hard and fast opinion on this, as I said numerous times, I don't know enough about it to have an informed opinion.
Originally Posted By: OldFolks>>>"But the "suits" were largely responsible for creating that culture..."But we (as Americans, not me personally) played along. It's as if a Satanic proselytizer comes along and converts you to Satanism with promises of earthly delights, sex and money, is it still not your responsibility to say no, regardless how good it looks? Are you still not going to have to pay by going to hell?To continue with the analogy, both play a part, yes. But who do you think bears the greater responsibility for the suffering? The individual who creates the conditions by which it exists and cons others into it (regardless of how this is done), or the person who gets conned into it? If a thief steals your wallet, it's as much your fault as his? (Hey...you weren't watching it closely enough.) Most folks put at least some faith in the concept that banks won't loan you money you can't afford to pay back. That doesn't abrogate you of your responsibility to pay it back, but it does mitigate to a certain extent (in my mind) the wrongness of the part you played in it. Add to that that when those folks bought into the stupid idea, they were playing with their own lives. Those folks giving them the loan had a responsiblity for the thousands of lives supported by their respective companies, not the mention the potential effect on the economy (one "Joe" isn't going to effect the economy)...and most of them (the suits) walked away with millions in their pockets for their mistake. Can the average Joe say the same?The average Joe who bought into this scam (because that's what it was) walks away with nothing but a debt he can't pay and bad credit. The suits in charge when this whole thing started walked away with millions in their pockets. So when it falls apart, who should have to cough it up? Certainly not the taxpayers who weren't involved in any of it...but that's who they're trying to lay this burden on. The average Joe already got his...let the suits get theirs too.
Originally Posted By: OldFolks
>>>That's why I think a more accurate statement of the situation is that the "suits" took advantage of the culture of greed. They didn't create anything. There was not need to. It was already there.
Scotty I too am somewhat tentative about my views, because I'm not an economics expert either. And I agree that many people made bad decisions. But I disagree on a few points.
First: I'm not at all so sure that the degregulation impetus had much of anything to do with desires of the general public, or that the general public understands much of anything about regulatory mechanisms. The breakdown in any distance between coporations and the government has a lot to do with all of this. The very idea of what's good for the public has been replaced entirely by the question of what's good for corporations as if those two were the same.
Second: The "suits" certainly did create something. I don't claim to have a lot of knowledge of "derivatives," "credit default swaps," the workings of "hedge funds," etc. But I certainly question whether any public interest has been taken into account in the creation of these relatively new financial instruments. A lot of the current crisis derives from selling of mortages by those who had no risk at all because they then bundled the mortages and sole them up the line. I heard McCain refer to this as a "Ponzi scheme," and I think it's a decent description of it. Everyone put the risk onto someone higher up the chain and it is the top of the chain that's now going under.
Then why has the mantra of this country been, for the last forty years, that less regulation of the markets is better? It wasn't one or two scam artist saying that, unless you want to throw Ronald Reagan into that catagory. Remember less government is better government?The people wanted less regulation and with less regualation comes risk. What these CEOs where doing wasn't illegal it was risky. As long as that risky behavior drove stock prices up and inflated peoples' portfolios the taxpayers didn't care. The taxpayer incouraged it. They elected leader after leader who said don't deregulate or at least don't enforce the regulations. And it was all good, but by doing that the American taxpayer incourged a risk.>>>"...and most of them (the suits) walked away with millions in their pockets for their mistake. Can the average Joe say the same?"Economies of scale... What Average Joe has to show for the good times are nicer houses, newer cars, and home theaters, maybe a pool in the back yard... all thanks to the credit markets and the free flow of money made available by speculation and risks taken by the mega-banks.
Originally Posted By: OldFolksThen why has the mantra of this country been, for the last forty years, that less regulation of the markets is better? It wasn't one or two scam artist saying that, unless you want to throw Ronald Reagan into that catagory. Remember less government is better government?How do you see this as "the mantra of this country?" This is clearly the mantra of conservatives and corporatists, and a lot of the origin of this certainly came from Reagan. Look at all the disasters that have derived from this ideology- from the savings and loan debacles, to the Enron scam, to the virtual elimination of all consumer protections, to the current situation. The problem with overly unregulated markets is that it creates limitless opportunities for scam artists on an unprecidented scale.
"I'm not at all so sure that the degregulation impetus had much of anything to do with desires of the general public, or that the general public understands much of anything about regulatory mechanisms."That's exactly it, nail on the head type shit. The public was sold a bill of goods in simple package. That being, "less government is better government." It's easy to understand, it's easy to repeat and easy to make sense of. Where as understanding the importances of regulation of banks and why it's needed is complex and hard and has no simple little catch phrase to latch on to. So what do people do, the elect leaders who repeat the simple catch phrase time and again the one that's easy on their brains and simple to comprehend. Unwittingly, what the did is set up the conditions for money managers to engage in risky, yet legal, ventures. The people, with their votes, took away the regulatory eye that understands these markets. Therefor I hold that they hold some culpability in the failure of these markets.>>>"The breakdown in any distance between coporations and the government has a lot to do with all of this. The very idea of what's good for the public has been replaced entirely by the question of what's good for corporations as if those two were the same."Another nail on the head moment. People where told and bought into the notion that what was good for corporations is good for them. It's an easy idea and simple to see. If my retirement is tied via a 401K to corporate America than when they do good I do good. Nobody talked about the risk or wanted to think about it. Corporate America could do no wrong as long as the portfolio grew. That's what the leaders said was good for us and by and large that's what most Americans agreed with and voted for. Remember privatizing social security.People bought into these ideas with their votes and by electing people who put these ideas into practice made greater risk a possibility. The people voted for and championed these policies.>>>"The 'suits' certainly did create something. I don't claim to have a lot of knowledge of 'derivatives,' 'credit default swaps,' the workings of 'hedge funds,' etc."Most of which or at least much of which was in no way illegal. For awhile most of those things where making a lot of people a lot of money.>>>"But I certainly question whether any public interest has been taken into account in the creation of these relatively new financial instruments."Exactly, it's not the job of corporate money managers to lookout for the welfare of the public interest. It's their job to look out for the interest of the person invested in their company. That means making share value grow and grow and grow.And that is why we should never believe, as we seem to have, that what's good for corporate American is what good for us. Yet we did buy into that and know we have to pay the price.I love these arguments where I don't have a fuckin' clue what I'm talkin' about.
"How do you see this as 'the mantra of this country?' This is clearly the mantra of conservatives and corporatists, and a lot of the origin of this certainly came from Reagan."And that's who this country has elected. Time and time again we have voted for this idea. The country bespeaks it's choices on such matters by the representative we vote for. This is why politics is something serious and not the entertainment, Amazing Race, it's become. Votes have consequences.
Google "Community Reinvestment Act" and see what you come up with. Who were the authors? Who were the opponents?The (at the time) democratic government mandated this problem...so it was not created as a result of lack of government involvement. Then they failed to oversee what was going on. Historically speaking, it was also the democrats that blocked the oversight (the demand for better oversight coming from mostly republicans, including McCain). So in a way, you are right...the government didn't get involved enough. But they created the monster in the first place...then failed to keep it on a leesh (some even fighting against doing so). So the government (at least part of it) was most certainly "involved".The proponents of this mess then got big campaign contributions (Clinton and Obama near the top of the list of those who got the most)...the financial officer of Fannie-Mae and Freddy-Mac walking away with millions (before it all hit the fan), then going to work for Obama.
Apart from damien, no-one seems to have realised that giving everyone in the US a million dollars would cost 300 trillion dollars, which is a lot more than 700 billion.
Just yesterday's stockmarket loss took more than 700 billion dollars out of the US economy.
It is of course unfair that companies that made stupid and greedy loans should be bailed out. Perhaps it might be possible instead to prop up the actual mortgages - though that would be rewarding a different set of stupid and greedy people. But those who think the system should just be allowed to play itself out have not learnt from the Great Depression. It's particularly hard to take an economics professor seriously who says "Bankruptcy does not mean the company disappears".
