I can't resist....

Socialism did not cause the collapse of the Soviet Union. The development of a totalitarian plutocracy who didn't understand economics or, more specifically, economic sustainability very well, caused the collapse of the Soviet Union.

I can't resist either...

I thought that's what socialism was? :cool:

Oh snap!

If you take the power away from the people (Socialism) - where do you suppose it goes?

Apparently, you have a lot more confidence in our Congresspeople.

Where did this come from? I've been against this bailout bill.

As I said ....... ideologues are the last to recognise the failure of the ideology ;)

Europeans scramble to save failing banks - Yahoo! News

Uh, let's be honest here. No liberals were excited about adding the AMT changes but the GOP needed that pork so they would vote for it.

SI

Did I read this right? A judge has blocked the Wells Fargo/Wachovia deal? WF would buy all of Wachovia without FDIC assistance, while Citi would require FDIC (and hence, using up to $42b of the bailout) just to buy part of Wachovia. Wouldn't the former be much better than the latter, since WF is on much firmer ground than Citi?

Its only a matter of contracts, so either they'll have to pay some sort of seperation fee or after looking at the contracts they'll be allowed to move with WF.

It will be a long, long time before the antagonisms of the past are forgotten in Europe and they can act in concert.

There's an interesting article here - a potted history of capitalism, it's booms and busts and the oscillation between free market and Keynesian economics. It's very readable:

http://www.guardian.co.uk/business/2...marketturmoil1

To me this whole Wachovia/Wells deal has shown just how undervalued the forced sales by the FDIC have been (ie. the break up of WaMu, Bears etc.).

Especially with the case of WaMu imho in which alledgedly the executives of the bank in question weren't even aware that their company was being broken up and were busy negotiating their own deals when suddenly informed it'd all been done without them ...

FDIC should back off since Wells Fargo is presenting a free market/private solution that doesn't dip into taxpayer/government funds at all. Hank Paulsen should then inform Citi that they won't get a penny of the 'bailout fund' if they pursue this matter for one more second. If those two things do not happen, they've blown their first post-bailout approval opportunity to show they have a clue.

Federal government solutions have to go looking for answers to questions, else how are they going to claim the justifications for doing things?

And despite screwing this up, the government will surely handle this $700 billion bailout/buy-in much better and save us all...

To be quite honest I don't think anyone knows accurately how this will pan out with the bail out - however most people agree things without it are going to get very hairy.

As such I see the bailout as a definite 'history in the making' moment - for good or bad I don't think we'll know until we've lived through it.

read the history of the great depression today and the similarities are striking and scary.

And yet, Republicans voting against still outnumbered those voting "for".

I think it was "intended" to coax some GOP members into voting for it...but since we have no transparency into who adds what to a bill...we can only speculate.

The reverse argument might be that pro-bill Democrats & Republicans realized more House Repubs would need to be catered to in order to vote for this turkey. It certainly doesnt make anybody feel any better to argue that point...but it is a bi-partisan BS tactic that has, and will continue to, go on until these same corrupt people vote themselves into transparency. Utterly sickening how the whole process continues to move on while we (i.e. the genral public) continue to be brought into partisan food fights to distract from the real problem...corruption.

I'm with you. What worries me is the idea that we sign a check and the problem disappears, which seems very unlikely. Action was clearly necessary, but it remains to be seen how much of an effect that action will have.

I don't think anyone is under the impression that the problem was going to disappear by signing a check. The problems do not just exist here - they're worldwide and its going to take time to work out of them. The 700b check just needs to free up the credit market so that things don't have to grind to a halt in order to work on fixing the problems.

Dow is below 10k.

I think you and I agree on the main point, but I'd disagree about the 'problem-solving check' -- I'm certain that plenty of Americans believe that now they've heard the bailout is going to happen that they can go back to watching TV and the crisis won't be a concern any longer. Long attention spans haven't been a hallmark of our national character lately.

Has Congress started fixing everything yet :)

What do you think they should do? I mean, if the problem is that the housing/credit market can't sustain itself without federal intervention, how exactly to you tear the whole thing down to sustainable levels WHILE you're propping it up? Or is it possible to just indefinitely keep it propped up?

I don't remember if I've heard you say if you think that a housing/credit collapse is inevitable.

There is a question as to whether the bailout/rescue package is too late with banks already crashing and the unemployment figures indicating an increase in the speed at which the economy is tanking. I don't think it's ever been believed that the package will avoid a recession but that it will hopefully restrict it to a level that can be tolerated.

It's no longer just the toxic packages - banks crashing is a problem in itself and reinforcing the downturn.

Wait, so we passed the $700 Blank Check Bill and now its supporters are telling us they aren't sure if it's going to work or not?

Awesome.

If you hadn't buried your head in the sand you would have heard all along that the bailout would not prevent a recession but hopefully prevent the situation becoming far worse that that - a much deeper, longer recession or even a depression. For all intents and purposes you've been in a recession for some time now.

Congress isn't exactly known for their foresight and recognition of a problem.

And yet now we have a "solution" that requires them (apparently) to "fix" the problem as this bides them time. That will NEVER happen. Why would anyone think it would?

This is more of a question for Gary, but I wonder if he would still be in favor of this temporary fix if he believed that Congress would do nothing to address the problems in the meantime (or conduct actions which are actually further destructive to the economy).

It is neither a fix nor a temporary fix. It's an attempt to prevent the situation getting completely out of control. You will have noticed that it was considered essential to act as quickly as possible even to the extent that the rescue package would not be the prefect one. That was because the economy is at a tipping point and we needed to act before the point was passed. Have we caught it in time? We can't know for some time.

But at least this will remove the initial cause of this - the toxic packages on the balance sheets of banks - but it's moving beyond that. Banks collapsing is a problem in itself - there can be a domino or snowball effect with one bank collapse triggering another. Hopefully we haven't reached that point and the removal of the toxic packages will mean that we get a manageable recession.

Well, if it was too late anyway, then wouldn't it have made more sense to take this opportunity to do a root-and-branch overhaul of the financial system so as to avoid this in the future instead of just throwing money at the problem in the hopes that it'll make the next couple of years a little more bearable?

I never said that the bailout would fix anything - I only felt it would keep the credit market flowing and prevent our economy from dropping to depression type levels. I've always felt a recession is inevitable - the question to me was could we keep things away from a depression. Without the bill I still think we would be headed to a depression - with the bill we could too but I think there's at least the possibility that this bailout stops the bleeding before it gets to that point. I was very clear in saying the bailout would fix nothing - there's far more problems to be fixed than throwing $700B at it.

I think the housing/credit market can be fixed without a total collapse as long as 1) the credit stays available and 2) credit is not being loaned out to businesses/people that can and will pay it back. You can not forever prop up giving people loans for houses they will never be able to afford or loans to businesses that have no assets of value nor am I suggesting you should.

There has to be failure here to make things better. Some businesses have to go under and some people sadly will have to lose their homes. What I want avoided is for the rest of the economy to come tumbling down with it. Should we head to "depression" levels alot of profitable, well run businesses will be jeopardized and their employees put at risk. People who have done nothing to contribute to this problem will end up having their lives turned upside down by it. That's why I'm in favor of getting this stuff out from the banks. The banks failing helps nobody. Let the government take it on and free the banks to continue lending to the people who can afford to purchase the house they want or to the business that will be able to pay back its loan. Now if the banks take the bailout money and do the same stupid things again then we're all hopelessly screwed.

Before the bailout there was alot of talks about banks trying to be able to set up a "good bank/bank bad" situation. A bank can still be a very profitable business - IF they're loaning money and IF they're getting paid back. There's no business like compounding interest. But if they're essentially getting rid of all their crap they need to take that relief and make good decisions now. They must loan money to keep our economy moving but they've got to tighten the standards so they will not take on poor risks.

We don't know that it's too late. We hope not. We hope we caught it in time (the delay in congress passing the bill didn't help). We can't know for some time. The unemployment figures only came out on Friday, the day the bill passed so that information about an accelerating downturn is new.

But even if it is too late the removal of these toxic packages will still help reduce the depth of the recession.

The American economy is already in a recession. The question now is will it be like the dotcom crash with recovery a year or two away or will it be much deeper than that and take several, even many, years to recover.

So basically the argument is that we throw money into the system as fast as possible to avoid the credit market failing altogether, and then solve the root problems later when we have time.

I'm sure that'll work out great.

I don't have a problem with pushing money into the markets to free up the credit market. The credit market is tight, the economy runs on credit ("operating credit" is not a bad thing like "overextended credit" is), can't have that fail, fine.

I don't have a problem with clearing the books of all the banks who have toxic assets on them. We've done that before, we'll do it again, and it's clearly the only way we'll get to a point where banks feel comfortable loaning to each other again.

But to do it without enforcing more transparency in the way banks report their financials (a key problem that got us into this mess in the first place)? To do this without getting any return on our investment of $700 billion (such as equity in the institutions we're saving)? To do it without requiring that the banks being saved act as good citizens once they're saved (the bill just assumes they'll do this)?

Give me a break.


The freezing of the credit markets is a direct result of the financial institutions being greedy idiots. If you're going to rescue them, and everyone they affected, from the result of their greedy idiocy, it seems like an ideal time to ensure they aren't such idiots in the future.

I have heard that a lot of institutions may balk at some of the requirements attached to the $700B bailout and refuse the offer and just try to ride it out.

The US markets are falling because of fears about the situtation in Europe, it appears.

Not a chance - if nothing is done to actually fix the problems then it is a complete waste of money. The bailout money is needed, IMO, to let the banks continue to operate and continue to lend and to keep the credit available to those businesses and people who should get it. As it was stated before, the patient needed to be kept alive so that surgery could be performed and that's what I believe the bailout to be.

I can't believe we're already back headed towards (or in) another recession. We really never really had a good recovery period from the last one.

SI

I'm now $10,000 below book value. This is scary/ridiculous. If I was 55 right now, I'd be pooping my pants.

Well, you not only give yourself breathing space but you remove much of the problem.


World banks have been pushing money into the credit market for months now - well over $200 billion - but it hasn't worked because it doesn't remove the cause of the problem - these toxic packages poisoning the banks' balance sheets and threatening their survival.


And that is what the bailout package is doing. But instead of a loan you're buying them and will sell them back into the market when their value has recovered.

The loans haven't worked because the poison remains. The government is absorbing the poison (only government can handle this size of debt) unitil it is no longer a problem.



The bailout package isn't the end - there is a great deal of regulation and oversight to be added to it to avoid it happening again. Both Obama and McCain have made it plain that will come.



Absolutely. Apart from a few free market ideologues that is what all believe must happen. These regulations etc have existed before but were progressively dismantled since 1980.

I'll give you a week to write up legislation that will not only fix the transparency issues, make sure you get the ROI you want and come up with new guidelines for the operating procedures of the bank...and to get enough votes in the House and Senate to guarantee it passes....and we're in election season.

Impossible.

This kind of stuff SHOULD HAVE been done LONG, LONG ago but it wasn't. Congress was not willing to act until the economy had flatlined - then they decided it might be worth looking into. They barely were able to pass a bill to simply get the toxic debt out of the banks - a free pass/redo for the banks for now - let alone try to do anything of substance. By their own fault they had no time to do anything here and they had to do something to buy themselves some time to fix the problem. Who knows if it will work but at least there's a chance it does as opposed to being on the bullet train to a deep recession/depression with no stops along the way.

I've haven't heard about the requirements. What exactly are they?

Gary -

I regret not having read the rest of this thread since my last post. Having my debit card stolen and my accounts cleaned out does work into this thread pretty well, though. :mad: Don't worry about me, though, the bank is going to give me a bailout equal to what was in the accounts to begin with. ;)

The problem with your above post and basically anyone that supported the bailout is that you don't see that it almost certainly will not work.

Just because you give banks free fake money does not mean they will lend it out. And if you only give them the money with strings attached that they have to lend it out to people that they wouldn't otherwise feel comfortable lending to, guess what you've now done? The exact same freaking thing that got us into this mess.

That's the whole problem. They are trying to fix a problem by doing the same thing that caused it.

I guess I picked a good time to sell what I had, since I knew I needed to sell and needed the liquidity. I sold all my holdings on the Friday before the first (and failed) vote on the bailout plan. I checked out with a decent gain, but not too much (important for my tax situation). I am going to start buying back in about 75 days or so, probably. I don't believe in timing the market, that's just when my new 401(k) picks up.

Congress? Bush and McCain (and their cronies) were, even a few weeks back, saying everything was fine. Doesn't make it alright, but it shows that many in government believed everything was just fine when they thought it was only affecting 'deadbeats who couldn't afford their mortgages.'

Totally disagree with this. They were hoping everything was fine and wanting to increase confidence in the economy. Behind the scenes, the banks were telling everyone on both sides of the aisle in Congress that there could be a problem coming that could have been addressed over 6 years ago when the first warning signs showed up.

Why would the banks not lend it out (assuming the other party is a worthwhile candidate to lend to)? How else does a bank make money? They're just going to sit there and hoard the money?

And I don't know what you mean about lending to people they wouldn't normally lend to. I said they should be lending to people and businesses that are not risky and that will pay the interest and loans back. It would be complete stupidity to get your books cleared and then go do exactly the same thing that clogged them up in the first place.

And they failed...by not sounding the alarm soon enough. Hard for me to blame just Congress for it. Sounds like it is easy for you, so good for you, but there is plenty of blame to go around on this one.

Let's be fair here - Obama and his cronies have their hands in this whole mess as well. Seems there's been a mention or two of him and Freddie/Fannie in the same sentence not to mention that he's a Senator - why wasn't he storming through Congress a year ago to get them to do something. Democrat, Republican...Bush, the House, Senate, Treasury...this is on all of them.

Seriously? Banks can't even trust other banks right now. There is less credit being handed out and fewer loans being given out (basically zero interbank loans) because nobody trusts anybody else.

So that's why. Kind of the reason the economy has hit the fan.

Yes, I'm quite aware of that - I've been one of the people mentioning that in this very thread. That's the purpose of the bailout - you take this stuff off the books and then the banks will lend.

they have always said that it was an attempt but that it was a best guess of the options available at the speed needed.