Thanks a lot, Congress

[Biggus Piggus]

At the moment, the Nasdaq and S&P 500 are down almost 7% in a single day.

This is horrific.

Guess what, Congress.  If you don't do something smart, this is just the beginning.

Good lord what idiots are running this country.

And I am most disappointed in our two presidential candidates, playing the stance dance on financial leadership while the financial markets completely lose confidence.

[grayhawg]

Better buy lots of canned goods and hide somewhere, if we don't do something constructive and very quick its going to hit the fan.

This bunch of morons in DC are going to drive us into a depression, if something don't give.

[Biggus Piggus]

Yes, to recap, here is what is going on.

The US financial services sector has lost $1.1 trillion in equity market value since the beginning of 2008.

That is a 31% decline in value.

You know all about Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, Goldman Sachs, Morgan Stanley, American International Group, Washington Mutual and Wachovia.

Here are some more casualties of the financial collapse.

National City (major bank), down 90%
MF Global (futures and options broker), down 89%
GFI Group (futures and options broker), down 85%
Genworth Financial (former insurance division of GE), down 80%
Conseco (health and life insurance), down 75%
Sovereign Bancorp (regional S&L), down 72%
IntercontinentalExchange (electronic trading exchange), down 66%
Regions Financial (major bank), down 65%
NYSE Euronext (stock market exchange), down 61%
Fifth Third Bancorp (regional bank), down 61%
Sotheby's (auctioneer), down 50%
Sallie Mae (student loans), down 48%
KeyCorp (major bank), down 48%
Legg Mason (investment manager), down 47%
CB Richard Ellis (commercial real estate broker), down 46%
Loews Corp. (conglomerate that owns insurance, hotels, and oil/gas), down 40%
Bank of New York Mellon Corp. (major bank), down 39%
Hartford Financial Services (insurance), down 38%
American Express, down 37%
GE, down 36%
State Street (bank to big money managers), down 34%
Prudential Financial (insurance), down 34%
SunTrust Banks (major bank), down 32%
MetLife (insurance), down 31%

And many more.

Not all of these companies were doing anything sleazy or shady.  Many just got caught in the backwash.  They may have owned seemingly safe assets, till the markets for those assets became illiquid.

Can you see the breadth of the damage?  These stock price moves are a direct read on two factors:

* The institution may have had to sell additional shares to raise emergency capital, or may be faced with a need to raise cash in a difficult stock market, diluting existing stockholders.
* The stock price also represents the perceived risk that the company could fail without outside help.

About one-quarter of the nation's major banks are down at least 30% in stock price this year.  A stunningly large number of financials (broadening beyond banks into insurance, leasing and other services) are down more than 50%.

The snowball effect of bank-by-bank crises has virtually shut down lending in the United States, making an immediate impact on the economy.  No matter what business you are in, somebody in your end markets has quit spending, or quit getting income, and it is going to affect you very soon.

Banks cannot lend until they know how much capital they have.  As long as house prices are falling and other major classes of assets cannot be priced fairly due to their sudden illiquidity, banks will not know how much capital they have.

The government can restore normalcy to the mortgage business by creating an entity to buy troubled mortgage assets from banks.  What has to stop is the unfair crushing of value of complex financial assets simply out of fear.  The government is the entity that can stop this madness.

As it is, it will take quite a while for business to return to normal.  Still, a financial system operating at 80% of its former capacity is much better than one that is close to zero.

[holman24]

sorry folks but the american public let this happen with taking out loans that they could just barely afford and once they couldn't then the economy will pay for it.  I don't think the gov't bailout is the answer.  The market will correct itself but it will be a large hole that we will have to dig ourselves out of but we dug the hole in the first place with greed and getting ourselves way in over our heads.  With the gov't bailout it only puts the strain on our kids to pay for what we let happen.  It is time to face the music folks, times will be hard but it was an easy ride before we got here.  Let's start the healing process and move on.

[Verge]

The american public hasn't been saving for years... We spend more than we even earn in income...


Who honestly didn't see this coming... This bill might control some of the damage, but anybody thinking we aren't about to see a HUGE SHITSTORM is blind, or lying to themselves.

[Porkys Revenge]

I saw it coming. Last year I was figuring that a dollar was really worth about 60 cents. But then again I figured that the people running this country were a heck of a lot smarter than I was. Welcome to the great depression part II.

[SultanofSwine]

The bright side is if you have cash, the market is ON SALE BIGTIME!!!

[Biggus Piggus]

sorry folks but the american public let this happen with taking out loans that they could just barely afford and once they couldn't then the economy will pay for it.  I don't think the gov't bailout is the answer.  The market will correct itself but it will be a large hole that we will have to dig ourselves out of but we dug the hole in the first place with greed and getting ourselves way in over our heads.  With the gov't bailout it only puts the strain on our kids to pay for what we let happen.  It is time to face the music folks, times will be hard but it was an easy ride before we got here.  Let's start the healing process and move on.

If you don't restart the financial system, there won't be any healing going on.  No music to face.  You will hand your kids a much harder time than they deserve, simply because of adherence to some sudden lip service to fiscal restraint.  Restraint at the darned wrong time.

Naysayers don't friggin get it.  Maybe they will get it once GDP is -5%.

[Scott E.]

Today I witnessed the greatest display of ignorance in the House of Representatives that I have seen in my lifetime.  Every "Nay" voter on H.R. 3997 needs to be taken out behind the Capitol building and have the crap kicked out of them.

[Masshog]

It was a crappy bill, but it needed to pass.  For the economy to turn around credit has to be available.   

[JAHOGS]

I can not believe everyone posting in here is for this bill. This bill is the very same reason why we are voting on this bill.

My vehement opposition to the proposed bailout bill has nothing to do with any opposition to bailing out Wall Street, bailing out homeowners, etc. that I might have. It has everything to do with perpetuating a problem that has been caused by precisely the same measures that are being proposed to fix the problem.

Recession is a natural part of the business cycle. Especially so in the unfortunate Central Bank/Fractional Reserve System that we have in this country. Prices must be allowed to correct and find their natural equilibrium, not find an artificial floor (this is a form of price fixing) established by irresponsible monetary policy (executed by our Federal Reserve) that inevitably results in another asset bubble. The excesses and mis-allocation of capital (malinvestment) must be purged in a truly free market system. This is paramount in bringing the economy back into balance. Creating more money and taking on more debt does just the opposite, benefits a minority, and creates a bigger problem in the future. Namely, it benefits the folks that spend the the newly created money first, before prices react to the upside as the new money works its way through the economy. Meanwhile, taking on more government debt crowds out legitimate economic investment as increasingly scarce capital is the source for this expansion of government debt, leaving less for legitimate economic investment. If we pass any sort of bailout, we are going to make the problem considerably worse (somewhat better in the short term, much worse in the long term). Government intervention in our markets will create more instability in the future along with a considerably more painful recession or possibly depression. This is not to mention the tremendous moral hazard present in the solutions being proposed. The free market must be allowed to work.

This problem was not difficult to see coming with just a reasonable background in the aforementioned subjects. I have been warning my friends and family about this for several years. Yes, it is going to be painful to do the right thing. But it is time that we take our medicine (finally ... after several chances that would have yielded a considerably less painful correction) because the cost of papering over these problems (via a foolish bailout measure) will be a much higher cost in the not too distant future.

[JAHOGS]

The ones that are for this bill say this should solve our problem.

Yet, every since bailing out Bear Stearns they have been saying the same thing. Was it $12 billion the FED put up to help them out and they said that would help solve the problem. That short lived bubble did last long and it popped. Then on to Fannie and Freddie($125 billion), then AIG($85), now the entire market ($700 billion.....). This bill was and is not a good bill.

[Masshog]

Ron Paul wants to put this country back on the gold standard.  Let Congress fail to do something (maybe not the crappy bill they are rushing to do now) and the economy just may deflate enough for him to get his insane wish (and no, I'm not going to debate the gold standard with you again). 

Plenty of mistakes have been made over the last twenty years, many of them enumerated in your post..... but letting them all unwind at once is a very bad idea. 

[Ash]

Most of the ones gungho against the bill here are investment professionals from my understanding. If the bill doesn't pass and the market tanks they are going to lose a lot of clients etc. So I understand them pushing so hard for it.

edit: type that changed the entire meaning of my post

[dunnhead]

I'm not an investment professional and I'm for this bill.  This isn't about a "price correction" or artificially propping up the markets.  I think there's going to be a price correction regardless of whether this bill gets passed or not.  The bill is about opening lines of credit back up.  Suppose you're a farmer.  I don't know what it costs to run a farm so these are fictional numbers.  Let's say it costs $250,000 for seed, fertilizer, pesticide, fuel, machinery, processing costs, etc.  Last year the farmer goes to the bank and gets a loan for $250,000 so he can grow and harvest his crop.  After he sells his crop and pays the bank back he clears $70,000.  This year he goes to the bank to get his loan, just like he's done since he started farming.  Mr. Banker tells him he can't get a loan this year for the reasons Biggus Piggus laid out.  Let that happen to enough farms and businesses and you can see that we're all going to be in big trouble.  Honestly, it pains me as a conservative to support a bill like this, but I think we all have a lot to lose if something isn't done.  Just my $0.02.

[HognotinMemphis]

I think this bill was a bad one. I'm glad it was voted down.

It would have been yet another case of a knee-jerk reaction by an uneducated Congress. Yet another case of the federal government providing a cure worse than the disease.

Let's agree that the economy is, and has been in, recession. It's going to be a rough economy, regardless of any intervention by Congress, for the next year or two. Let's leave it at that instead of turning a recession into a 10 year depression thanks to the "help" of Congress.

The markets will correct themselves. Just about everything out there is, or was recently, way over-inflated. Cost of doing business too high, cost of carrying employees too high, cost of insurance too high, cost of fuel and energy too high, et al. Clothing too high, groceries too high as well. A devaluation is needed.

Too many live on credit in this country...both individuals and corporations. This has meant, especially recently, that if any link in the chain breaks, individuals and companies fall apart. It's not supposed to be this way. Should have a lot more skin in the game, a lot more equity than debt. Buy with cash or very short-term credit. I'm talking about everything from buying a car, to a home to inventory for your business. The days of easy and cheap credit are OVER! As well they should be.

[Biggus Piggus]

Most of the ones for the bill here are investment professionals from my understanding. If the bill doesn't pass and the market tanks they are going to lose a lot of clients etc. So I understand them pushing so hard for it.

The only reason why I would lose clients is because of investment performance.  I am measured two ways, 1) do I beat the market, 2) is that return attractive.  If the market tanks, people just pull their money out of the market including us.

Don't accuse me of being deceptive or unethically misrepresenting myself.  You have a lot of gall.  It's very likely I understand this issue, and you don't.

[HognotinMemphis]

I'm not an investment professional and I'm for this bill.  This isn't about a "price correction" or artificially propping up the markets.  I think there's going to be a price correction regardless of whether this bill gets passed or not.  The bill is about opening lines of credit back up.  Suppose you're a farmer.  I don't know what it costs to run a farm so these are fictional numbers.  Let's say it costs $250,000 for seed, fertilizer, pesticide, fuel, machinery, processing costs, etc.  Last year the farmer goes to the bank and gets a loan for $250,000 so he can grow and harvest his crop.  After he sells his crop and pays the bank back he clears $70,000.  This year he goes to the bank to get his loan, just like he's done since he started farming.  Mr. Banker tells him he can't get a loan this year for the reasons Biggus Piggus laid out.  Let that happen to enough farms and businesses and you can see that we're all going to be in big trouble.  Honestly, it pains me as a conservative to support a bill like this, but I think we all have a lot to lose if something isn't done.  Just my $0.02.

How about that farmer living within his means for a few years, save his money, and use his own equity to finance his needs, give himself working capital?

Why does he need to go to the bank every year in order to make a living?

It's called spending all you make, which is also called living above your means and living paycheck to paycheck. I'd hate to think I had to be able to get a big loan every year just to make my business work and earn a living.

[Biggus Piggus]

Let's agree that the economy is, and has been in, recession. It's going to be a rough economy, regardless of any intervention by Congress, for the next year or two. Let's leave it at that instead of turning a recession into a 10 year depression thanks to the "help" of Congress.

No, you are talking about an abrupt halt introduced by a sudden vacuum in the credit markets, which exists because banks cannot determine their capital positions.  Somebody has to stop the dominoes, or they will keep falling, and you will have a huge economic fall off a cliff, not the normal situation you pretend this is.  This is not normal.  Don't know how many different ways it has to be said.

Good lord man, you act as though the suspension of credit is trivial. "Tough it out, rub some spit on it."  The majority of the darned economy runs on credit.  The way you talk you wouldn't mind if it all had to run on cash, which is so laughable it's not even worth considering.

[HognotinMemphis]

No, you are talking about an abrupt halt introduced by a sudden vacuum in the credit markets, which exists because banks cannot determine their capital positions.  Somebody has to stop the dominoes, or they will keep falling, and you will have a huge economic fall off a cliff, not the normal situation you pretend this is.  This is not normal.  Don't know how many different ways it has to be said.

Good lord man, you act as though the suspension of credit is trivial. "Tough it out, rub some spit on it."  The majority of the darned economy runs on credit.  The way you talk you wouldn't mind if it all had to run on cash, which is so laughable it's not even worth considering.

If banks are allowed to run basically the same way they've been running, they'll just find a new asset to invest in...not sub-prime loans or CDS's this time...it will be something new. And we'll start this all over again.

Banks should be able to take deposits and make loans and that's it. And their ability to make loans should be highly restricted by the regulatory agencies...loans with more than adequate collateral and borrower equity.

I don't see anything wrong with much credit drying up for awhile. It's a cleansing this country needs as well as a lesson on how the future is going to be. It's going to be an economy operated on more equity and less easy credit.

[dunnhead]

How about that farmer living within his means for a few years, save his money, and use his own equity to finance his needs, give himself working capital?

Why does he need to go to the bank every year in order to make a living?

It's called spending all you make, which is also called living above your means and living paycheck to paycheck. I'd hate to think I had to be able to get a big loan every year just to make my business work and earn a living.

I knew that was coming.  How about when the farmer dies.  Maybe a young guy wants to take his place.  I guess he'll have to work for diddly as a farm hand for the next 40 years until he can save up enough to pay cash for his own farm.  I understand living within your means.  I think we rely on credit too much, but I also believe that not all lending is bad.  And, like it or not, an awful lot of businesses rely on credit to function.

[Ash]

The only reason why I would lose clients is because of investment performance.  I am measured two ways, 1) do I beat the market, 2) is that return attractive.  If the market tanks, people just pull their money out of the market including us.

Don't accuse me of being deceptive or unethically misrepresenting myself.  You have a lot of gall.  It's very likely I understand this issue, and you don't.

I'm not trying to call anyone unethical. I just know from experience that emotion has an impact on the decisions we make and what we believe. That is why you have many people for this bill and also why you have so many people against it. Right now I believe most people are letting emotions rule their decision-making. You also probably do understand this better than I do however I'm not a complete idiot I'm just young and inexperienced. I think the short-term problems in the credit market would be horrible if they freeze up and stay that way for an appreciable amount of time. On the other hand what problems do we introduce if we follow through with this? I've been trying to work through that but I haven't came up with any good answers except the immediately obvious ones such as massive inflation due to the rapid depreciation of the US$.

God... I just realized I said on the other hand. I promised myself when I received my economics degree that I wouldn't use that term. You know the joke, what's the difference between an economist with two hands and one with one. The economist with one hand can't say "on the other hand."

[Ash]

If banks are allowed to run basically the same way they've been running, they'll just find a new asset to invest in...not sub-prime loans or CDS's this time...it will be something new. And we'll start this all over again.

Banks should be able to take deposits and make loans and that's it. And their ability to make loans should be highly restricted by the regulatory agencies...loans with more than adequate collateral and borrower equity.

I don't see anything wrong with much credit drying up for awhile. It's a cleansing this country needs as well as a lesson on how the future is going to be. It's going to be an economy operated on more equity and less easy credit.

The problem right now is banks can't invest in assets because their capital base has been eroded due to them marking to market the value of their mortgage securities. The point of the bailout would be to buy some of those mortgage securities which would have the effect of not only decreasing the asset base that the bank has to hold capital against but also increasing their cash (which requires no holding of capital). This puts the banks in a better financial situation and makes them much more likely to lend. The belief (which I think might be true) is that once the market becomes liquid again a lot of those troubled securities will increase in value. At which time the government sells them back to the market at a controlled rate and pays of the initial cost.

If credit froze up for more than a week or so (maybe less I'm not sure I don't deal with it day-to-day) then I imagine that you would see a whole passel of problems. I'm talking stores not being able to stock goods etc. I know that HiM is a big believe in not depending on credit but unfortunately once you get past a certain size that is impossible to do.

[Verge]

Today I witnessed the greatest display of ignorance in the House of Representatives that I have seen in my lifetime.  Every "Nay" voter on H.R. 3997 needs to be taken out behind the Capitol building and have the crap kicked out of them.

Alot of economists say the same thing about people who answered YES.. i'm interested to hear why you think buying foreclosed homes is a good decision... especially with money we DO NOT HAVE.

[Verge]

I think this bill was a bad one. I'm glad it was voted down.

I've emailed all my representatives and bitched bitched bitched... and apparently, alot of other people did as well.

[HognotinMemphis]

Tell me how this was going to work if it was passed. It was a kneejerk response as far as I can tell and those are rarely reasoned, rational and effective responses.

As I understand it, the Treasury was going to get $250 billion immediately from the federal gov't. Okay, where was this going to come from? Crank up the money printing presses? If not, from where? More debt?

Then, the Treasury was going to start buying these mortgage-backed securities from banks. Okay, well...what about the mortgages that backed these securities? If they're not being paid by the borrower, then what? Take the home and try to sell it along with all the other millions of homes for sale now that cannot sell? Wouldn't that create a greater glut of homes for sale than there already is and drive the selling price and value of homes down further?

As part and parcel of the Treasury buying these securities/assets (ha! assets! More like liabilities...here, I'll pay you to take this off my hands!), the Treasury was going to take warrants in these financial institutions so that the taxpayer would benefit from future appreciation in the value and stock price of these publicly traded BHC's and similar institutions that the Treasury may buy these securities from. Okay, but what if these companies, BHC's et al, don't ever become very profitable any time soon? And whether they do or not, how much is the issuance of warrants going to dilute the value of the existing shareholders in these entities? A lot I would imagine. Is that a good thing? If not, how bad is it?

Further, what is the mechanism or process that the Treasury would have used to determine a price to pay for these securities? What if the entities selling these securities said, "no, we want a higher price."? What then? Are they forced to sell for a price to be determined by the Treasury? Would the Treasury offer to pay more than someone would in the private sector? What is the check and balance here to keep the Treasury from over-paying for these cr*p assets and to keep the Treasury from taking an unfair share of warrants? How is it determined the amount of warrants the Treasury would get?

I've heard NO ONE address any of this. Was it going to be done on the freakin' fly? Seat of the pants BS? Probably. That's why this was a terrible solution. Glad it failed.

[Ash]

As I understand it, the Treasury was going to get $250 billion immediately from the federal gov't. Okay, where was this going to come from? Crank up the money printing presses? If not, from where? More debt?

There would have been a Treasury auction of securities. Most likely this would have caused a drastic depreciation in the value of US Currency.

Then, the Treasury was going to start buying these mortgage-backed securities from banks. Okay, well...what about the mortgages that backed these securities? If they're not being paid by the borrower, then what? Take the home and try to sell it along with all the other millions of homes for sale now that cannot sell? Wouldn't that create a greater glut of homes for sale than there already is and drive the selling price and value of homes down further?

I believe the Government was planning on holding these until the market became liquid again. How long that would take is anyone's guess. They would take a loss on somethings and a gain on others and the end cost to the taxpayer would be less then 700 billion. In fact there is a slight possibility the US Gov't would make money on the deal.

Rest of your questions I don't know enough to try to answer. Some other folks could answer the question about the warrants better than I.

[holman24]

I for one would rather see this thing work itself out in the market than to get our gov't involed in this.  Everytime the gov't gets involved it never works out like they said it would (i.e. Iraq).  It may be tough and sure some will lose their jobs and we may even have a depression but it will not be the end of the world.  We have had it very easy as compared to our forefathers and it might be time for us to carry our share of the burden instead of passing it on to our children.

[Verge]

I believe the Government was planning on holding these until the market became liquid again. How long that would take is anyone's guess.

That's the problem right now... these assets are liquid, and when these firms go bankrupt, they WILL sell.... They have gone bankrupt holding this crap for 5 years hoping the market will turn around... in reality, they should have fired the loan officer that made these crap loans, took his pay out of the price of the home... and sell it. Who wouldn't buy a home RIGHT NOW if it was 1/2 price.

Screw em, these assets will sell eventually, capitalism will work.

[Biggus Piggus]

Alot of economists say the same thing about people who answered YES.. i'm interested to hear why you think buying foreclosed homes is a good decision... especially with money we DO NOT HAVE.

What do you mean, money we do not have.  The government can print money, you know.  As much money exists as it wants.  In all times of hardship since the Depression, the government has taken on debt to help the economy.  Nothing new.

The idea is to do two things:

1) Restructure loans so people can pay them off, instead of getting foreclosed on.
2) Manage foreclosures so we don't have these rolling spikes that cause unprecedented declines in home values, which is what is putting pressure on the financial system to begin with.

The bailout would do these things, you guys.  Mark, your arguments are based on absolute unawareness of the plan, which is published in about a thousand different places.

[Biggus Piggus]

That's the problem right now... these assets are liquid, and when these firms go bankrupt, they WILL sell.... They have gone bankrupt holding this crap for 5 years hoping the market will turn around... in reality, they should have fired the loan officer that made these crap loans, took his pay out of the price of the home... and sell it. Who wouldn't buy a home RIGHT NOW if it was 1/2 price.

Screw em, these assets will sell eventually, capitalism will work.

If all these assets are FORCED to sell AT THE SAME TIME, many more banks fail.  And those loan officers?  They are long gone.  They are no longer the problem.  This vicious cycle of falling values causing distress sales causing falling values is the problem.  So-called "natural" market forces failed to regulate this coming into it, and they won't regulate its viciousness going out.

You guys talk about market forces like they were spirits.  I know what market forces are, being in the [CENSORED] middle of it, and when an orderly market does not exist there's no such thing as market forces.  In the lending world today, there are no market forces that will force lenders to lend.  I can't believe how you guys can trivialize this, out of some kind of loyalty to right-wing dogma or something.  Quit taking your ideas from Fox News and GOP talking points, and start thinking for yourselves.  Stupid politics for show are about to ruin this country.

[ConwayHog]

If all these assets are FORCED to sell AT THE SAME TIME, many more banks fail.  And those loan officers?  They are long gone.  They are no longer the problem.  This vicious cycle of falling values causing distress sales causing falling values is the problem.  So-called "natural" market forces failed to regulate this coming into it, and they won't regulate its viciousness going out.

You guys talk about market forces like they were spirits.  I know what market forces are, being in the Franking middle of it, and when an orderly market does not exist there's no such thing as market forces.  In the lending world today, there are no market forces that will force lenders to lend.  I can't believe how you guys can trivialize this, out of some kind of loyalty to right-wing dogma or something.  Quit taking your ideas from Fox News and GOP talking points, and start thinking for yourselves.  Stupid politics for show are about to ruin this country.

So if someone happens to agree with something on Fox or that GOP leadership has said they must not be thinking for themselves?

It appears to me that the only way someone is not an idiot in your world is to a) be a democrat and b) agree with you.

You'll catch more flies with honey than vinegar. 

[Niels Boar]

I for one would rather see this thing work itself out in the market than to get our gov't involed in this.  Everytime the gov't gets involved it never works out like they said it would (i.e. Iraq).  It may be tough and sure some will lose their jobs and we may even have a depression but it will not be the end of the world.  We have had it very easy as compared to our forefathers and it might be time for us to carry our share of the burden instead of passing it on to our children.

During the Depression my grandfather was hopping trains to Chicago with enough money in his pocket for one meal.  No exaggeration.  I don't care to repeat that experience, and I doubt he would either if he were still alive.  The Depression led directly to the rise of fascism in Europe, which ended up costing millions of lives.  You think those eighteen-year-olds sitting in foxholes were glad Hoover didn't deficit spend when they were five.  If this situation really could lead to another Depression, we better hope the US Government is doing everything possible to prevent it. 

Over the last couple of days I've read a lot of commentary that echo what Biggus is saying from economists both liberal and conservative.  The facts about the unprecedented rise in interbank interest rates bear out the credit crunch.  I'm not an expert on finance, but I know enough about business that jobs on Main Street depend on credit.  Some people who don't deserve it will get bailed out, but that is preferable in my book than all of us suffering.  My guess is Biggus has a better handle on this situation than most.  Thanks for the commentary, Biggus.   

[Biggus Piggus]

So if someone happens to agree with something on Fox or that GOP leadership has said they must not be thinking for themselves?

It appears to me that the only way someone is not an idiot in your world is to a) be a democrat and b) agree with you.

You'll catch more flies with honey than vinegar. 

I do not have the slightest idea what Democrat talking points are.  They do not rule my life.  The only thing coming out of the mouths of most opponents are GOP talking points as distributed by Fox and the talk radio talking heads and such.  I know very well what those are, as the financial world is inundated with them.

This is a big part of what happened in this crisis.  Read closely.  THIS IS A BIG PART OF WHAT HAPPENED IN THIS CRISIS.  The sell side and buy side of the Street both parroted all the GOP talking points through the past eight years, because they believed

1) GOP means less government meddling, lower spending and lower taxes
2) GOP means better for stocks and bonds
3) what they actually say doesn't matter, just getting them elected is all that matters.

Increasingly over the years, actual policy has become more and more important, because guess what, W didn't just sit there like a turnip, he pushed through a lot of things, many of which have cost trillions of dollars.

Further, where the government has been laissez faire is exactly where modernized regulation was necessary.  The government let the GSEs and derivatives and hedge funds and CDOs run wild when some modern, sophisticated re-regulation was called for.

The financial sector did not lead the clarion call for re-regulation, of course.  Just kept parroting the bull.  And they knew it was bull.  Seriously, any CEO in America will acknowledge that it got harder and harder to toe the party line.  They really didn't believe they had a choice--couldn't abandon the president, couldn't leave the party, what, vote Democrat?  Crazy.

And seriously, I cannot call myself a Democrat, for they stand for very little I believe in.  Our political system is seriously mismatched vs. the demands on it anymore.  It's practically impossible to elect the right kind of leadership.  The Republican party is riven with anti-intellectuals, and the Democrats have turned into 100% union-loving, budget-busting populists.

[Verge]

What do you mean, money we do not have.  The government can print money, you know.  As much money exists as it wants.  In all times of hardship since the Depression, the government has taken on debt to help the economy.  Nothing new.

The idea is to do two things:

1) Restructure loans so people can pay them off, instead of getting foreclosed on.
2) Manage foreclosures so we don't have these rolling spikes that cause unprecedented declines in home values, which is what is putting pressure on the financial system to begin with.

The bailout would do these things, you guys.  Mark, your arguments are based on absolute unawareness of the plan, which is published in about a thousand different places.

Wow, so printing 700 billion dollars of new money...


This will drive up oil prices, drive up inflation, and drive up the price of everything consumers buy.... This leads to what, more foreclosures. Bigger pinch on every middle/lower class american, that's already getting squeezed to death.

I'm not sure what you mean by "manage foreclosures."

[Biggus Piggus]

You'll catch more flies with honey than vinegar. 

Sorry, losing my patience, not really trying to persuade, but I am baited to argue with the people who are spouting baseless nonsense.

But I really am, in the business world here, fighting hard as hell to understand what's going on, and my opposition are these tinker toys running for re-election who pander to Everyman's outrage that he absorbed from Rush and Michael Savage.

[Biggus Piggus]

Wow, so printing 700 billion dollars of new money...

This will drive up oil prices, drive up inflation, and drive up the price of everything consumers buy.... This leads to what, more foreclosures. Bigger pinch on every middle/lower class american, that's already getting squeezed to death.

I'm not sure what you mean by "manage foreclosures."

You are not going to have to worry about oil prices for a while when those big negative GDP prints come across.  Well before that actually.

Go look at the WWII government debt % of GDP for an idea of what's tolerable.  Hint: Far north of here.

Manage foreclosures = restructure some loans, foreclose but lease back to homeowners instead of liquidate, then liquidate some remainder at a far more normal pace than the 10x normal (yes, 10x) that is going on at this moment.

[Biggus Piggus]

To simplify what I said above:

For years, the big money people who finance the GOP participated in the party's charades on the assumption that it would be good if the government spent most of its time doing trivial crap.

For the past few years, there has been a crying need for somebody to write intelligent public policy, but we didn't elect those kinds of people, because we elected shills.

Now the fricking Congress is loaded with Republicans and Democrats who can't write intelligent public policy or recognize it if it's hanging right in front of their noses.

When the Bush administration belatedly concocted a panic financial sector rescue plan, few in Congress were equipped to deal with it on any level.

In November, you should vote for whichever congressional candidate isn't playing gimmicks for votes.

[HognotinMemphis]

During the Depression my grandfather was hopping trains to Chicago with enough money in his pocket for one meal.  No exaggeration.  I don't care to repeat that experience, and I doubt he would either if he were still alive.  The Depression led directly to the rise of fascism in Europe, which ended up costing millions of lives.  You think those eighteen-year-olds sitting in foxholes were glad Hoover didn't deficit spend when they were five.  If this situation really could lead to another Depression, we better hope the US Government is doing everything possible to prevent it. 

Over the last couple of days I've read a lot of commentary that echo what Biggus is saying from economists both liberal and conservative.  The facts about the unprecedented rise in interbank interest rates bear out the credit crunch.  I'm not an expert on finance, but I know enough about business that jobs on Main Street depend on credit.  Some people who don't deserve it will get bailed out, but that is preferable in my book than all of us suffering.  My guess is Biggus has a better handle on this situation than most.  Thanks for the commentary, Biggus.   

Heil, Putin.

[ConwayHog]

And seriously, I cannot call myself a Democrat, for they stand for very little I believe in.  Our political system is seriously mismatched vs. the demands on it anymore.  It's practically impossible to elect the right kind of leadership.  The Republican party is riven with anti-intellectuals, and the Democrats have turned into 100% union-loving, budget-busting populists.

I especially agree with that last line.  I don't see the party out there whom I would prefer to vote for this fall.  Fiscal discipline doesn't exist in their dictionary. 

[Biggus Piggus]

I especially agree with that last line.  I don't see the party out there whom I would prefer to vote for this fall.  Fiscal discipline doesn't exist in their dictionary. 

Our entire election machine works so that realistic people are ejected and only spin doctors get elected.  Both parties are poised to destroy anyone on the other side who has the foolish guts to try to confront reality.

[Ash]

We must defeat the two party system that has taken control of our political landscape. I suggest you vote Libertarian or for the Constitutional parties. Everyone says voting third-party is throwing away your vote. But if everyone that said that would have the sack to actually vote third party then it WOULDN'T be throwing away your vote.

[Niels Boar]

We must defeat the two party system that has taken control of our political landscape. I suggest you vote Libertarian or for the Constitutional parties. Everyone says voting third-party is throwing away your vote. But if everyone that said that would have the sack to actually vote third party then it WOULDN'T be throwing away your vote.

Paul Krugman had a good line: "There are no atheists in foxholes and no Libertarians during a financial crisis." 

The problem with extreme philosophies is that they tend to work better in theory than practice. Nobody wants to pay for a safety net until they are faced with the imminent gravitational consequences of rapid deceleration that usually ensue post-fall.   I wish we had a nice centrist party to vote for.  Middle-of-the-road seems to be correct more often than either extreme imo.

[BlackKnightHogFan]

Even with the liquidity injection by the federal reserves worldwide yesterday the credit markets are worsening.  Check out the LIBOR to Treasury spread.  Additionally, do a little research into ATT today, the action they took and why.  This is spreading fast folks and unless you want to be standing in a soup line you better rethink and look at the real consequences of "letting the markets work".

[HognotinMemphis]

Even with the liquidity injection by the federal reserves worldwide yesterday the credit markets are worsening.  Check out the LIBOR to Treasury spread.  Additionally, do a little research into ATT today, the action they took and why.  This is spreading fast folks and unless you want to be standing in a soup line you better rethink and look at the real consequences of "letting the markets work".

Not saying that something should not be done but the bailout as porposed was a disaster waiting to happen. Those who voted for it are complete idiots. I'm really sad right now that Congress has this many idiots.

Giving the Treasury Secretary total authority with no guidelines or specific limits or instructions on how to purchase assets, what to do with them once he buys them, and how to sell them, is no way to bailout the public. If this had been approved, I would have fully expected the gov't. coming back soon for an extra trillion or so.

[Biggus Piggus]

Giving the Treasury Secretary total authority with no guidelines or specific limits or instructions on how to purchase assets, what to do with them once he buys them, and how to sell them, is no way to bailout the public. If this had been approved, I would have fully expected the gov't. coming back soon for an extra trillion or so.

They really didn't need that much.  As it was Paulson was set up to take advantage of the situation.

[Masshog]

Most of the ones gungho against the bill here are investment professionals from my understanding. If the bill doesn't pass and the market tanks they are going to lose a lot of clients etc. So I understand them pushing so hard for it.

edit: type that changed the entire meaning of my post

Despite the fact that your post is rather insulting I will respond anyway. The reasons some of us are for this crappy bill is that we think that the economy is on the verge of having a complete seizure.  Most of the professionals that I work with think that this crappy bill is better than no bill at all. That despite its considerable shortcomings that it will dull the panic and should begin the process of moving the credit markets forward again.  As tempting as it might be for you to write off our support as selfish (or even idiotic), it could be that we think its the best thing for the country.

My experience is a bit different from that of Biggus (he is an equity guy).  I am a debt/credit trader.  I am involved in making the buying and selling decisions (remember that when we buy a security we are essentially loaning money) for one of the largest fund families in the country. Our holdings range from long corporate and mortgage debt down to the cp/fed funds/repo and so forth that we hold in our money funds. I'm not young, I have spent twenty five years trading and studying my markets and the economy.  Frankly, theres not much that you can show me at this stage that I haven't seen in some form or fashion at some point along the way. To be good in my position requires a great deal of cynicism.  Anyway, I don't mention any of this to be a braggart, but simply to provide context for for what I am about to say.

Here is what I know, the credit markets no longer work. They are completely dysfunctional.  As a dept. we are even backing away from from borrowers who only a few short weeks ago were considered solid gold plated and in many cases we are no longer loaning beyond overnight.  We are even becoming reluctant to lend against collateral.  This is a pattern that is being duplicated in thousands of trading rooms across the planet. In our case, it is our job to protect our shareholders. If that means hunkering down, we hunker down.

Maybe it will hit home to you when your employer can't finance his inventory, or find money to do an expansion with or finance a payrol or any of dozens of things that businesses need credit and financing for.  In short, credit of all kinds is shutting down and its shutting down at light speed.  And the smaller the company.... the worse it is becoming.   

One last point.... a depression is in NO ONES self interest.  The excesses of the last twenty years need to clear, but not all at the same time.  Its just too dangerous.   

I do agree with Biggus on something else.  They are all despicable.   Both parties are responsible in their own ways for Washington's share in this mess. 

Night all. 

[Masshog]

One other point.... its not the time for finger pointing... freak that.  Its time to do what we can to fix it.  Plenty of time for the other stuff when things are functioning again. 

[john c]

Dang, Mass, just how old are you.  One of my friends said he was so old he farted dust.  You're not that old are you?  How much have you aged the past few weeks.

At least we've got some good football to look forward to.  See, this is what I don't understand.  Arkansas' scoreboard is terrible this season, yet I'm enjoying the games more than in prior years and have high hopes against FL Saturday even after having high hopes against TX.  Being an MBA, CPA, CMA, CFM and small business owner and knowing that if credit dries up I stand to lose bunches of wealth in the form of current asset values on a mark to market basis, I still don't want that stinking bail-out.  Perhaps I'm losing it. 

[Masshog]

Im enjoying football more this year also.  Must be something in the air.  and I'm maybe ten years away from farting dust (or at least I was before all this blew up). 

This bail out thing should make everyone extremely angry.... I know that I'm angry about it.  Ive seen this day coming for a long time (the bright spot is this has been personally very good for me and the funds/accounts I work with are way ahead of the index this year)... but now its here, Ive lost my stomach for it.  We need to get it stopped in its tracks.... Thats my opinion. But like I say....  hell, I'm wrong a lot.