So, unless you've been living under a rock you'll know that the Bush administration is asking for $700 billion to bailout Wall Street.
The need is urgent as "the entire economy is in danger", said President Bush in his address to the nation today. Congress, on the other hand, is in no mood to be hurried along (Rep. Mike Pence of Indiana - a Republican, actually - has the best quote so far on this. He said:
"I must tell you, there are those in the public debate who have said that we must act now. The last time I heard that, I was on a used-car lot ... The truth is, every time somebody tells you that you've got to do the deal right now, it usually means they're going to get the better part of the deal." (Source)
I'd like to ask you, dear Neatorama readers, a simple question: Should we bailout Wall Street? Why or why not?
[poll=8]
Photo: A demonstrator holds up a "Fail" sign behind US Treasury Secretary Henry Paulson and Fed Reserve Chairman Ben Bernanke during a Senate hearing. (Chip Somodevilla / Getty, via The Denver Post)
There is no easy way to do this. I opt for let's get this party started instead of let's see if we can think our way out of this. Mistakes will be made, corrections will made, and we will look back at this time as a turning point in our history.
-By the way, I am a liberal democrat who is realistic about our options.
The Republicans have long held a strategy of crippling the federal government to keep it from funding social programs and regulating industry. This is their finest hour--if they can trick us into this massive debt we'll be stuck forever paying it off at best. At worst our nation will collapse.
These guys are so good at manufacturing crises to shove through covert power grabs. Watch that video and tell your representatives what you think. You and your kids will be paying for this, if it goes through.
>:[[
Having a FREE MARKET means that if you make bad business decisions, you FAIL, and there is no reason you would deserve a handout from the government (via YOUR and MY POCKETS).
It's more like they burned our house down, and now they're asking us to buy them another house, while we have to rebuild and keep living in the destroyed one.
I like political discussions just as much as the next guy, but don't let the home of neat things turn into a politics forum. that being said....
Hell, no don't bail them out! We don't know what is going to happen to that money, we don't know if the US will ever really get any kinds of returns on the investment, and even if it does, is it worth it?
however, something needs to be done. Not just long term regulation to solve this, but something short term and immediate needs to be done to allow people to borrow money again. without that we're all rather - ahem - boned.
so don't throw money at them... but we gotta do something. Honestly I'm glad I'm not in any position of power, I don't want to decide this stuff!
I heard this somewhere, and may be repeating it wrong but I liked it: this is "socializing losses and privatizing gains"
Mebeh
The US Government prints its own money, no longer backed by a gold standard, hence what backs every dollar in our pockets is just faith in the good ol' US of A, right? And we're a capitalist nation, where privatized businesses run in a free market to lose or gain. So, the government, who makes its own money backed by the performance of America, is going to give money to companies who failed to perform? Isn't that the snake eating its own tail?
Seriously, these corporations already have more rights than people, and the fat cats that run them got a tax break AND will get millions in severance pay when they're fired. They'll not miss one meal over this crisis.
What the government should do is forget the bailout, let the banks fail. Give the money to the FDIC (it won't need 700 billion), and all depositors will get their money, up to $100,000 per account. This will save grandma's nest egg. A few banks, those who invested less riskily, will survive and get those deposits.
http://www.salon.com/comics/tomo/2008/09/23/tomo/
However, whether we bail them out or not, the 'fat cats' (as Miss C called 'em :)) ARE going to get their unfairly huge piece of the pie. This is going to happen if 'we' bail them out or not.
As much as I hate to say it, we're kind of stuck here. If we don't bail out the banks - even with a good plan (again, like Miss C said about giving to the FDIC), the collapse of a lot of banks will have a very starling effect on the economy, and *globaly* too, not just in the USA.
And that effect would be very bad.
Of course, we don't have the money in the treasury to do it, but... :)
My opinion on the matter: It's obviously not a good idea. But, do I have the smarts to know what bad thing will happen if we don't do it? No, I don't.
Overall, though, colour me "suspicious".
If I win, I win.
I I lost, I split the bill with citizenship.
USA is knew as the free-market (FM) paradise.
I don´t like FM. If somebody likes it, it´s ok. But being proFM and became antiFM (and bail Wall Street is not Free market) when the things go bad is not fair.
The natural evolution is destroy FM and make a capitalist system but watched by a person elected by the citizenship (yeah, the government).
In USSR there was only government´s economic control. That´s not desirable, but the opposite is not desirable either and the crisis is the proof.
I cringe a lot.
I am not qualified to answer.
If I have to choose between preventing an economic meltdown or principles, I'd prevent the meltdown. I'd be happier not losing the rest of my money.
I wonder what the public was saying in September of 1929.
We fortunately have the history to see what happens when we don't act fast enough to prevent disaster.
So the 'moral' choice is moot for me. The real question is will the plan work? I am not nearly qualified for that answer.
I'm currently in a MAJOR financial crisis but its of my own doing, that and a little bad luck. I bought a house that we could afford as long as both of us were working. Well one of us is currently unemployed and our savings aren't going to last much longer. So its time to get a smaller & more affordable house. I'll probably not be able to sell the house for what owed on it, so it will still be my responsibility to pay whatever is still owed. My big problem is with the banking crisis I can't get a loan to buy a different place either right now. So I'm stuck between a rock and a hard place.
I don't expect anyone to BAIL me out, though I wish someone would. So why should the big shots get a government hand out. Let them start over just like I'm going to have to do.
That being said, banks aren't failing despite their best efforts to remain ethical with an eye for long-term economic health. They're failing because they saw a way to soak people for a quick buck. In a perfect world, there would be repercussions for this.
Anyone here under the illusion that the world is perfect?
I watched his speech last night, and was still left sitting on my couch, scratching my head and saying "Huh?"
I don't understand how doing this would help? Don't understand how not doing this would not help?
I mean I know banks made bad choices by giving everyone and their mother a loan... but that's as far as my pea size brain understands lol :P
Anywho... *shrugs*
JP Carter you had many readers listening then you ruined it by sticking to a metaphor and complaining about the ill-informed (like myself).
The only thing we'll see if this bailout happens is a delay of the inevitable. The immediate effect is that the dollar will lose another 10 percent of its value, and it'll get worse from there.
And for all those blaming this fiasco on the free market, de-regulation and the Republicans, it didn't happen as a result of free market actions. It's a DIRECT result of government meddling (there is a reason Congress want this to pass, so the many skeletons in their closets don't get revealed) and the attempt to use the financial industry to do social engineering and make it look like free market activity.
And for those who want to blame George W. Bush for the mess, while he should shoulder some blame, this mess has been 40-plus years in the making. And tell me, boys and girls; who has been in charge of Congress for most of that time?
And since the U.S. isn't really much of a manufacturer any more, that means our economy is propped up on consumerism. And the flipping Fed has exacerbated it by being so afraid of even a minor correction, that they've continued to encourage this irresponsable debt spiral, with low rates.
So, who's to blame? Well, everyone who bought things they couldn't afford, and who encouraged or financed that. It's not just the banks.
10 years ago, before the .COM bubble burst, I'd have lauded some cleansing of debt by some hefty interest rate hikes.
Now, however, we're left with two choices:
Inflate our way out of this (bailout with $700B at first, and then another $1T when they realize this is a catastrophe, all the while trying to increase money supply and encourage savings by hiking interest rates)---that will kill employment, and a lot of people will hurt, and the wealthy people from before will continue to be wealthy. That sucks.
Correct (deflate) our way out of this, and that approach involves letting bad debt fail. Unfortunately, that includes our government, at this point. We've let the situation get so !@#$% bad, that we'll end up with a second Great Depression, and hope to take our suppliers (other countries) down with us, so that the U.S. can continue to exist.
That sucks.
It sucks that I've been responsible with my money, haven't bought things that I can't afford, and that *either way*, I'm footing the bill.
It sucks that in the first approach, the people who are more responsible for this mess aren't punished appropriately.
It sucks that the tragedy here is the choice between (good people punished, bad people not so much vs. everyone punished)
It sucks that in order to punish the bastards, we'd have to lose everything.
It sucks that the only three ways out of this mess (that come to mind) are:
- crazy-ass innovation (likely in the area of energy) that makes the U.S. much more efficient, COMBINED with newfound fiscal responsibility. [Think "Mr. Fusion" from Back to the Future"]
- Depression that may just dissolve the U.S.
- Letting the bastards get away with it, inflate our way almost to the level of Zimbabwe, by bailing the bastards out.
So, do I like the bailout plan? No. IT SUCKS. But I'm not betting on option 1. And option 2 seems like too big of a gamble.
It sucks.
What do we learn from a bail-out? Go ahead, live beyond your means, make stupid choices- someone will be around to pick up the pieces to save you. I believe that doing this means that we as a nation of people will be less and less able to function, to survive, to live smart. Yes, this melt-down hurts. Yes, it means that there will be tough times ahead. Yes, many will suffer. But swooping in to save the situation only fosters the stupid kind of thinking and actions that led to this situation to begin with.
A non-US citizen just said to me: The wonderful thing about the American economy and government is it is self-cleansing. These times are painful but keep the economy healthy longterm.
So, does this bailout engender economic health longterm? I think not.
I might be wrong. I'd love to be wrong. I'll wait and see, since it seems inevitable that the bailout will happen.
The banks that fail will fail because they promised investors money they didn't have, with the erroneuous expectation that the housing bubble wouldn't burst. For that, I think they should fail.
That leaves me with two questions:
1 How hard are the hard times if the govt doesn't do something?
2 What are the repurcussions of the govt assuming the risk?
Opinion 1: I have no clue, like most, and have a feeling that my fears are being played like a fiddle by the administration and consultants to the administration(Wall St).
Opinion 2: The govt that cannot fix nationalized education is going to assume responsibility and risk of the mistakes of the "professionals", now consultants to the administration? Wait a sec.
I am cringing on this one as well. This "fix" gives the govt too much power. Invoking a terrifying internal and external threat is the first step to making a democracy a military state, as if we aren't half way there. I don't think America should give in to this false sense of security.
1. Republicans rack up huge debt somehow while also somehow appearing to and/or tricking Republicans into thinking that they are shrinking the federal government.
2. Democrats, actually caring about things and doing the fiscally responsible thing, attempt to balance the budget and repay the debt -- thus leaving no money for all the programs the Democrats would otherwise implement.
3. Repeat.
That being said, your option 2 sucks, but that's the one I'm sticking with. And it will suck big time.
At the same time, the gov't won't let that happen, I think we're stuck with option 1 whether we like it or not. Kind of like we were railroaded into Iraq against popular opinion.
I'd love to hear Obama and McCain answer that at a debate.
I agree that this isn't entirely Bush's fault. But his administration has been in charge for damn near 8 years. What did he do to avert this? He's got no reason to take pride in his work, that's my opinion anyway.
Also, I agree with some of the commenters here. Part of the reason were are in this mess is that financial institutions didn't believe they could fail. Maybe we'll need to save some of them, but some of them we should let die. It'll be good for the system.
Has anyone seen or lived in government housing? I have, it's not fun. I was grateful to have a roof over my head and it was nice to have a heater, but there were also some sub-standard issues with the quarters and on an ownership scale that of Washington Mutual, well I feel the houses are just going to be let go and over time become dilapidated and sold to slum lords.
The idea that the government will also own the housing brings up ideas of the Soviet Union and the Communistic idea that the government would own and be in charge of everything. This goes against what the United States strives for, Freedom. Both socially and economically. If the government is involved in everything and then owns everything, what's the point of having Capitalism? What's the point of owning your own business if the government is going to create ways for your business to fail?
I agree that we all put our name on this failing, we could have said, "Sub-prime loan? You mean, you are giving me this house I can't afford? What's the catch?"
No such thing as a free lunch, but there has got to be a better way out of this.Executives who messed up the details of the plans are going to get paid for their action and tax payers are going to pay the price.
Go Free Market!
We ought to bail them out. Then, as a warning, we ought to vote out every bastard in Congress who helped push through this package. We ought to demand Bernanke's and Paulson's heads on cutting boards, and we ought to charge Bush and Cheney the full cost of the Secret Service protection they'll require every day for the rest of their lives because of the dumb shit they've done in this and other matters.
1) Government monopoly on the printing of unbacked money with an unlimited, unchecked power of money printing via the Federal Reserve.
2) An entire unelected regulatory body that regulates the stock market (SEC).
3) Government price fixing of the interest rates via the Federal Reserve (it fixes them lower than it would be in the absence of this power, which has led to loans being made that otherwise wouldn't have been made)
4) Sarbanes-Oxley. 'nuff said.
5) The unelected Federal Trade Commission
6) Government Sponsored Enterprises like Fannie Mae and Freddie Mac
7) The FDIC which takes responsibility off of banks to reimburse their depositers.
8) A court system that interferes heavily in the market (usually at the behest of the defendant's competitor), has the say so on who is a monopoly and who isn't, who is behaving "anticompetitively", who is "price gouging", who is violating "intellectual property" (these perverse IP rulings end up telling people what they can and can not do with their own actual real property), and who is discriminating against their workers.
9) A national congress along with a whole host of legislatures and city councils daily changing the rules that market participants have to take into account. They are constantly banning, limiting, zoning, gauging, price fixing, metering, monitoring, taxing, expropriating, protecting (the bad kind of protection: mercantilism), punishing, fining, suing, harassing, arresting, and impounding the goods and servicing passing from American to American or from American to foreigner and vice versa.
10) Tariffs and subsidies protecting many sectors of market from competitive forces (Medicine, Education, Transportation, Insurance, Defense, Justice, Banking, Farming and more).
So this is the untrammeled free market at work, huh? This is laissez-faire?
It seems to me that the facts argue otherwise.
Freedom works. It's time the USA started believing again. Trusting the government to change your diapers hasn't worked out too well.
fucking win.
Bend over America. You're not getting kissed first.
Bear Sterns $60B, AIG for $85B, promises to buy soiled Lehman securities for $100s of Bs, loans extended to BoA to buy Merril for almost $50B, and now this - which is just a start. The total bill might go into the $Trillions. Total prosecutions for fraud? Total billionaires being asked to fork over their 99% of their fortunes to ensure the survivability of the firms they have led off a cliff? 0. Remember that Paulson is the retired CEO of Goldman Sachs, a major beneficiary of this, and is worth at least $.5B.
It's amazing that you can go to jail for not paying a $50 ticket, but not one person is being punished for this. Sort of like 9/11 - people are only punished when relatively little things go wrong, not major things.
A case can certainly be made that it was too much government intervention, not too little, that caused the Great Depression. A massive credit glut for a decade, followed by massive, poorly thought out government initiatives to protect Wall Street. Sound familiar?
Our democratic republic barely survived that crisis.
What would happen if the Dollar loses it's reserve currency status and we face hyperinflation? The question is, can our Republic survive the (now assured) economic cataclysm?
I wouldn't bet my money on it.
So, batten down the hatches, and vote every single incumbent out on every level. Never vote for a Democrat or Republican again.
Some people are suggesting a revolt of the creditees-simply stop making all payments on unsecured debt. Screw your credit rating, a good credit rating will just enable you to make poor decision and get yourself strapped with debt in the future. If they can't repossess something more valuable than your debt, stop making payments. We shouldn't be helping the bankers run off with our country.
This will be remembered as the most audacious financial crime in recorded history.
The U.S. will collapse and no longer be the U.S.A we maybe China or Russia or maybe one of the Middle East countries we give so much money to for oil.
On the side note: We have greedy politicians that have millions of dollars in the stocks and they know if they do not pass this they will lose the money they have. I believe there is no way on earth this is not going to pass, they will are going to put a temporary fix on it so they can stay rich while and retire and we can pay for it after their time. This will probably spark the next great depression in 10, 20, or even 30 years. But, they won’t have to worry about it by then.
Now, I know that the American people won't have to front all of the bill but thats an insane amount of money when you think of it that way and whats worse, I can't see it having much effect on the crisis.
http://img517.imageshack.us/img517/6267/theplants5.png
Not a good idea to give money when you need money.
1. Reduce illegal immigration. Who'd want to come 1000 miles to struggle when they can do it at home.
2. Reduce the level of decadence. Who'll pay $40,000 for box seats at hockey games, who'll pay $200 a month for phone sex, who'll buy designer jeans for $300, who'll be able to afford a BMW for their high school kid?
3. Reduce the terrorist threat. When the evil empire becomes the feeble empire, it takes the fun out of the rhetoric. Also see decadence.
4. Reduce our dependence on foreign oil. We will actually have to change our consumption patterns. Besides, we won't be going anywhere far from home.
5. Reduce the risk of war over far away places and over false causes. It is hard to send an army into battle When there is no money to buy bullets.
6. Shrink government at all levels. When there is no tax to be collected, they'll have to do what they now do not want to do.
7. Strengthen labor unions and re-create the neccessary tension between labor and management
8. Resurrect political parties with clear, opposing philosophies to replace the two parties which are complicitly seeking the same re-election contributions
9. Prove capitalism to be as false a god as communism. Time we recognize that balance and moderation is good for personal and national health.
10. Create another generation of Americans who are self sufficient, value hard work and save(like the Depression kids)
yours is the only line of thought so far that makes the bailout sound compelling to me...
I confess (like others have) that I don't understand things well enough to truly 'get it'. But it still just plain makes me mad to think about it... and- I can only speak for myself, but I actually happen to be an American who has never lived beyond my means, has never over-extended on credit, has kept things under control (that's the way Dad and Mom brought us up and we all live like that, incidentally). So, I do feel justifiably angry over this situation...
The recent news that WaMu's 17-day CEO Alan H Fishman is eligible for $19.1 million in compensation is galling, to say the least. One could hope he has enough decency in him to refuse it... but he would hardly be where he is if he did, would he? The whole thing makes me sick... and I think we have a right to feel this way.
This "bailout" would take $3,500 in money or (overpriced) services from each working American for an unelected official to arbitrarily buy up loans that should never have been made, were often fraudulently made, and are essentially worthless assets of greedy bankers and Wall Street powerwhores. These very same entities insist upon strategies to zero their tax liability, many are overseas, and none of them support "windfall taxes".
If the "bailout" goes forward it will be the single largest act of THEFT from the people of any nation. It socializes risk yet privatizes profit. It will mark the Fall of our Republic and the beginning of a Fascist (merger of corporate and state power) Amerika.
The thing about the bailout I don’t understand is, why we would use our taxpayers money to bailout others due to there stupid mistakes. Why the bank allowed the economy to be in such a crisis and let people take out numerous loans that they couldn’t pay off. It is like they expect us to save them from failure. I personally think that the bailout may save us from a lot of hard ship in the future, but is it worth risking the average Americans hard work to do it? I think that the plan seems like a good one, but I am not so sure if people are also thinking about the future and its long term effects that may happen. I have very mixed opinions about the whole thing but based off what I have learned and read so far, I think that the bailout is outrageously stupid. I know that if we don’t do something people will lose everything. I just think that we need to create a better solution that is fair to everyone. So my overall opinion is that we should think about the futuristic outcomes of the bailout and any other options that would be more effective and fair to everyone, rich or poor.