Market bail-out

"The U.S. government is moving to enact a broad-based plan to rescue the struggling financial system that Treasury Secretary Henry Paulson says will cost “hundreds of billions of dollars.” The multipart plan includes relieving banks of bad assets and halting some short selling in a bid to combat manipulative trading and protect investors. "
Alright, this is all over the news today, and it’s something really big.

But I’m not very financailly savy, and it doesn’t make a lot of sense to me.

How is this going to work? If these loans are bad, how can the government ‘relieve’ the banks of them? Do we have the money for this? What could happen if the government doesn nothing?

Is this a good idea?

What they are going to do is not known yet. The fact that they saw it was big trouble coming and were going to do something huge to counteract is hopeful. But will it work.? If they do not find a way to keep people in the homes and paying mortgages it will fail. They have to renegotiate the mortgages. If we keep booting 50.000 plus out of their homes and the system has to absorb the losses , the so called fix will fail.

This isn’t over yet. What the government did is akin to going up to a small child and saying “we’re going to give you the best Christmas present ever.” The child will be very happy and excited. That’s the exact same reason for our two day rally in the market.

No matter what you give that child for Christmas though, it’s bound to be a disapointment compared to expectations.

I dunno, Scylla. I’ve seen the figure of 500 billion dollars being bandied about. Even half of that would be one hell of a Christmas present, and definitely better than corduroys from Sears.

I’ve seen the current tally over 800 billion without counting the Xmas present. The funny thing about the way these things work is that it may not actually cost anything, or it might cost more.

I was just saying in the pit and will say it here, the bailouts will be failures IMO. They are giving the money to the financial industry so they once again have money to loan to the people. The problem, not one bank will be willing to loan someone 300G for a home that is only going to be worth 200G. The housing market needs to hit bottom before we can start to pull ourselves up.

Easiest way to bottom out home prices? Glut of empty homes. It was going to do it on it’s own. But like every good political fellow, it was decided the best way to fix something was throw wads of cash at it. That cash only plugged a leak, the water is just going to flow over the top now.

Once it’s all done, put back in place the regulations that we removed and we may hold on until the next bubble bursts.

The government is assuming a potential liabiity of nearly a trillion dollars. In other words, that’s how much it would have to pay (at taxpayer expense) if all the liabilities went bad; but hopefully it won’t be nearly that much. It will be a lot though, since there’s a lot of overextended credit out there based on unrealistic mortgage values. There’s got to be some contraction somewhere.

Maybe it’s hype, but the impression I got this week was that we narrowly ducked out of the Great Depression II, only by a government intervention almost amounting to nationalizing the finance industry. I’ve been cynically joking that we may actually see socialism come about, because the government will end up owning everything anyway after buying out all the bankrupt industries.

Report on MSNBC this morning was that the bailout package sent to Bush was $700 billion.

Well, there’s another trillion we’ll never see again. Thanks a lot, baby boomers.

It’s just money, we can print more. :smack:

Understand, I’m not arguing the need of the bailout at this point. I’m just railing against the incredibly self-entitled generation that got us into this mess.

I blame Gordon Gekko in Wall Street. The money changers took that to heart…Greed is good. They made it their mantra.

The current bailout plan is a nightmare. Basically the taxpayers take on all the risky investments and the companies continue doing business as usual with the good stuff.

Screw that. I’m not going to spend the next 20 years paying higher taxes so stupid investors can walk away scott free.

Take a look at Senator Saunder’s plan:

  1. Soak the rich to pay for this debacle.
  2. Build in an economic recovery plan for poor and middle class workers who have been screwed.
  3. Regulate the hell out of the stupid investment bankers so they don’t fuck up like this again.
  4. “If a company is too big to fail, it’s too big to exist.” Break up these massive banking operations into smaller, safer units.

That’s a plan I could get behind. But just giving the Secretary of the Treasury carte blanche to shovel money out the door … no way.

I don’t quite follow this. Could you please explain? The baby boomer bit, I mean.

(btw: I’m not a baby boomer. Too old.)

Well, look, I know it’s an overgeneralization. But Phil Gramm is practically a baby boomer (born during WWII ought to be close enough), as is Jim Leach, and yes, I know that bill passed with a veto-proof majority, but Clinton still signed it. The former CEO of Bear Stearns is a boomer, as are the former CEOs of Merrill Lynch and Lehman Brothers, and I’m not sure about the rest (Wikipedia isn’t being helpful on the dates.) So that’s a trillion dollars my generation is on the hook for, plus the cost of Iraq, the refusal to do anything about Social Security and Medicare, and instead of being able to have real debates we get refighting of Vietnam and the culture wars back again. Can you see why I may be a little bit mad at the generation primarily in power?

You know, I’m pretty sure I’ve ranted about this before.

It just might be that this is what the plan was. Nordquist was talking about making the government so small they could flush it down the toilet. This may simply be the rich neocons finishing the plan before Bush left office.
They will tell us next week how every program for the poor and weak must be dismantled . We can not afford them. Medicare, medicade ,social security, wipe them out. Keep the wall street bailouts, they are needed. This may just be the final step in the plan.
Do you ever wonder why Bush waged an expensive war and cut taxes at the same time. It was illogical unless breaking the system was the real point. The rich and powerful have made out like bandits. They have money all over the world. They will do fine. Bush became president and had a surplus. He gave it to his rich friends. They called it a tax cut but pennies to the people and big bucks to the rich. He kept doing it again and again.
When we moved the industrial base abroad ,they cut a hole in the economy that once was the middle class. We have the biggest disparity between rich and poor that ever existed in America. It will get worse.

You may be required to prove that, you could be a stealth boomer.

I’m reminded of how the Coalition Provisional Authority had billions of dollars in cash sent to Iraq to disperse as they saw fit with little to no record-keeping, much less oversight. And since that seemed to work out so well…

Well, at least we voted those guys out of office, and the new guys wouldn’t actually be dumb enough to implement the same M.O. on a larger scale on Wall Street, right?

Wait, it’s the same administration? OK, we’re just fucked. Maybe Congress will grow a goddam spine and demand at least some oversight of the bailout. Ya know, after you notice and object to the administration’s bad ideas, stop fucking enabling it.

This whole bailout is getting kinda spooky–first Paulson and Bernanke drag Congressional leaders into a closed door meeting where they basically say “hey, if we don’t move on this like yesterday the whole world is gonna go kablooey!!” Then they come up with their plan, and it’s looking like the biggest goddamned Trojan Horse you ever saw. From the Naked Capitalism blog:

So the scare is on, the “gotta do it right now” push is on, but it looks like Paulson is digging in his heels when Dems want to put in some other provisions, like changing bankruptcy laws to allow for restructuring mortgages for those in foreclosure to keep them from defaulting (and thereby making more of those junk credit default bundles more of a liability than they are now) and also to cap salaries, benefits and bonuses of management level employees of the bailed out companies–why, if they’re sucking taxpayer money, should they profit obscenely by getting millions of dollars to reward them for being shitty businesspeople? Yet Paulson doesn’t want provisions on his blank check–he wants the Treasury Department to have control over this huge chunk of money (and, by the way, it’s NOT 700 billion–it’s 700 billion outstanding at any time, they can come back for more if they sell off some of the junk defaults at a net loss to some sucker stupid enough to buy them.)

Shit, it looks like they want to extend this mess to foreign bankswith holdings in the US as well–yep, your taxes going to foreign banks who also can’t manage money correctly.

There’s a DailyKos diary with an excellent compilation of cites for economists both on the right and the left, conservative and progressive, who’re scared shitless over the planned verbiage of this bailout bill. There’s also another excellent analysis of the deregulation mania led by Gramm and ably assisted by McCain and the Bush administration that led to this mess–how in the hell can anyone still defend these Republican snakes? They’ve done this exact same shell game over and over and over–deregulate, make billions, merge corporations into gigantic megacorps that are “too big to fail! Onoz!” and then the huge ticket bailout from the taxpayers when they inevitably DO fail.

There is no downside for the perpetrators of this game–they get rich beyond all dreams of avarice, then skate off with their golden parachutes clenched firmly in their sweaty little fists to their next cushy job fucking up more lives. Pensions go into the toilet for little people, but never for these fat fucks–they have their pet politicians to fix their messes. We get less and less for the more and more we spend in taxes while these bastards lobby to get themselves tax cuts and special little exemptions to regulations so they can offshore more jobs to maximize shareholder dividends. I’m so sick of this shit I could puke bullets.

Oh, and any Republican apologist who wants to call us progressives “socialists” because we want to spend our tax dollars on things like health care and education and infrastructure can just officially fuck off and die–Republicans are the big socialists and it doesn’t change the label when it’s huge corporations you wanna bail out (with billions of dollars of other people’s money) from their own incompetency and greed instead of wanting to give a couple thousand to just regular people who’ve been fucked over by those corporations or who’ve just had a run of bad luck, or what the fuck–maybe from their individual incompetence. It’s ever so much cheaper to have liberal, progressive “socialist” programs than it is to have stupid “conservative,” Republican-style socialist corporate bailout programs by a long shot. That 700 billion could pay for a lot of tuition, a shitload of health care, a lot of roads or hospitals or bridges. It could pay for a lot of food for hungry people. But no, we “have” to spend it in order to “rescue” our economy from the completely foreseeable and titanically obvious consequences of the unregulated actions of a few huge corporations. And the worst of it is that not ONE of the fuckers who made this happen will spend even one day trying to live on $400 a week unemployment benefits and getting that sinking feeling every time they go through the very scanty help wanted ads.

This whole bailout is pretty much just like getting assraped by a whole gang of sweaty bikers, then being forced to kiss each stinking, shitsmeared bloody dick and say “thank you” for the privilege. Over, and over, and over. I just pray to the god I don’t believe in that the stupid fucks who voted for Bush twice either wise up or stay the fuck home on November 4th so the rest of us can start cleaning up the fucking mess. Again. Just like we always do–the Republicans make damned sure to leave as big a shitpile as they possibly can whenever the political tide turns to hold them over to the next time the sheep forget how bad they are and are tempted to let the bastards get their hands in the cookie jar. AGAIN.

Gee, thanks, SmartAleq for making me more depressed than I already am. Sadly, everything you say is probably right on the mark.
I actually find myself beginning to wonder if we’re approaching the day when we proles, with nothing left to lose, will dust off the pitchforks and axes and start taking direct action against our oppressors.

Sorry about the depression thing, I share it which is why I’m so damned angry! I’m also hoping that one of the consequences of the Republicans using bogus social issues to arbitrarily divide Americans in order to conquer will backfire on them something serious. They like to make the Second Amendment into a big issue, saying that us librul types is gonna steal they guns so we all better vote for the good guy, conservative R’publikinz to preserve our gawd gived right to own machine guns and Vulcan mini guns and suchlike–one of these days the general run of stupid American is going to WAKE UP and figure out that the REAL war is between the haves and the have-nots, but the stupid rich fucks forgot to take the guns away. As a liberal, progressive, gun owner I can easily see a time when rich CEOs get dragged out of their country clubs and strung up on phone poles to be used as target practice, while the Army and National Guard the governor calls out is full of poor kids who only signed up so they could afford to go to college and couldn’t care less if the rich bastards get fucked up since their parent’s pensions evaporated with the last market crash–so they look the other way.

I can absolutely guarantee you that if/when this day comes I will be laughing and pointing and cheering with every fiber of my being. I am completely sick of clueless rich people, their stupid attitudes, their greed, their mindless consumption, their crass inability to empathize in any meaningful way with others, the way they know the cost of everything and the value of nothing. I would love to see a day come when people were ashamed of being rich, that it made them paranoid to be so–kinda like the East Coast “old money” families who dress for shit, drive old clapped out cars and never, EVER talk about money because it’s low class to do so–but who give millions a year to good charities and worthy causes. You’d never find those kind of rich people swinging from lampposts–SO tacky!