Free money everywhere...from republicans??

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so we're putting a ton of risk in hoping to save some banks while putting the entire economy on the line?


we'd be okay with the banks falling for bad practices because others would rise up in their place. this garbage with trying to keep such things around will bankrupt the economy...especially with this combined with trying to sustain a presence in the middle east.

Are you remotely qualified to be making that assertion? Because all of the people I've heard from who might be have a rather different take on the impact on the economy if this had been let to spin out on its own.

it would have fallen pretty far but not as far as it's going to with all of what's going on with all of these bailouts. essentially the country is digging itself deeper into debt and that's the core issue at all of this. we inflated how much money we had with trash mortgages and when that house of cards finally fell, the market was going to react in kind. you can't stop that. all of the money garnered in the market through false means with the garbage housing will have to be purged. bailing out like this is a huge gambit with a big loss on the end if it doesn't pay off.

right now it's looking like it's not going to pay off. the smart route would have been to take the hit up front and build up. our market wasn't purely based off of garbage mortgages, right?

i'd rather take a loss up front rather than take a much, much larger loss a couple years down.

http://www.msnbc.msn.com/id/26850571

31 black....let it ride!!

We don't have to crank taxes up to unprecedented levels. Adding a 10% tax bill to people making more than a million a year would do the job in less than a decade. They would gripe and moan, but their tax rate would still be lower than it was under Eisenhower.

one thing that drives me nuts is how full of s**t paulson and bernanke are about the bailout. they're saying that it'll hit the taxpayers and we're all on the hook no matter what.

the problem is that they're not saying the honest fact that the bailout is a huge gamble and doesn't necessarily guarentee any kind of stoppage on this and could result in much, much, much larger losses than not doing the bailout.

if anything they should take that bailout money and give it to the good banks and encourage growth for them. if not with direct money than through tax benefits and other benefits they could possibly receive.

And doing nothing is an even bigger one. Every decision carries an element of risk, even the decision to do nothing, skafather84.

More politics of envy, I see. I can never understand how you can justify taxing people an additional amount over the going rate just because they earn more. The fairest system is where everybody pays a fixed percentage whatever they earn. If you need to raise more tax then everybody should contribute. I really dislike the idea of picking on one group of your compatriots just because they're in a minority, and unpopular, even if they are rich. Once you go down that road it's very easy to see how the law can be changed to intimidate any minority group. Of course, I know you're a dyed-in-the-wool socialist, Monty, so I guess I should be expecting that kind of inequitable suggestion.

I was reading about the bailout story today and I just had this... vision of what this looks like.

These big companies are dying... I'm seeing them as an old, fat dying person who is dying because they have been living very unhealthy lives, eating cheap and easy junk food, smoking, drinking, not exercising and now broke in the hospital about to die.
But wait!, here's the come the Federal Government to the rescue. "You're just too important to let die so let up help save you! Here's how this works. You s**t in a bag and we'll pay you $700 Billion for your bag of s**t(the bad debts). You will now feel much better and can now pay your medical bills and continue your junky lifestyle. This will help everyone in the long run."
Deal goes down. Old, fat dying man staves off death for another few years.
"Thank you Federal Government! I feel so much better now! Back to eating junk food and booze now."
So now the country is saved and our Federal Government is left with debt up to gates of heaven and a sack of s**t.
"It's a dirty job, but somebody has to do it."

Let's repeat this all this next year all shall we? Cause that was just so fun.

lesser risk. you're not investing additional money into companies that still have a strong likelihood of failure. that's money lost on top of the banks being lost. that's a much larger net loss.

i realize you're a closet socialist who wants all the banks nationalized but letting the market purge on its own is a much safer long-term option than trying to prop up illegitimate business with freshly printed money that'll quickly lose value.

http://www.cnn.com/2008/POLITICS/09/23/ ... index.html

------------

Many Americans today are asking themselves how the economy got to be in such a bad spot.

For years they thought the economy was booming, growth was up, job numbers and productivity were increasing. Yet now we find ourselves in what is shaping up to be one of the most severe economic downturns since the Great Depression.

Unfortunately, the government's preferred solution to the crisis is the very thing that got us into this mess in the first place: government intervention.

Ever since the 1930s, the federal government has involved itself deeply in housing policy and developed numerous programs to encourage homebuilding and homeownership.

Government-sponsored enterprises Fannie Mae and Freddie Mac were able to obtain a monopoly position in the mortgage market, especially the mortgage-backed securities market, because of the advantages bestowed upon them by the federal government.

Laws passed by Congress such as the Community Reinvestment Act required banks to make loans to previously underserved segments of their communities, thus forcing banks to lend to people who normally would be rejected as bad credit risks.

These governmental measures, combined with the Federal Reserve's loose monetary policy, led to an unsustainable housing boom. The key measure by which the Fed caused this boom was through the manipulation of interest rates, and the open market operations that accompany this lowering.
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When interest rates are lowered to below what the market rate would normally be, as the Federal Reserve has done numerous times throughout this decade, it becomes much cheaper to borrow money. Longer-term and more capital-intensive projects, projects that would be unprofitable at a high interest rate, suddenly become profitable.

Because the boom comes about from an increase in the supply of money and not from demand from consumers, the result is malinvestment, a misallocation of resources into sectors in which there is insufficient demand.

In this case, this manifested itself in overbuilding in real estate. When builders realize they have overbuilt and have too many houses to sell, too many apartments to rent, or too much commercial real estate to lease, they seek to recoup as much of their money as possible, even if it means lowering prices drastically.

This lowering of prices brings the economy back into balance, equalizing supply and demand. This economic adjustment means, however that there are some winners -- in this case, those who can again find affordable housing without the need for creative mortgage products, and some losers -- builders and other sectors connected to real estate that suffer setbacks.

The government doesn't like this, however, and undertakes measures to keep prices artificially inflated. This was why the Great Depression was as long and drawn out in this country as it was.

I am afraid that policymakers today have not learned the lesson that prices must adjust to economic reality. The bailout of Fannie and Freddie, the purchase of AIG, and the latest multi-hundred billion dollar Treasury scheme all have one thing in common: They seek to prevent the liquidation of bad debt and worthless assets at market prices, and instead try to prop up those markets and keep those assets trading at prices far in excess of what any buyer would be willing to pay.

Additionally, the government's actions encourage moral hazard of the worst sort. Now that the precedent has been set, the likelihood of financial institutions to engage in riskier investment schemes is increased, because they now know that an investment position so overextended as to threaten the stability of the financial system will result in a government bailout and purchase of worthless, illiquid assets.

Using trillions of dollars of taxpayer money to purchase illusory short-term security, the government is actually ensuring even greater instability in the financial system in the long term.

The solution to the problem is to end government meddling in the market. Government intervention leads to distortions in the market, and government reacts to each distortion by enacting new laws and regulations, which create their own distortions, and so on ad infinitum.

It is time this process is put to an end. But the government cannot just sit back idly and let the bust occur. It must actively roll back stifling laws and regulations that allowed the boom to form in the first place.

The government must divorce itself of the albatross of Fannie and Freddie, balance and drastically decrease the size of the federal budget, and reduce onerous regulations on banks and credit unions that lead to structural rigidity in the financial sector.

Until the big-government apologists realize the error of their ways, and until vocal free-market advocates act in a manner which buttresses their rhetoric, I am afraid we are headed for a rough ride.

But they know that if they don't act those banks will fail. The risk is in the knock-on effects from that. Even if companies aren't directly trading with those organisations when they fail, many will go under because there will be so little confidence within the economy that nobody will lend money to anyone else, and even if they do it will be at an extortionate rate. All businesses rely on finance. The ability to get that finance, and pay a reasonable amount for it, influences their profitability and whether they stay in business. It influences whether people invest money in your country. It influences whether you have a job, and it influences whether your government has money to stop those who don't have a job from starving, because business activity generates tax revenue. Even without those banks having gone under, most businesses are having to factor-in increased charges for finance because of the threat they might fail. They, too, are receiving less credit from suppliers, who are spooked into reducing payment terms. There are many business-related risks to those banks failing. Some of these risks are insurable, yes, but then I guess you'd have seen AIG go under, too. That would have caused many companies to be uninsured at a time when they needed it most. And what would have happened if you'd added the failure of Fannie and Freddie into all that?

I've not even scratched the surface of how those organisations, you want to see go under, are inextricably intertwined with the prosperity of your country, and indeed the rest of the western world. You see, letting those banks, insurance companies etc. fail en masse isn't an option. The consequences can't be directly quantified, but they will be terrible. And I mean three-horseman-of-the-apocalypse type terrible.

whatever, comrad. you obviously don't understand the idea of value of money and that printing more money, especially in a failing economy, will only devalue the currency moreso in the longterm.

and what are you talking about? this isn't even your tax hike! it's easy to talk big game when it's not your money. i know the global impact and global impact will be worse with wantonly printing more money not to mention it will destabilize many tenuous relationships even farther. real world war.


let the market purge itself and recover sans government intervention and put that money towards rebuilding and supporting the surviving institutions instead.

Don't you mean four horsemen, ascan?

No, Death can't make it; Sarah Palin shot his horse...

Not a good time for Ron Paul - government regulation didn't cause the Great Depression and isn't the root cause of today's mess. Unbridled speculation and a lack of transparency are bigger factors. There are no atheists in foxholes, no libertarians in economic depressions.