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$700 billion!


Off-Topic Discussions

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Taldor

So what do folks think of the bailout plan that the govt. is pushing? I was surprised to see that I agree with some of the ideas the Democrats are floating around including limiting executive pay and taking shares in the saved company. Of course, some of their ideas aren't so hot but it's a start.

And a quick question for the Republicans, doesn't this go against everything the party stands for?

Qadira

I just want to know where we get this 700 billion from? We are currently in massive debt (although we had a surplus before Bush got in 8 years ago). What do we borrow 700 billion dollars from some country? Who? China? Russia? Who has that kind of dough to lend us?


I suspect that, as has often happened in the past, that the Mint is tasked with whooshing more currency to mystically finance things.

Either that, or they're selling off certain State Secrets to Scumbags. Be an interesting way to deal with the 45% or so of our current debt presently in the hands of foreign persons/institutions...


Fake Healer wrote:

I just want to know where we get this 700 billion from? We are currently in massive debt (although we had a surplus before Bush got in 8 years ago). What do we borrow 700 billion dollars from some country? Who? China? Russia? Who has that kind of dough to lend us?

Heck, China saved that up putting melamine in their milk....

Qadira

Also I just wanna say I am really tired of the entire party change thing. Before Clinton we went into debt. During Clinton we erased the debt and I wasn't hurting financially during any of that period(except for my own foibles). Bush gets in and we immediately go back into debt and I am pinching pennies and praying that raises are equal to cost of living expenses. Yes. I am planning on voting for Obama. I don't want a dude worth 30+million who tells me that middle-class makes around 500,000+ a year deciding what's in 'my best interest'. Sorry, Bush has done a slam-bang job up til now so why would I go for Bush-lite?


Kruelaid wrote:
Heck, China saved that up putting melamine in their milk....

Kruelaid, The is the Chinese High-speed Internet Police. C.H.I.P.s is alerting you that Republic will not tolerate talk like that. Please report to your nearest CHIPs treatment center for 're-education'.

That is all.

Andoran

Pathfinder Adventure Path, Campaign Setting, Roleplaying Game Subscriber
Callous Jack wrote:
So what do folks think of the bailout plan that the govt. is pushing?

What I'm sticking on is that under the Administration proposal the money would come without strings or oversight. Here's the money quote:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

That's a show-stopper by itself. I wouldn't trust any President--Bush, Obama, or McCain--to handle that much money without Congressional or judicial oversight.


Personally, I’m pleased to see Capitalism die an ignoble death. Time to usher in some social democracy, although Congress appears to have zero clue how to go about this (let’s throw the money at the people who screwed things up, yeah, that’ll fix it). Someone please call the French and the Irish and pick up some tips! The whole “crisis” makes me a little ill, as someone who has always been very careful with what little cash / debt he has. Rampant speculation, improper financial management on the part of consumers, and easing of banking restrictions put in place for this exact reason. Was anyone surprised when it tanked?


<sarcasm>I for one would like to welcome our new socialist way of life. Everyone is a ward of the state and you should be thankful you live in a country that has the foresight and knowledge to spend your money wisely.

Thank you generous overlords for taking care of us, your children.</sarcasm>

Thankfully, we can all now relive the 80s and complain about a high national debt under ANOTHER republican president!


veector wrote:

<sarcasm>I for one would like to welcome our new socialist way of life. Everyone is a ward of the state and you should be thankful you live in a country that has the foresight and knowledge to spend your money wisely.

Thank you generous overlords for taking care of us, your children.</sarcasm>

Thankfully, we can all now relive the 80s and complain about a high national debt under ANOTHER republican president!

You seem to forget who controls the money. It's congress. Since the Democrats have taken power in congress the spending isn't slowing down. Both parties are spending like drunken sailors, not just the Republicans.


It's a Republican appointee for the last 7 years that has overseen the Treasury and the SEC.

EDIT: Unleashed capitalism doesn't work. Why? Cause a few greedy people can always tip the balance in favor of the haves instead of the have-nots.


I can see the panic/implications but I'm really against bailouts. The CEOs/execs get HUGE amounts of money then bail when the bubble bursts. Even if it is their own doing. (like 'encouraging' 'creative' mortgages to people who didn't have a chance in hell in repaying.)

For those who want to cry politics/lack of oversight over the situation there was an interesting tidbit on Fox Business news(I know, the F word to some) that tied the mortgage collapses into something Clinton did/supported in '99. This allowed mortgage capital to be used as security on the stock exchange, creating the mortgage/inflated house values bubble. I can't find a link for the story but I'm looking. If true it does show the long term consequences for whichever adminstration's actions/inactions.

This follows the pattern of car leasing problems. The auto companies create financial groups to administer leases, then pressure them to have low rates and high residual values only to fall short at lease end. All to sell more cars now. Eventually the lease bubble bursts, as it's doing now.

The bailout of Chrysler in the 80s was successful, but the
Savings & Loans bailout wasn't so much.

You'd think that if the exec boards could be charged with REAL jail time this crap would slow down/be avoided.

Tell the legislators from both sides of the aisle to stop playing politics with the economy!

*rant button off*

Andoran

Garydee wrote:
veector wrote:

<sarcasm>I for one would like to welcome our new socialist way of life. Everyone is a ward of the state and you should be thankful you live in a country that has the foresight and knowledge to spend your money wisely.

Thank you generous overlords for taking care of us, your children.</sarcasm>

Thankfully, we can all now relive the 80s and complain about a high national debt under ANOTHER republican president!

You seem to forget who controls the money. It's congress. Since the Democrats have taken power in congress the spending isn't slowing down. Both parties are spending like drunken sailors, not just the Republicans.

they also seem to forget that bush (03) and mccain (05) BOTH tried to reign in fannie mae / freddie mac, but were stymied both times by that well known republican barney frank.

furthermore, pelosi and reid have been completely obstructing anything republicans have been trying to do to nip some of this in the bud (look at how many bills that address these problems have been stalled of late), and won't do anything until after november in any case (seriously, the country is in a "crisis", how many recesses are the dem congress goin gto take, ffs?), as a bad economy is good for obama, and doing nothing helps the dems in their quest for the white house.

i'm sorry, but if anyone really thinks the dems give a crap about this country, they are so out of touch with reality it isn't even funny...

(the republicans are just as bad, i just get tired of lefties thinking the dems are any better...)


Emperor7 wrote:
I can see the panic/implications but I'm really against bailouts.

The problem is that everyone (globally too) gets screwed if they don't bail them out.


veector wrote:

It's a Republican appointee for the last 7 years that has overseen the Treasury and the SEC.

EDIT: Unleashed capitalism doesn't work. Why? Cause a few greedy people can always tip the balance in favor of the haves instead of the have-nots.

The private sector and lack of regulations are not the cause of these problems. Guys like Barney Frank were the problem. The problems were caused by political greed, not corporate greed.

Cheliax

Fake Healer wrote:
Also I just wanna say I am really tired of the entire party change thing. Before Clinton we went into debt. During Clinton we erased the debt and I wasn't hurting financially during any of that period(except for my own foibles). Bush gets in and we immediately go back into debt and I am pinching pennies and praying that raises are equal to cost of living expenses. Yes. I am planning on voting for Obama. I don't want a dude worth 30+million who tells me that middle-class makes around 500,000+ a year deciding what's in 'my best interest'. Sorry, Bush has done a slam-bang job up til now so why would I go for Bush-lite?

So instead you want a dude that plans on raiseing taxes on anyone making over $75,000 running the show? Don't forget it was the fiscal principles of the Newt Gyngritch congress that got us that surplus. Clinton was more than happy to run deficits until the Republican congress said in 1994 that they would not pass a budget that was not balanced or had a surplus in it. When the debt reappeared was when Tom Daschle and the Democrats took control of the Senate in 2001, and according to BLS numbers, the current economic problems we have started about the same time as the Democrats took control of Congress in 2007.

Qadira

Yet a Republican-majority Congress had no problem piling up massive deficit spending on operations in Iraq. So apparently fiscal conservatives are all for regulated spending unless its used for military operations...


David Fryer wrote:
Fake Healer wrote:
Also I just wanna say I am really tired of the entire party change thing. Before Clinton we went into debt. During Clinton we erased the debt and I wasn't hurting financially during any of that period(except for my own foibles). Bush gets in and we immediately go back into debt and I am pinching pennies and praying that raises are equal to cost of living expenses. Yes. I am planning on voting for Obama. I don't want a dude worth 30+million who tells me that middle-class makes around 500,000+ a year deciding what's in 'my best interest'. Sorry, Bush has done a slam-bang job up til now so why would I go for Bush-lite?
So instead you want a dude that plans on raiseing taxes on anyone making over $75,000 running the show? Don't forget it was the fiscal principles of the Newt Gyngritch congress that got us that surplus. Clinton was more than happy to run deficits until the Republican congress said in 1994 that they would not pass a budget that was not balanced or had a surplus in it. When the debt reappeared was when Tom Daschle and the Democrats took control of the Senate in 2001, and according to BLS numbers, the current economic problems we have started about the same time as the Democrats took control of Congress in 2007.

Exactly. The left tends to forget about the "Contract with America" that Gingrinch and the Republicans pushed on Clinton. If the Dems had controlled congress during Clinton's time, Clinton probably would have gone down in history as another ineffective Jimmy Carter.

Osirion

veector wrote:
EDIT: Unleashed capitalism doesn't work. Why? Cause a few greedy people can always tip the balance in favor of the haves instead of the have-nots.

Unleashed *anything* doesn't work.

Communism was supposed to be a glorious power-to-the-people workers paradise, that would eradicate all the evils of tyranny and elitism.

But then pesky human beings got involved. Ideals are great. Theoretical systems are great. People, on the other hand, are selfish and competitive, always have been, and always will be (and those who aren't get taken to the cleaners by those who are!). Put them at the top of a trickle-down economic system, and they will clench their fists and let not a single silver sheckle 'trickle-down.' Put them in any sort of 'first among equals' role over a democratic state and they will give themselves more and more power until they are right back to dictatorship.

Sometimes it even happens with the best intentions. 'They can't be trusted to save for themselves, so we need to take a certain percentage of their money and save it for the rainy day.'

4000 years ago, when the peasant farmers along the Nile would sell every bit of grain they produced during the wet season only to end up starving and rioting during the dry season, Pharoah demanded that they hand over all of their grain in taxes, stored it in grain silos in the cities, and then hired all of the peasant farmers during the dry season and told them to build big fancy urban projects, which was just make-work, for which he would pay them the exact same grain he taxed from them earlier in the year. Riots and famine and pestilence all went down, and Egypt entered a golden age of growth, so much so that later Pharoahs ran out of meaningful stuff for the workers to build, and ended up building ever-more-ridiculous monuments to their own glory, just to keep them busy.

Today, it's called Social Security. 'We, the government, have deemed that you are too short-sighted to plan for the future, so we're taking some of your stuff and will give it back to you later.'

Unlike Pharoah, we don't even have to do any civil construction to earn back the money the government took from us, although that might be a good idea, since we could use the infrastructure maintenance...

Qadira

Pathfinder Adventure Path, Modules Subscriber

The money will come from American taxpayers, like it always does. On the other hand, they might throw in a bout of inflation to reduce the real value of the debt over time. You have been warned.

On the one hand, the bail out helps an industry which is extremely bad for the economy - banking. On the other hand, it also helps out an economy which is vital to the economy - banking. It certainly brings in a large amount of moral hazard, but the morally-clear option of leaving the banks to stew in the crisis of their own making runs the risk of tipping the world economy into a prolonged recession, wreaking havoc on ordinary people. Unpalatable as this bail out is, both from the fairness and a cost perspective, it is probably the least bad option.

RPG Superstar 2008 Top 32

David Fryer wrote:
So instead you want a dude that plans on raiseing taxes on anyone making over $250,000 running the show?

Fixed.

(And as opposed to someone who wants to cut taxes on people making more than that number? Hell yes.)


veector wrote:
Emperor7 wrote:
I can see the panic/implications but I'm really against bailouts.
The problem is that everyone (globally too) gets screwed if they don't bail them out.

Yeah, I know it but I still don't like it.

I couldn't find an article to cover the show but I did find this...link

Financial guys blaming politicians, and politicians blaming financial guys. *where's that darn pitchfork?*

Cheliax

Pathfinder Adventure Path Charter Subscriber; Pathfinder Comics Subscriber; Pathfinder Tales Subscriber

None of the tax issue matters, now. After this bail out, and the bailout of AIG, it doesn't matter who is elected president - taxes will have to be raised to pay for all of it.

And for the record, yes. I would rather have those that make more than $75,000 a year have their taxes raised than give more tax breaks to multi-millionaires, hoping that it will 'trickle down' to me.

Big Oil gets more tax breaks than anyone, and continues to gouge us with price increases. Every quarter, it's another record profit for Big Oil. I'd love to see the IRS go in and audit their books and find out the actual cost to refine a gallon of gas and compare it to what we're paying as consumers. I'm sure the mark up is astronomical. (and yes, I'm aware some of the gas price is tied to local taxes, but those taxes don't go up and down everytime the weather changes). I would vote for anyone who would have the b@lls to go up against the oil companies and make them justify their prices.


Pathfinder Adventure Path Charter Subscriber

Everyone should call their congressmen to oppose this bailout.

Reasons why-

1) We can't afford this, we already are too heavily in debt.
2) This won't be the last time, the banks will come back asking for more handouts, the automobile industry will ask for $50 billion, etc.
3) The Federal Reserve will have to run the printing presses more and more to pay for these bailouts, inflationary money will destroy everyone's savings accounts.
4) It punishes people who saved money and didn't overborrow, and rewards people who overspent and overborrowed. (Also see 7))
5) This bailout doesn't bailout ordinary folks, it bails out rich bankers and CEOs. (Also see 7))
6) Why is Paulson the Treasury secretary allowed to unilaterally announce that he is going to bail out his former company Goldman Sachs? What happened to conflict of interest?
7) This bailout will ensure poverty for the poor and middle class who will have to pay for these bailouts, and it allows the rich who foolishly lost trillions of dollars to land with golden parachutes.

Osirion

Larry Lichman wrote:
I would vote for anyone who would have the b@lls to go up against the oil companies and make them justify their prices.

Such a person would be dead faster than a Kennedy at an NRA event. But yeah, it would be nice to see.

Fallout from the bailot has already begun;

http://money.cnn.com/2008/09/22/markets/oil/index.htm?cnn=yes

CNN wrote:
NEW YORK (CNNMoney.com) -- Oil prices jumped more than $25 a barrel Monday in biggest dollar jump ever as the dollar was punished by the government's $700 billion Wall Street bailout plan and big investors scrambled to fill obligations as the October contract expired.


Larry Lichman wrote:

None of the tax issue matters, now. After this bail out, and the bailout of AIG, it doesn't matter who is elected president - taxes will have to be raised to pay for all of it.

And for the record, yes. I would rather have those that make more than $75,000 a year have their taxes raised than give more tax breaks to multi-millionaires, hoping that it will 'trickle down' to me.

Big Oil gets more tax breaks than anyone, and continues to gouge us with price increases. Every quarter, it's another record profit for Big Oil. I'd love to see the IRS go in and audit their books and find out the actual cost to refine a gallon of gas and compare it to what we're paying as consumers. I'm sure the mark up is astronomical. (and yes, I'm aware some of the gas price is tied to local taxes, but those taxes don't go up and down everytime the weather changes). I would vote for anyone who would have the b@lls to go up against the oil companies and make them justify their prices.

The government will never go after Big Oil. The reason why is that the government makes more money per gallon(taxes) on oil products than what the oil companies themselves make per gallon. It's a dirty little secret that a lot of people don't realize.

RPG Superstar 2008 Top 32

In practical terms what has happened is that we allowed a large handful of people, no one of which can be held responsible but all of whom should have known better, to take the world economy hostage. And we're paying the ransom.

Oh, we should pay, because the alternative is worse (We don't need the Great Depression to undergo a name change the way the Great War did.) But we should look at who allowed it to happen.

Obviously, the major players in the investment banks should have known better. Buying on margin was banned after the Great Depression and with good reason. Coming up with new names for it ('Short selling' and 'leveraging') doesn't make it any less of a bad idea. (Those who do not learn from history...yadda yadda yadda.)

We also have banking regulations dating from trying to prevent a second Great Depression that have been slowly dismantled over the course of the last 30 years under the call for 'market forces'. The wall between investment and insurance was taken down by a bill written by Phil "Mental Recession" Gramm, which allowed AIG (an insurance company) to buy all that bad debt. I think we're learning pretty rapidly that these things were regulated for a reason.

McCain has been calling for deregulation for his whole career until a few days ago. Draw your own conclusion.

RPG Superstar 2009 Top 32

veector wrote:
Emperor7 wrote:
I can see the panic/implications but I'm really against bailouts.
The problem is that everyone (globally too) gets screwed if they don't bail them out.

And this is bad for what reason?

The "cancer" in our economy has to be excised. The long term effect of propping up these companies that suffer from decades of poor management is to allow the financial market to continue to avoid reality.

No, not letting the market correct itself (Yes, I know that would through a lot of people out of work - myself included - but it is the only way to really fix what has happened.)

RPG Superstar 2008 Top 32

NPC Dave wrote:
1) We can't afford this, we already are too heavily in debt.

We can't afford not to. The Depression was BAD.

NPC Dave wrote:
2) This won't be the last time, the banks will come back asking for more handouts, the automobile industry will ask for $50 billion, etc.

That's true, unless we regulate those industries to make taking the economy hostage illegal.

NPC Dave wrote:
3) The Federal Reserve will have to run the printing presses more and more to pay for these bailouts, inflationary money will destroy everyone's savings accounts.

Selling treasury bonds is not the same as printing more money. We just have to pay interest on the debt instead of devaluing the money.

NPC Dave wrote:
4) It punishes people who saved money and didn't overborrow, and rewards people who overspent and overborrowed. (Also see 7))

True. Once again, this is why we need regulations to prevent this from happening again.

NPC Dave wrote:
5) This bailout doesn't bailout ordinary folks, it bails out rich bankers and CEOs. (Also see 7))

Right now, the Democratic congress is trying to put a rider in the bailout to limit the amount of compensation said CEOs get. I don't know if it will make it (since time is of the essence here.)

NPC Dave wrote:
6) Why is Paulson the Treasury secretary allowed to unilaterally announce that he is going to bail out his former company Goldman Sachs? What happened to conflict of interest?

Same thing that happened with Cheney and Halliburton.

NPC Dave wrote:
7) This bailout will ensure poverty for the poor and middle class who will have to pay for these bailouts, and it allows the rich who foolishly lost trillions of dollars to land with golden parachutes.

Welcome to where 'Capitalism' becomes 'Capitalocracy'.

RPG Superstar 2008 Top 32

Lord Fyre wrote:
The "cancer" in our economy has to be excised. The long term effect of propping up these companies that suffer from decades of poor management is to allow the financial market to continue to avoid reality.

Even if it means killing the patient? (I realize that eventually it would recover, but I'd rather avoid spending a decade or more just waiting for stuff to get fixed to where I can have a job.)


Pathfinder Adventure Path Charter Subscriber; Pathfinder Roleplaying Game Subscriber
Garydee wrote:


Exactly. The left tends to forget about the "Contract with America" that Gingrinch and the Republicans pushed on Clinton. If the Dems had controlled congress during Clinton's time, Clinton probably would have gone down in history as another ineffective Jimmy Carter.

I'm calling BS. The Omnibus Budget Reconciliation Act of 1993 started the balanced budget ball rolling, entirely opposed by Republicans in the final vote. The "Contract with America" was superfluous to the primary charge for budget balancing during the Clinton administration. The Democrats had already signed on to the benefits of a balanced budget.


Hmmm, I thought I posted it, guess it got swallowed:

Kruelaid wrote:
Heck, China saved that up putting melamine in their milk....
Crag the mule wrote:

Kruelaid, The is the Chinese High-speed Internet Police. C.H.I.P.s is alerting you that Republic will not tolerate talk like that. Please report to your nearest CHIPs treatment center for 're-education'.

That is all.

I have just returned from CHIPs re-education, which was mostly having to watch 70s and 80s action shows while they pried my eyes open with alligator clips.

And in immortal words of B.A. Baracus, all I have left to say about the debt is "I fee sorry fer you foos!"


Pathfinder Adventure Path Charter Subscriber
Ross Byers wrote:


Oh, we should pay, because the alternative is worse (We don't need the Great Depression to undergo a name change the way the Great War did.) But we should look at who allowed it to happen.

Obviously, the major players in the investment banks should have known better. Buying on margin was banned after the Great Depression and with good reason. Coming up with new names for it ('Short selling' and 'leveraging') doesn't make it any less of a bad idea. (Those who do not learn from history...yadda yadda yadda.)

We also have banking regulations dating from trying to prevent a second Great Depression that have been slowly dismantled over the course of the last 30 years under the call for 'market forces'.

The economy in 1929-1930 suffered a crash because of easy credit from the Federal Reserve. Crashes occur due to easy credit, from fractional reserve banking.

But that isn't what caused the Great Depression, the Great Depression was caused by the government trying to force prices to stay up. Prices needed to come down, so recovery could begin. Prices were kept up, through price controls and other economic foolishness, thus no recovery for a long time.

If you want a repeat of the Great Depression, then support this bailout. This bailout is going to try and keep prices up, prices of financial company shares, and real estate prices. This will ensure stagnation, as a lot of damage has been done to the economy and especially real estate markets.

For a recovery to begin, prices need to fall, not be kept up artificially until the US government goes bankrupt, and then the prices fall.

Short sellers were actually restoring equilibrium to the market by driving financial companies down to their real actual values, which it turns out is very little. The government shouldn't be allowed to scapegoat short sellers for a mess it caused through the Federal Reserve.

Osirion

Unfortunately, I feel like the bailout is a necessary evil.

But then, reading this thread, it feels like there is a whole lot of blame to go around.

It's the politician's fault for empowering the financial companies and investment firms to come up with creative products to help stimulate the economy.

It's the financial institution's fault for coming up with "creative" programs that they "knew" would put the economy in its current state.

It's the mortgage companies and/or real estate brokers that were pushing certain loan products when they didn't need to. (Option ARMs were the number one mortgage loan type in California for many, many years.)

But at what point does it become the consumer's fault? Why isn't it their fault that they tried to get into a house that they should have known they couldn't afford? Why isn't it their fault that they didn't read the documentation that they were given? Supply and demand -- if there wasn't a demand for crappy programs, then there wouldn't have been a supply. Obviously there was a demand. So where did the demand come from?

Why do I now have to pay for the poor choices of millions of consumers?

Osirion

Ross Byers wrote:
McCain has been calling for deregulation for his whole career until a few days ago. Draw your own conclusion.

I would like to believe that perhaps the old dog isn't too old to learn a new trick, and recognize that we don't need another Great Depression to learn that the finances sector needs to be weaned away from their 'greed is good' short-term-profit / long-term-meltdown / somebody-elses-problem mentality.

Osirion

Ross Byers wrote:
NPC Dave wrote:
6) Why is Paulson the Treasury secretary allowed to unilaterally announce that he is going to bail out his former company Goldman Sachs? What happened to conflict of interest?

Same thing that happened with Cheney and Halliburton.

Paulson is stoned if he thinks that he's above the judicial and legislative branches. Didn't he watch 'I'm Just a Bill?' as a kid? Doesn't he know how it works?

The Supreme Court may just roll over, since they are pretty heavily in the pocket this term, and the Senate may be impotent right now, trapped at 49 Dem/49 Rep/2 Ind, but that's not gonna last forever. No matter who wins, *nobody* is gonna take 'you can't touch this' lying down.

RPG Superstar 2008 Top 32

NPC Dave wrote:
*some decent points*

I agree that the market needs to correct itself: Overvalued things cannot remain overovervalued. (Stein's Law: If something cannot continue forever, it stops.)

I'd just prefer a controlled descent and soft landing to a plummet and a resounding *thud*.

Qadira

Pathfinder Adventure Path, Modules Subscriber

The problem is that, while regulation is necessary, it is unlikely to be a panacea. Most regulation put in place is designed to prevent the last economic crisis, not the next one. And regulators always operate at a disadvantage to the businesses they regulate because they are not insiders, and so don't get access to the same level of information, plus being a regulator doesn't pay as well as a banker so they don't get the best people.

You could regulate heavily but, while some financial innovations have not been very well managed, a lot of what has happened in the last decade or so has been pretty good for the economy as a whole, and the greed and lax controls over mortgage securities should not obscure that. Overly aggressive regulation could severely hamper the banking markets and reduce the overall growth rate, and could also make the premium for avoiding or circumventing regulation that much higher. You could even argue that the regulations helped create this mess - many of the products that were used, and certainly the travails of AIG, were directly related to using financial derivatives to circumvent (perfectly legally) regulatory rules on capital adequacy. I myeslf worked for a bank which had such arrangements (and was brought down by them), all with the perfect awareness and blessing of the regulator.

Banking is an inherently highly-cyclical business, as it operates at the sharp end where financing decisions are made. And it is innovative, and so regulators will always be playing catch-up. You can argue who or what was respoinsible, but I suspect a number of factors: overly accomodative monetary policy (Greenspan, I'm looking at you), poor understanding by regulators, poor internal risk management, and the use of excessively complex instruments where the risks were not fully appreciated, a terrible bonus culture encouraging short-termism, and a failure of integrity at many levels of management in some institutions. But none of this was actually that obvious at the time.

RPG Superstar 2009 Top 32

Set wrote:
Ross Byers wrote:
McCain has been calling for deregulation for his whole career until a few days ago. Draw your own conclusion.
I would like to believe that perhaps the old dog isn't too old to learn a new trick, and recognize that we don't need another Great Depression to learn that the finances sector needs to be weaned away from their 'greed is good' short-term-profit / long-term-meltdown / somebody-elses-problem mentality.

The problem is that we do need another Great Depression to "learn that the finances sector needs to be weaned away from their 'greed is good' short-term-profit / long-term-meltdown / somebody-elses-problem mentality."

Until Wall Street is forced to face the reality of its actions, nothing will be learned.

RPG Superstar 2008 Top 32

Set wrote:
I would like to believe that perhaps the old dog isn't too old to learn a new trick, and recognize that we don't need another Great Depression to learn that the finances sector needs to be weaned away from their 'greed is good' short-term-profit / long-term-meltdown / somebody-elses-problem mentality.

I fully support the idea that a politician is allowed to change their mind in the face of changing input.

However, in the current case of McCain, I don't think that this is a well considered policy change, seeing as he's continued to call for deregulation throughout the buildup of this crisis (including the subprime morgage stuff that's been going on for over a year.) and into the crash last week.

Even if he means it, it's still wiser to go with the people who saw it coming.


Pathfinder Adventure Path Charter Subscriber
Ross Byers wrote:
NPC Dave wrote:
1) We can't afford this, we already are too heavily in debt.

We can't afford not to. The Depression was BAD.

And this one will be even worse if the bailouts happen. The Depression was caused by Hoover and later FDR continuously throwing good money after bad keeping prices up and bailing out businesses that needed to die and get cleared away.

Ross Byers wrote:


NPC Dave wrote:
2) This won't be the last time, the banks will come back asking for more handouts, the automobile industry will ask for $50 billion, etc.

That's true, unless we regulate those industries to make taking the economy hostage illegal.

If that were true they would be going after the Federal Reserve, which caused this mess.

Ross Byers wrote:


NPC Dave wrote:
3) The Federal Reserve will have to run the printing presses more and more to pay for these bailouts, inflationary money will destroy everyone's savings accounts.

Selling treasury bonds is not the same as printing more money. We just have to pay interest on the debt instead of devaluing the money.

They won't be able to sell enough Treasury bonds to pay for all this, they will have to inflate. The AIG bailout is inflationary, no bonds are planned to be sold to pay for it.

Ross Byers wrote:


NPC Dave wrote:
4) It punishes people who saved money and didn't overborrow, and rewards people who overspent and overborrowed. (Also see 7))

True. Once again, this is why we need regulations to prevent this from happening again.

The regulations were already in place, and ignored. The same people who setup and then ignored the regulations are to be trusted with putting in new ones?

Ross Byers wrote:


NPC Dave wrote:
5) This bailout doesn't bailout ordinary folks, it bails out rich bankers and CEOs. (Also see 7))

Right now, the Democratic congress is trying to put a rider in the bailout to limit the amount of compensation said CEOs get. I don't know if it will make it (since time is of the essence here.)

Let them lose everything they own in shares instead. The government limited their salaries in 1993, causing them to ask for more stock and play games boosting stock prices.

Ross Byers wrote:


NPC Dave wrote:
6) Why is Paulson the Treasury secretary allowed to unilaterally announce that he is going to bail out his former company Goldman Sachs? What happened to conflict of interest?

Same thing that happened with Cheney and Halliburton.

Another reason to oppose the bailout.

Ross Byers wrote:


NPC Dave wrote:
7) This bailout will ensure poverty for the poor and middle class who will have to pay for these bailouts, and it allows the rich who foolishly lost trillions of dollars to land with golden parachutes.
Welcome to where 'Capitalism' becomes 'Capitalocracy'.

This had nothing to do with capitalism. The Federal Reserve lent fiat money to banks through its legally approved cartel. This caused the bubble. The banks overlent trusting that the government would step in and bail them out. The proper term for this is socialism.

Taldor

Fake Healer wrote:
Also I just wanna say I am really tired of the entire party change thing. Before Clinton we went into debt. During Clinton we erased the debt and I wasn't hurting financially during any of that period(except for my own foibles). Bush gets in and we immediately go back into debt and I am pinching pennies and praying that raises are equal to cost of living expenses. Yes. I am planning on voting for Obama. I don't want a dude worth 30+million who tells me that middle-class makes around 500,000+ a year deciding what's in 'my best interest'. Sorry, Bush has done a slam-bang job up til now so why would I go for Bush-lite?

I just want to make this clear, does anyone think the deficit (or our national debt) went down during the clinton years, the surplus was in the years spending balance, our national debt actually increased under clinton as it has under every single president since I was born at the very least, possibly ever. Anyone with a bit more knowledge know if the deficit has ever gone down?

Yes we had a surpluss in the budget during clinton. No we did not go out of debt under clinton. Does that mean I like bush any better, no I think he is one of the worst presidents we've ever had. I just hate this false belief that we had no debt under clinton.

Qadira

Pathfinder Adventure Path, Modules Subscriber

No one needs a Great Depression - I think that is the height of foolishness. That screwed the American economy for twenty odd years afterwards, and was a factor in WW2 and what went after. And it would make no difference - it would never eliminate this sort of thing. It happens once a generation. We had stuff like this in the 70s, we had a recession in the late 80s/early 90s. The people who remember move on and a new crowd with no memory of what happened before take over. So a new Great Depression would have a salutory effect for maybe a decade or so, and in the meantime wreak havoc in the US and abroad. I think you will find that this is bad enough to concentrate minds in the finance community.


Pathfinder Adventure Path Charter Subscriber
Ross Byers wrote:
NPC Dave wrote:
*some decent points*

I agree that the market needs to correct itself: Overvalued things cannot remain overovervalued. (Stein's Law: If something cannot continue forever, it stops.)

I'd just prefer a controlled descent and soft landing to a plummet and a resounding *thud*.

You are right, we are on the same side, I agree with you.

Unfortunately I don't know if that is possible, if the government somehow stops this, it will probably be at the cost of destroying dollar savings, and then we get a worse crash when the government's checks start bouncing.

RPG Superstar 2008 Top 32

Lord Fyre wrote:

The problem is that we do need another Great Depression to "learn that the finances sector needs to be weaned away from their 'greed is good' short-term-profit / long-term-meltdown / somebody-elses-problem mentality."

Until Wall Street is forced to face the reality of its actions, nothing will be learned.

They were 'forced' to learn their lesson in the 30's too. You'll notice that they've forgotten it all. You cannot teach people not to be greedy, particularly across generations. Even if we let each and every broker, fund manager, and banking executive ruin themselves today, there is no reason to think that their replacements in twenty years will have learned the lesson.


IMHO this bailout is a horrible mistake. Yes, good people would suffer if it isn't done, but no matter what good people are going to suffer. It is a case do we pay the price now or later. I am of the firm opinion that we pay the price now and get it over and done with.

Qadira

David Fryer wrote:
So instead you want a dude that plans on raiseing taxes on anyone making over $75,000 running the show?

Umm, under the plans I've read the taxes are lowered for everyone making up to $226,000 a year. I would like to read the plans you've read because they don't mesh with any I've seen. I would assume your info came from someone who doesn't like Obama as opposed to a non-biased group.

Osirion

One of the fun ironies of my life is that the Republican President with the best, albeit belated, grasp of the economy was George Herbert Walker Bush, who was forced to raise taxes to bail us out of the mess that 'Reaganomics' got us into.

Breathtaking practicality. He grit his teeth and did what he had to do. And boy howdy, did he get punished for it in the next election...


Bill Dunn wrote:
Garydee wrote:


Exactly. The left tends to forget about the "Contract with America" that Gingrinch and the Republicans pushed on Clinton. If the Dems had controlled congress during Clinton's time, Clinton probably would have gone down in history as another ineffective Jimmy Carter.
I'm calling BS. The Omnibus Budget Reconciliation Act of 1993 started the balanced budget ball rolling, entirely opposed by Republicans in the final vote. The "Contract with America" was superfluous to the primary charge for budget balancing during the Clinton administration. The Democrats had already signed on to the benefits of a balanced budget.

No BS to it Bill. The Omnibus Budget Reconciliation Act was just a scam to raise taxes. That's why the bill was rejected by so many Democrats as well. It barely passed. Change didn't occur until the Republicans took over.

RPG Superstar 2008 Top 32

NPC Dave wrote:


They won't be able to sell enough Treasury bonds to pay for all this, they will have to inflate. The AIG bailout is inflationary, no bonds are planned to be sold to pay for it.

Yes they will. Bonds are considered 'safe', same as gold. When the rest of the financial market goes nuts, more people are willing to stuff their money in the matress.

AIG's bailout might not have required a special auction the same way the $700 Billion dollar plan does, but the Treasury still makes its books balance by selling bonds instead of just printing money. We're not that far gone. Yet.
NPC Dave wrote:
Let them lose everything they own in shares instead. The government limited their salaries in 1993, causing them to ask for more stock and play games boosting stock prices.

That's a good idea.

NPC Dave wrote:
This had nothing to do with capitalism. The Federal Reserve lent fiat money to banks through its legally approved cartel. This caused the bubble. The banks overlent trusting that the government would step in and bail them out. The proper term for this is socialism.

You're right. Specifically, it's Corprate Socialism. What I mean by 'capitalocracy' is that currently 'money = power'. (As opposed to 'democracy' where people = power, or 'monarchy' where one=power, or even theocracy, where god = power.)

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