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Dice Monkey wrote:Intweresting quote form a Forbes article

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

So the 700 billion dollar figure was pulled out of someone's rear.

Or it was intended as a negotiation tactic. Paulson shows up and says he need a large sum of money to save the market, the specifics don't matter so long as the amount is sufficient. It saves him from wasting time working up a detailed bill which Congress is likely to spend just as much time debating in perpetuity. Specifics can be the death knell of any legislative initiative; especially so when they are so implicitly political.

Quite true.

So... lets say they pass this bill and $700,000,000,000 becomes available for the banks, etc.

Where does this money come from? is this just some magical number that uncle sam just generates and magically turns into money just because the government can? Or are all of our taxes about to go up?

Is it too convenient that this happens right at election time? Could this whole "crisis" have been a planned event so that one of the candidates could emerge looking like some kind of hero to ensure his election? A fella at work was saying something like that.. sounds crazy, but ya never know...

dogma wrote:

Dice Monkey wrote:Intweresting quote form a Forbes article

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

So the 700 billion dollar figure was pulled out of someone's rear.

Or it was intended as a negotiation tactic. Paulson shows up and says he need a large sum of money to save the market, the specifics don't matter so long as the amount is sufficient. It saves him from wasting time working up a detailed bill which Congress is likely to spend just as much time debating in perpetuity. Specifics can be the death knell of any legislative initiative; especially so when they are so implicitly political.

Or he picked a large number in order to scare the public into agreement. It backfired by his underestimating the incredulity and cynicism of the American public.

Necros wrote:So... lets say they pass this bill and $700,000,000,000 becomes available for the banks, etc.

Where does this money come from? is this just some magical number that uncle sam just generates and magically turns into money just because the government can? Or are all of our taxes about to go up?

Is it too convenient that this happens right at election time? Could this whole "crisis" have been a planned event so that one of the candidates could emerge looking like some kind of hero to ensure his election? A fella at work was saying something like that.. sounds crazy, but ya never know...

The money will be borrowed from the 'world market', foreign investors both public and private. Our taxes will go up in order to help offset the increased leverage, but not by as much as you might think.

The crisis has been brewing for some time. The economic stimulus package was one of the more recent, and deeply misguided, measures designed to avoid it. Realistically, the coincidence with the election isn't surprising. There is a very strong force in the government towards handing problems off to the next administration; Bush just wasn't able to keep the collapse at bay quite long enough to do that.

Dice Monkey wrote:

dogma wrote:

Dice Monkey wrote:Intweresting quote form a Forbes article

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

So the 700 billion dollar figure was pulled out of someone's rear.

Or it was intended as a negotiation tactic. Paulson shows up and says he need a large sum of money to save the market, the specifics don't matter so long as the amount is sufficient. It saves him from wasting time working up a detailed bill which Congress is likely to spend just as much time debating in perpetuity. Specifics can be the death knell of any legislative initiative; especially so when they are so implicitly political.

Or he picked a large number in order to scare the public into agreement. It backfired by his underestimating the incredulity and cynicism of the American public.

I doubt it. Paulson wasn't selling the initiative to the public, he was selling it to Congress. The disconnect occurred when Congress, and the government as a whole, was unable to sell it to the people.

As a project manager, it's exactly what I would do if I had no idea how much I needed.

You wonder if it's enough. Fortis bank of Belgium had to be bailed out this week. Its liabilities are triple the size of the entire Belgian economy, so they had to be helped out by Holland and Luxembourg as well.

Perhaps banks have gone past the point of being too big to let fail, and are getting too big for anyone to save.

Same difference.

Both cause by an insane level of greed paid for on the never never.

Necros wrote:So... lets say they pass this bill and $700,000,000,000 becomes available for the banks, etc.

Where does this money come from? is this just some magical number that uncle sam just generates and magically turns into money just because the government can? Or are all of our taxes about to go up?

Again, it isn't a 700 billion loss, it's being used to purchase assets at discount, assets that will likely end up returning around 70% of their face value at minimum. Worst case you're looking at a 200 billion loss, probably more like 100 billion, some folk think you might break even.

Whatever the loss actually is, it ends up getting added to the 9 trillion in debt you already have.

Is it too convenient that this happens right at election time? Could this whole "crisis" have been a planned event so that one of the candidates could emerge looking like some kind of hero to ensure his election? A fella at work was saying something like that.. sounds crazy, but ya never know...

Most of us do know... that is crazy

You can't control economic events within that level of precision. Even if you could, you'd be suggesting a Republican executive and Paulson, a Republican appointment and old Wall Street guy, engineered a crisis that plays into the strengths of the Democrats. That seems unlikely.

Kilkrazy wrote:As a project manager, it's exactly what I would do if I had no idea how much I needed.

You wonder if it's enough. Fortis bank of Belgium had to be bailed out this week. Its liabilities are triple the size of the entire Belgian economy, so they had to be helped out by Holland and Luxembourg as well.

Perhaps banks have gone past the point of being too big to let fail, and are getting too big for anyone to save.

I was talking about that in one of these bail-out threads earlier this week. In Europe the banks might be too big to fail and too big to save, because there's fewer banks it take a far greater portion of GDP to save one.

dogma wrote:I doubt it. Paulson wasn't selling the initiative to the public, he was selling it to Congress. The disconnect occurred when Congress, and the government as a whole, was unable to sell it to the people.

Nah, originally Paulson was talking directly to Wall Street, to settle it down and prevent a crash. Note that it largely worked, as we didn’t see a really big crash until the house rejected the bill.