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malfred wrote:It took a few years, but I don't have credit card debt either. I pay my
balance off every month. It galls me to think that I'm still feeding the credit
system a profit when they charge merchants for my convenience, so
I'm trying to get to the point where I can buy all my luxuries with a
savings account separate from the rest of my money, which would put a
hard cap on my spending. However, that's still a ways off.

I've never had a credit card. I have no idea how many comercials and crap I saw for places that would help you get out of debt and what not. I figured if there were that many people working on getting people out of debt, it must be a real problem. As a real problem, it was something I would want to avoid, so no credit cards for me. I used to have to walk though crouds of people with clip boards on campus trying to get students to sign up for credit cards. They would offer you free shirts, hats, pens, pizza, and a whole lot more. It really did remind me of drug dealing.

In a 'soft' sense much of this crisis can be traced to the American proclivity for 'more'. According to standard wisdom more of good thing is always better. Regulation protects the taxpayer? More regulation! Less regulation increases profits? Less regulation! Never will you here someone fervently advocating a middle ground. Why? Because the middle ground requires reflection; it requires work. Something which is anathema to a society in which financial and social solvency are all but ensured by birthright. We live off of the easy answers because our success tells us that it is those answers which will save us. Of course that isn't the whole story. The answers which we throw-up in response to every possible question are easy only because they are proven. The hard work of constructing the ideological primer was done long ago, by those great minds who begot the United States. Today all we see in the public, private, and corporate world is the continued application of old rules to solve new problems. There is, quite simply, a dearth of innovation in modern America.

Conventional wisdom would have you believe that such a state is reached only because the populace has become too insulated from failure. This is the standard Libertarian argument. The flaw here is that unrestrained capital growth inevitably leads to the creation of systems which serve to ensure the conditions under which that growth can continue. Recall that the American government was founded by a collection of the wealthy seeking to become even more wealthy. Even if we could unfetter the economy it would bring us right back to the place we started from. This is not to say that a fully socialist system is any more desirable. Indeed, any system which systematically vests the few with power over the many is doomed to failure. Rather we should be seeking a balance; one which rewards innovation through financial success, but also insulates those willing to take risks from the fear of failure that turns people into raving idealogues.

Kilkrazy wrote:The crisis is spreading to the Eurozone and beyond. Banks in Holland and Iceland had to be bailed out today. The Russian stock market is tanking.

I still cannot understand where all the money has gone. I suppose a big chunk went on bonuses to bankers. I like to imagine a lot of builders and real estate agents in the mid-west rolling around in solid gold Hummvees powered by single malt whisky. We're not seeing that -- they've probably stashed it all away in the Cayman islands.

that reminds me of my earlier plan: Buy a house, work hard and be nice to people. And talk about 40k.

Typeline wrote:
I hope they don't pass anything like this bill. 700 Billion dollars divided up to every U.S. citizen would do more good. I'm really interested in seeing how things turn out if none of this 'bailout' crap happens.

That is a hilariously bad idea. If the Fed gave everyone 20k, inflation would grow out of control and any reinvestment in the economy would mean diddly.

Dietrich wrote:Businesses fail, that's part of capitalism.

So what happens if Citigroup or JPMorgan collapse? Let them drag the economy into a death spiral because that's how capitalism works?

avantgarde wrote:

Typeline wrote:
I hope they don't pass anything like this bill. 700 Billion dollars divided up to every U.S. citizen would do more good. I'm really interested in seeing how things turn out if none of this 'bailout' crap happens.

That is a hilariously bad idea. If the Fed gave everyone 20k, inflation would grow out of control and any reinvestment in the economy would mean diddly.

Yeah because our economy definitely tanked when they gave out the stimulus package. I'm still reeling from having no money from when they gave me some.

Typeline wrote:

avantgarde wrote:

Typeline wrote:
I hope they don't pass anything like this bill. 700 Billion dollars divided up to every U.S. citizen would do more good. I'm really interested in seeing how things turn out if none of this 'bailout' crap happens.

That is a hilariously bad idea. If the Fed gave everyone 20k, inflation would grow out of control and any reinvestment in the economy would mean diddly.

Yeah because our economy definitely tanked when they gave out the stimulus package. I'm still reeling from having no money from when they gave me some.

The differences in scale, mode of distribution, and standard of eligibility make your comparison completely invalid. Moreover, it didn't work, we still went into recession while tacking 150 billion onto the national debt.

IT'S ALIVE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

You just can't keep a good thing down. Looks like the Senate is going to vote on it tomorrow. Wow, I sure hope we bail out those bankers. They are such swell folk.

Phoenix wrote:

malfred wrote:It took a few years, but I don't have credit card debt either. I pay my
balance off every month. It galls me to think that I'm still feeding the credit
system a profit when they charge merchants for my convenience, so
I'm trying to get to the point where I can buy all my luxuries with a
savings account separate from the rest of my money, which would put a
hard cap on my spending. However, that's still a ways off.

I've never had a credit card. I have no idea how many comercials and crap I saw for places that would help you get out of debt and what not. I figured if there were that many people working on getting people out of debt, it must be a real problem. As a real problem, it was something I would want to avoid, so no credit cards for me. I used to have to walk though crouds of people with clip boards on campus trying to get students to sign up for credit cards. They would offer you free shirts, hats, pens, pizza, and a whole lot more. It really did remind me of drug dealing.

You were smarter than me. Good thing I didn't learn about
STDs the same way that I learned about credit cards.

jfrazell wrote:No thats not correct. thats a case of BAD regulation. Readjust the regulation to the way it was, plus all this market fun corrects it.

Do you see what you’re saying here? “Removing regulations is bad regulation.”

Are you then arguing that we need to ‘de-regulate’ by returning to the original, stricter regulation? Because that would be non-sense.

No the only debate is by people who are either blind are not actually in business (I've seen this argument proposed by professors and talking heads but not any actual CEOS). Its like the tech losers in the late 1990s "oh tech'll never go down." Then one day someone pipes up "well er, you talk alot but you've never actually made money." insert

crash here.

Ah, the tech boom isn’t a business cycle. Nor is the current financial crisis. They were speculative bubbles that rise out of microeconomic conditions, and when they collapse as a result of microeconomic conditions they lead to a decrease in aggregate demand, and it is that decrease in aggregate demand that is part of the business cycle.

jfrazell wrote:Incorrect. I've not seen anyone actually working in business who thinks that the business cycle has been repealed. Anyone who thinks that needs to show some serious proof or be laughed off the stage.

You’re adding a lot more into my comment than I put in there. Whether its deliberate or not I don’t know, but it seems to happen a lot. I’ll just put my last sentence on the issue down, then follow it up with your own here;

“Except that there is considerable debate as to whether the business cycle really is inevitable”
“I've not seen anyone actually working in business who thinks that the business cycle has been repealed.”

Do you see the disconnect there? I never said it had been repealed. I said there was debate that it might not be inevitable, and you took that and somehow decided I had declared no more business cycle.

avantgarde wrote:That is a hilariously bad idea. If the Fed gave everyone 20k, inflation would grow out of control and any reinvestment in the economy would mean diddly.

It’s also missing the key point that so many are missing.

This isn’t actually handing out $700 billion.

It is authorising up to $700 billion for the purchase of assets to remove the bad assets from the system. It is extremely unlikely that anywhere near $700 billion will be invested, that number was picked out because it was as good as any other number. Further, the assets purchased will not be all bad, only a small portion will be. These assets will be purchased at a discount, and while the most likely result is a final cost of around $100 billion, this is a fraction of the cost of leaving the banking system in torpor.

The American dream includes owning your own home. (It's the British dream too.)

The reason why people in financial difficulty are going to be helped at the expense of people who aren't is simply that no-one can get money from people who haven't got any.

Ideally the tax burden should be distributed according to the ability of the citizen to pay it, meaning that the richer you are the more tax you have to cough up.

Of course it will be the full $700,000,000,000. I like to add the noughts because it drives home just how much is being spent. Somehow figures speak louder than words.

Banks with money are like Alcoholics with Booze. Offer an alcoholic upto 20 pints, and sure, theoretically, they'll only drink 10 before throwing up and passing out. But that won't happen. With 20 pints before them, all 20 will be guzzled. Same with the banks.

Screw them I say. Again, the mess is of their own making. If they lose businesses through it, tough titty. That is what happens when you lose your gamble.

MDG: I'd love to see the people responsible punished. But they are not the ones who are going to get punished by financial collapse, not the worst anyway. Older people, young, less well off homeowners and small businesses, as well as innovators and the like are going to be hit hardest. I think. I'm basing this off stuff I read on the internets. Apply salt. But in any case, it seems unlikely that even minus any sort of "bail out" the CEOs of any of these companies are not going to live in luxury for the rest of their lives. We can't punish them unfortunately, so why punish ourselves?

The irish government recently promised to look after investments in any irish bank, effectively promising to cover any loan or whatever. It could theoretically cost us 500 billion, but it's more than likely going to restore confidence in Irish banks and put them in a good position to trade and whatnot. I'm not delighted that those fethers left us with this choice, and certainly if I could find some of those responsible I'd be handing out beatings a la Batman, but thank god our government can occasionally do something that could be unpopular for the greater good.

avantgarde wrote:

Dietrich wrote:Businesses fail, that's part of capitalism.

So what happens if Citigroup or JPMorgan collapse? Let them drag the economy into a death spiral because that's how capitalism works?

No, capitalism is supposed to ensure there is competition for businesses and the government is supposed to prevent monopolies. That prevents the collapse of a single business from pulling down the whole economy because there's other businesses to pick up the slack. Now, that's an idealized model, so it obviously doesn't work perfectly in the real world. I don't agree with the concept of a bailout, but realize that it some cases, it's the best thing to happen. If the fed is willing to bailout automakers and airlines (industries that could have weathered a few failures and are still struggling despite government intervention), then it has to step in at this point.

Mad Doc Grotsnik wrote:Of course it will be the full $700,000,000,000. I like to add the noughts because it drives home just how much is being spent. Somehow figures speak louder than words.

Banks with money are like Alcoholics with Booze. Offer an alcoholic upto 20 pints, and sure, theoretically, they'll only drink 10 before throwing up and passing out. But that won't happen. With 20 pints before them, all 20 will be guzzled. Same with the banks.

Screw them I say. Again, the mess is of their own making. If they lose businesses through it, tough titty. That is what happens when you lose your gamble.

You say that with this great sense of authority, but it’s really just stuff you’re making up on the spot, isn’t it?

It can’t be $700 billion unless every single housing loan out there is in default, which is a ludicrous assumption. It has nothing to do with your greater worldview and how much you like the banks. Unless every home loan out there is in default, government will not lose the complete 700 billion. At which point you start asking how many loans there are bad, and use that as the base number for the expected govt loss.

The Senate approved the modified financial rescue plan in a 74-25 vote Wednesday night.

Looks like it is going back to the House. Lets see if it really gets defeated.

It may well. That tax break they tacked on is something Dems, especially populist house Dems, have been fighting for some time. And, in the context of the bailout, its hard to see how its addition is anything but a shift in costs away from the corporate sector.

They will absolutely use all of the money if this bill gets passed. Even Warren Buffett has already suggested the $700 billion is not going to be enough.

This bailout is just a straight-up bad idea.

It now includes so much Pork fat you will need a "hatchet" to get to the prime cuts.

Artist's Interpretation of the Current Bill:

That same picture could be applied to any spending bill passed by Congress.

.......or the current administration.

...or Congress.

Lemartes wrote:It now includes so much Pork fat you will need a "hatchet" to get to the prime cuts.

How dare you! Wooden toy arrow makers need those funds we need them for a sound economy and defense!!

utan wrote:They will absolutely use all of the money if this bill gets passed. Even Warren Buffett has already suggested the $700 billion is not going to be enough.

This bailout is just a straight-up bad idea.

Did you read my post above? Do you just really intensely not want to understand this? It isn't hard.

There is $700 billion for the purchase of assets. Some portion of those assets will be bad. Even if the full price is paid for assets purchased (very unlikely), to lose the full $700 billion it would require each and every asset purchased to have a true value of $0. This is only possible if every house in the US with a mortgage defaults. This is not very likely, and if it did happen you'd have bigger problems than a $700 billion loss.

And you watch the Banks sell off slightly dodgy, completely dodgy, not that dodgy and other loans they don't want.

This bail out is offering them a chance to realise a lot of their 'on paper' wealth into proper wealth. You really think the greedy little bams are going to pass that up?

I don't mean to sound rude, but I can't help but feel you are being a little naiive. And yes, I am being completely cynical, but I feel the mess the Banks have landed people in is justification enough for any level of cynicism.

Remember Bush's statement about who the US could attack? Anyone that is a threat, was a threat, or might be a threat. I can see this be adopted by the Banks 'we'll sell you the loans which are a threat, could be a threat soon, and might well be a threat in the next millenia'

That´s the reason the bill was defeated the first time around. Quite a lot people felt that giving the Fed & friends 700 billions with no limits on how to spend them was a lousy idea.

Now we´ll have to check if the new bill has eough failsafes to avoid the scenario you are painting.

M.

Mad Doc Grotsnik wrote:And you watch the Banks sell off slightly dodgy, completely dodgy, not that dodgy and other loans they don't want.

This bail out is offering them a chance to realise a lot of their 'on paper' wealth into proper wealth. You really think the greedy little bams are going to pass that up?

I don't mean to sound rude, but I can't help but feel you are being a little naiive. And yes, I am being completely cynical, but I feel the mess the Banks have landed people in is justification enough for any level of cynicism.

Remember Bush's statement about who the US could attack? Anyone that is a threat, was a threat, or might be a threat. I can see this be adopted by the Banks 'we'll sell you the loans which are a threat, could be a threat soon, and might well be a threat in the next millenia'

Well, yeah, they'll be selling off the most risky debts. That's the point of the exercise - to remove the dodgy assets from the system and get the credit markets moving again.

But you're wrong if you're thinking the assets purchased are specific loans on specific houses. The assets are bundles of loans, and in each bundle only some loans are bad.

Funny how its not explained why the banks would sell their bad assets to the government, take a hard loss, and then be expected to make loans instead of curling into a fetal ball until the recession is over, like they are doing right now.