Paulson's PATRIOT ACT- Sec. of Treasury Bailout Proposal

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Permalink Reply by Tony Katz on September 22, 2008 at 12:02pm

There is a lot we can do. The first thing is be heard!

I'm proud to have started NoBailouts! at http://nobailouts.ning.com/ and already have good people from all walks of political and socio-economic life standing up to this potentially devastating foolishness.

It is not a questions of ethical behavior on the side of Wall Street. Rather, it is about a belief in Capitalism; that sometimes you win and sometimes you lose. If you can keep all of the profits in good times, you should have to deal with what happens in the bad times. For the President and Congress to allow these companies close to $1 trillion is obscene.

So join us at http://nobailouts.ning.com/ . Get involved. Write, email and call your Representatives, your Senators and the President. Tell them No Bailouts! I look forward to you joining us.


Tony Katz
http://nobailouts.ning.com/

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Permalink Reply by ROADTRIP RADIO on September 23, 2008 at 7:56am

Do you think that we are still a democracy?

I'm beginning to wonder if we are now a Capitalistocracy, where rules and laws will be bent, whether in regards to justice or policy, for money. Police are now used to drain citizens, tax laws are built to take money at the point of a gun. The warning of the military industrial complex has come true.

It is a simplistic question and point I am making but an important one to ask in this discussion.

-The Roadtrippers

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Permalink Reply by Matt Gowdy on September 23, 2008 at 10:46am

Unfortunately, it seems like congress may pass this one under the fear of a market collapse and subsequent domino effect creating conditions similar to the Great Depression, or at least, that's what they are being told.

I just saw this on Digg: http://www.cnn.com/2008/POLITICS/09/23/paul.bailout/index.html

It would seem that part of this situation wasn't so much deregulation, but misregulation. But to each his own.

Either way, bailing these companies out effectively puts them under government control. That means that taxpayers will be responsible for the actions of these companies as they will then be controlled by agents of the government on behalf of the people. I'm sure some of you know where this is going and it's not going to be good at all. The point of the free market is to honor the tenets of supply and demand. Nationalizing the market will have the opposite effect as politicians will seek to appease the populace and at some point we will end up in a depression.

You can choose to say that capitalism caused this, you can say that socialism caused this, it doesn't matter because the problem has happened and we need a better solution to this issue than throwing money we don't have at it and hoping it'll go away.

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Permalink Reply by ROADTRIP RADIO on September 23, 2008 at 12:04pm

I think every one has contributed to this very necessary conversation.

I definitely didn't see Matt's comments as condescending. I thought he added valuable information to the discussion.

-The Roadtrippers

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Permalink Reply by Matt Gowdy on September 23, 2008 at 1:44pm

Everyone is going to have a different opinion of how this situation got caused. Blame is being laid in a number of places, but in the end, we still have to deal with the problem. If you feel that deregulation caused this, so be it, but from the stuff that I've read online, it seems to be more of a collusion of free market opportunism and federal regulatory practices that created the false housing bubble. It wasn't the market wholesale because in order to get this far, they had to ignore the rules of supply and demand. This was in the article I linked to above and it makes logical sense to me.

Credentials? I am not a politician nor an economist. Just a concerned citizen.

We're not currently in a depression. When you see the banks collapse wholesale and everyone lose their money, that's when we're in a depression. Unfortunately, it seems like that may be a skip and hop away, depending greatly on what the government does to rectify the current situation.

I'm not attempting to persuade anyone, merely voicing my opinion.

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Permalink Reply by Robbie H on September 23, 2008 at 2:39pm

Man it's getting heated here!

My two cents on the issue: I'm completely for small government, but when it comes to the nations economy collapsing - I want anyone who can to please help, even if it is the government.

However, asking for no oversight on how an institution is spending 700 billion of my and my familys money, I'm NOT in favor of. Though it is a pressing matter I think the nation can afford to wait, have a healthy debate, and then democratically decide how we should procede.

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Permalink Reply by ROADTRIP RADIO on September 24, 2008 at 10:48am

This is the future generation we want to see. Smart, informed citizens who make it their business to discuss the issues. And we give credit where credit is due. Listen for your comments during a quick recap of this discussion on the next episode of David's podcast The Porch on Roadtrip Radio.

- The Roadtrippers

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Permalink Reply by Alex V. on September 24, 2008 at 7:43pm

Hopefully they will get this right, otherwise things are going to go really pear-shaped and not just for the US. In my opinion a bail-out is necessary to keep the financial system from collapsing and sending the US economy into another great depression. How much money will be poured into the system and what new rules will be established remains to be seen.

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Permalink Reply by Alex V. on September 29, 2008 at 5:44pm

So, the US congress has rejected the bailout plan. Here's a nice timeline of the crisis from BBC News. Let's see what happens next. Personally, I'm scared.

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Permalink Reply by PiousRenegade on September 29, 2008 at 8:14pm

Sadly, either way you cut it, we're gonna take a big bite out of the national shit sandwich on this one.

The basic point (as lovingly explained by CNBC's anchor-hyenas) of the bailout is to bring the credit markets back to life. Right now, there is a ton of fear in the market. That fear is heavily restricting credit flow to banks and big lenders. This means that corporations cannot easily aquire capital for new ventures. On the surface, that might not sound so bad, but remember that many sectors require a massive outlay of capital to expand or develop new products. Airlines, for example, buy airplanes on credit. Oil companies use credit to explore/drill for oil.

For John and Jane public, banks are now extremely scared of issuing loans and credit for cars, education, and probably especially homes.

As the money that would have been pumped into the economy dries up, companies lose their ability to move product and services, and hence cannot meet payroll and have to layoff or outright fire workers. Unemployment goes up and suddenly things look a lot like the early 1930s.

The bailout's basic premise was to have the government purchase the derivatives that represent all those bad mortgages. This supposedly does a couple of good things. Firstly, it assigns a value to the bad assets. Part of the trouble is that those mortgages have been so heavily repackaged that their value (in derivative form) is nearly impossible to determine. Secondly, it gets those bad loans off of the books in those banks, so they can take more risk and start issuing loans.

In essence, Paulson wants to send a defibrilating (sp?) shock to the economy so it can start operating with some level of normalcy. The measure is by no means a solution. The underlying causes still need to be resolved.

Thats the plan as I understand it, and I'm by no means an economist.

Now, as a taxpayer, I find the idea deplorable, and I agree with the vast majority of the public on their objections. But, I think unfreezing the credit markets is more important than principle in this case. We can take the Paulson plan, or we can chose an alternative. Larry Kudlow (another CNBC hyena) proposes that we beef up the FDIC (you're seeing bank failures partly because faith has been lost in banks, resulting in massive withdrawals) and tackle the confidence issue using established federal government agencies. That certainly has more appeal than another $700b loan.

To sum up my feelings: I think that if we do the bailout option, the bill should be (1) severely time limited, to maybe a few months, (2) install heavy oversight, (3) limit executive pay!!!

If things calm down, then the nation needs to be realigned to pay down the national debt and get the money system on a less chaotic footing. Also, heads need to roll on this one. Just not now. There's a time and a place for revenge, and its not now.

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Permalink Reply by Matt Gowdy on September 30, 2008 at 10:45pm

Just ran across this online... http://www.bloomberg.com/apps/news?pid=20601087&sid=a9MTZEgukPL...

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