Screw the bailout, let them rot.

[hogboy]

I sez let the big investment houses rot and go bankrupt, just like the professor from Harvard says. let this crap self-correct and then we'll end up on more solid ground in the long term, and more sound financial instruments will appear and better rules from the SEC.

if you bail them out now it will only continue the corrupt practices


The sky is NOT falling no matter what Wall street cries about. this will not tank the economy...ours
or any other nation. it just removes some wealth from the already wealthy and the investors they screwed.

[Slider]

Well, be prepared to wait a long time for things like mortgages, car loans, full shelves at your local retailers, and very possibly, your paycheck. Many employers use credit to make payroll. You gonna quit if yours is among them? Might be a bad idea - no one else will be hiring for a long time.

The bailout is a buffer to help us get back on our feet, ALL of us. It is definitely important that the taxpayers are protected, but doing nothing will only prolong the pain. We don't want to be on the hook for some hedge fund managers $50million bonus, but that isn't the only alternative. We can build in protections, and that is what will hopefully arise out out of the current deadlock.

Slider

[hogboy]

Well, be prepared to wait a long time for things like mortgages, car loans, full shelves at your local retailers, and very possibly, your paycheck. Many employers use credit to make payroll. You gonna quit if yours is among them? Might be a bad idea - no one else will be hiring for a long time.

The bailout is a buffer to help us get back on our feet, ALL of us. It is definitely important that the taxpayers are protected, but doing nothing will only prolong the pain. We don't want to be on the hook for some hedge fund managers $50million bonus, but that isn't the only alternative. We can build in protections, and that is what will hopefully arise out out of the current deadlock.

Slider


your reply is narrow

quote from Jeffrey A. Miron, senior lecturer in economics at Harvard University

Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy's allocation of its financial resources.

Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time.

Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.

Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents.


there is more....but anyhow....I am on the side of...let them rot.

[Slider]

The immediate problem is that no one is providing credit to anyone, so all processes that rely on it grind to a halt. There is no money for anyone - big institutions that aren't sitting on lots of cash included - to buy the assets of the bankrupt companies.

There may well be better ways to infuse the money that the economy needs, but they all rely on large amounts of money. The Feds are the only ones with the cash at this point. Waiting for others to amass the money will take lots of time, and most likely mean transfer of more of our debt overseas. In many ways, as long as there are protections, it is in the taxpayers' interest to buy the debt.

Like always, the devil is in the details.

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[Mr_Cheeze]

The Feds. You mean, the Fed. The devil is in the Federal Reserve backing lavish government spending with credit upon credit upon credit, devaluing the dollar and creating instability in the market... creating the large amounts of money! Get rid of the Fed, keep the market free, and allow it to correct itself.

I know you want to believe Barney Frank when he says the sky is falling. Problem is, Frank and others have a personal stake in a government bailout, setting himself up with nifty trust funds on future earning in those rescues companies. Ninety percent of his constituents don't want the bailout. So who is he representing, exactly? Himself, that's who. Typical big government rich watching out for the rich. Frankly, I'm surprised Slider of all people is buying this crap. Of course they want you to think there will be no credit to be had. They want you to want the bailout.

[kernel crash]

The immediate problem is that no one is providing credit to anyone, so all processes that rely on it grind to a halt. There is no money for anyone - big institutions that aren't sitting on lots of cash included - to buy the assets of the bankrupt companies.

Slider

And some of the others that do have money are sitting on it. Why spend it if Uncle Sam is going to bail you out. The 700 billion would pay HALF of all mortgages that exists in todays economy. Less than 10 percent are in trouble so in theory you could pay off all the bad mortgages with a fraction of that 700 billion. Where's the rest of it going? Foreign banks? Foreign Investors? Bad car loans? Credit card debt? The major banks are in a position to write off all the bad debt that they created with this bailout. Where's the reform? What to prevent it from happening again. Personally I want my pound of flesh. Screw the debates let start the indictments. This all goes back to Fannie and Freddie and the Democrats that believed that everybody should be able to own a home. Even if your collecting welfare. Not a citizen? Not a problem.

[kernel crash]

If we lived in China these guys would be in front of a firing squad. Slider since when do you trust Bush's instincts? Paulson I believe own 1% of Goldman Sachs and stands to collect 500 million. You think Haleburton got a payday. Sh!t. You ain't seen nothing yet. If Obama gets elected the Dems will take over the distribution of the rest of the 700 billion. Speaking of Obama if the American public got a look at this video on U-Tube, Obama would be back to community organizing.

http://www.youtube.com/watch?v=_MGT_cSi7Rs

[kernel crash]

I know you want to believe Barney Frank when he says the sky is falling. Problem is, Frank and others have a personal stake in a government bailout, setting himself up with nifty trust funds on future earning in those rescues companies. Ninety percent of his constituents don't want the bailout. So who is he representing, exactly? Himself, that's who. Typical big government rich watching out for the rich. Frankly, I'm surprised Slider of all people is buying this crap. Of course they want you to think there will be no credit to be had. They want you to want the bailout.

Speaking of Barney Frank do you find it surprising the Democrats are in such a hurry to get this all behind us? You think they don't want the American public taking a good look at this mess. You think the main stream media will play the clip of Frank telling government regulators that Fannie and Freddie don't need no more oversight because they are solid and there is no risk to the American economy.

Also ask yourself why the market was down almost 400 points before the bill was defeated? Where was the support for the bailout. Now the market is up today after the defeat. Hmmm...

http://www.youtube.com/watch?v=_MGT_cSi7Rs

[Slider]

We will recover without a bailout. The question is when, and what happens in the meanwhile.

I am not saying hand out money, but buying the assets at a good price is exactly the opposite - it is an investment. There are lots of good mortgages in those portfolios. When the tide turns, their value will increase. Even Warren Buffet sees the value, and backed that with a $5billion investment in Goldman Sachs. The taxpayers can do the same and they can use the leverage to create reform in the meanwhile. Massive win/win, IF THE DETAILS ARE CORRECT. Those can include salary caps for Wall Street, and anything else that avenges your anger at the bankers, if they take our money as part of a restructuring.

Fannie Mae and Freddie Mac are minor side stories to the collapse, no matter what the finger pointers claim. They were hurt as credit tightened up and were not major players in the poorly secured loan racket. Subprime mortgages - by definition ones that did not conform to Fannie Mae and Freddie Mac standards - are the problem, along with the securities that were built on them without metrics on the specifics of each mortgage.

Proof - we bailed out Fannie Mae and Freddie Mac, and all hell still broke loose. The collapse was due to far deeper factors centering on deregulation, lack of oversight, and inadequate reserves that put us where we are.

Slider

[kernel crash]

Fannie Mae and Freddie Mac are minor side stories to the collapse, no matter what the finger pointers claim. They were hurt as credit tightened up and were not major players in the poorly secured loan racket. Subprime mortgages - by definition ones that did not conform to Fannie Mae and Freddie Mac standards - are the problem, along with the securities that were built on them without metrics on the specifics of each mortgage.

Proof - we bailed out Fannie Mae and Freddie Mac, and all hell still broke loose. The collapse was due to far deeper factors centering on deregulation, lack of oversight, and inadequate reserves that put us where we are.

Slider

Its amazing how far you will bend over to twist the facts. Fannie Mae and Freddie Mac are the linchpins that held up this whole house of cards. "Subprime mortgages - by definition ones that did not conform to Fannie Mae and Freddie Mac standards" Standards! Freddie and Fannie didn't have any standards. They fueled the market for sub-prime loans because banks knew they could dump those loans on them. Fannie and Freddie took on more and more risk because they always assumed the government would bail them out. Meanwhile regulators and Republicans, that's right, Republicans were warning of impending disaster at Fannie and Freddie. The Democrats accused them of playing politics and said everything was just rosy at Fannie and Freddie. Barney Frank and Nancy Pelosi are trying desperately to deflect the blame to anyone but themselves. The main stream media has been playing along but cracks in the story are starting to get out. The press meanwhile is more interested in showing us clips of Saturday Night Live. Can we sink any lower???

[Slider]

You misunderstand how Fannie Mae and Freddie Mac work. There are strict guidelines on the loans they can purchase. They can and do only buy conforming loans. Subprime - non-conforming - loans were sold elsewhere, primarily as mortgage backed securities. Those collapsed in price with the housing market and are the primary cause of the huge debt in the banking system.

Slider

[chaupa00]

The thing that amazes me is why Cogress is trying to solve this on their own. The are a bunch of #$E%@%$^@. Bring in experts to testify and use past models.
http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?em

[kernel crash]

You misunderstand how Fannie Mae and Freddie Mac work. There are strict guidelines on the loans they can purchase. They can and do only buy conforming loans. Subprime - non-conforming - loans were sold elsewhere, primarily as mortgage backed securities. Those collapsed in price with the housing market and are the primary cause of the huge debt in the banking system.

Slider

Wrong again Slider.

"In the name of diversity, banks began making huge numbers of loans that they previously would not have. They opened branches in poor areas to lift their CRA ratings. Meanwhile, Congress gave Fannie and Freddie the go-ahead to finance it all by buying loans from banks, then repackaging and securitizing them for resale on the open market.

With those changes, the subprime market took off. From a mere $35 billion in loans in 1994, it soared to $1 trillion by 2008. Wall Street eagerly sold the new mortgage-backed securities. Not only were they pooled investments, mixing good and bad, but they were backed with the implicit guarantee of government.

Fannie Mae and Freddie Mac grew to become monsters, accounting for nearly half of all U.S. mortgage loans. At the time of their bailouts this month, they held $5.4 trillion in loans on their books. About $1.4 trillion of those were subprime."

http://www.ibdeditorials.com/IBDArticles.aspx?id=306632135350949

[MTBME]

Checkmate!

[hogboy]

Checkmate!

Subpwned!

[BG]

yeah...

[Slider]

Wow. It is really gratifyng to realize how much you all have invested in me being wrong. Confirms for me that it doesn't happen much.

Unlike most of you, I can admit when it happens. I didn't get that they caved to the market pressures. I was in real estate through the last crash, and Fannie Mae and Freddie Mac were THE standards. We needed them, like we did this time around.

I did a little more research. The recent bailout does tie back to recent corruption when, like a lot of other corporations, they padded the results for short term performance gains, kicking in bonuses and lots more.

So, feel better?

Slider

[bikdav]

I have a thought about this. Watch the bail-out fail to pass. The economy (as we know it) will crash hard. As a result, somehow most of those who are struggling or seriously down and out will be prospering while most of the fat cats who caused the problem will see what it is like to suffer financially. They will lose their huge house, the $100,000 car, the $15,000 bicycle, whatever. I know this sounds like fantasy land, but what if this actually happened?

[kernel crash]

Wow. It is really gratifyng to realize how much you all have invested in me being wrong. Confirms for me that it doesn't happen much.

So, feel better?

Slider

Nope. I'm down almost 50 grand. Its not you I'm pissed off at.

[MTBME]

I have a thought about this. Watch the bail-out fail to pass. The economy (as we know it) will crash hard. As a result, somehow most of those who are struggling or seriously down and out will be prospering while most of the fat cats who caused the problem will see what it is like to suffer financially. They will lose their huge house, the $100,000 car, the $15,000 bicycle, whatever. I know this sounds like fantasy land, but what if this actually happened?

More realistic the fat cats will come down a few notches but they'll still have more than enough to move into your modest home as your being shown the door. You'll still be on the outside looking in. But if you cling to your guns and your religion you still might make it. Buy your ammo now.

[Slider]

Nope. I'm down almost 50 grand. Its not you I'm pissed off at.

Pick a couple of the most sound mid-sized banks you can identify and put $5K there. They'll have a huge upswing if they survive. The money will be at risk in the meanwhile, though.

slider

[Slider]

Pretty good recap if the Fannie Mae mess in the Times: http://www.nytimes.com/2008/10/05/business/05fannie.html?pagewanted=1&_r=2&hp

Slider