….after all, didn’t they mess it up in the first place ?. No, we shouldn’t be coming to their rescue, says this commentator…, while the argument here is that the cost of the bailout should be weighed against the cost of a bust.
Want an example ? This is what happened in Sweden in the early 90′s.
As US lawmakers begin a fresh round of negotiations within the next few hours, trying to agree President Bush’s massive rescue plan for American banks and financial institutions, we want to know if you’re happy to dig deeper for the overall good of the economy where you live?
This columnist is far from happy at the prospect of putting her hand in her pocket
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The problem is that the banks are not another entity in the system, but part of the Mechanics. This question is like asking, “whose responsibility is it to fix your cars transmission?” “Banks” (lending institutes) should never have been able to grow to the capacity that they have in the system. Their failure is kind of like the manufactures being forced to stop selling cars with automatic transmissions. Most people these days don’t know how to drive a stick shift. They would have to relearn to drive all over again.
Bail out the credit institutes and we can continue to put cloths, groceries, school supplies, and houses on a credit card. Don’t bail them out, and we have to learn to buy daily needs with the cash on hand. In other words, learn to drive our economy in a different way.
Surely it’s not the banks that are being rescued (as the demise of Lehman Brothers proves) but the American and world economies which would be dragged into the mire if the market was left to its own devices.
If ever there was a case of “damned if you do, damned if you don’t” this is it.
The banks themselves aren’t especially interested in digging deeper into their pockets for the rest of the world–I’m not especially enthusiastic about digging deeper into mine to support them–but the consequences of doing nothing might be too horrible to contemplate. I definitely agree with Dwight: this is a good opportunity to rethink and, if necessary, overhaul the system…but it looks like we’re going to miss it altogether.
Of course we shouldn’t have to pay for their bad decisions. But we had a hand in the bad decisions and fell into them just as easily.
I’ll tell you what though, no matter how many people stand up and voice their discontent with bailing out these idiots, the government is still going to do it. Way to represent the people, not the corporations, eh?
And to add to that. If my tax money is going to be used to fund these corporations, I want a stake in them, I want stock, and I expect dividends once they are back on track.
Too bad thats not going to happen.
Thats not a bailout, thats a jack.
The word ‘duty’ strongly suggests moral obligation.
http://www.merriam-webster.com/dictionary/duty
If moral obligations are to be applied, then now would be the time to remind those who are attempting to resolve this crisis that they have a duty to prevent failures of this magnitude from happening again. This not only impacts taxpayers, but has a ripple affect through out the entire world economy.
Can somebody tell me what happens when Bank stocks loose all of their value, or any stock for that matter?
let us say that a company has 1 million $1 stocks. the next day those stocks drop to a value of $.02. Where did the money go? Who got the $.98 on the dollar? The people who took that $.98 should be the ones to bail out the banks.
NO! However, it’s too late for this debate now. Since, we, the taxpayers are bail-outing banks, the government has a responsibility to better attach some strings with lending out it’s citizen’s money. I would like to see this treated as an investment where, in which the profits go towards paying down the national debt and balance the US budget.
Treat this $700 billion as an investment. My tax payer dollars better not pay for fat cat salaries for the incompetent [--] people who got us into this mess.
Absolutely not. If a business makes poor decisions that cause it to fail, it should be allowed to fail. Other businesses will spring up in its place to fill the void. It is not the taxpayers’ duty to prop up any businesses, especially those that got where they are because of poor leadership.
@ Brett
The “we” part of what you said doesn’t include every taxpayer. There are plenty of people who have always been responsible with credit, myself included. You’re right about the government going ahead with this in spite of popular opposition, though.
This is part of an analysis of the Great Depression by Marriner Eccles, FDR’s chairman of the Federal Reserve Bank from 1934 to 1948.
“… a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.”
http://en.wikipedia.org/wiki/Great_Depression
There are a lot of competing theories about how it happened and what could have been done to shorten it’s effects (a bailout is one) but they all agree on one thing – it was enevitable and unstoppable.
In other words – bailout or no it’s going to get a lot uglier before it starts to get better.
I’m so torn on this. I don’t want there to be a great depression v2.0, but I think people will just never learn. 10 years from now, people will not have learned their lesson, and some new financial crisis. People need to learn to live within their means, and if it means hard times to learn this, then so be it.
With these government bailouts, the money is likely going to be debt used to support the banks, so we’re just pushing all that debt to our grandchildren to have to pay off. I truly pity the people being born today, we’re going to make them pay for our irresponsibility.
The insult to this injury is the lack of a serious debate–involving we, the taxpayers–on this matter. For once, I do sympathize to an extent with the Congress–they’re undoubtedly receiving a deluge of phone calls and emails from furious citizens on the one hand, while being equally bombarded by the Bush Administration’s penchant for alarmist rhetoric and demands for “action NOW NOW NOW!”
@ Dwight & Kelsie
Stop it, you’re making too much sense! I prefer my cup of Joe with a side of danish not toasting my taxpayer dollars away along with my shrinking savings.
The “we” part of what you said doesn’t include every taxpayer. There are plenty of people who have always been responsible with credit, myself included.
I used “we” as a majority of taxpayers, of course not everyone. Sorry for the mixup.
@ Jessica
Before we start talking about profits, we need to be able to break even on this “investment”. Given that so much of it is made up of bad debt — people who have already defaulted on their loans — breaking even seems highly unlikely.
@ Steve
“People need to learn to live within their means, and if it means hard times to learn this, then so be it.”
I’m sure it’s true everywhere, but this seems most evident in big cities. What about the rest of us who will suffer and are having our quality of life diminished, because of fat cats and people who don’t understand “bigger is not always better”? I don’t have a home I can’t afford. I don’t pity anyone, besides people who got us into this mess could careless about all that debt to our grandchildren to have to pay off. For them it has always been about, looking out for #1 and only #1. We paying for their irresponsibility.
@Jessica:
Served well with a bailout bagel and an I-Can’t-Believe: I-agree-with-Steve scone.
The sad fact is, we’re stonewalled–whether we choose to accept the administration’s rationale or not is a moot point by now…if the package fails, what will the rest of the world’s markets think? I don’t want to see our children (and our children’s children) saddled with this enormous debt, but we’ve crossed the proverbial Rubicon…I just hope it doesn’t turn out that the administration yelled “fire” in a crowded theater…
@ Roy
I know, you are absolutely right. I need to see a silver lining here. I am depressed about the economy and what it is costing me. I’m young and “mad as hell” that at this rate I will be “feeling” the effects of this into my retirement–if I am so lucky to have retirement. The little money I put away in investment account (not of my choice–my employer selects them, if I agree to the match program). What the hell did I save money for that is now *poof* gone?
@ Kelsie
Served well with a bailout bagel and an I-Can’t-Believe: I-agree-with-Steve scone.
That made me smile.
I work work in Manhattan and not to be a stereotypical agressive New Yorker, but I’d like to shove the I-agree-with-Steve’s-scone into a lot of wall street fat-cat mouths.
@ Brett
I wouldn’t even go so far as to call it a majority. Googling “percentage of homeowners in default”, and looking at the first page of results, it’s in the neighborhood of ten percent. This is disturbingly high, sure, but I don’t see why everyone else should have to bear the cost of the poor judgment of a select few.
@Jessica,
You have every right to be hacked off, as am I. I’ve invested money into a 401K and a Roth, and have a savings for the proverbial rainy day. I do not like losing money because of others, nor do I like getting stuck with the bills of others. However, if you are young or have a few decades before retirement, then taking solace for having time on your side may be the best thing to do.
This is less of a bail out and more protecting the tax payer. If the scheme fails then the results are unpredictable. If protection scheme are structured correctly the tax payer can stand to make some money and protect ourselves (that’s a BIG IF).
As Bob says, damned if you do damned if you don’t.
@ Jessica
You’re surrounded by the irresponsibility in NYC though. When I lived in the NY area (on Long Island) there were all these people that lived in trendy and super expensive areas, spending probably all of their income on their rents. You know, the have a $30,000 job but live in the upper west side or Greenwich Village types.
DC has those types too. They work in non profits, but spend close to most of their income to live in Dupont Circle because it’s “Trendy”. This is the sort of irresponsibility that progresses to credit cards, then huge mortgages..
@ Roy
“This is disturbingly high, sure, but I don’t see why everyone else should have to bear the cost of the poor judgment of a select few.”
But you’d do that with socialized healthcare.
The bail out would make sense if it made sense.
Firstly, on what is the figure of $700 billion based if, as we are told, no one knows the true extent of the problem?
Secondly, we are told that the the problem has been caused by sub-prime mortgages. How many mortgages are we talking about for heaven’s sake? There are only about 300 million people in the US. If you take out children, very old, and non-sub-prime home owners (there must be a fair few of them) it is impossible to see how the problem could have got $700 billion bad, unless there is something else in addition to sub-prime mortgages that we are not being told about, in which case, who knows what the $700 billion is going to be used for?
Thirdly, George Bush is predicting amageddon unless the package is passed but if so, why is it that Buffet has taken a stake in Goldman and JP Morgan has just bought a bank? My guess is that if nothing is done the weak will be swallowed up by the strong and the banking industry would come out alot cleaner and fitter. Credit would be tight for a while but I suspect that credit will be tight whatever happens. We have to remember there is nothing magic about banking, it needs very little infrastructure to lend or borrow money. I have no doubt that if Congress does not bail the banks out there are entrepreneurs out there who will find a way.
I wouldn’t even go so far as to call it a majority. Googling “percentage of homeowners in default”, and looking at the first page of results, it’s in the neighborhood of ten percent. This is disturbingly high, sure, but I don’t see why everyone else should have to bear the cost of the poor judgment of a select few.
% in default is only part of the picture though. Theres all of those in the loan, appraisal, etc industry who allowed artificially high prices to be turned into loans. Those who sold and bought houses under ‘bubble pricing’, then those in the investment/finance industry… Theres plenty of people with a hand in it who were passive in allowing this to happen for their own gain or profit no matter how small.
“This is disturbingly high, sure, but I don’t see why everyone else should have to bear the cost of the poor judgment of a select few.”
And I completely agree with you on this.
To answer your question: we want to know if you’re happy to dig deeper for the overall good of the economy where you live?
After what happen in Mexico with FOBAPROA, I would say: No, I am not happy to pick up for the mistakes of greedy people.
But unfortunately, it seems there is not other “viable” course of action in the U.S. given the current situation. In my opinion it is something that should not have happened.
I hope that the “collateral damage” in other countries, like mine, given the U.S. crisis wouldn´t be so devastating. ..Fat chance! since Mexico depends in some industries from foreign -mostly U.S.- investment and capital; not taking into account the decrese of revenues from Mexicans working in the U.S. which is our second source of national revenue after oil.
For sure.
What do you expect? Tax payers have always been the scape goat for every dismal government gaffe. The war goes wrong the tax payer foots the bill. The economy goes into tatters, the tax payer has to prop it up through taxes. Greedy business executives engage in unprofitable ventures and the tax payer is called to the rescue.
@ steve
“But you’d do that with socialized healthcare.”
Don’t you dare hijack this news thread. Take it to the blank or talking points page. We’re not talking about health care, we’re talking about the $700 billion bail out. Stay on TOPIC.
@ Jessica
My point was to show the double standards people have. Sorry to point our your double standard, and it makes you angry.
@Steve
Your first comment was great. Well said!
@ Lexa
It is based on nothing. It was pulled out of thin air. A few days ago, a treasury spokesperson was quoted by Forbes as saying “It’s not based on any particular data point. We just wanted to choose a really large number.”
So there you have it. They chose $700 billion because it is a “really large number”.
I don’t think that taxpayers should be responsible for bailing out banks. It’s easy to say that people should live within their means, but that is hard to do when the working poor do not even have enough to meet their basic needs. What is their means? Never having even enough to pay their basic bills? If nothing is done now, the mess will only get worse. As for what will happen in the future, I don’t even want to think about it. The sad thing is that even though I don’t really mean that, most people really don’t want to think about what impact decisions made today have on the future. They want to stick a band-aid on it and say it’s better until it comes back to bite them……..
This is what happens when the product and users of the product are separated from reality. Banking is simple really. You have money and you charge interest to loan it to me. You win and I win.
What has happened here is just another scheme to expand the lending process so that thieves can rob us both.
The crisis is an unnecessary outcrop of globalization. The thieves have operated outside local jurisdiction in the name of globalization and the good of the global economy. It is time to get back to smaller is better. Cut out all the processes except lending and borrowing and we will have a system that works for us all, not just the manipulators.
This is Bush and his cronies last stand before the government changes. It is nothing more than that but it is still a mess, albeit a created mess.
You know I had to accept Bush was elected even though I knew that this incompetent “elitist “was going to lead the US into the crapper. Then we had to suffer the added indignity of having him a second term. I know how the world views our diminished image. But the idea of this coward(the sky is falling address) getting us to pay for his bumbling and stumbling into economic chaos just is too much. “Tax cuts and regulatory relief “is what he promised and that is what America got. Let the companies go under and we will all suffer it together and rebuild our economy and image.
Bravo, Jess, bravo!!!!!!!!
@ Steve
I’m am not going to address your bias, classist (elitist) and superior attitude on this page. Take it to this weekend’s blank page and I’ll debate you on the issue. Your ignorant assumptions are flabbergasting and, as such, will not let you give off the perception to WHYS world readers that all Americans think like you do!
Not at all, you don’t posse the skills to make me angry, but are highly entertaining.
Hi All,
What is really annoying me is that we in THE UK bailed out Northern Rock a year ago. The boss resigned with three quarters of a million pounds, and a 2 million pound a year pension! All this paid for by us tax payers! If doing wrong pays so well why do the rest of us abide by the law?
I feel we have no option but to help but really want to see those resposible made to pay. When I was working if I did wrong I got the sack and no pay out. The same should apply to these.
@Jess
Yes, yes! Thanks!
Jessica, stop personally attacking me.
Steve,
You stop insulting me.
@BBC WHYS,
Please inform Steve to leave his off topic comments from this page and making personal attacks against the person who pointed his off topic comment. It is extremely disruptive to this very important debate.
@Peter Gizzi
Welcome back to WHYS!
I feel we have no option but to help but really want to see those resposible made to pay.
You are right and I think that many people are beginning to see the light. Perhaps it had to come to this before anyone could react.
@Steve
Jessica asked that you debate insults on weekend page. Please comply. Thank you.
Understood, it’s okay for you guys to bring up off topic idea, and make personal attacks and insult people, but not for anyone to call you out on it. Clear.
@ Jessica
When did I insult you? You’v einsulted me multiple times on this blog. Before on another topic you even said that you don’t respect me as a person. You called me classist, biased, and hope that other don’t think all americans are like me, yet that’ snot an insult? I simply asked you to stop, and you accuse me on insulting you?
@Jennifer
Well said!
It is easy for people, with means, to exhort people, without means, to live within their means.
There are people working two jobs that can’t afford decent food and clothing and a roof over their heads. How can they possibly live within their means?
Maybe some who have this attitude, as they live from huge paycheck to huge paycheck, will find that out in time.
How many are just one paycheck away from poverty, yet ask others to live within their means. What are YOU going to do if you lose that job?
@ Steve
Oh, boo hoo hoo nobody wants to play with you. I’ll send you some tissues. Right now, we’re playing at addressing “Is it the taxpayers’ duty to bail out the banks?”
Any suggestions on how to ensure American learn their lesson, since as you pointed out, history has a way of repeating its self?
Again Jessica, I was pointing out double standards. Quit personally attacking me.
Do you have any suggestions for the question you posed to me? I don’t, because any bailout is just going to enable people, and push off the consequences for years.
@ Peter Gizzi
Welcome back, long time no read!
If doing wrong pays so well why do the rest of us abide by the law?
That’s exactly what I tried to argue yesterday. It makes me really mad when the top management screws up and drives the company into the sand and then, when they get sacked, they still walk away with a golden handshake. How dare they??? It was their short-term thinking just to the next quarter reports, combined with greediness in the first place that got their company into this mess, so why should the taxpayer now not only have to bail out the company but also finance their lavish life style?
@ ALL
I have read many of the articles and watched several news programs last night. It is unclear to be what will happen now that WaMu was sold/bought by JPMorgan. Can anyone break it down? How does this relate to the $700 billion bail out?
To stave off another Great Depression that will undoubtedly lead to WW-III we need to save the system but notice that Paulson has saved HIS friends who keep their hundreds of millions of dollars despite that they nearly crashed Capitalism.
These “Masters of the Universe” must be made to pay for their greed as should the credit agencies (Moody’s) who gave the AAA ratings to the now defunct financial institutions.
I also believe that Bush has absolutely no understanding of the situation of the gravity of the situation. His speech was filled with emotional rhetoric but said nothing of substance. In any event he hasn’t a clue why Americans oppose this in such large numbers. He just wants this issue to go away so he can go back to playing in Iraq.
The taxpayers do not have a duty to see to it that the rich become richer. With this bailout they are doing just that.
Taxpayers do have a duty to root out thieves and hold them up to public scrutiny.
Let us pray that happens!
Thanks Selena,
Just had another thought. Currencies used to be supported by gold reserves. The UK Government sold ours so what supports the pound now I have no idea? Fresh air and words perhaps.
Perhaps it is time to insist that governments have something “solid” to support them like gold?
Having said that, overall The Pound has stood up pretty well against The Dollar and The Euro considering by contrast we are such a small though over crowded country.
@ Julie P
I have no personally attacked anyone. I pointed out a personal attack on me. I brought up an off topic issue to prove that people hold double standards about bailing out people due to their poor choices. Since it doesn’t agree with your political views you want be to be silence. You need to learn to be objective and realize that not everyone is going to agree with you. I have not personally attacked anyone, how could you even suggest it? Did you read the posts?
@Dan,
I like that “BOV” reference. Pretty cool
@Steve
You were off topic! You were asked to stay on topic. You didn’t! Please move the case over to the BP.
Thank you.
@Steve,
Yes, I did read the posts, including the first one. It was off topic, someone pointed it out to you and you took it personally. You show disrespect to her and to those of who like to particpate in these debates. This coversation is over, unless you would like to continue it with Ros and I.
@ Selena
Please, give me a break. Virtually everyone in this topic has brought up things unrelated to this bailout. Yet I’m somehow not allowed to do this to point out a double standard that people hold?
In fact, your post is off topic, now get back to talking about the bailout rather than posting every chance you have to cheer on other attacking me.
Do you have any views on the bailout? I have stated mine. You can choose to read them if you like.
@ Steve and all,
“I wish bailout is just going to enable people, and push off the consequences for years.”
Yes, I’d like for $700 billion as an investment. As Roy pointed out, all we can hope for is to break even. So I am trying to understand how the Feds take over of WaMu and sold to JP Morgan will help. I also read that the government, “relaxed” monopoly policies to allow for WaMu to be bought by JP Morgan…. which seems like more trouble in the future. Also, I don’t understand why some republicans are advocating for less oversight, since it was a lack of regulations that got us into this mess. I thought, the government would have tighten the lid after the collapse of Enron. So the government apparently doesn’t learn it’s lesson either.
@ Julie P
“You show disrespect to her and to those of who like to particpate in these debates. This coversation is over, unless you would like to continue it with Ros and I.
”
And I suppose Jessica’s comments weren’t disrespectful to me? I would love to talk you and Ros about this. I’m tired of the personal attack and all the bias and intolerance for those who you don’t agree with.
That you cannot see this statement as a personal attack shows you are not objective, and biased yourself. These comments were very insult and a clear case of a personal attack. If you can’t see this, I dont’ know what to say. :
“I’m am not going to address your bias, classist (elitist) and superior attitude on this page. Take it to this weekend’s blank page and I’ll debate you on the issue. Your ignorant assumptions are flabbergasting and, as such, will not let you give off the perception to WHYS world readers that all Americans think like you do! ”
In summary, I was called biased, classist (elitist) and hold a superior attitide. I am also ignorant.
I’m sure you’ll justify it and think it’s not a personal attack since you agree with the poster politically. You are too biased to be objective and to see things.
The issue of bailing out banks will certainly hit the tax payers as the money needed for social projects will be channeled into banks that in the first place let things go wrong.
The bailout should be the last surgery to save a sector from a chronic situation that is likely to affect the rest of the world, knowing that the US economy counts 20% of the international trade. Otherwise a global crisis will spread like fire hitting the US economy and other economies beyond.
Perhaps there should be a mechanism by which the government can retrieve the $700 billion when the bailed out banks return to a healthy state. It won’t make sense that banks will continue to have a pat on the back each time they are in trouble instead of a slap on the hand each time they go knowingly go wrong. Taxpayers don’t just have the right to know where their money goes but the right to ave their say on how it should be spent.
This issue is surely a big headache for Obama and McCain in this presidential election period. It’s the biggest test for them to show the voters to what extent they can be up to big challenges.
@ Jessica
The government is composed of people, and people are irresponsible. SO we will always have crises like this. Mix in greed, and there’s really not much we can do. I think the only way is through mass misery, if people learn a lesson the hard way, they will appreciate what they have, and stop being so greedy.
We here in America may think, “Oh, how bad could it get, really?” Some may even believe that a collapse would be a good thing in the long run, and that we would come out of it with a more stable system and a stronger economy.
Total collective world debt is somewhere around 12 TRILLION dollars. Billions of people depend on the aid that this system provides to keep them alive. How do you define “duty” when your actions could result in the deaths of millions or even billions of people?
We have to think globally about this “duty” question because the rest of the world is going to hold us accountable for our decisions.
@Steve,
You have addressed other people who have posted flippant topics and directly told them they are off topic and to take the topic seriously. If you can tell others that they are off topic, then it is only fair that others can do the same for you.
If you have a personal issue with Jessica, then send her a personal e-mail and address the issue with her and not on this blog.
I have not made one personal attack against you or any other contributor in the WHYS blog.
However, I will be making a formal complaint with WHYS and I will also be contacting the BBC in London.
@ Julie P
Well, I’ll have a pretty good defense given all the personal attacks on the blog a against me. I never said you have personally attacked me, but others have.
There’s a difference between posting off topic and pointing out a double standard. I’ve had people do that to me countless times and they were not accused of being off topic. I merely was pointing out someone’s double standard. I don’t see how any reasonable person can interpret what I did differently.
That you cannot see that these are personal attacks, made by other moderators, shows how much of a bias problem there is here. That will be in my defense.
@ Steve
“…You know, the have a $30,000 job but live in the upper west side or Greenwich Village types….This is the sort of irresponsibility that progresses to credit cards, then huge mortgages.”
In most cases, the landlord is not suppose to rent you a place to live if you do not make 4x the rest in salary per year. SO If an apt cost 12,000 /year you salary has to be $48K annually. When I signed my lease, I had to give bank records, pay stubs and show a certain balance in my saving to prove I could afford it. The cost of living in NYC is already outrageous, so I don’t fault people for wanting a better quality of life, that is their choice where to live. However, in terms of the bail-out the banks need to not be lending people money they cannot afford. For example, I have a $2000 overdraft from my bank on my checking account that I did not ask for or need. Why the heck are they giving anyone the oppertunity to over draft their account by $2000?!?! All of which is FDIC insured. So If I do overdraft it and do not replay it, the government pays.
PS– all other personal remarks, take it to this weekend’s BP or I will not address them.
It is not hijacking a thread to a post topic to bring up an issue that is relevant to the discussion. The topic of this thread should be the bailout, banks and their policies, and anything relevant to our economy. You can’t just say talk about the bailout-MANY things have led us to the mess we are in right now. It’s only right that people be allowed to see that what effects one system will effect all others.
I don’t think it should be allowed for someone to call someone “bias, classist (elitist) and [having a] superior attitude” much like it’s not right for someone to say someone is not a “decent person” because they have different beliefs. I also believe it is wrong to address that person as the one being in the wrong. My feeling is that someone got busted in a double standard and thus “lost the argument” which is ridiculous. This blog is supposed to be about sharing ideas and having discussions. People should at least have the common sense to know that we will never all agree but never should we be disrespectful to each other personally.
Moderators should make every attempt to ensure that posts attack the issue that someone disagrees with-not allow a person to attack another person because he or she has different beliefs or opinions. I think when they do not ensure that there is a standard for everyone here, it is doing a disservice to everyone and the purpose of this blog. It is giving is a bird’s eye view and not showing the full scope of everyone’s opinions. Many people will simply step back from sharing their opinions because it’s not even an environment they feel able to share their opinion in muchless without judgment.
@John in Salem,
As I have said before. Welfare is the epitome of, “The road to hell is paved with good intentions.” What if the whole world came to depend on one farm. A farm that did well enough in providing that people who would otherwise starve, not only live, but receive enough “aid” to procreate. So even more people then naturally possible come into existence. Then what happens if one day there is a drought? Whose fault is it that there are people starving. The farmer for providing the free food in the first place? Or the people who existed solely on the aid of others yet still found it necessary to procreate?
Yes deciding not to “bailout” the credit industry will result in devastating effects. Americans will die. Many others will suffer and wish they were dead. But do you cut off the diseased limb to save the body? This was not avoidable, the benefit of the buy now pay later was too intoxication. Guess what, hangover is here, and that fat ugly chick next to you in bed is your cousin and she is now pregnant.
@ risk of going off topic, this is the same mentality people are applying to global warming. The same people telling you that you do not need to deregulate the ecology.
steve,
with or without socialized health care, you are paying for the choices of others…..just think about it.
@ off topic.
This thread is starting to look more like a 3rd grade class then a legitimate debate. I fear scaring away or at the very least confusing new contributors if this continues.
@ Dwight
If what needs to happen actually happens, it will mean mass unemployment, an end to the “american dream”. Americans need easy credit to live beyond their means. The house of cards will fall is this stops. In the past, it wasn’t this way, but money has been devalued. I won’t take this off topic with my theories why, but in the 1950s, a family could survive off one income, now they really can’t. Plus there’s been a lot of inflation, so people could live responsibly in the past, but now the “i want it all” attitude drove up RE prices, due to easy credit meaning more people could throw higher offers out there..
What the country needs will cause a lot of suffering, and I don’t think people are prepared to retroprogress. It’s part of the american dream to live better than your parents did, which isn’t going to happen anymore. My parents were able to afford to buy a home in the DC area. I don’t think I responsibly never would be able to do that. It’s still insanely expensive. People will start living worse off than their parents did.
@ Jens
Yes, but in this situation, the taxpayer will be paying off the greed of other people, bankers,a nd people who wanted “it all”. Is that any worse than paying off someone’s choice to smoke?
Yes, on a daily basis we pay the price for other people’s choices. I would rather get run over by a Prius than an Escalade.
Hi Katerina,
Thanks for your message.
Dan above mentions a possible great depression and WW III which I think is a real possibility if the stock markets are not rescued.
Having said that The USA and The UK do well out of wars as our economies run partly on selling arms.
sadly The French Government may shortly own our nuclear power plants. This really bothers me. They can produce plutonium. Which Government will we answer to in future?
Steve,
i think it is worse than paying for somebody who smokes. yes we pay for the treatment, but that person goes through pain and most likely will die. the fat cats do not suffer and still get their golden parachut with my money. there is a hugh difference there.
ultimatly i don’t care if an escalade or aprius runs me over. it is all a matter of mass and speed and both will go faster then me and weigh more
No, taxpayers do not have a duty to bail out the banks. However, taxpayers do have a vested interest in bailing out the banks because otherwise the United States and other countries who depend on US trade will be in for a long and miserable recession.
@ Jens
But the talks of the bailouts are including limiting executive compensation since the taxpayer is footing the bill. I really doubt they’re going to make out with massive payments, but I’m sure they’ll get paid more than the average american does. Being a CEO is not exactly an easy job.
DEAR ALL,
let’s just take a step back breath deeply and get a nice herbal cup of tea. sip it slowly and give one another a cyber-hug……..
ok feel better now. i hope so.
steve,
sure being a ceo is not easy, but so is being a scientist, and i got royaly fugged by this economy and reason for down turn, ie the war in iraq…..plus i get paid a tiny fraction of what these guys do.
the irony is that i even work on stuff in the national intrest. funny isn’t, or shall i say ironic
I too am torn about the issue. There are several things that bother me such as the figure pulled out of the sky and just throwing money at something is the standard way to solve a problem.. What frustrates me most is the veiled secrecy of the bail out. Obviously this is going to happen regardles of my opinion; I want to know how this is going to be resolved. I have the same confidence in the Bush Administration as I do that this bail out is actually going to work.
i am glad to see that maccains contributions were ever so helpful and that he can make it to the debate….
@ Jens
Again, unless the public ownership issue of a corporation, you have no right to complain about how much a CEO makes unless you are a shareholder. I’m sure your job is more difficult than being a football player, but football players make a lot more money than you do as well.
When the cows have escaped, discussions about barn door closing responsibilities are irrelevant, someone must corral the herd. As taxpayers, we have the responsibility to clean-up this mess because only we have the capability of creating wealth. Money guys do not create wealth; they just skim-ff some while handling it.
This failure in the banking system should teach the simple lesson that laissez-faire capitalism does not regulate itself as its proponents suggest. In fact, it is at its very core a paradigm of non-equilibrium. By its conventions, no amount of wealth is sufficient. Only human inadequacy militates against one, extremely savvy individual controlling the entire financial world.
A very small number of people, maybe only few thousand or so, have caused enormous financial and physical harm to both to residents of the US and much of the financial world. They may have profited from their greed and idiocy, perhaps they did not. Some of them may have stupidly indulged at the trough of plenty. No matter. Their mess may need seven hundred billion dollars (five thousand bucks for every taxpayer in the country) to clean up (That is, if the bail-out works.). Cleary, no such tiny number of people can be allowed control of such a vital part of the economy, ever again. Also quite clearly, the full power of the judicial system should be brought to bear upon every one of these few thousand individuals. For, at this level in the financial world, stupidity must be considered criminal negligence.
g
steve,
i know, BUT we the tax payers are bailing the failed companies out, so it is my business if they get a golden parachute or not…..if they do well and great i could not careless, but they are not doing great.
the difference between them and me is they screwed up and get a golden handshake, i worked my ass off and produced great results and get kicked in the ass for it
@ Venessa
There are more democrats in favor of a bailout than republicans. Many republicans are outraged at a bailout. All that’s going to happen is that we’re going to push these problems onto our grandchildren, just like with everything else we do. All the genY madisons and connors are going to have a rough life when these debts are due.
Without a bailout, the economy would contract to the size it should be, which we would never allow. So to continue the lives we live, it’s necessary. People choose to live beyond their means these days. Remember , well, at least my parents, my Mom was the first person in their neighborhood to get a TV set. Everyone would come over and watch. Nobody in their right mind would have two TV sets. Now everyone has an HDTV and they are in every room.
@Dwight
This was not avoidable, the benefit of the buy now pay later was too intoxication. Guess what, hangover is here, and that fat ugly chick next to you in bed is your cousin and she is now pregnant.
You couldn´t put it better! Bravo!
@Steve
Limiting FUTURE exec compensation is the politicians feeding us pabulum to pacify us.
The “Masters of the Universe” need to forfeit their bonuses for the past 7 years when Bush allowed them to run wild in the streets.
steve,
i have an HDTV, but is one of the few luxaries we have. ok i have motorbike, as well but did so for twenty years. it’s my little hobby.
anyway i don’t think we lead the life of plenty, have a cheap house and 15 year mortgage, eat cheap and healthy and i have no idea the last time we went to a movie…..
we were responsible when buyin g and financing the house etc. now i have the pleasuer of paying for people who screwed it up, while loosing my job…..i am just a wee bit pissed off at the entire thing
@ Jens
That’s just the system we live in. Lots of people who are on welfare could go to school or get training and be in high paying fields, and you fund the welfare with your tax dollars. There are also state funds to help out victims of uninsured motorists. YOu pay for someone else refusing to pay for auto insurance. This is just part of life in a modern society. You sound almost Libertarian today.
The question today is do we let the economy shrink to it’s realistic size, or do we continue to allow people to live beyond their means and make future generations pay the price?
Now hold on! Isn’t the bailout being organized by the same clown college that got us into this mess? Considering that they’ve been digging the hole we’re in with great enthusiasm for over seven and a half years plus whatever experience they had in the private sector I’m just a little suspicious.
We aren’t going to see very many heads rolling in these giant banks and the people who made millions running them into the ground get to stay rich. They aren’t even willing to consider knocking executive salaries and compensation down to the same pay as the president of the US of A.
This is a pure con run on the entire world to make one last pile of cash out of us before they run for the doors. I don’t believe anybody promoting this is telling the whole truth.
I would ask everyone to consider the hypothesis that contracting energy supplies are the true cause of our current financial troubles. When growth in energy supplies was constrained we turned to growth of debt to continue economic growth. Now that that donkey is dead the original load is heavier.
Money is just a means of keeping score; but keeping score of what? What if it’s energy and we’ve got less income coming in next year?
@Steve
Again, unless the public ownership issue of a corporation, you have no right to complain about how much a CEO makes unless you are a shareholder.
But you and the rest of American taxpayers are going to pay for their bail-out of private corporations… that should make you and the rest getting the bill “shareholders”, at least to ensure that does not happen again.
@ Dwight
“Yes deciding not to “bailout” the credit industry will result in devastating effects. Americans will die. Many others will suffer and wish they were dead. But do you cut off the diseased limb to save the body?”
Will we actually be cutting of the diseased limb from the person who was irresponsible or be hacking it off of a healthy person who had nothing to do the irresponsible person’s body?
“This was not avoidable, the benefit of the buy now pay later was too intoxication. Guess what, hangover is here, and that fat ugly chick next to you in bed is your cousin and she is now pregnant.”
I am laughing at the image you placed in my head and their prospective child, but shame on you.
@ Luz
That’s why I said “unles the public ownership issue of a corporation”. in this scenario it is relevant to us because we now pretty much own the shares, so executive compensation is relevant. But for a company that the government hasn’t taken over, the compensation of their CEO is none of anyone’s business, like how I have no say in what you do at home.
@ Steve
Most of what you say about people living beyond their means is accurate. However, the situation we now find ourselves in is a bit like the punch line of a bad Irish joke: “I wouldn’t start from here if I were you”.
The trouble is, we DO have to start from the fiscal situation we find ourselves in. As I said earlier, both action and inaction have major downsides but, on balance, I think the bail-out needs to happen with as many safeguards and protections for the taxpayer as possible.
Incidentally, your example of the televisions isn’t totally right. Back when my parents bought the first TV on the block in the mid 1950s, it cost my father well over a month’s pay. However, when I bought a 50 inch HDTV last year, it cost me about two weeks of my meagre pension (and I paid cash by the way). Smaller, standard definition sets for other rooms can now be had for very little money–a day or two’s pay even at minimum wage. This in no way changes the basic proposition that many people live beyond their means–it just goes to show that historical comparisons are not always valid.
Just for clarification’s sake, the compensation of executives is peanuts in relation to the price of the bailout. It’s more of a just a point that compensation is an issue, the numbers are still peanuts, as the cause of the crisis was poor decisions to give out loans, and poor decisions to live beyond one’s means was the cause of the crisis, not the compensation of executives.
Dwight~
True enough – we’re not responsible for them.
But they’re not going to understand why this is happening. All they’ll know is that the fat cat citizens in the US who have been using so much of the world’s resources and living high on the hog have now decided to share the bill with everyone else.
We may not be responsible for them but it would be prudent to keep them in mind cause they’re gonna be really pissed and looking for someone to blame.
@ Bob
Yes, TVs are cheaper now, but homes are much more expensive now than when my grandparents got their first TV, and the home is WAY more expensive today than the TVs were back then. So today, people are by far living more beyond their means than people did back in the day.
Also, with those homes, people want bigger and better, while in the past, homes are smaller, and less ostentatious. I really think this stupid crisis is from people trying to one up each other. As I think will rogers stated, america is basically about spending money you don’t have, to buy things you don’t need, to impress people you don’t even like.
steve,
there is a libertairian streak inside me…………………….
in fact i might be democratic libertairian, however diametricaly opposed that may sound.
plus what is the realistic size of an economy. the problem is that it is not the guys who rode us into this mess are going to pay. it is you and me and everybody on this blog. plus i truely have the feeling that all of this is being talked up to panic the joe blogs of the this world, so that we cough up our money allowing the rich to get richer.
This is a pure con run on the entire world to make one last pile of cash out of us before they run for the doors. I don’t believe anybody promoting this is telling the whole truth.
Fool me once shame on you; fool me twice shame on me.
This is Iraq #2 guys! And there are still some who are pushing for the bail out to happen.
It is like the addict who knows the s/he is in trouble but can’t stop the train until it crashes.
Everyone knows the economy is heading for disaster but still believes one more fix will cure the problem.
Rock bottom is coming, with or without the fix!
Mark in the studio here -thanks for all these comments and i’m glad you recovered from some of the frankly childish nonsense at the top of the debate. I really think we’re better than that…right, if it’s ok with you we’ll get on with the programme.
Interesting story about how this crisis is affecting students in their choices. They are realizing they won’t all be rich investment bankers.
http://abcnews.go.com/Business/Story?id=5868400&page=1
steve,
i never bought anything to be one up on my neighbors or friends….i don’t know who these people are but i do not know any of them.
@ Steve
Homes being more expensive now is a major part of the crisis we find ourselves in.
However, a topic worthy of debate, if not on this programme then in the future, is whether the over-borrowing happened because house prices rocketed…or house prices rocketed because credit became too easy to get.
I don’t blame JUST the consumer for borrowing too much. Some idiot at the bank or credit card company had to be willing to give them the money even when it was obvious the loan could never be repaid.
@ Steve
“and poor decisions to live beyond one’s means was the cause of the crisis, not the compensation of executives.”
Are you saying, executives should be rewarded and continue to have million dollar salaries and thousands of dollars in bonus for their job well done?
“while the argument is that the cost of the bailout should be weighed against the cost of a bust.”
Does this mean the US, in case of a bust, should be welcome to the Third World Club?
It remains to ask who will benefit from US economic difficulties, will it be China who will jump on US markets abroad?
It seems that for the US government the bailout is a matter of life or death. As a powerful country with a very ramified economy, it will be unthinkable that it will ask for international help to phase out its current troubles. This seemingly economic tsunami is unlike Katrina disaster which make the USA for the first time in its history to accept international aid to cope with it. The US economy to save itself and the economies of other countries need restructuring at every major financial institutions for them to go regularly smoothly, creating benefits and not not unsustainable losses.
Thank you Mark Sandell… words of wisdom, as always.
@ Bob
It’s the cause of the crisis we are in now. Irrational pricing made the mortgages not worth what they were sold for, so these assets that were not worth as much as they were bought for meant that these banks had to write down huge amounts of money. It is the very cause of the problem!
Bob, it’s very clear that house prices went up due to easy credit. When you have easier credit, people have more money to offer. Ever bought a home? You make a bid, and the highest bidder wins. The actual values of homes are just estimations of what people would pay. There’s no specific thing that makes homes more valuable. My parents paid $64,000 for their house in 1976, and It’s probably “worth” over $500,000 today, nothing changed, it’s actually older, but people had more credit to throw around, hence the prices go up.
jess,
it’s million of dollars for bonuses……
@ Jessica
“Are you saying, executives should be rewarded and continue to have million dollar salaries and thousands of dollars in bonus for their job well done?”
not for the companies that have been taken over, but for ones still owned by private shareholders and not the public, their compensation is none of anyone’s business other than shareholders.
there are really people out there who think that palin would be able to turn this around. she does not even know her arse from her ellbow, this is truely shocking considering her performance in yesterdays very short interview….
Steve
What’s the difference between a company being in the hands of public or private shareholders regarding what leadership is paid. A shareholder is a shareholder, and collectively they decide the pay of the exec in question. The only difference between private and publicly listed companies is that the latter need to declare what they pay the chiefs to the market so all those thinking to buy know in advance.
I understand the need for the bailout, but I hate it. I also think that all of the CEO’s and fund managers that made tens and hundreds of millions of dollars from this whole mess should have to pay up. All of their salary should be put into the bailout. I realize it would just be a drop in the bucket, but I think it should happen.
Jesica,
I would like to go on record as saying that that was an analogy, not one based upon personal experience.
@ Robert
Actually the stockholders do not get a vote in what the executives are paid. That is decided by tohe board of the company. This in itself is a problem because the head executive is the one that decides if the board members keep their jobs.
Eric Abramson writes:
Hello WHYSers…
If people like Warren Buffet are willing to invest in these failed companies, why not let the private sector buy these criminals out?
If we are going to be a socialist system instead of a capitalist one, let’s start with health care. I think 700 billion would probably cover it! We bail out these badly behaving “bankers” and then what’s next? GM, United Airlines, etc. If my company failed because I made a lot of bad films, nobody would be there to bail me out.
@ Robert
I think you are confusing what I said. By public, I meant the taken over companies, the ones that the govertnment took over. Because of that, it has made me a shareholder, so comp of an executive is my business, especially when it’s a failed company. I wasn’t refererring to publicly traded companies vs closely hold companies.
My point was that unless you are a shareholder (which we are when there’s a takeover) compensation is none o fyour business. If you have a problem with the compensation, buy some shares.
Maina Kimani says:
Bail-outs happen even in third world economies like kenya’s. I believe it’s all in line with sadistic capitalism thats our world today. It shouldn’t happen but the super rich are only thus rich because of the world’s poor guillablity and folly. Its a classic of robbing the poor to service the rich’s appetitie for luxury and indolence.
@ Comments by French President Sarkozy.
I heard a report on BBC overnight that suggested that he had a very interesting take on this mess but I can’t find a transcript. Has anybody run across a transcript of his speech in Toulon yesterday?
I an a US citizen living near Portland, Oregon. I have mixed feelings about this issue but, at the end of the day, I think we should bail out the financial system. There are many businesses that cannot not survive on its own financial “feet” but need financial help. Examples would be the hospital systems in the US, the train system (Amtrak), etc….these are good for the citizen but they will never generate a “profit” as a business.
NO! The taxpayers should not pay. Let the markets work, if they crash then the survivors will take over. Maybe the politicians are trying to keep their BIG contributors happy. I guess they do not care for the little people or the people they work for. All of them have to remember that they serve at OUR pleasure.
Alan Shadrake:
I think it would be a good idea if all those CEOs of banks and financial houses who have been paid obscene salaries and pay-offs which helped cause this disaster were listed and their loot counted.
It is they who should be bailing out the very banks that are now sinking… They should be pilloried until they opened their bank accounts.
These men should also include Cheney & the Bush family and their cohorts at the Carlisle Group who have systematically robbed the US treasury in its crooked behind the scenes deals supporting the wars in Iraq and Afghanistan.
Jon Davis writes:
It isn’t the tax payers duty. However, we are between a rock and a hard place. To not bail them out, a lot of us will lose our retirement plans, and it will end up costing as much or more. Keep in mind, when a bank closes (in the USA anyways) the money is guaranteed by the FDIC.
There is plenty of blame to go around. This is largely a result of artificially influencing the economy excessively through the Federal Reserve. This is goes back to the Clinton administration, and has been an accepted practice by both parties. You can even spread some blame to the Carter Administration.
I do feel that there is obligation to bail out some of the companies due to failing mortgages. The Community Reinvesting Act of 1977 requires that the lenders invest in high-risk (sub-prime) mortgages. Then, in 1995 the act was amended, which made matters worse.
Furthermore, the reason many Americans aren’t paying their mortgages is that their house is worth less than they paid for it in the ridiculously inflated market of the 1990s. The housing market didn’t collapse, it corrected. I have been expecting for years that this would happen. There is a point when people aren’t willing to pay $500,000.00 for a small house in a bad neighborhood. What alternatives are there to a bail-out?
This is a terrible move, but when it comes down to this or bread lines, I’m absolutely for it, as soon as possible. This move spreads the terror out over time, rather than allowing us to plunge head first into 1929.
Mark Lukin
As a citizen that has been personally financially responsible, and one that has not participated in the Wall St. “ponzi” scheme in years, I am extremely angry being asked to shoulder the financial burden created by the criminal elite of our country.
I’ve sent e-mails to several politicians that I will not vote for anyone that supports this traitorous scheme.
Adelaide Paul:
As a working American (indeed as an American, period) I am appalled at the Bush administration’s rush to dump close to a trillion dollars into the Wall Street debacle. Where was that kind of resolve when we had tens of thousands of people displaced by Hurricane Katrina? Or in facing the fact that we still have no provision for affordable health care for millions and millions of our most hardworking citizens?
Imagine what kind of nation we would be if we made that kind of investment in our schools? I would venture to say, one hopefully intelligent enough to not end up with eight years of George Bush.
Want to know where this all came from?
I, a hard working responsible American, should not have to pay for the actions of irresponsible people and corporations. I declined to “flip houses” and “get rich quick” like thousands of Americans tried to do during what was a hot housing market because I knew it was not sound business. Now that the bubble has popped it is I who am being asked to flip the bill. NO thank you. If I make poor choices in my personal life and business I don’t expect anyone to bail me out and please don’t look to my and my family to bail you out. FIrst a “crisis” in the middle east that turned out to be a mistake now you want us to trust that you have the judgement to lead us out of this “crisis”…ever heard of the boy who cried wolf?
@ Steve
These privately owned companies is why were are here… they went unregulated, unbalanced and unchecked and now tax-payers funds are paying for their private “mistakes”.
My name is Michele Berry from Wixom Michigan. I feel quite against the bail out considering the Bush Administration has lied to our people for the last eight years.
Wall Street has been able to run the free market without regulation. Now they are standing back. In all the tragic issues that have occured in this nation the federal government has done nothing to help the people. The people have been struggling for the last eight years here in Michigan while the government has stated that everything is fine. Loss of Jobs, homes, everything you can think of…and nothing from the federal government.
So, no let Wall Street fall, the people are survivors and we will maintain. Along with the world, the people of the United States have fought to stop Bush. We will continue.
Noel emails us:
I feel that the american banks that have caused the present crisis through their reckless and unrestrained greed, should be allowed to sink. Clearly the present model of capitalism is a rotten bad apple and needs to die. Yes, there may well be a long recession or even depression, but better that and a new better more regulated banking model than the one that exists at present. This entire episode has parrallels with the fall of the Berlin wall – that destroyed an entire political model, this financial crisis could well destroy the economic pillars that have supported the freedoms we enjoy in the west. These bankers should be allowed to hang by the rope they have made for themselves.
@ Jessica
Again, the compensation of the CEOs is irrelevant to the decisions the corporations made. The numbers are insignificant compared to the the numbers involving the bad debts. Even if CEOs were paid $1 a year, the result would have been the same, and the numbers wouldn’t be different. Their compensation is irrelevant, and you have no more right to criticize their compensation without owning shares than I have a right to tell you what you can hang up on your walls in your apartment.
the ultimate joke is that the goverment of less intervention, is intervening more than any other goverment on this planet……
If we don’fund the banks, they will fail. If the banks begin to fail, the remaining banks will recall loans and horde cash. This will cause a further contraction and the spiral downward would continue. And let’s be honest, the idiot professor you have on now is a political hack. He is an idiot and didn’t have an answer for what would happen. t
Th
Wow, I ran into a great thesis by a blogger I read where he talks about clearing out Wall Street being “creative destruction” akin to a forest fire burning out the dead wood.
Check out Charles Hugh Smith’s What Crisis? a.k.a. Creative Destruction Is The Beating Heart of Capitalism. This is a work of pure genius in my book.
Definitely not! Why should we, the taxpayers bail out the banks? They have shown greed and callousness in their daily operations, they slug customers with fees and charges while pampering their executives with multi million dollar rewards and are quick to hammer the small guy and excuse large entrepreneurs who they made bad loans to. They are so quick to do over us when they have money to recoup for their billion dollar profits but this allows them to get away with it with no accountability for their greed or mismanagement.
As an American citizen i think that the bailout is unfair. First, I dont believe that the majority of congress-members are competent enough to handle this massive deal.
We the citizens are left to help banks (and executives- I’m sure they will walk away with great severance packages) who acted irresponsibly in the first place. How can Bush expect this deal to be considered and approved in one week when this issue has been developing for the past 10+years?!?!?!???
The US NEEDS call in experienced world economists to offer another perspective and expertise. Clearly, Mr. Bush does not have the understanding, the responsibility or the know-how to handle this situation. Mr. Bush should be aiming to help homeowners who are losing their homes and lively-hood because of the irresponsible lending practices.
Why not tax the bank CEO’s who get $7.5 m signing bonuses and million dollar salaries? (WaMu)…not the people at the bottom of the totem pole who barely make $50k/ year!
on shareholders and executive pay
Over the years, as a shareholder, I have often received ballots to vote on retaining or not retaining members of a board for a company, but have never had the opportunity to vote on the salaries of executives. Often, I have had to hunt through loads of fine print in corporate reports even to find the salaries, and then it is almost impossible for a layman to figure out how valuable the various forms of stock options given to them. Further, in many of these companies, I have discovered that my small amount of shares, even if combined with all of the other similar shareholders, doesn’t match up to the controlling interest held by the members of the board, the executives, and the large investment groups that usually own the majority of the shares. Sure, I could attend the shareholders’ meeting and voice my opinion, but the cost of getting there and back is costly and beyond my means.
Further, when I own shares in hundreds, if not thousands of corporations, via various mutual funds, I don’t ever seem to get those ballots . . . I guess the investment bank that puts together the fund has the vote.
Ok, I’ve been just listening for a few weeks, but I HAVE to say something now. Your last speaker who was just talking about how this crisis is affecting main street and the common taxpayer, I want a question posed to him.
How many homes for working class americans would 700 billion dollars pay for? How much confidence would gauranteeing and paying off the homes of working class americans?
If you are going to just GIVE money away, give it to the taxpayers, give it to the people who are hurting the most. Don’t give it to the damn bankers who are going to retire with millions in golden bonuses anyways!
Stop hurting our country!!
Why not by everyhome owners mortgage? It helps the home owners, it helps the lenders, but prevents the ridiculous plans to use tax payers money for the CEO’s and other fools who got us into this problem
@Jens,
Please pardon me sir, I stand corrected. I retract thousands and insert millions. *shrug*
@ Dwight
Too late, I already know you have cousin-auntie-kids. Look at the silver-lining, 1 person counts as three votes!
@ Current speaker, professor “hankie”?
He makes some sense, but is there a guarantee to his theory? That is Sorors’ thoughts too from what I read.
steve,
jessica did not mention ceo’s, she just said that unregulated companies are responsible for this.
i don’t care about ceo’s salaries, although they are obscene, as long as they are private, but many are now asking for handouts…..that is the issue. the ship is sinking but the party is still on.
Americans should be responsible financially for what has happened to the economy. This is a democracy…we allowed this crisis to thrive. We sat and watched while our laws and regulations were bent to the will of the financial players, and our information systems (news media, etc) were reduced to cheap spectacle…spewing out non-information or disinformation between vivid celebrity & crime features. And we’ve had the crucial wisdom for generations: Unsustainable systems crash.
Confidence?
I Am Confident that children will be paying for it. Lets take our lumps now! Everyone also states that people are losing our homes. The true stats is only about 10%. Some of those people purchased home they should not have. Some walked away because the marker value of their homes went down. And some lost their homes because of job lose or financial issues. My confidence is stronger in the market forces not the politicians.
@ Michael
No you don’t vote on their pay, but you have standing to sue the corporation because you are a shareholder, hence you have a “say” in executive compensation, whereas a nonshareholder does not.
As for your last comment, when you have mutual funds, you own shares in the fund, not the actual shares the fund buys, that’s why you don’t get a vote.
In fact, mostly when you buy shares , you still don’t directly own the stock, the broker really does. They are listed as the owner in most cases, and it’s mostly due to a privacy issue so that the names and addresses of all shareholders wont be found out.
Hi all. I’ve laid low on this one so far because I actually think Canada will weather this storm pretty well… we’re rich in the things who’s value is going up: oil, gas, minerals, timber etc. But I digress.
Does anybody feel like we’re missing some piece here? It doesn’t seem to me that anything is this cut-and-dried. Either 700B will save the world or destroy it? I’m still comparatively young but even I know the truth is never at the end of the spectrum.
I hate to jump on the conspiracy bandwagon, but has anybody considered that this could be the Republicans trying to make such a big mess for the Dems that the American people will never vote Democrat again? I’m sure the Republican brains are already thinking and planning for 4/8 years down the road. The ‘leaders’ have always aired their conflicts at the expense of the taxpayer… it just seems to me that somebody, somewhere thought somebody would make a lot of money off this.
It just seems to me that what’s happening is a classic case of misdirection. We’re too busy in-fighting to step back and figure out just who’s going to come out the winner.
Jens ~ Oh the tangled webs we weave…..
This is a collective-goods problem that requires a collective solution. Our collective mechanism for dealing with massive problems is government.This is not a bail-out of Wall Street. This is a cooling off period to interrupt a massive fire-sale of American Homeowners main asset.
I’ve had enough of the market-fundamentalists mentality of Dr. Sanford. We have privately rational decisions (calling loans restricting lending by uncertain banks) that makes sense for individual banks or investors, but it is a socially suicidal practice because it devalues assets. We need a collective effort to coordinate and cool off the panic.
Our homes. The credit constriction we face means that Americans cannot finance their homes their small-businesses, their financial aid for education. This is an effort to cool-off a panicking market to avoid a repeat of the private markets solutions that prevailed in 1929.
If the tax-payers step in with a publicly coordinated management of the debt crisis we will recover much faster than if we let our economy collapse. We will lose more in lost tax-income to the panic and devalued assets and constriction, then what we will lose by seizing devalued assets and selling them back to the market when things cool off.
justin,
it would buy about 5 million homes at about 140000 each
@ Jens
Where on earth can you buy a house for $140,000? Where I live, Studio apartments cost way more than that.
venessa,
and what tune would you like to listen too, while we are going down “don’t worry be happy” maybe
I don’t know what’s best given where we are now. I DO know that current economic theory FAILS DISMALLY in any logical analysis.
The “common knowledge” is that an economy must GROW, yet nothing can grow indefinitely. The world is FINITE. Any survivable economy must be a SUSTAINABLE economy.
The U.S. economy cannot be separated from the occupation of Iraq. The U.S. CANNOT AFFORD IT! Congress just passed yet another $612 Billion to fund the occupation and now proposes another $700 Billion for bailouts. Permitting the sale of ailing banks, such as WaMu to JPMorgan simply sets up one more “too big to fail” entity that may well need a bailout in the future.
Any sensible bailout must inject funds at the BOTTOM of the system, not at the top – infrastructure, help for struggling homeowners, raising minimum wage, extending unemployment benefits, expanding Medicare to cover more and ultimately ALL of the populace. The plan must NOT REWARD the chiselers who took advantage of an unregulated milieu to line their own pockets.
Look at WaMu – by far the largest bank failure in the US to date. Depositors are OK, bond holders and equity owners not ok. They lose as they should. It’s called credit default risk. Don’t loan your money unless you know who you’re lending it to and what the odds are you’re going to get it back. If we can overnight absorb this failure, why do we need $700B? Because the “guys” on Wall Street know if they paint a really bad picture AND STICK TO IT, they’ll be in line for a gift from the taxpayers. That’s the administration’s way, conjure up a story, keep telling it until a large number of people believe it to be so, and there you go – fiction becomes fact. Rest assured there IS money out there and it’s just waiting to see how stupid the American taxpayer via their federal government will be. Wall Street can’t afford to let the economy totally disappear – but they will step in to pick up the pieces at a bargain price. $700B just makes the pot that much sweeter.
@ Corporate CEOs compensation
Corporations are chartered by the state and those charters can and should be withdrawn if the boards are engaged in malfeasance. That should include paying the executive team millions of dollars in compensation of stockholders money when the corporation is collapsing.
It’s quite obvious now that these compensation packages have nothing to do with fair fees for values received by the stockholders. It’s crony capitalists raiding the registers of the nations business.
steve,
NEW MEXICO……
we have a nice place and half an acre and did not pay much more than 140000
@ Steve
“Their compensation is irrelevant, and you have no more right to criticize their compensation without owning shares than I have a right to tell you what you can hang up on your walls in your apartment.”
Just b/c their million dollar salaries are a “drop in the bucket” compared to billions of dollars, their choices to make this risky loan for a high profit is what gets the CEO and Executives paid millions of dollars. Furthermore, it is costing me, personally, tax-payer money and I have every right to question their illegitimacy.
The proverbially “posters I hang in my room” (they’re of Obama, by the way), did not cost any tax-player a single penny or affect any other person in the world. There is a big difference.
@ Steve:
Where on earth can you buy a house for $140,000?
My house a year and a half ago was $130,000 has a 2.5 car garage and on a 1/3 acre……
There were hundreds of houses in and around Richmond for under 140,000…. Even more of em now
I agree totally with the speaker from Baltimore. Clear and direct. In my opinion the best comments that I have heard about this crisis since it all started.
@ Pangolin
Again, that’s for the stockholders to worry about, unless you are a stockholder, it’s none of your business how much executives make. Malfeasance would refer to breaking laws and violating fidiciary duties, and I doubt compensation has even been viewed that way, so it’s simply not going to happen. Often executives themselves are shareholders of the corporation.
@ Brett
in DC you cannot even get a closet for $130,000. Wow, if they had high speed rail I would probably live in Richmond and be able to have a house and not live beyond my means.
You just stated on your open “Greater Good”. The grater good is to NOT do the bail out.
Now your guest stated what Mr. Buffet did. The big thing here is he usted HIS MONEY not taxpayer who don’t have a say!.
Sorry steve
Once again two countries divided by the common language. We would normal say state owned instead of public owned. I thought you meant privately traded companies (were shares are sold in one to one deals) vs publicly traded one (on a stock exchange) . I agree with your point on this one. Paying within companies is off nobodies business but those that own the company or work for them.
If we are going to end up footing the bill for these companies that are “too big to fail”. Shouldn’t we be considering breaking the companies up into little pieces. I don’t want to be facing this situation ever again and I don’t think we can count on the leadership of these companies to do the right thing when the consequence of failure is the government charging to the rescue.
@ Jessica
“The proverbially “posters I hand in my room” (they’re of Obama, by the way), did not cost any tax-player a single penny or affect any other person in the world. There is a big difference.”
I’m shocked you have Obama posters LOL. But anyways, the point of that analogy was I have no right to tell you what to do in your home, and a corporation is like a home, unless you are a shareholder, you have no say in what they do. Of course there are laws that affects what a corporation can do, or what you can do at home. A corporation cannot engage in illegal activities, and you cannot do illegal drugs at home, you cannot keep people hostage at home, but you can make indian food or put up Obama posters, that’s your right, and nobody else has any say, just like you have no say how much compensation a CEO gets unless you own shares.
It is the duty of government to govern and lead. Accordingly government handles taxpayers money which they are obliged to protect every way they can.
In the present situation ie: the financial crisis, to do nothing can lead to dire consequences whereby the public will more than likely suffer immeasureably.
By bailing out the financial institutions to the tune of several billion dollars is a matter the United States Government just has to do. The fact is the United States has tremendous resoures and they alone are able to meet this financial crisis.
Considering a similar crisis happened in Sweden around 1996, the govenment stepped in and pumped money to save a leading bank, all the tax payers money was recovered within four years. The same principle can be applied by the US govenment and should be implemented.
The US senators that oppose the plan is mostly political as they believe should it fail, they would say later ‘I told you so’ , on the other hand should it succeed, all is forgotten.
@ Robert
I should have phrased what I wrote better. I’m not even sure of the terminology to use because this is very rare when the government takes over a private publicly traded corporation.
The bail out will not help the little people on main street. The money is not going to come down to us. Also, as I stated, the banks have to be cofident with one another. Maybe this is just a political issue that is holding the taxpayers hostage. STOP IT!
steve,
plenty of people do illegal drugs at home………………
This may be an interesting idea. Lets have the American People vote on the bail out. Let us read the fine print. Let take the time. Maybe with a little time it will right itself.
This bail out plan is socialist, uncapitalistic – nonetheless, imperative to avoid public panic and ecenomic depression.
Some kind of package will definitely go through, and soon. I think what feels suspect, and what should not be accepted, is the don’t-look-at-the Wizard-behind-the-curtain aspect of the current proposal.
It sounds like a hostage situation: “Give me the money and no questions asked – or the stock market gets it.” (Blazing Saddles? ’cause we are the stock market/sheriff?)
A proposal could avoid that feeling while still emphasizing the need for speed if it eliminated that no-oversight, no-consequences element: sound more like a doctor who does want to act quickly but has no problem telling you why and who doesn’t make you promise you’ll never speak with another doctor about the original condition and subsequent treatment.
As far as getting back home to campaign, Congress will find that the vote on this will be a good chunk of their campaigning; done. We will notice, and we will care for a long time. Too often I think they factor the element of fatigue into our negative reactions.
Members would do better to advertise how they took care of the budget and the market situation, and the fact that they stayed in Washington until it was done well, as reasons for their constituency to vote to keep them.
(I’ve never done that point size increase thing before; I had fun, but feel a little dirty, like I’m sending spam!)
@ Shaun~ The missing bit is that the energy pie that we all live on food, fuel and electricity, isn’t growing as fast as the number of eaters. (population). No matter how many dollars, euros, marks or shekels you wave at that problem the essential function of declining resources available on a per-capita basis will not go away.
To hide this fact the US borrowed from the future (debt) to play today without ever increasing either the energy supply or making efficiency changes yield more from available resources.
We’ve hit the wall. The only way to settle accounts is to devalue the future of our money. But it still won’t put gas in the tanks or food on the table.
Wow, if they had high speed rail I would probably live in Richmond and be able to have a house and not live beyond my means.
Lol, I wish! That would make too much sense to have high speed rail.
I mean, you can take Amtrak but thats neither fast nor too reliable as far as times are concerned lol.
How about the lower and middle class citizens who irresponsibly took out loans or unethically walked away from loans take some responsibility too? I don’t see how it’s just the fat cats who bear the responsibilty for this mess.
US tax payer must NOT bail out these crooks. I agree with prof.
i am not sure what the speaker is going on about.
bankers running banks, duhhh. what is a finacial engenieer?
Someone tell Mary we are not baling out Rich people, we are all going to lose if the economy crashes!
congratulations to the senator of vermont, i want to move there……seriously
The on air guest is saying the rich don’t pay their fair share of taxes. The top 10% income people in the US pay 68% of the income taxes. Where does he get off making claims like that?
http://www.house.gov/jec/news/news2006/pr109-94.pdf
Jens:
congratulations to the senator of vermont, i want to move there……seriously
Really, this guy’s on point. If I was into maple syrup and cold weather, I’d head up there in a heartbeat lol.
@ brett
richmond would take forever by VRE if it even goes there to DC. Amtrak is very expensive, and even the high speed isn’t much faster than the regular train. You save only 20 minuts on a trip from DC to Philly by taking Acela Express vs. the normal regional train..
This is not a bailout for the wealthy, it is a bailout for everyone’s bank account–for all the business bank accounts, which would be insured by the FDIC anyway. These banks are insured by the FDIC to protect your money and your employers money.
There were no bailouts in 1929–and bank after bank closed, leaving business owners and individuals penniless, jobless, and unable to get their goods to market. We lost one today, Washington Mutual, because of our own folly, imagining that the housing market would continue tor rise. Because of unregulated credit default swaps and overvalued cdos, all hinged the illusion of a money-printing housing market.
If you are against this bailout, you might as well just say you want to lose your job, you want to lose your house, and you want to starve because you want your government to be happy with a laissez-faire response to a dire economic situation. It seems that the people who are against this don’t have any concept of how dependent their food and shelter are on the disposition of the nation’s economic system, and principally, the banks.
Ask your parents or grandparents! They remember what it was like, what we’re headed for. It’s time to get OFF of our hands and ACT. Time is of the essence here.
We will ALL be affected if we allow our government to sit back and watch us drown because overly optimistic people entered into stupid mortgages they couldn’t afford because they were hypnotized by the overly-optimistic lenders.
Yes to rescuing the economy. No to letting banks get away with their collosal misjudgment. Frequent rescues encourage excessive risk: head I win, tail the tax payer loses. The problem is doing nothing is too dangerous, the crisis can spill into the real economy and a major depression can be triggered where everyone will lose badly, including the poorest of the poor. So it is in the interest of everyone that a rescue has to be worked out. As usual the devil is in the details. Best thing for the government to inject liquidity into the economy and prevent credit crunch is to BUY part of the failing banks. When the dust settles, the governenment can sell these assets and recoup at least part of the cost.
The take home lesson is financial markets have to be regulated in a comprehensive manner to prevent something like this to happen again.
Agraa, Geneva
brett,
i like maple syrup and the cold, what the hell am i doing in NM. well actually NM can get cold in the winter and maple syrup is available in stores down here.
maybe montana would be an option
The market won’t tread water for all that long, despite it’s size.
The worldwide extent of the U.S. economy will have a stronger
effect on the poor on the world than it will on the U.S. public
themselves. This is an opportunity for them to adopt an agressive
stance that requires a net profit over 10-20 years. The market can
absorb that sort of debt, whilst still operating.
The main point, though:
The reason there’s no liquidity right now is that banks are too
afraid of each others’ insolvency to be able to risk loans.
If this is truly a free economy, why don’t we stick to a pure Nash equilibrium model where MAXIMUM INFORMATION SHARING is the means of metricising risk? Then adjust the interest rate of a interbank loan relative to the risk of insolvency. Those who develop the best models, best maths, fastest reaction thereafter have the upper hand. Combined with actual REAL data about the quality and quantity of domestic product will provide the proper counterflow needed to avoid periodically “blowing up the still”, so to speak. Right now it’s ludicrous to apply what amounts to medieval economics to the 21st century.
Isn’t there a possibility, with rising oil prices and a coming winter, that we’ll see many more foreclosures; further devaluing the debts that the Fed is proposing to buy?
steve,
yes they pay 68%, but that is because the rest of the population has no money…………..
@Steve
Indeed, illegal is illegal. Even though it breaks the law many-many people still do illegal activities including politicians and executives. CEOs and Execs private choices it is costing me, public tax-payer money. Their business choices and practices should be scrutinized, because it involves all Americans.
All tax-payers should question corporations illegitimacy, because it is costing us money. Remember, you said history will repeat itself, because people do not learn. I would be remiss if I did not insist our government leaders regulate this from happening, again. I do not want to experience a great depression, I am depressed enough, thank you, from my declining pension, increasing cost of food and fuel prices.
Here is an email I just received, with an interesting proposal:
Subject: FLUFF: Making Sense???
To my fellow Americans…….
I’m against the $85,000,000,000.00 bailout of AIG.
Instead, I’m in favor of giving $85,000,000,000 to America in a We Deserve It Dividend.
To make the math simple, let’s assume there are 200,000,000 bonafide U.S. Citizens 18+.
Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up..
So divide 200 million adults 18+ into $85 billon that equals $425,000.00.
My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend.
Of course, it would NOT be tax free. So let’s assume a tax rate of 30%. Every individual 18+ has to pay $127,500.00 in taxes. That sends $25,500,000,000 right back to Uncle Sam.
But it means that every adult 18+ has $297,500.00 in their pocket. A husband and wife has $595,000.00.
What would you do with $297,500.00 to $595,000.00 in your family?
Pay off your mortgage – housing crisis solved.
Repay college loans – what a great boost to new grads.
Put away money for college – it’ll be there.
Save in a bank – create money to loan to entrepreneurs.
Buy a new car – create jobs.
Invest in the market – capital drives growth.
Pay for your parent’s medical insurance – health care improves.
Enable Deadbeat Dads to come clean – or else.
Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back. And of course, for those serving in our Armed Forces.
If we’re going to re-distribute wealth let’s really do it…instead of trickling out a puny $1000.00 ( ‘vote buy’ ) economic incentive that is being proposed by one of our candidates for President.
If we’re going to do an $85 billion bailout, let’s bail out every adult U S Citizen 18+!
As for AIG – liquidate it.
Sell off its parts.
Let American General go back to being American General.
Sell off the real estate.
Let the private sector bargain hunters cut it up and clean it up.
Here’s my rationale. We deserve it and AIG doesn’t.
Sure it’s a crazy idea that can ‘never work.’
But can you imagine the Coast-To-Coast Block Party!
How do you spell Economic Boom?
I trust my fellow adult Americans to know how to use the $85 Billion.
We Deserve It Dividend more than the geniuses at AIG or in Washington DC .
And remember, this plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam.
Ahhh…I feel so much better getting that off my chest.
PS: Feel free to pass this along to your pals as it’s either good for a laugh or a tear or a very sobering thought on how to best use $85 Billion!!
@ Jessica
We don’t know if anyone did anything illegal. And we have a prohibition against ex post facto laws. Things they did might become illegal in the future, but it’s not a crime if it’s legal when it’s done.
@ David
I agree. We will all be much worse off if the economy fails completely.
@ ANON
Get real.
Tom,
Thank God the dud who send you the e-mail is not running anything like a bank
if you divide 85 billion by 300 million, everybody would get about 283 dollars, nothing like the 430 thousand suggested…..
I VOTE NO TO BAIL OUT. THEY NEED TO RIP WHAT THEY SOW.
Congress has no right to give the White House and its Secretary of the Treasury the power to transfer the people’s money to the richest bankers in the country. Vote No to the Bailout legislation. The Bailout legislation is being rammed through Congress in a matter of days. This is an illegal power grab by the White House and their richest friends on Wall Street. The Legislation allows the Treasury Department to appoint the same bankers who created the crisis to administer and dictate the use of trillions of our tax dollars. It is also one of the biggest transfers of wealth from working families to the ultra-rich in the history of the United States.
Congress should help families stay in their homes. Wealthy executives should be forced to disgorge their obscene profits, fees and bonuses that made them ultra-rich while they ran the economy into the ground.
This 700 Billion dollar bail out should be use to help the lower economy, If they was to use this money to create new employment or open back position that was replaced by out sourcing jobs to foreign countries, this country would not be in the condition it is. By creating these jobs people would be able to pay their loans to Bank.
As for the Bank they should be forced to revise existing loans, by extend the terms and lower interest rate so that people can afford to pay there loans, it was them that came out with the scam that has created, many house own to fall under foreclosure. Bank and Realtor agent also should be penalizing for the damage that was done, because they also has a hand at this economy fail. By created fails evaluation of properties, increasing property price know that this would eventually cause a crash in prices.
They should also stop all company that hire employee over sea and who use pyramid to avoid taxes in the U.S.A. force them to bring these jobs back in America and penalize them for profit they earned these last 4 years. Fact today we have over 100 million people unemployed cause by these companies. Not to mention company that have been profiting of f of bankruptcy laws that have been playing in there favor. One I love to mention is Donald trump. Who can file bankruptcy and still fire over 10,000 people every time. And come back strong again to repeat his cycle. Then there is our president Bush who also Have billion do you really thing he is concern about the people in this country. NO His soul purpose is oil. For reason of family revenge he attacks a country under fails pretence and involves everyone by declaring that they were creating nuclear weapons. A waste war and a big lose of lives for low class families.
We should void bill that permit foreigners to come here and open business free of tax for 5 years. They should void all H1 visas that permit them to do this. Investigate all transaction done by these foreigners who transfer money back to their countries that they earn here and have not been tax for. Which then they transfer their business to another family member to repeat the same cycle.
our country should also stop all purchase from other country and force exsisting foriegn company that are establish here to create work in the U.S.A. to product their products.
Further more as far as politic is concern. I feel there are too many chief and not enough indians. the best thing our country could do is to remove all theses politic that collect a 6 figure income with no track record what so ever in serving a purpose to our country.
these people should be tax: politicians in office, media who hind cover the blue collar crime, wireless phone company, government agency who work for the office and contributed to covering up this blue collar crime. the wealthy should have no mercy because they know exactly what they was doing and did not give any mercy to the lower economy that has made their wealth all these years. So why should we hard working tax payer continue to pay for the crimes and action of the wealthy society.
Fact there is 95% of our economy who is going down the tube. While 5% of the economies who are rich still live high and can afford to lose a couple of their investments.
I feel that also our President bush should be impeach and an investigation should be done on all the Bush family and associate friends, plus their access should be frozen. So they can understand what they did to our country. further more all these people should be put under house arrest, plus not allow leaving the U.S.A until all investigation is complete. This investigation should be done by someone not in the politic arena.
I am also suggesting an open vote of the elections and any other matter that need to be address, be vote by the people. being that we already experience several tamper with the voting polite. Because all these poles of vote I have seen on T.V was not announce. I would love to know where and who are voting on these poles. I am sure it is not the American people. I also feel that they should be random calls to people of the U.S.A on live T.V to see what we have to say about these crises.
Further I feel that Media should focus more on the people opinion, then on what politician have to say. Fact show that they don’t know what they are saying nor care of what the lower class feels. Politicians are only worry about their own pocket, because they fall under those that make 6 figures. They also contribute to propagandas that increase racisms in our country, pre judge mental in valuation on fails fact and statistic.
Vote today NO on bail out. And that to let the people speak. All information was found in the government statistic, Which can be Google in your search engine. Wake up American lets show that we have a voice to speak and vote.
@TomDFord
Maybe I’m doing my math wrong (because it’s a whole lot of zeros), but I think it comes out to $425 per person. 85 billion divided by 200 million. Thanks for giving me hope though. I feel like buying a bigger lunch.
This is a collective-goods problem that requires a collective solution.
Our collective mechanism for dealing with massive problems is government.This is not a bail-out of Wall Street. This is a cooling off period to interrupt a massive fire-sale of American Homeowners’ main asset our homes.
I’ve had enough of the market-fundamentalists mentality of Dr. Sanford.
We have privately rational decisions (calling loans restricting lending by uncertain banks) that makes sense for individual banks or investors, but it is a socially suicidal practice because it devalues assets. We need a collective effort to coordinate and cool off the panic.
Our homes. The credit constriction we face means that Americans
cannot finance their homes their small-businesses, their financial aid
for education. This is an effort to cool-off a panicking market to avoid a repeat of the private markets solutions that prevailed in 1929.
If the tax-payers step in with a publicly coordinated management of the debt crisis we will recover much faster than if we let our economy collapse. We will lose more in lost tax-income to the panic and devalued assets and constriction, then what we will lose by seizing devalued assets and selling them back to the market when things cool off.
Dear WHYS:
I am confused by something I keep hearing. Experts are saying that because of the credit crunch people are losing their homes… isn’t it the other way around? Isn’t it because people have purchased houses they can’t afford and taken on loans with terms they can’t meet that the whole situation has been created? I don’t understand how any of this wasn’t caused by the people who borrowed money they couldn’t pay back.
To WHYS in general:
Sorry guys, but four or five people chatting online ’bout the relative seriousness of the hurts to their feelings doesn’t sound much like a world conversation…
g
I disagree with giving 700B$ to people who have shown they are not capable of managing such money.
What I would propose is a loan to these companies. They could get as much money as they need (within reasonable limits on a per company basis) but would have to pay it back with interest (interest should be based on how badly hurt they are i.e. higher interest for they really worst cases, smaller interest for the ones that have been victim of “colatteral damage”).
The main advantages I see are:
- money is made available for the rescue
- the companies have to decide if a loan is a good choice for them
- the tax payer is not liable for the whole sum (a good portion will be paid back)
The biggest disadvantages:
- I don’t see a good, reliable way of deciding how much interest they would have to pay
- of course some will accept the loan and will end up dying anyway
kevin,
you are right, i divided it by 300 million and got 283 bucks. divide it by 200 million and you get the 425
@ Steve
“No you don’t vote on their pay, but you have standing to sue the corporation because you are a shareholder”
I see . . . I have no vote, but I can pay an attorney to sue the corporation, or try and get other small shareholders to band together and sue the corporation . . . then have the corporation spend money defending the suit and the only people who win financially are the attorneys.
“when you have mutual funds, you own shares in the fund, not the actual shares”
“In fact, mostly when you buy shares , you still don’t directly own the stock, the broker really does”
So, in fact, I may have NO rights to take any real action toward deciding executive pay, because I am some sort of “virtual” shareholder who still actually has a real financial interest in the corporation.
If that is the case, and if a person is interested in this executive compensation issue, then the most financially responsible action one can take is to complain, complain, complain in every venue possible in the hope that the message will take root and have an effect toward supporting one’s real financial interests through one’s virtual investments.
@ Michael
You have the right to file a shareholder derivitive suit if you are a shareholder. You also don’t vote on what brand toilet paper the corporation fills it’s bathrooms with either.
How is this any different than anything else? You have to pay an attorney. Yes. Just like with every other matter. If you have a tenant that isn’t paying rent, you can’t just put their stuff in the lawn and change the locks. You have to use the legal system, to sue for eviction. That’s the way things are done in a civil society rather than people doing it themselves which can lead to violent confrontations.
The way I see it is that blank check bail outs have not worked to date, why do we expect anything different now?
What I think we should do is NOT reward bad behavior but rather be careful where we lend our money.
I would like to see us review each company and decide if they have a good recovery plan if lended our money. Then I would like rules in force for the money they would be as follows:
1. the money is A LOAN with interest.
2. until the loan from the US taxpayers is paid back in full, the company MUST enforce the following:
a. No raises, bonuses, severance packages
b. salaries must be paid at federaql scale…NO EXCEPTION
c. ALL books MUST be made public and reviewable by the lenders (the US taxpayers)
d. renigging on the loan will result in the company being liquidated and all funds being recovered for the US taxpayers first.
as for the mortage problem, the governemnt can use some of this money to buy these houses at current market rate or below and lease them back to the current occupants. Since they have only been paying interest, no principle, they have in effect been paying rent.
@Gary
Sorry guys, but four or five people chatting online ’bout the relative seriousness of the hurts to their feelings doesn’t sound much like a world conversation…
LOL No, but it does give great insight into why we can never solve world problems.
A few points that I’ve not heard made during today’s discussion:
1) To follow the imagery used by one of the guests, if George W. Bush is trying to “put out a fire”, he and his co-idealogues are also the arsonists. He has preached — but more importantly practised — policies of “hands off”, “de-regulate”, “the market will cure all ills” and a general attitude that “anything goes”. Consquently, America has cultivated a vulture-culture of making money at all costs over and above making things of actual value.
And so the big money guys knowingly bundled up thousands of mortgages, including many they knew were based on false assertions not assets, and sold them and resold them like a game of hot potato, knowing that if they weren’t the ones holding the actual “security” (funny name, no?) at the end, they could make a killing without bearing the risk. Crimes are committed by criminals who should be held accountable … and made to pay.
2) Contrary to what we’ve heard for 8 long years, markets do not regulate themselves!! (Enron and WorldCom weren’t “accidents” and neither is this.) The only way to prevent this kind of greed from repeating is to return to reasonable, reasoned regulation. McCain has a life-long history against regulation. Electing Obama should be a no-brainer.
3) This is a big business against small business as well as “regular people” issue. Small businesses generally have much less depth of financial reserves to run their business than huge corporations. They cannot operate if credit dries up for financing inventory, payrolls, capital investments, etc. They also tend to produce real goods and services that fuel the economy, as well as being documented creators of more new jobs than big business. They will really deserve a public helping hand if they start failing due to paralyzed credit markets.
4) This was NOT an unforeseen crises; it IS a CRIME that has long been in the making. To wit, Mr. Jim Rokakis, our Treasurer here in Cuyahoga County, OH, has for at least the last several years, been trying to get the Federal Reserve, Congress and others to “do something” about predatory home mortgage lending. No one really listened; no one was interested in doing anything.
In particular, the Federal Reserve Bank — now endorsing this massive bail-out of the perpretrators of this bust — was completely unresponsive to Mr. Rokakis’ pleadings on behalf of its real victims, working Americans, their families, businesses and communities. .
Also, as has been pointed out in the news, Secretary Paulson et. al. have been working on this “bail out” plan for at least a year. Seems to me that a whole lot more could have been in this past year to preclude the magnitude of the problem than to come up this catastrophic cure.
Americans have a HUGE choice in November: we can return to office the people and party whose moral stance created this mess — or we can elect Barack Obama and Joe Biden.
I cannot imagine facing world opinion if the U.S. elects a Pres. McCain and worse-yet Vice-Pres. Palin.
The taxpayers have now to take the burden because of the charade of the current government in power which always claimed that the economy was fundamentally strong when it was in tatters for more than 2 years. There is no other way out.
John in Salem,
Tell them to get in line. The whole Middle East hates us because we have our oil wells on their sacred camel trails. The Chinese hate us because they want to be like us. The north Koreans hate us because Bill Clinton promised them an energy reactor and Bush reneged on it. So any hopes of being the next Asian success is on hold. The Jews hate us because we support the Palestinians. The Palestinians hate us because we support the Jews. The Japanese hate us because they have become just like us. And most disturbing is that we hate ourselves and continues down this path of self destruction like an alcoholic in a liquor store.
So what if a few Africans hate us too. I think they are already ticked about the diamond and ivory trade anyway. Oh yah, and that slavery thing.
I know. The US Investment system seems to look like a ponzi scheme. I had no idea that short-selling was going on. It doesn’t take a mathematician or economist to realize that the short-sell devalues the market the way that reverse evolution could de-evolve the dinosaurs into blue-green algae.
But too many people have their retirement savings invested in the brokerages. If they fail, there’s going to be more people on the street than can pay taxes to prevent it from happening in the first place.
This is why Bush’s advisers are so avid to buy out so many at risk investment houses on Wall Street.
Actually, they’ll be getting a pretty good deal. The Mortgage debacle should be stabilizing by now. So what’s fueling the Wall Street sell-off is nothing more than panic. For one thing, our media can’t keep from dwelling on it. I estimate about half — HALF — the discussion on N.P.R. and cable news is about the Stock Market.
There’s just too many economists out there who are crave attention. “National pubic Radio calling. Can you spare a half hour of your time to vent your opinion as to why the end of the world is imminent? Maybe, after you get your fifteen minutes of fame, that cute blond down the hall will go out with you.”
If the US can get a good price on A.I.G., they could be looking at actually making some money on the deal. So I don’t regard it as a bailout. It’s a bargain.
–Regards. Louisville, Kentucky, US.
@selena in Canada
Well, that make two of us who can see behind the curtain…ony 6+ billion to go and everything will be OK.
g
A Hobsons choice with no good options .The financial system needs immediate treatment to keep the plaque from spreading .Lamentably ,future generations will pay the price of this period of excess.However ,a total meltdown would bring great misery for years . With intelligent leadership the US can once again harness the people to a common goal ,restore our economy ,end military adventurism and reign in spending .No more golden parachutes for failed CEO’s and punish the Politicians who are incompetent and self serving.
@ Gary
I just used an opportunity to voice my opinion;) Selena made a very good point!
There is a lot of nonsense and double-speak about economic policy. When you look at the “fine print” the government underwriting of the big ecomomic performers is always there in some form or another. Letting things “rip” has always been the rhetoric of those who want to catch cheap votes on a con. The responsibilities of governments to those economic formations which keep the wheels of economies turning worldwide has always been supportive in time of “boom” and “bust”.
It is not the job of the taxpayers to bail out the banks, but its the only option. if there is no bail out we face economic default and panic. the last thing I want to do is grow up having to pay for the debt of my parents generation. The archaic government institutions like Medicare, Medicaid and social security must be reformed to deal with the economy of today. there are not enough people paying in to there systems and there are to many taking money out of it.
Anyone have suggestions?
I think this is first time in Banking histry that Govt is bailing out a bank instead of by force closure, as for as Example of SWEADEN is concerned that is immetrial being a small country with small economy compairing to USA.
If we study Forced Closure of Bank Of Credit & Commerce International which started from England in 1988 up till now Liquidation process is in progress may be linger on half a century, each & every account holder is suffering beside Liquidator’s.
I dont know how long US Tax Payers will efford this bail out , how long dose it take, who will produce guaranty & who is going to pledge what to tax payer’s.
In fact they are educated criminal’s without natinality, religion & sincearity with US Tax payer’s. Commonly these people are involve in undernoted Crimes:-
(a) Money Laundring.
(b) Technology Laundring.
(c) Job’s Laundring.
(d) Paralise Industrial sector in USA.
(e) Disbalance Trading.
First US Govt brought the charges against them, then establish Tax Payers Governing Counsil for monitering them, then bailout might sound appropriate otherwise compulsary liquidation is the best solution for crooket kind of business lobbiest’s in USA. I may recommand please nationalise all there properties & Assets to secure public money. If they are incompetant windeup for China.
Whats the sense in loads of figures and calculations??????.
The Truth doesnt need figures. When banks are bailed out, its done for a reason, just one problem, those who worked for the banks and caused the trouble will probably not be those that are looking for work.
The Greedy gamblers, and the incompetent executives are those that should be made to empty their Bank Account, to the advantage of the Tax Payer.
Why personalise seriouse subjects, there are forums for such things.
John in Germany.
greedy, greedy bankers, in order to make yet another fat bonus for themselves pauperised untold numbers of small people. Wiped off their savings. The ONLY justice to be seen to be done is to publish all those names of bankers losing their jobs. In fact ALL of them should be replaced. If any of them remain in their job – they will be laughing all the way to the bank again!!!!
No, it is not the duty of the taxpaers to bail out the banks. Because its set a dangerous idea of that banks can do whatever they want and…..
Dennis
its the tax payers in the 3rd world that are digging deeper even in their side pockets to bail out americans,europeans and even asians from their addiction of our natural resources.no american tax payer is paying anything to bail out him or herself as for a fact.its their not worked hard for cash that will be used to buy goods and services from africa in particular..you know the cash are just illegal print outs.
former benevolant pharaoh
THE LAST DON
nairobi/vihiga/kenya
who doesnt know the americas strong economy was built from the sweat of slaves?
THE LAST DON
nairobi/vihiga/kenya
The US gov’t has failed its people by failing to do anything about all these large corporations making ridiculous loans. Companies like Washington Mutual had been on the FDIC’s watch list for a while, but it failed to do anything before the companies collapsed. Furthermore, the companies shouldn’t have been making the loans in the first place. It is the CEOs and managers who watched their employees make loans to people who they knew would default that should have to pay for this crisis.
I think it sucks but, I guess it’s necessary. I just hope the people who have caused this are punished in some way. And I certainly hope they don’t get ANY “pay outs.”
This is merely the latest in a litany of scams devised by some ‘persons’ who use the US government and its military to subjegate any other people who have a resource they (ruling the USA) desire and can profit from by purchasing or (failing that) seizure – no matter how high the ultimate cost to those sent-in to do their dirty work.
The same was true of Britain, Spain, France, Portugal, Germany (in Europe) and peoples from regions in the middleeast and asia during previous centuries.
It’s the old ‘Shell Game’ wherein the hucksters divert your attention to matters in-which they provoke intense interest while their assistants pilfer your purse.
It’s no different today – only the stakes and risks are a LOT higher – citing the nuclear, biological & chemical options.
One need only view the last scenes in the Redford film
‘Three Days of the Condor’ in conjuntion with ‘All the President’s Men’ to get the gist of the situation.
Like all empires – this one will collapse too as the hucksters hoof it out of town – leaving their gullible prey and (hopeful) co-conspirators to take the fall.
The tax payers were never asked, they w ere told by their elected governments that they or their future geenrations will have to pay up on the theory that any collapse of the banking system/economy would be infinitely worse. One would hope that Speaker Nancy Pelosi’s words ” the party is over” will also mean that those responsible will not get away but be held to account, answer for the losses,and not walk away with any loot.
I do not wish to bail out banks with my tax dollars. I was smart enough to get a fixed rate mortgage and make enough money to pay for it. These banks and mortgage companies made it to easy for people who can’t hold a job to buy houses and now we all have to suffer for it. Let them go under. The US needs a kick in the balls to wake up!!!!!!!!
There are other ways to bail out this problem why is no one taking about it ????Like a 10% Hair cut on a 50 year old system but lost name of system dsnc cds something like that.
Banks are just different businesses at the end of the day., some survive some fold. They all take risks with our money and we allow them to take those risks. however if a bank is in financial trouble it should not be bailed out by the taxpayer. The general public will remove it’s money from a struggling bank and deposit it in another, therefore increasing the value of that bank. It is not rocket science..Unfortunately we do not live in a simple world, we live in a greed is good world where the banks have put pressure on various govenments around the world to “prop them up”. In the UK, despite the taxpayer bailing out various banks they did not pass on the reduction in the base rate, leaving it for themselves…how greedy!..I would rather see banks go to the wall as they should without help from the taxpayer
I do not wish to bail out banks with my tax dollars. I was smart enough to get a fixed rate mortgage and make enough money to pay for it. These banks and mortgage companies made it to easy for people who can’t hold a job to buy houses and now we all have to suffer for it. Let them go under. The US needs a kick in the balls to wake up!!!!!!!!