Political Discussions
The Bailout - I'm starting to flip flop
Posted by csiunatc • 9/26/08 • Subscribe to this Discussion [RSS] • Report This Topic
Topics: bailout, depression, election, recession
So I've been more than clear that i support the Bailout as a neccesary evil.
But over the last couple of days, i've been thinking about this.
Not going forward with some sort of rescue package is going to hurt a hell of a lot more than to bail the banks out ... in the short run.
But I can't be sure that it is the best decision for the long run. And although i know that a lot of common folks are going to get seriously hurt financially if this doesn't happen. Im starting to wonder if a good solid depression isn't exactly what is needed to clean the slates of a lot of bad corruption, sneaky boardroom deals and bad politics.
If we really want our children to be better off then maybe this is not a good idea.
If we want to cushion the blow for ourselves, and pass the debt on to the next generation. Then the bailout probably is the better choice.
What is abundantly clear is that whomever gets the oval office in 2009 won't be there in 2013. Which is why i think both candidates are so touchingly in agreement on that this has to happen.
My economic convictions tell me that it would be better to let the dinosaur die, but my self preservation sure isn't looking forward to what that might to do the economy.
Whats your take on it. Would you rather suffer a little for a long time, or suffer a lot in the short run?
User Comments
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I'm on the fence like you are, but for slightly different reasons.
I think that economic situations being what they are - what with globalisation, outsourcing, and tremendous international - and national, individual debts being what they are a depression now will be much harder to get out of than what we experienced in 1929.
Essentially, I'm not convinced that the fall out will be short term - I think it will have lasting effects.
On the other hand, a part of me say f**k 'em, let those who can, do so, and those who cannot? Too bad, so sad.-
No i don't mean short run as "short" there is no telling how many years the economy is going to suck dead donkey balls. (lets see if that expression gets the post deleted or not)
But to repay loans of 700 billion is going to take longer in any case... which is what i am referring to in the "long run" -
I would prefer that they take what they can from the CEO's and upper executives to pay for the damages.
Like you would for any other kind of damages. That way, you get a whole lot more paid for, avert total disaster, and it won't cost the taxpayers their lively hoods.
I don't think anyone else agrees with me though
But I mean, if you're at the top and willing to take credit (and mass profit) for all the good times, you'd better be ready to take responsibility for when you mess up the entire nation's economy!
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I'm leaning heavily against -- I've been referring to it as the "big reverse-socialist redistribution of wealth" -- but I'm not completely sold. I think a real persuasive argument could win me over.
I'm just glad I don't have to make the decision. -
It sounds like there could be a way to do this with less liability to the public, and more responsibility to the banks, but I do not quite grasp the degree to which we have to save them in order to make the economy stable enough, and I think the debt we owe has something to do with why we have to do more of a bailout than less. I've agreed with myself not to read anymore economic journals this weekend, they are not helping me see this any clearer.
They have to be liquid enough to deal with a run on them, I just don't know how they determine exactly how much they would need in case their were to be a run on the banks.
Another thing, haven't many of these companies already had offers so someone is waiting in the wings I'd like to know who...-
If it was sold without disclosure of the terms, then yes it is fraud. But last i checked, no one has had a gun to their head to sign a mortgage.
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Polybore is not sure. If you have decided that a free market is the way forward it seems to be an odd solution to suddenly about face.
The words "knee" and "jerk" spring to mind. The problem is that all stock is now dependant, not on the financial bottom line of the particular stock, but on the decisions of politicians.
Polybore thought that this whole state vs free enterprise thing had been sorted out but now the waters have been muddied it is difficult to see where this will go.
Because the politicians and the market have both lacked the foresight to see that this situation would arise, this makes polybore think; are they capable of resolving this?
Keeping things simple it would seem to make sense to say that the market got us into this, the market should get us out.
These are but early days but I see massive, truly gargantuan, class actions ahead. It is worth remembering that what kicked off this whole thing were mortgages sold to people who could not afford them.
The keyword here is SOLD. If you sell crap then it is fraud.-
You talk about yourself in the third person. That's cool! Opinionstreams is reminded of a Seinfeld episode... -
Polyobore has no first or second person. Have you seen them?
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It reminds me of the of the Sherminator...
And a guy that was in my brothers class, but i think he killed himself... -
One prefers the third person when online. Phew. You are starting to sound a bit thirdpersonist csiunatc.
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Hmm.. if that means not liking to read or hear someone speaking of themselves in third person, then yes I am a thirdpersonist.
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Polybore is revolted by your use of the use of the first person but has, until now, politely not mentioned it.
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wrong place
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I am willing to defer to people with a clue. I just want to see them consider more than only Wall Street's interests, and I'd like to see them have enough backbone to not worry about what us clueless masses think. Course the latter is expecting too much only a month out from elections.
I would also like to see us talking about an issue no one wanted to discuss last night (perhaps understandably): the government is very likely going to need to spend on a lot of things in order to keep the GDP afloat. From that point of view, Obama's proposals were at least more promising than McCain's, who sounded like Harding after 1929.
But maybe people are hoping the bailout will be enough. I guess we can cross our fingers, pray, and do a banker's equivalent of the rain dance. -
I am against the bailout for a whole host of reasons. The first of which, I think the liquidity issue is being oversold as a scare tactic.
Also, the issue isn't the foreclosures on the books but the expected foreclosures to come. An aggressive policy to give the economy an electric shock treatment can quickly change that expectation.
Yes, some liquidity support may be needed but not as the main thrust of the plan and not to the degree George Scare Tactic Bush is selling it.-
Xmarks, I am interested in your perspective...
I wonder about this: after the depression, FDR's administration purchased houses to help alleviate some of the glut and the federal gvt. later sold those houses back to the public, sometimes as a profit.
I wouldn't mind a program like *that* because the government would be owning an actual asset.
However, giving money to investment banks (or holding companies now?) is just buying paper that may be worthless tomorrow.
Couldn't the bailout money be used to actually purchase homes in foreclosure instead of the sold and re-sold, re-packaged conglomeration of that bad debt at the investment banks? -
Mom: That's where I'm at. I don't know if we even need to purchase anything but provide enough encouragement for private money to purchase. For example, if the problem is not enough demand in housing, perhaps a first time home buyers program for military families and teachers (for example). The program would have to be set up so they have a good shot at making the payments.
They would accomplish injecting some activity in homes and give addition incentive for people to join the military or become teachers. -
I believe it is a scare tactic. As everything that has to sway the public:
This issue has nothing to do with war at the moment however this quote rings loud to me.
"Naturally the common people don't want war; neither in Russia, nor in England, nor in America, nor in Germany. That is understood. But after all, it is the leaders of the country who determine policy, and it is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is to tell them they are being attacked, and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same in any country"
Hermann Goering -
@210Betty:
A fitting quote during this economic/war/terrorism/virus/"catastrophic emergency" fear campaign.
Ugly, isn't it? -
xmarks there are already some great programs for first time home buyers and for development in areas already in place.
They just need to get the info out there (it isn't well advertised) and, of course, the prices of homes had to come down before it could work.
My husband and I are going into one of the rural programs right now - it's a great deal, and it doesn't have to be your first home. it's designed to help buyers like us (trying to recover from ID theft and all that entails) as well as helping rural communities not lose everything to foreclosure, and/or big box developments.
It's a good deal.
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Like Obama said, "there are bad options, and there are worse options." One thing is obvious, though: Paulson isn't the man to fix the problem.-
Is it possible that we only have those two types of options for this situation, bad and worse? Looking at how Congress and the White House are handling this, that may just be the case. -
Sati,
Did you see that Paulson's original "proposal" (what was it, 2 and a half pages long?) is now more than 100 pages?
I would like to get my hands on a copy of that for a little look-see.
If anyone discovers a link, please post it!
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Honestly, I'm not sure which direction would be best for the country in the long run. My eyes and ears are open to who is saying what about the bailout. A lot of us simply have to trust the people we feel best represent our views and those more knowledgeable about finance/economics that we favor.
Initial thoughts: no bail out
Based on what I've heard so far: it may be a necessary evil -
No One seems to want to talk about the company most in need of this bailout, walmart. Each of them have major financial ties to the corporate giant or its major suppliers. Failure to bail them out will affect Walmarts ability to stay in business or continue as the the cheapest place around.
I am not a fan of Walmart or their business practices, but I most certainly do not want to see the largest private employer in the country, the biggest user of commercial services, and the only place a lot of people can afford to shop right now. Causing walmart to fail, or even close unprofitable stores, raise prices, or cut back on staffing is not going to be good for anyone.-
How on earth is Wal-Mart relevant? It's not part of this mortage and financial services meltdown. The bailout isn't for businesses in trouble, It's to save the financial system of this country, which is about credit, banks' liquidity, and so on, which is tied to bad mortgages.
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This turned up in my inbox today:
This idea sounds just crazy enough to possibly work, so naturally it won't be given serious consideration. How great is our bureaucracy!! HAW! --m
Hi Pals,
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 billion 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 I do the geniuses at AIG or in Washington DC
And remember, The Birk 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.
Kindest personal regards,
Birk
T. J. Birkenmeier, A Creative Guy & Citizen of the Republic
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!!-
check the math.
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You need to move the decimal point to the left about three places.
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You had me going there until I took out the calculator...
Seriously, Barron's got it right today. (They beat me to it those dead tree media bums)
The plan is to buy assets, that's not a bail out, that's an investment. We could make a lot of money on this because these assets are not worthless, they are just misspriced. Sweden went through a similar bank asset rescue and made a nice profit on the deal.
If the sovereign (that's all of us, by the way) can't make a buck at a time like this, at the expense of the traders who forced down the asset prices, well, then we get what we deserve. -
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We are stuck in a rut because the problem with making money out of money is flawed that it has failed in the expected so-called trickle down effect of spurring manufacturing and job creation that comes with it. Our economy has been turned into a national casino where the roll of the dice determines losers and winners with the taxpayer at the losing end with the bailout proposal.
The bailout is just like a financially strapped home borrower trying to refinance their mortgage they cannot afford in the first place because the salary was not able to keep up with the casino style wall street. -
Who knows where the money is going to and how big the whole is? I don't hear anyone explaining what's really going on.-
Well that is exactly it. Quite frankly, I don't think that anyone has a firm grasp on the size of this, and wether 700 billion or even more is going to make a real difference, or if it's just going to slow things down a little..
I can't say that i am convinced that this will be enough to remedy the situation. And if it isn't going to FIX it, then what is the point..
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Listen......
How many banks are still around after 150 years, how man stores are around after 150 years, how many people are around after 150 years....... DER the last one is a trick question:P
But really, everything in the world and nature has to correct itself. We don't need as many banks, taco houses, hamburger joints, coffee houses or whatever else we have in excess in our country. Things have to work out it is the law of the land.
Things can only be out of whack for so long. -
I understand why both McCain and Obama are going to support this thing. They're right to do it. But I do not get why either one of them would want any credit for that vote. Are the politics of this bailout changing so much that undecided voters now like the plan? This thing could be politically toxic, which is why Democrats want Republicans on board. Everyone needs to be there and not grandstand, but I should think many lawmakers will not want to draw attention to themselves this time round.
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The bailout should be enacted in several steps -- the first being a temporary monetary infusion that will get us through the election. After that, they can come up with a plan without politics being a factor.
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Get us through the election? Hell no, this has nothing to do with the election.
It seems that most are against it. Which is even more interesting since that makes this yet another time where politicians choose what they want and care little for the public... -
Both of my senators say they are going to vote for the bailout and it is my plan to vote against both of them.
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@SJ: According to the current plan, the money will be released in stages. And even this huge plan is only a way to get us to the next administration. Much more economic legislation will be necessary, including economic stimulus. The $700 billion is a band aid.
@CSI: It's called statesmanship. It has something to do with why we do not have direct democracy but rather representative democracy. The representatives are listening to their constituents on this, but they have to show leadership too.
@XM: Dunno what party you're voting against, but this is a bipartisan decision. Are you going for 3rd party candidates for Congress? -
I am fiercely opposed to this bailout and any other corporate bailout. It makes me disgusted to see our politicians cater to their corporate friends.
We, the American people, are being hoodwinked and some don't even realize it.
Did you hear the latest?
US Congress passes $25 billion loan guarantees to automakers!!!
www.breitbart.com/article.php?id=080928164938.dtc44u1c&show_article=1&lst=1 -
According to the first sentence in that piece, the issue is completely different. You might want to start a separate thread on it, since it could also make an interesting discussion.
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I don't believe all congress people will vote yes. I haven't checked if I have a 3rd party candidate available to me yet. If I do, I will strongly consider voting for them. Even if there isn't a 3rd party, I think 90% of current congress should be replaced. Even if it is the same party, it is time to raize the old establishment to the ground.
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Well, the Broncos just got beat by the lowly Chiefs so when you put things in perspective, this whole bailout thing doesn't really matter all that much.
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Go back to 1988 after 8 years with Reagan. There was the savings and loan crisis. It was followed by a bailout. We were fine. Bush is following in the tradition of Reagan with trickle down economics. Lots of money was made very fast, then it all fell apart and had to be bailed out. Don't worry the bailout is necessary, history is repeating itself. Trickle down economics works short term, but then it has to save itself with something else.-
Weheiru,
Are you at all interested in presenting real fact? Or is la-la land just too nice a place to live?
The S&L crisis stemmed out of Carters 1980 Depository Institutions Deregulation and Monetary Control Act. Which allowed overextension of small institutions up to 20%.
Yes, Reagan didn't really help, Just like Bush didn't correct Clinton's mistakes thats behind the current crisis. But PLEASE. Try to at least place some responsibility where it belongs. Even if admitting the whole truth hurts too much for you to face. -
weheiru said, "Go back to 1988 after 8 years with Reagan. There was the savings and loan crisis. It was followed by a bailout. We were fine."
We had a pretty severe recession after 8 years of Reaganomics.
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