OK, what is the sense of DU on the bail out

[lapfog_1]

Now that we have three choices, or four if you count "other".

The third choice which I've titled "House Republican Plan" has, as it's components (as I understand them) a 2 year moratorium on all corporate taxes, a complete and total elimination of the capital gains tax for investors, and more deregulation of the financial services industry. The goal of these actions is to attract billions of new investments to the market to offset the losses from the mortgage meltdown, along with a the presumed promise to "never do it again" or something.

I've seen a lot of "let them burn, no bailouts" posts and I thought it would be good to see a poll result on the subject.

[Greyhound]

1. No, to the currently offered choices.

There are any number of alternatives and this corporate welfare is among the worst, it is a lose-lose with no guarantee of success.

[lapfog_1]

3. OK, offer up another choice with a modest amount of detail

and I will run another poll after we have a number of them.

Needs to address the current liquidity and credit crisis and should have a chance of addressing the complete problem (not another few billion cash injection bandaid).

[chknltl]

8. Bernie Sanders plan:

(THIS is IMO the right step in the right direction.-c) (First sentence only edited for clarification)

By Senator Bernie Sanders

The current financial crisis facing our country has been caused by the extreme right-wing economic policies pursued by the Bush administration. These policies, which include huge tax breaks for the rich, unfettered free trade and the wholesale deregulation of commerce, have resulted in a massive redistribution of wealth from the middle class to the very wealthy.

The middle class has really been under assault. Since President Bush has been in office, nearly 6 million Americans have slipped into poverty, median family income for working Americans has declined by more than $2,000, more than 7 million Americans have lost their health insurance, over 4 million have lost their pensions, foreclosures are at an all time high, total consumer debt has more than doubled, and we have a national debt of over $9.7 trillion dollars.

While the middle class collapses, the richest people in this country have made out like bandits and have not had it so good since the 1920s. The top 0.1 percent now earn more money than the bottom 50 percent of Americans, and the top 1 percent own more wealth than the bottom 90 percent. The wealthiest 400 people in our country saw their wealth increase by $670 billion while Bush has been president. In the midst of all of this, Bush lowered taxes on the very rich so that they are paying lower income tax rates than teachers, police officers or nurses.

Now, having mismanaged the economy for eight years as well as having lied about our situation by continually insisting, “The fundamentals of our economy are strong,” the Bush administration, six weeks before an election, wants the middle class of this country to spend many hundreds of billions on a bailout. The wealthiest people, who have benefited from Bush’s policies and are in the best position to pay, are being asked for no sacrifice at all. This is absurd. This is the most extreme example that I can recall of socialism for the rich and free enterprise for the poor.

In my view, we need to go forward in addressing this financial crisis by insisting on four basic principles:

(1) The people who can best afford to pay and the people who have benefited most from Bush’s economic policies are the people who should provide the funds for the bailout. It would be immoral to ask the middle class, the people whose standard of living has declined under Bush, to pay for this bailout while the rich, once again, avoid their responsibilities. Further, if the government is going to save companies from bankruptcy, the taxpayers of this country should be rewarded for assuming the risk by sharing in the gains that result from this government bailout.

Specifically, to pay for the bailout, which is estimated to cost up to $1 trillion, the government should:

a) Impose a five-year, 10 percent surtax on income over $1 million a year for couples and over $500,000 for single taxpayers. That would raise more than $300 billion in revenue;

b) Ensure that assets purchased from banks are realistically discounted so companies are not rewarded for their risky behavior and taxpayers can recover the amount they paid for them; and

c) Require that taxpayers receive equity stakes in the bailed-out companies so that the assumption of risk is rewarded when companies’ stock goes up.

(2) There must be a major economic recovery package which puts Americans to work at decent wages. Among many other areas, we can create millions of jobs rebuilding our crumbling infrastructure and moving our country from fossil fuels to energy efficiency and sustainable energy. Further, we must protect working families from the difficult times they are experiencing. We must ensure that every child has health insurance and that every American has access to quality health and dental care, that families can send their children to college, that seniors are not allowed to go without heat in the winter, and that no American goes to bed hungry.

(3) Legislation must be passed which undoes the damage caused by excessive de-regulation. That means reinstalling the regulatory firewalls that were ripped down in 1999. That means re-regulating the energy markets so that we never again see the rampant speculation in oil that helped drive up prices. That means regulating or abolishing various financial instruments that have created the enormous shadow banking system that is at the heart of the collapse of AIG and the financial services meltdown.

(4) We must end the danger posed by companies that are “too big to fail,” that is, companies whose failure would cause systemic harm to the U.S. economy. If a company is too big to fail, it is too big to exist. We need to determine which companies fall in this category and then break them up. Right now, for example, the Bank of America, the nation’s largest depository institution, has absorbed Countrywide, the nation’s largest mortgage lender, and Merrill Lynch, the nation’s largest brokerage house. We should not be trying to solve the current financial crisis by creating even larger, more powerful institutions. Their failure could cause even more harm to the entire economy.

[TahitiNut]

24. I agree with Bernie 100% and adamantly oppose anything less.

Try getting Boehner on-board for that. Good luck.

[Greyhound]

37. As you say, good luck. Nothing good will even be considered until we,

as in us, in huge numbers, get very involved and demand it.

I have criticisms of what FDR did and didn't do, but people have forgotten that he was able to do what he did because of overwhelming popular support from the people. He was fighting the same battle and mostly the same interests we are now, and they controlled politics almost as much as they do now, but more then money, politicians like to stay politicians and they have to keep getting elected to do it.

I think this is a last-ditch game of chicken, will we swerve?

[HamdenRice]

50. "Ensure that assets purchased from banks " You do realize this means Bernie supports bailout, right?

That he is proposing conditions, not opposing the bailout.

[chknltl]

61. Yes, I was answering OP's question:

"OK, offer up another choice with a modest amount of detail". I am against a bailout myself believing that this 'urgent' need for a bailout is a con on a cosmic scale put forth by the bfee, (actually those who control the bfee). If the Govt. is hell bent on a plan though, I am throwing out plans like Bernie Sanders Plan or Thom Hartmann's Plan, (post #60) because of who is paying for it. Our not getting stuck paying for it ultimately is the last line in this battle that needs to not be crossed.

My unrealistic dream would be for bipartisan Congressional OPEN hearings into exactly who caused this and how. Let We The People-those interested that is,(raises hand) get a chance to become educated to this issue along with Congress. THEN formulate the best course after those hearings. The very fact that the bfee is scaring the hell out of everyone (again) and using this nationwide fear to force us down a road at best ill defined, (again-think Iraqi war fiasco), tells me that this need for a rapid response is likely a whole lot less urgent than we are led to believe.

[chimpymustgo]

57. Bernie's plan sounds good. Obama needs to get behind THAT. Everything else coming from both

parties is RAPE of the people.

[Greyhound]

33. There are two Scandinavian examples already making the rounds.

If, as they say, the mortgages are the problem we could take the collateral for true market price and they will have to eat the loss from the fraudulent valuations. The buyers that are still in possession have a newly valued property and most will be able to make the new payments, avoiding foreclosure.

For the inventory of foreclosed properties, we take possession of those as well we could then hold that supply of houses and bring them back into the market at a controlled pace that lets the market correct more slowly and in the meantime use those assets to address other, "Main Street" problems. Hmm, holding a lot of houses and lots of homeless people, sounds like there's an opening for some innovative thinking there. Under-skilled and un/under-employed people, something else we have in abundance.

That's three ideas in 10 minutes. If there was any will to actually address the problem they could have a hundred better ideas tomorrow. This is not about "saving the American economy", it is about saving the financial industry that feeds DC.

Fuck them, they sucked trillions of dollars out of us already, if they want to survive they better pony up and bail themselves.

[chimpymustgo]

59. Here's link and except from NYT article ("most emailed" for much of this week)

Guess our Congress-critters missed it.

http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?em

Stopping a Financial Crisis, the Swedish Way


By CARTER DOUGHERTY

-snip-

But Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing.

Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.

That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.

“If I go into a bank,” said Bo Lundgren, who was Sweden’s finance minister at the time, “I’d rather get equity so that there is some upside for the taxpayer.”

Sweden spent 4 percent of its gross domestic product, or 65 billion kronor, the equivalent of $11.7 billion at the time, or $18.3 billion in today’s dollars, to rescue ailing banks. That is slightly less, proportionate to the national economy, than the $700 billion, or roughly 5 percent of gross domestic product, that the Bush administration estimates its own move will cost in the United States.

But the final cost to Sweden ended up being less than 2 percent of its G.D.P. Some officials say they believe it was closer to zero, depending on how certain rates of return are calculated.

The tumultuous events of the last few weeks have produced a lot of tight-lipped nods in Stockholm. Mr. Lundgren even made the rounds in New York in early September, explaining what the country did in the early 1990s.

A few American commentators have proposed that the United States government extract equity from banks as a price for their rescue. But it does not seem to be under serious consideration yet in the Bush administration or Congress.

[Greyhound]

63. Norway ended up paying even less IIRC and emerged stronger than ever. Thanks for the link. n/t

[timtom]

49. Kucinich plan

http://kucinich.house.gov/News/DocumentSingle.aspx?DocumentID=103496

[Art_from_Ark]

4. Just like the ol' Social Security privatization scheme

Since they couldn't get the money directly from SS privatization, even after Duhbyuh's Great Snake Oil Show, they're doing an end run in the guise of a "crisis" to get it.

[lapfog_1]

6. We all have theories about how and why we got here...

but we are here. Either you think there is a crisis or you think it's all fear mongering. If it's really a crisis (threat of Depression), then which of the solutions gets us out and/or present your own.

[Art_from_Ark]

16. It is a manufactured crisis to suck as much money out of the Treasury

as possible by 1/20/09.

Just like the Social Security "crisis" was.

[Greyhound]

35. No theories, well documented historical fact. We know exactly who did what, when, that lead to this.

We also know who warned that it would bring this and even when. We also know who ignored them.

[chknltl]

12. I agree

The ones who are demanding this $$ are the same ones who put us in this situation. We gave bush more $$ for Iraq to be rebuilt-how'd THAT work out? When they say 'MO' we need to say 'HELL NO!!!'

[WePurrsevere]

52. Wrong place.. need more coffee. ;-) n/t

[tama]

2. Let it crash n/t

[MrModerate]

5. This is so far out of my area of expertise that I feel somewhat helpless . . .

What we *must* avoid doing is leaping into some administration scheme without time to examine its likely effectiveness or fairness. The markets should just hang tough (or do what they're going to do) until some well thought-out plan can be agreed on.

The Paulson bum's rush on this is a huge red flag.

[lapfog_1]

7. Seriously, if you believe that there is a crisis...

then believe that it is upon us now, like this week or, at most, next.

The amount of borrowing from the Fed this week alone is terrifying ($200 B a day).

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4093410

[MrModerate]

21. That's as may be. Flailing around and doing something stupid . . .

Is unlikely to be the best choice.

[Quantess]

9. ..huh, what just happened

[lapfog_1]

13. Why? Because I ask a legitimate question?

I've seen a lot of threads from DUers who either believe there isn't a crisis at all, or if there is one we shouldn't do a thing about it. So I was curious as to how many feel one way or another about this.

what's the problem with that?

[Quantess]

15. No way, it's because of subverting rights 'n stuff

quantessd (1000+ posts) Fri Sep-26-08 01:02 AM
Response to Original message
9. ..huh, what just happened

[chknltl]

10. Kucinich is about to release a plan:

(No, this is not his plan yet...he does discuss what he will add to his plan which should be out shortly-c)

(by Dennis Kucinich from his own official web link: http://kucinich.us/index.php )

Protecting the public interest in any economic "bailout"
The U.S. government has been turned into an engine that accelerates the wealth upwards into the hands of a few. The Wall Street bailout, the Iraq War, military spending, tax cuts to the rich, and a for-profit health care system are all about the acceleration of wealth upwards. And now, the American people are about to pay the price of the collapse of the $513 trillion Ponzi scheme of derivatives. Yes, that’s half a quadrillion dollars. Our first trillion dollar compression bandage will hardly stem the hemorrhaging of an unsustainable Ponzi scheme built on debt "de-leverages."

Does anyone seriously think that our public and private debts of some $45 trillion will be paid? That the administration's growth of the federal debt from $5.6 trillion to $9.8 trillion while borrowing another trillion dollars from Social Security has nothing to do with this? Does anyone not see that when we spend nearly $16,000 for every family of four in our society for the military each year that we are heading over the cliff?

This is a debt crisis, not a credit crisis. Just as FDR had to save capitalism after Wall Street excesses, we have to re-invigorate our economy with real - not imaginary - growth. It does not address the never-ending war on the middle class.

The same corporate interests that profited from the closing of U.S. factories, the movement of millions of jobs out of America, the off-shoring of profits, the out-sourcing of workers, the crushing of pension funds, the knocking down of wages, the cancellation of health care benefits, the sub-prime lending are now rushing to Washington to get money to protect themselves.

The double standard is stunning: their profits are their profits, but their losses are our losses.

This bailout will not bring real jobs back to America. It will not bring back jobs that make things. It does not rebuild our schools, streets, neighborhoods, parks or bridges. The major product of this financial economy is now debt. Industrial capitalism has been destroyed.
In the next few days I will push for a plan that includes equity for every American in any taxpayer investment in this so-called bail-out plan. Since the bailout will cost each and every American about $2,300, I have proposed the creation of a United States Mutual Trust Fund, which will take control of $700 billion in stock assets, convert those assets to shares, and distribute $2,300 worth of shares to new individual savings accounts in the name of each and every American.
I will also insist that all of the following issues be considered in whatever Congress passes:

Reinstatement of the provisions of Glass-Steagall, which forbade speculation
Re-regulation of the finance, insurance, and real estate industries
Accountability on the part of those who took the companies down:
a) resignations of management
b) givebacks of executive compensation packages
c) limitations on executive compensation
d) admission by CEO's of what went wrong and how, prior to any government bailout
Demands for transparencey
a) with respect to analyzing the transactions which took the companies down
b) with respect to Treasury's dealings with the companies pre and post-bailout
An equity position for the taxpayers
a) some form of ownership of assets
Some credible formula for evaluating the price of the assets that the government is buying.
A sunset clause on the legislation
Full public disclosure by members of Congress of assets held, with possible conflicts put in blind trust.
A ban on political campaign contributions from officers of corporations receiving bailouts
A requirement that 2008 cycle candidates return political contributions to officers and representatives of corporations receiving bailouts
And, most importantly, some mechanism for direct assistance to homeowners saddled with unreasonable or unmanageable mortgages, as well as protection for renters who have lived up to their obligation but fall victim to financial tragedy when the property they live in undergoes foreclosure.

These are just some thoughts on the run. You will hear more from me tomorrow.



Dennis Kucinich

[lonestarnot]

18. Now that is sounding like a plan and when in doubt do nothing.

[appleannie1]

11. I voted other because

I do not think we need to rush a decision that costs each of us.
I think the underlying causes of what has occurred need to be addressed in any bail out. (I predicted this would happen over a year ago. Why couldn't so-called experts see it coming?)
I realize we need to maintain our liquid assets but there has to be alternatives other than simply using taxpayers to bailout stupid decision making. Those that made those decisions need to be penalized also or we will face this again further down the line.

[endthewar]

14. Other: Opinion piece by James K. Galbraith

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/24/AR2008092403033.html?nav=slate

[Douglas Carpenter]

19. an interesting and possibly viable proposal by Professor Galbraith that will also cost 700 billion.

If I was Secretary of Treasury or President of the United States it is a plan that I would likely support.

Unfortunately, it is not the proposal that is on the table and I don't expect it will be on the table. So we are stuck with working with proposals that are on the table and the clock is ticking - liquidity will soon evaporate -

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/24/AR2008092403033.html?nav=slate

The point of the bailout is to buy assets that are illiquid but not worthless. But regular banks hold assets like that all the time. They're called "loans."

With banks, runs occur only when depositors panic, because they fear the loan book is bad. Deposit insurance takes care of that. So why not eliminate the pointless $100,000 cap on federal deposit insurance and go take inventory? If a bank is solvent, money market funds would flow in, eliminating the need to insure those separately. If it isn't, the FDIC has the bridge bank facility to take care of that.

Next, put half a trillion dollars into the Federal Deposit Insurance Corp. fund -- a cosmetic gesture -- and as much money into that agency and the FBI as is needed for examiners, auditors and investigators. Keep $200 billion or more in reserve, so the Treasury can recapitalize banks by buying preferred shares if necessary -- as Warren Buffett did this week with Goldman Sachs. Review the situation in three months, when Congress comes back. Hedge funds should be left on their own. You can't save everyone, and those investors aren't poor.

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/24/AR2008092403033.html?nav=slate

[endthewar]

22. "liquidity will soon evaporate"

Where have I heard this before? Something about Saddam preparing for a nu-cu-lar holocaust or something.

The indication right now is that McCain isn't committed to the bailout program and might support the Republican alternative, which the Democrats won't support. Pelosi won't have her party be the sacrificial lamb for Bush's incompetence. No deal will be done tomorrow and Congress may go back to the drawing board.

[Douglas Carpenter]

23. I am afraid this is very real and anyone following this matter at all knows this and has been

anticipating a possible economic meltdown since the massive decline in real estate equity values - has created a massive worldwide withdrawal from the credit markets - this created panic among the markets all over the world - thus triggering the failure of multiple banks and other insurance and investment institutions.

This massive withdraw of credit - removes financial liquidity from the markets and will - basically cause the economy to grind to a halt.

The only shock about the timing - is that the timing is playing out in a way that plays to the benefit of Democrats. It is beyond ludicrous to suggest that the Republicans would intentionally sabotage their own party's chances in the upcoming election and massively discredit their own party's ideological orthodoxy, possibly forever,

Banking and credit survive on the basis of banks loaning to other banks and convincing the credit markets to puchase instruments that will keep credit afloat.

This is all imperaled right now and yes, credit will soon evaporate possibly within days or even hours without a major intervention of some sort.

Anyone who thinks this is just the Bush Administration playing an election game is delusional. I frankly wish it was. There would be a lot less to worry about.

Time really is a factor here. In this computer age it takes only minutes for massive financial changes to occur. I happen to know both anecdotally from acquaintances and from solid economic writing that real panic was spreading all over the world last week - a situation in which total financial liquidity could dry up within hours. If that were to happen the whole thing collapses like a deck of cards within hours. A Singaporean banker I know who works out of the Gulf, personally told me that he took a loss of half a million dollars last week. Because he sees a situation of complete meltdown looming. Could it still happen anyway, even with a bailout? Yes it could. But a bailout would buy some time and might give markets a chance to stabilize.

This is the reality. With a bailout there will be some very negative consequences, especially inflation...and the markets could still collapse.

If there is no bailout. The whole thing collapses within weeks; before the election.

I would prefer a bailout that MIGHT prevent a collapse over no bailout that WILL mean a collapse.

[lapfog_1]

28. More important in some ways

was the story I read about a young woman in Singapore... It cost her about $2000 to close her accounts with AIG, which only had $7000 total in them. Yet she was willing to do that and take the loss, probably something like a years savings for her, just so she could be liquid in the market. Multiply that story by millions of young Chinese and other Asians...

And I expect that there will be dire consequences by next week if no deal is done. Stock market first, but a sharp increase in business closings, especially businesses that depend on access to inexpensive credit. Even overnight credit.

[Douglas Carpenter]

31. I'm hearing ;the same stories myself, every day!! This is not from neocons

this is mostly coming from Asians and Middle Easterners who really do see a very real and complete drying up of financial liquidity - many of them have already moved their assets in anticipation. And this is coming from very cautious minded people. This is very, very REAL!!

[endthewar]

40. Yes, there's a problem. Doesn't mean this bailout is a good idea.

It doesn't solve the underlying problem and represents a $700 billion investment in an idea that will be rushed, not have adequate oversight, be understaffed, and has no indication of clear direction. Just like Iraq, there is no exit strategy or victory plan with this bailout idea. We're just trust Paulson's judgment, his gut feeling, the angel sitting on his shoulder. If Bush personally came by your house and asked you to fork over $3000 by the end of the week to buy something that NOBODY in the free market wants to buy, would you buy it? If so, I've got a bridge in Alaska to sell you. :rofl:

[Douglas Carpenter]

44. the bottom line is - if a massive intervention which one way or another will amount to hundreds of

billions of dollars is not enacted and enacted soon - liquidity will very quickly dry up, the markets will collapse and millions upon millions - perhaps hundreds of millions of people all over the would will be plunged in poverty and economic destitution.

I personally would prefer Dr. Galbraith proposal which is mentioned above with a link to his Washington Post editorial. http://www.washingtonpost.com/wp-dyn/content/article/2008/09/24/AR2008092403033.html?nav=slate
But unfortunately, that proposal is not on the table and the clock is ticking and credit markets and thus liquidity will soon evaporate.

There is no guarantee that any of this will work. That is true. This is like using a very, very experimental form of chemotherapy that has about a 50/50 chance of working and will cost half your life savings, and will produce some undesirable side effects. Or one can simply chose not to accept the therapy and simply die.

[endthewar]

45. You readily admit that you would prefer another proposal

but are willing to go along with this bailout idea? Does that make sense to you?

[Douglas Carpenter]

47. like all decisions in life one has to chose between what is on the table and what is on offer

not what is not on the table and is not on offer.

I would also prefer a job that payed ten times my current salary in which I only had to work only two days a month to my current job. But that is not what is on the table.

In politics as in life one has to chose between what is available - otherwise one is living in fantasy land.

But right now this could all become irrelevant as the House Republicans and possibly the McCain campaign might try to propose a deal that has no chance of either Bush Administration backing or Congressional Democratic backing. Thus the talks will collapse and liquidity will soon dry up and the markets will soon collapse.

[endthewar]

51. Here's what it looks like to me

McCain's stunt during the White House meeting has caused the talks to implode. Republicans will decide to not back the plan for political reasons. Pelosi will not subject her Democratic colleagues to the unthinkable; being blamed for the Bush administration bailout backed only by the Democratic Congress. She understands that is how Republicans can steal the election and Congressional seats.

So it's somewhat likely that they will go back to the drawing board if the above happens. That's what I'm waiting for. Then I hope that they take their time and come up with a better plan.

[Douglas Carpenter]

55. The Democratic proposal really does not sound too bad

It would, as I understand it from CNN International (which is light years ahead of CNN domestic)the Democratic plan would split the 700 Billion into two packages. The first 350 billion would be essentially what Secretary Paulson asked for - immediate purchase of the toxic assets. Remember these are supposed to be eventually paid back. The second 350 billion would be used to purchase equity investments in the failing banks - so the public would essentially own a major interest of these banks and in theory could eventually benefit when the economy rebounds.

The Democratic plan would offer relief to forestall foreclosure on individual homeowners who acted in good faith.

The Democratic plan would forbid "golden parachute" severance packages to the senior executives of the banks which accept this assistance.

Amazingly it appears that President Bush and Secretary Paulson were prepared to accept this. I suspect because they are over the barrel and had no choice.

Unfortunately, most the House Republicans now appear be posturing to vote against the bipartisan compromise and claim that it is they who stood up to Bush and Wall Street.

When the market collapse - which they will - if no package is pushed through by the end of next week, if not sooner - It will be interesting to see how the Congressional Republicans will posture then. I don't believe the Congressional Democrats will bring it to a vote if most Republicans insist on voting against it. I doubt that they would put themselves in that position. But when the markets crash next week - all bets are off.

[endthewar]

56. Paulson is still in charge of $350 billion

Nothing good about that plan at all. The White House has been talking about this bailout for months it turns out, yet they only want Congress to spend 1 week on it. This is a HUGE transfer of power to the executive branch, a branch of government already too powerful as the past few years have proven. Don't be fooled by the Congressional calls for oversight. The plan is inherently structured to give Paulson freedom to spend the money with no oversight. Oversight is not the same as accountability. We might find out that Paulson made some bad investments with that money, but there won't be much Congress can do about it. Which toxic assets and which banks will he invest in? Those kinds of details are completely missing. We know that Paulson has an idea about this, but is not sharing. Why is that?

This plan doesn't pass the smell test, plain and simple. Do you trust Bush to properly invest $350 billion in assets nobody wants to purchase? A ton of economists are now warning against this bailout plan. I'm following their judgment and want to see a better plan.

[Douglas Carpenter]

58. well all I can say is they better come up with something fast

I might prefer, the Galbraith plan, the Sanders plan the Kucinich plan or perhaps Noam Chomsky or Howard Zinn have a plan. But none of those plans will pass.

If nothing passes by the end of next week, the market news is going to be interesting indeed.

[Truth2Tell]

17. Other. Use the 700B to protect working people.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4093764

[pfitz59]

20. Wait until Bush is out of office!

No fix can occur with the Chimp in charge!

[ozone_man]

62. Best answer!

That is one huge reason why it's happening now, and why we should wait. Part of the Bush shock doctrine like the Iraq War. We're getting railroaded into this.

Why the rush to spend $700B for these toxic derivatives? Let Goldman Sachs sell them at market prices. If they go bankrupt, deal with it then. The whole timing here seems like it was designed to give GS an escape route before they went bankrupt, allowing them to become a regular bank holding company.

[Two Americas]

25. push polling

That is one of the most biased polls I have ever seen here.

[lapfog_1]

29. Feel free to come up with your own description.

Yeah, I'm biased. so what.

I don't want to see a mild depression or even a bad recession.

I want Obama to win... and I trust him to choose the right plan for the moment, maybe not the best plan, but I think we are in a corner here. I do not believe that we can wait.

But it's not a push poll.

[Two Americas]

30. biased is fine

Dishonesty is not.

[lapfog_1]

34. Kinda hard to argue against a charge of dishonesty if you

don't say where I lied or in what aspect.

If it's about the details of the House Republican Plan, I'll admit that I haven't yet seen it in print or any print stories about it, only what was said on the TeeVee... and my memory isn't all that good.

So if I either left something out or have some detail wrong, please tell me. and please provide a news source for the correction.

If it's something else, I don't know what it would be.

[endthewar]

42. Ignore the idiots. This is the best poll on this subject matter yet.

:hi:

[leftofcool]

26. No to Obama's plan.....no bail out

alternate plan.......make it a 750 billion loan instead

[Douglas Carpenter]

27. that is what they are doing. This 700 billion is a loan, both the Bush and Obama proposal

although admittedly a less than secure loan, that is what the term,"purchase of toxic assets" means.

[lapfog_1]

32. Sorry, that's not correct.

It's an asset purchase plan. the institutions that sell us the asset have no legal rights to it after the sale, nor do we have a right to be repaid for the money we give them for the asset. What we CAN do is buy the worthless asset (a sub-prime mortgage) AND some stock in their company for a price which is over the market price of the mortgage. that removes the bad debt from their books, gives them more cash to offset the write off of the bad asset and dilutes their shareholders a bit.

I think we should insist on a Board of Directors seat as well, with veto power over any compensation given to any executive, current or past.

We would then hope to recoup the money spent by 1) holding onto the mortgage (house) until the market gets better and then selling it for more than we paid. and 2) holding onto the stock of the now profitable investment company until it rises some from when we purchased it. and 3) receiving any dividends paid by the company.

But the money we are using to "bail out" is not a loan.

A loan of any amount does nothing to make their books look better and so it doesn't lead them to solvency.

[Douglas Carpenter]

38. actually the Democrats proposal which the Administration seems to have agreed to

would involve splitting the 700 billion into two. The first 350 billion to purchase the toxic assets. The second 350 billion to purchase equity investments in the banks.

There is simply NO certain way to insure that unsecured loans to insolvent banks holding massive amounts of toxic assets will repay their loans any more than there is a way to insure that the toxic assets will not default. Just as there is no certain way to guarantee an unsecured loan to someone with an unstable income will be repaid.

If the plan works, even the toxic assets will be repaid - or at least the vast majority of them.

If the banks default on these assets that will be because they are insolvent - and then we are ALL really in trouble. I would rather take the chance on something that might overt an immanent drying up of liquidity and the collapse of the market that WILL occur very quickly without some sort of multi-hundred billion dollar intervention.

[lapfog_1]

39. That's what I stated that I want to have happen.

I would like one other item.

After the government buys the mortgage back (and that's a bit tricky now that they have been sliced and diced and are owned by lord knows who)... it would be nice it many instances to find the foreclosed party and renegotiate the loan with them... at a lower interest rate and, possibly, at a lower loan amount. Yeah, it's an unfair giveaway to possibly cheating borrowers (who knew they couldn't afford the house when they bought it). But it keeps people that have a stake in the house IN that house and, therefore, raises property values in the neighborhood, helping all taxpayers... not to mention that the government would not have to pay for security and maintenance of their asset.

[Douglas Carpenter]

41. The Democratic proposal does seem to offer genuine relief to homeowners

Although the exact details are not yet available.

And the proposal basically forbids "golden parachute" severance packages to senior executives.

The problem is though you agree, I agree, the House and Senate Democrats agree, even President Bush and Secretary Paulson seems to be reluctantly agreeing. I suspect because they have no choice - they are over the barrel. The problems seems to be the House Republicans and possibly the McCain campaign appears to be posturing and trying to turn this into a political game where they can claim to that they tried to save Americans from bailing the Wall Street fat cats and stood up against the unpopular President of their own party.

I always thought it would be a cold day in hell when I would find George W. Bush acting relatively reasonable - at least in comparison to the congressional leaders of his own party.

[magellan]

36. Other

Not a penny until we have a firm grasp of the breadth of the liquidity problem and whether throwing money at it, at the risk of screwing our economy by seriously devaluing the dollar further, will help more than hurt.

Then, if necessary, I like the ideas Sanders and Kucinich have floated.

[Hubert Flottz]

43. The repub plan sounds like throwing gasoline on the fire...

more trickle down bullshit...the very same things that put us in the spot we are in today.

[lapfog_1]

46. Paulson apparently already threw a huge wet blanket over it

It is not only silly, but it's simply another bandaid... a temporary patch at best. but then, for those true "drown it in a bathtub" types, it only has to "work" until the election.

Not to mention that it would be yet another massive transfer of tax burden from the corporations and the rich to the middle class and the poor.

[timtom]

48. I voted "Other"

Any "bailout" should have adopted the Kucinich plan as its guideline!

http://kucinich.house.gov/News/DocumentSingle.aspx?DocumentID=103496

Why there was no discussion of this at all makes all and sundry participants COMPLICIT in thuggery of the first order.

[LWolf]

53. Other: Adopt Kucinich's plan.

As usual, it's the best on the table.

[WePurrsevere]

54. Other: Wild idea but how about we send the bailout $$ to Americans & let it trickle up...

I feel that this would help Americans, the economy and the banks. (FWIW I used $150k merely as an example.)

First and foremost... We've already thrown over 1 TRILLION dollars in rescue money this year alone so no more welfare to large corporations and certainly not if they don't/won't keep/bring most of their jobs in the US and buy the majority of the supplies they need from the US. Regulations and oversight must also be in place and mortgages and other loans should be refinanced minus out the BS that has harmed so many.

Then take the $700B, divide it by the number of American households whose income is under a set amount including those on SSD, Workman's/Veterans comp like they did for the stimulus (this would be approx $10k per household from what info I can find), and send it out to them much as they did with the gov stimulus checks but in a larger and much more meaningful and helpful way.

Think about what Americans could do with that kind of money. Those that are in foreclosure might be able to save their homes, others could pay off loans and others will spend and save and/or invest if they chose to and stimulate the economy. All of the previous would then trickle up to the banks, etc. Although the idea is fairly rough, IMO this at least is a better solution then BushCo's plan of throwing money and rewarding greedy corporations.

Barring this (since I know it has a snowballs chance at the Equator): I'm leaning towards... going slowly and not rushing into anything. To paraphrase an old saying, "Bailout in haste, repent at leisure". If a bailout MUST happen though... I'd MUCH prefer Barack's then Bush's. I want regulation, investigation, oversight (a mix of consumer protection representatives, economists and gov), NO "rewards" for those that helped cause this and should have known better and most important of all... help for "Main Street".

After so many years of it, I'm sick to death of the US government bailing out big corporations while they leave middle and lower income American tax payers hanging. "Trickle down" is BS and DOESN'T work... let's try TRICKLE UP.

[chknltl]

60. The Thom Hartmann 'bailout' Plan

From: http://www.thomhartmann.com/index.php?option=com_frontpage&Itemid=1

How Wall Street Can Bail Itself Out Without Destroying The Dollar
By Thom Hartmann

For Grover “Drown Government In The Bathtub” Norquist, this bailout deal will work out very well. At a proposed cost of $4,780 per taxpayer, it’ll further the David Stockman strategy of so indebting us that the next president won’t have the luxury of even thinking of new social spending (expanding health care, social security, education, infrastructure, etc.); taxes will even have to be raised just to pay for the bailout. It’ll debase our currency, driving up commodity prices and interest rates, which will benefit the Investor Class while further impoverishing the pesky Middle Class, rendering them less prone to protest (because they’re so busy working trying to pay off their debt). It’ll create stagflation for at least the next half decade, which can be blamed on Democrats who currently control Congress and, should Obama be elected, be blamed on him.



But there’s another way: Create an agency to fund the bailout, loan that agencythe money from the treasury, and then have that agency tax Wall Street to payus (the treasury) back.

It’s been done before, and has several benefits.

In the United Kingdom, for example, whenever you buy or sell a share of stock(or a credit swap or a derivative, or any other activity of that sort) you paya small tax on the transaction. We did the same thing here in the US from1914 to 1966 (and, before that, we did it to finance the Spanish American Warand the Civil War).

For us, this Securities Turnover Excise Tax (STET) was a revenue source. For example, if we were to instate a .25 percent STET (tax) on everystock, swap, derivative, or other trade today, it would produce – in its firstyear – around $150 billion in revenue. Wall Street would be generatingthe money to fund its own bailout. (For comparison, as best I candetermine, the UK’s STET is .25 percent, and Taiwan just dropped theirs from.60 to .30 percent.)

But there are other benefits.

As John Maynard Keynes pointed out in his seminal economics tome, The General Theory of Employment, Interest,and Money in 1936, such a securities transaction tax would have the effectof “mitigating the predominance of speculation over enterprise.”

In other words, it would tamp down toxic speculation, while encouraging healthyinvestment. The reason is pretty straightforward: When there’s no cost totrading, there’s no cost to gambling. The current system is like going toa casino where the house never takes anything; a gambler’s paradise. Without costs to the transaction, people of large means are encourage tospeculate – to, for example, buy a million shares of a particular stock over aday or two purely with the goal of driving up the stock’s price (becauseeverybody else sees all the buying activity and thinks they should jump ontothe bandwagon) so three days down the road they can sell all their stock at aprofit and get out before it collapses as the result of their sale. (Weironically call the outcome of this “market volatility.”)

Investment, on the other hand, is what happens when people buy stock becausethey believe the company has an underlying value. They’re expecting thevalue will increase over time because the company has a good product or serviceand good management. Investment stabilizes markets, makes stock pricesreflect real company values, and helps small investors securely build valueover time.

Historically, from the founding of our country until the last century, mostpeople invested rather than speculated. When rules limiting speculationwere cut during the first big Republican deregulation binge during theadministrations of Warren Harding, Calvin Coolidge, and Herbert Hoover(1921-1933), it created a speculative fever that led directly to the housingbubble of the early 20s (which started in Florida, where property values weregoing up as much as 70 percent per year, and then spread nationwide, only toburst nationally starting in 1927 as housing values began to collapse), thenthe falling housing market popped the stock market bubble and produced thegreat stock market crash of 1929. That speculation aggregated enormouswealth in a very few hands, crashed the housing and stock markets, and producedthe Republican Great Depression of 1930-1942.
Franklin D. Roosevelt, as part of the New Deal, put into place a series ofrules to discourage speculation and promote investment, including maintaining –and doubling – the Securities Transaction Excise Tax. Other countriesfollowed our lead, and the UK, France, Japan, Germany, Italy, Greece,Australia, France, China, Chile, Malaysia, India, Austria, and Belgium have allhad or have STETs.

Perhaps the most important benefit of immediately re-instituting a STET in theUSA, however, isn’t that it would raise enough money to bail out the banks andbillionaires (and after that crisis is covered, could pay for a national healthcare system), or that it would encourage investment and calm down markets.Those are all strong benefits, and absent the current Republican Administrationbailout proposal would stand-alone strongly.

But the Republican Bush Administration is currently suggesting that we borrow$700 billion (or more) from China and Saudi Arabia and other countries andinvestors, add that to our national debt, and repay it with interest (makingthe actual cost over the next 20 years over $1.4 trillion). This is whatRepublican Herbert Hoover tried in 1931 when he first created the ReconstructionFinance Corporation (later totally reinvented by FDR) to bail out the banks in1931. Hoover’s RFC bailed out the bankers, paid off huge salaries in thebanking and investment world, bought him a few months (maybe that’s the realgoal of the Bush/McCain Republicans now – just hold things together until afterthe elections), but ultimately led to the failure within two years of virtuallyall the banks in the United States. The bailout failed.

Similarly, in 1998 the Japanese banks were facing a serious crisis of liquidityas the result of a bursting housing bubble in that country. The Japanesegovernment used public funds to re-float a number of large banks that year, andit similarly failed. In one example out of dozens, in 1998 135 billionYen were given from public tax funds to Ashikaga Financial Group, but thecompany limped along for a few years and in November of 2003 collapsed again,requiring a second infusion of a trillion yen from public coffers. And,as the BBC reported in a 30 November 2003 article (“Japan Bank Bail-Out ‘AOne-Off’”): “But experts warn that Ashikaga could be just the tip of theiceberg.” Professor of Finance at Tokyo University Takehisa Hayashi said,“It will come as no surprise if we see another Ashikaga case in the near future.”And they did.

Japan continues to limp along, as a result of bailing out banks rather thanfixing structural problems. (At least the Japanese had enough savings touse their own money, instead of debt, to bail out their banks.)

So bailouts don’t work, and never have. And they also have the sideeffects of damaging a nation’s credit, sucking up its taxpayers resources, and(when done with debt) weakening its currency.

So let’s go back to what we know works. After Hoover’s 1931 bailout of thebanks failed, FDR did a cold reboot of the entire system, putting into placestrong rules to prevent speculative abuse. And he doubled the STET tax,both producing revenue that more than funded the Securities and ExchangeCommission and further prevented a repeat of the speculative bubble of the1920s that led directly to the Republican Great Depression.

We’ve done it before. We financed the Spanish American War and partiallyfinanced the Civil War, WWI, and WWII with STETs. We stabilized our stockmarket with a STET from the mid-30s to 1966, and other nations are doing ittoday. It’s time to do it again, this time using the STET so tax WallStreet can pay for its own bailout.



Thom Hartmann is a Project Censored Award-winning New York Times best-sellingauthor, and host of a nationally syndicated daily progressive talk program onthe Air America Radio Network. Hismost recent books are "Screwed: The Undeclared War Against the Middle Classand What We Can Do About It and "Cracking The Code: The Art and Science of Political Persuasion