DUers against the Dem bailout bill--I don't understand you

[jpgray]

There are a few discrete camps of opposition to the Dem bailout as I see it on DU. I take issue with most if not all of them.

1. Those who are against Paulson's plan.

Welcome back from Monday! Paulson's plan isn't on the table in any recognizable form. Not in terms of the $700 billion all-in-one commitment, not in terms of complete lack of oversight, and not in terms of refusing to seek equity for taxpayers or close-to-market-value purchases.

2. Those who are against the Dem plan, due to its focus on buying bad debt.

Way more understandable. Many smart economists (Galbraith being most often cited) argue that buying bad debt is -probably- not a necessary plan at all, and we should instead pursue a better one. So it's simple, yeah? Just drop the bad debt buying! No $700 billion! Well it isn't that simple. The proposal that Galbraith (for example) lays out -still- ties up $700 billion of taxpayer money, it's just focused on regulation and the FDIC. That's still a bitter pill for taxpayers, offers no guarantee of initial healing, and may still be exploited by the GOP politically.

Moreover, the steps Galbraith really pushes to fix the crisis are non-starters with the GOP: Create a new HOLC (FDR!), federal revenue sharing (gov't subsidy of states' social spending!), and Social Security supplementation (which they seek to destroy, not grow). How to pay for it? A turnover tax on stocks. None of this is going to fly with douchebag Republicans, and since any response to the crisis that spends taxpayer dollars in the hundreds of billions is going to be unpopular and probably won't "fix" anything by November, the Democrats are seeking a fig leaf of bipartisanship on this.

If we can pass a bill that simply buffs up regulation and secures the FDIC for the moment, that may be a better solution. So this kind of opposition I understand best and agree with most--incidentally if you have other great alternative plans to buying bad debt by expert economists, feel free to post them here as I'd like to read them.

3. Those who applaud the GOP opposition.

First, you're insane. Second, they are not simply opposing this nasty bailout, they are proposing a "plan" of their own. Who wants to guess what it contains? If you said deregulation, tax cuts for fat cats and vague free market hand-waving, you're exactly right! Many economists justly oppose the Paulson plan, but they use far more dire language against the GOP plan. Robert Waldmann for one:

“I think it is obvious that it will cost much more than the Dodd-Frank plan *and* create new risks for the financial system.”

“I can’t manage to find any reason to doubt that the House Republicans’ plan would destroy the U.S. financial system,”

There are a few articles out on this craven political gambit, and I encourage anyone who is saluting Shelby or Boehner as defenders of the little guy to read all they can find.

4. Those who say "Do nothing at all for now. Let things collapse"

This one I really don't get. If someone could point me to expert opinion on how doing nothing -at all- is a superior choice, please post them in this thread. I just really hope it's not fans of "heightening the contradictions," or adherents to the mistaken belief that a severe recession hurts the rich in any significant way.

[European Socialist]

1. Maybe we just don't like being taken by filthy rich crooks who could bail themseves out.

[jpgray]

2. Do you believe inaction will primarily harm the rich?

[depakid]

3. I think many if not most of these folks don't have retirement accounts

and/or don't understand (or refuse to believe) that a credit freeze up has dire ramifications for EVERY sector of the economy- including their own.

[DailyGrind51]

25. A lot of us average "working stiffs" with retirement accounts will lose.

This isn't just a "screw the rich" gesture, to allow banks to fail, it affects everyone, especially without those employer-provided pensions, who took the initiative to start their own retirement annuities.

[European Socialist]

6. If someone slaps your face, you are not too eager to help them...

even if that might be in your best interest. I think that is the way most people feel and I'm one of them.

[tosh]

4. Good post.

After the excitement of the long-awaited first debate plus all of McCain distractions, I awoke feeling bummed: Back to the Big Bailout.

It has been hard enough for me to try to understand the mess, its implications and its possible solutions but, like you, I cannot understand this opposition. Outrage at the mess itself, yes I get it. Opposition to the Dem proposal, no I don't get it.

[and-justice-for-all]

5. Giving Paulson 700billion of our money...

unregulated, to do so as he pleases, is not my idea of a plan.

Letting the system fail, as hellish as it could be, might actually force us to form a more responsible and functioning financial structure. The system has failed and it failed because it was allowed to do so, it is a free market system that was left to its own devices and it did not work.

There has to be more regulation and over sight, the Government is responsible for are well being as a society and it should be in their best interest to make sure that shit like this never happens. But everyone one is scarred of socialism, even though it has worked brilliantly everywhere else.

Capitalism creates and breeds greed. We need a 50% socialized system that is 50% capitalist; it is reasonable and realistic to have both.

[Selatius]

7. A lot of working class voters got destroyed these last decades. There's huge resentment out there.

You have working families who are falling behind on the bills. Many people work 2 jobs, and some even more than that. A lot of people are wondering if they have the liquidity to cover the bills that come at the end of the month, and others are struggling with trying to put their children through college or cover the prescription drugs or their utility and gas bills. It's a grim and daily struggle for many of these people. Many have fallen into bankruptcy and foreclosure, and millions have watched good, high-paying manufacturing jobs disappear into countries like China.

There's quite a lot of anger out there.

So when bankers in Brooks Bros. suits wearing Rolexes on Wall Street who, to them, appear to be infinitely better off come and ask for more money from them after they have foreclosed on their homes, what would the reaction naturally be from people who know nothing but struggle instead of ease, pain instead of comfort, anxiety instead of peace of mind?

They are likely demanding that if the government is going to spend 700 billion, then necessarily the executives who run these banks should be made to put up some of their own resources to pay for the troubles they helped foment.

[Uben]

8. Let me preface my response with this....

....a bail-out would surely recoup some of the losses I have taken in the market, now at about $250K. I would love to have some of that money back because I live on it.

But, it will come back in time. Letting irresponsible banks fail sends a message to the industry that if you fuck up, we are not bailing your ass out. You either maintain responsible loan policies, or go down in flames. This was not something beyond their control. They had as much a chance to succeed as all the other banking institutions but they chose the wrong path....greed.

Our economy is not going to crash. Quit listening to the doomsday people. Look around, people are still working, stores are open, and bamks are open. There are some banks that will fail, and in turn, that will mean some businesses will fail, but overall, our economy will survive this.

We would survive a bail-out as well, but it sends the wrong message to the industry. Executives may cushion their falls with a golden parachute, but banks should not have that luxury. You either practice rational lending policies or fail...period! I think these institutions have a fiduciary responsibility to their investors to practice safe, reasonable policy, always. They did not do that. They let greed skew their policy, and while it looked like they were going to really make a killing off of these sub-prime loans, it was a gamble that they lost, and lost big! It came up snake-eyes!

I stand to lose a lot of money without a bail-out, but I knew those funds were at risk. The market is not a sure thing, and that's why people are told to diversify their holdings. Fortunately for me, most of my holdings are in real estate here in Texas where it is still strong, especially in my area. Had I had everything in the market, I would be sunk. That is a risk I would never take, but a lot of people have their life savings in the market, and they are going to lose a big chunk of it. If they are young enough, they will recoup a lot of it over time.

So, I say no to the bail-out. Let the cards fall where they may. Why burden every American with my losses? I took the risk, I take the fall. That is the way it is supposed to work!

[cali]

9. I'm not sure where I stand but Joseph Stiglitz sure doesn't

care for the bailout bill- and he's someone I have a lot of respect for. And one thing is really cheesing me off: the dropping of any form of help for strapped homeowners. I will not support any legislation that doesn't help homeowners. And I'm disgusted with Pelosi and Obama for saying it's out.

[Hugin]

10. The fact that millions of Americans that are without health-care didn't cause a similar 'crisis'...

is why I'm leary of any rushed bailout of the financial services industry. You see, those are people who have no
health insurance, not corporations who's management made bad decisions.

Understand?

[magellan]

11. I'm against them rolling over to Bush** when they're the majority

And I'm totally against a bailout of any sort because it won't solve the problem. This is a solvency crisis, not a liquidity crisis (much as Bush** and the Fed are dicking around with things to scare us into thinking so).

I'm never in the mood for being robbed by money junkies with toy guns.

[bridgit]

12. And to those interested in seeing greedy, clueless corporatists turn on the spit a time or two?

I'll buy the next round :toast:

[elifino]

13. The government enabled this problem and it must fix it.

Congress Pushed Fannie, Freddie In Wrong Direction During 1990s

By TERRY JONES

INVESTOR'S BUSINESS DAILY | Posted Thursday, September 25, 2008 4:30 PM PT
It was October 1992, nearly 15 years before the housing meltdown and subprime crisis. Republican Rep. Jim Leach of Iowa was on the floor of the House, talking about something that no one at the time seemed to care about: the potential danger that Fannie Mae and Freddie Mac posed to the economy.

In remarks later reported by the Washington Post, Leach warned that Fannie and Freddie were changing "from being agencies of the public at large to money machines for the stockholding few."

Leach's prescient comments went unheeded — indeed, Congress spent the next decade and a half avoiding the alarms going off around Fannie and Freddie. Until, that is, it was too late.

Led by top Democrats, including Rep. Barney Frank in the House and Sen. Chris Dodd in the Senate, Congress not only did nothing about the growing risks at Fannie and Freddie, it in essence doubled down on their risks.

Link http://www.ibdeditorials.com/IBDArticles.aspx?id=307241242284619

The present administration had 6 years, with a majority to prevent the current cluster**** and did nothing.

I really do not know the best way to fix the immediate problem, but just as important our elected leaders must pass legislation which will prevent this from happening again.

I just hope the do not think they can solve the problem with the following:

http://www.ibdeditorials.com/CartoonPopUp.aspx?id=302732581348634

[Zhade]

56. Don't post your bullshit rightwing lies on this board.

They're not welcome.

[girl gone mad]

65. Thank you.

IBD is a right wing propoganda paper.

[sendero]

14. I don't understand the people who are for it..

.. do you REALLY think that this will fix our shadow banking system?

There are an estimated $62 TRILLION of credit default swaps out there. Pouring $700 billion on it isn't going to do JACK SHIT.

The ASSHOLES who have gotten us into this message are no holding a gun to our heads and telling us either $700 billion or else.

Fact is, they cannot fix this mess and they know it. They can stall it off for a while to try to help Republicans in the upcoming elections. That is the best they can accomplish.

Eventually there will have to be government intervention. But it won't involve handing out free cash to the assholes that made billions bilking the country out of its treasure. It will be to put men and women to work building infrastructure.

[Nay]

17. Thank you, sendero -- exactly my points as well. $700 billion only

makes sure that things REALLY go to shit for the next administration, not the Bush administration, and further, it puts us basically another trillion in the credit hole for no reason because, as you say, the money is not enough to actually buy the bad debt. Even if we felt buying bad debt would help (which I don't.)

The only way any of us should even consider this bailout is if every SOB who made big bucks off these barely legal deadly derivatives is reduced to poverty -- they can't keep their Rolexes, houses, cars, and offshore bank accounts. They personally have to start over, like so many of us have. Oh, and they can't work in finance anymore, for the same reason they don't let pedophiles teach grade school.

As you say, no free cash to the assholes who made billions bilking us. And yes, if that means we all go down, then we all go down. I think it will be easier in the long run to build a new system than it would to try to fix a system so rife with corruption, powerful rich people, etc.

[ixion]

15. there are some pretty basic reasons why I'm against handing large amounts of cash to

US finance corps.

1) We're broke already. We don't need to make it worse by buying up worthless paper... at any price.

2) Even if we had the money, it would not solve anything. But since we're broke and we're still considering it, it will actually make things worse rather than better, as it will devalue the dollar futher.

3) In general, I am against the government giving handouts to large corporations. If they make bad decisions, they fail. That's rule number one. As a small-business owner, I am always very aware of this rule. I don't have the luxury of scamming the general populace and then asking for a handout, so I don't see why these companies should have that luxury.

4) Did I mention that we don't have an extra trillion laying around?

Please keep in mind that I would favor legislation that put the screws to the bastards who have decimated our economy. They should lose every penny they bilked from people under false pretenses. I think that would be a productive thing. However, I do not think that a bailout is the proper cure for this virus. The proper cure is to let them fail.

Just sayin'...

:hide:

[Irish Girl]

16. it's because

JPGray, we're not fools. We realize they have the control over the financial system. And they use a constant barrage of fear tactics to break down our mental psyches. We don't support this bailout full of lies and deceit because while they have control, 'we the people' have the power. And like any good bully, that is why they fear us.

It's not about -not doing anything at all-. It's about doing what's right, standing up and fighting for our country to take it back from fascists who, quite frankly, don't give a shit about us.

[MadHound]

18. There are sound economic reasons to oppose this bailout

First, injecting an additional trillion dollars worth of liquidity into the system will devalue the dollar and raise inflation really high.

However the real kicker is that as we starting taking on this additional trillion in debt, at some point along the line, US treasury bonds are going to be downgraded. This is much, much worse than what will happen if we do nothing. There will be no money for the government, no money for our country, and our economy, government and country will be the victim of an extinction level economic event.

I work with several economist, actually quite liberal Keynesians are among them. They are all scared shitless of this bailout.

You would think that we, as a country, would learn. After all, we've watched as Bushco has used fear, Fear, FEAR to stampede the country over the cliff, time and again. Yet here we are again, we're heading right up to the edge, and the Democratic plan will take us right on over. You would think we would learn, you would think that we, as a country, would stop and think about this. But nooo, our politicians are pounding right along, showing the whites of their eyes, and they're going to take the rest of us right on over the edge with this one.

All this bailout is going to do is save the government's corporate masters on Wall St. and provide a bridge of time for Bushco to skate out of office, leaving the whole mess for the next president to clean up. The cure in this case is worse than the disease. But very few people want to see this. They'd rather just run along with the herd, terrified and fearful, and taking the rest of the country with them, right on over that cliff. Gee, thanks. Once again we're going to be facing a disaster of epic proportions, this time an extinction level economic event. MOOOOO! MOOOOO! Goddamn herd mentality.

[jpgray]

50. Where are you getting the $trillion figure?

The all-out-once provision of the Paulson plan is no longer on the table, no? I believe $250 bill is all Treasury will see for a while. Do you have any links to articles that propose plans that include:

1. No substantial taxpayer costs (e.g. no $500+ billion hit)

2. No purchasing of bad debt.

3. A reasonable chance of passing Congress.

I'd love to read them.

[sniffa]

19. Good OP.

:thumbsup:

[RadiationTherapy]

20. Lao Tzu in the Tao Te Ching refers to "doing nothing" as one of the supreme acts of a sage.

does that help?

[LeftishBrit]

72. Hoover thought that 'doing nothing' was the best thing for the economy too.

While I would prefer greatly increased regulation; nationalization of failing banks - which is to some extent happening in the UK; and fewer golden parachutes; I do not want a laissez-faire approach that could just let the economy collapse. Intervention is absolutely necessary; the only, and crucial, question, is what form it should take.

[denverbill]

21. I oppose it for several reasons.

#1, just on principle. I, and most other Americans, are tired of having to bail out billionaires. It wasn't even 20 years ago that we did the Savings and Loan bailout. Where is the fallout from that? I don't recall hundreds of S&L executives going to jail for gambling with taxpayer guaranteed funds. In fact, I'd be willing to bet $100 that many of the exact same executives we bailed out from their failed S&L's in the late 80's are now running the banks that are failing in 2008. Bailing out Neil Bush and Andrew McCain just galls me.

I understand that doing nothing may lead to disaster, but from what I understand, doing the bailout may not help that much anyway. And I could probably be led to support a bailout attempt, but if, and only if..

#2, the Republicans and their talking shit-heads are unable to use this against us on election day. They are already hitting the airwaves whining about it, and believe me, it will have an impact. If Democrats vote for a bail-out plan when Limbaugh, Hannity, and large numbers of Republicans in Congress oppose it, we'll have a "deregulatin', estate-tax cuttin', industry-protectin', consumer-screwin' Congress for the next 20 years. And the result, for most Americans would probably be worse than a Depression caused by doing nothing.

[riverdeep]

22. I had a long answer all ready to go, but this says it all more succinctly:

From a toon post someone posted yesterday.

[OmmmSweetOmmm]

36. I just mentioned this "thought" in my post below and added the Patriot Act to that too.

[pipi_k]

23. What guarantee do we have

that the whole thing won't crumble anyway?

That was the position of a couple of financial advisers I saw interviewed last night before the debate...that we could fork over 700 billion and it could actually get worse (before it got better). Hell...if things might get worse, then let it happen however it's going to happen.

Personally, I don't believe the Chicken Little shit anymore. The sky is falling, the sky is falling!!! How many times have we heard that in the past 8 years?

They want to hand over OUR money without accountability...without oversight...

And that's not even addressing the problem of millions of home foreclosures that will drive down the value of homes around them.

NO!!! It all just seems like a huge plot to bail out the pockets of the rich corporate PIGS, who should be tarred and feathered, at the very least...not getting saved by the people they screwed.

[w4rma]

24. Herbert Hoover pushed through a similar bailout near the end of his administration.

The Great Depression still happened, because it was only a stalling measure.

[the other one]

26. 5. Those who see through this "crisis"

Rebuild the safety net for real people and we will all be fine

[OregonBlue]

27. Perception is everything in an election year. The perception is that this is a DEMOCRATIC BAILOUT.

Winning this election and taking charge of the country are more important that bailing out Wall Street. If you are listening to the MSM, the Dems are now identified with this legislation and it is WILDLY UNPOPULAR!! Either the President get the House GOP on board or they walk away. It's his party, it's his mess and we cannot allow him to back us into a corner.

If we lose the election over this, it has all been for naught because John McCain and his cronies will destroy what is left of our nation!

[natrat]

28. this blows

[Better Today]

29. #4 for me and I know most don't understand this POV, but it is the best one

because top down economics hasn't been working, that we have proof of, whether you can find an economist to support that, I don't know. Not my concern, however construction logic applies. If your roof is too heavy to be supported by your house of cards, you have to abandon the roof, scatter the cards, and begin with the foundational studs to properly start over. Sure, we will all get rained on in the meantime, but anything less, just guarantees that the heavy oversized roof still exists and is still trying to be held up by not so much more than decks of cards. Simple logic.

[Orsino]

81. I can only defend #4 as an idealistic wish to build something better.

Unfortunately, it ignores the chaos, misery and death attendant on a systemic collapse. It seems akin, in an unhealthy way, to neocon fantasies of Better Living For Iraqis through invasion and occupation--that better life, if it ever materializes, will not be available to the millions who fled, were killed, were maimed, or were paupered, and who in the meantime are living without basic services.

We need to build Something Better, sure, and we need it badly. I won't, however, volunteer anyone else as victims of the upheaval that would follow simply "letting it fail." The people who most need Something Better are among those who would suffer the most.

[mhatrw]

30. It's the biggest transfer of wealth from everyone else to the top 0.1% in history.

It will destroy the dollar.

[Spritz57]

31. Something I haven't heard said yet

In my opinion something is vastly under reported in this Wall Street vs. Main Street dichotomy. If these securities are purchased for say 50 cents on the dollar, then for those with 401k funds containing these securities, you have just lost one half of your investments. If you lived through the Keating 5/S&L Bailout which originally cost the tax payers 500 Billion though the government's intervention, though the government did recoup much but not all of the original outlay, 20,000 Arizonians lost their entire retirement funds. So the taxpayers were on the hook for the 500 billion and though the government did recoup much of their aid, the individual investors lost everything. My frustration with the rhetoric over credit and the proper functioning of our economy never seems to address this loss to the "Main Street" regular hard working employees who have marginal control over their 401k investments (under the best of circumstances) and will lose some if not all of their retirement funds.

Personally, until this is addressed with specific legislation, it is apparently implicit the middle class once again is the sacrificial lamb. I don't need credit to buy a car, I need assurances my meager retirement funds are safe.

[Moochy]

32. Not surprised at your pro bailout stance

must be a pain in the ass to be so trusting of people who have lied so often. Bamboozled much?

[prolesunited]

49. You have no idea what you're talking about

What's your solution? What do you think will happen?

Good post, Jon. Always a voice of reason.

[Moochy]

55. McCain to Obama: "You just dont understand"

You to me: "you have no idea what you are talking about."

Trust us!

[iamthebandfanman]

33. i wont like it until we take over business that MAKE money

instead of always taking over business that are FAILURES...

but i can look past that for the sake of stopping any short term disaster that may be looming...(tho nationalization the oil industry would be a great source of income and jobs for our country)...

i just want the bill to make sure that these ceos and people in charge of these companies DONT GET A DIME OF IT...our tax money shouldnt go to pay their exaggerated salary's when they are the reason everything is screwed up.

we need plans for helping out home owners also, not just these big banks who practice bad business.

like it was said on Real Time last nite, this plan kinda is the WORST parts of socialism with none of the good parts that actually benefit the average hard working person(who will feel the brunt of this more than anybody)

[Douglas Carpenter]

34. THIS IS THE SIMPLE REALITY: Unless there is some deal by the end of next week or sooner -

a deal that is at least grudgingly acceptable to the Democratic Congressional leadership, the Republican Congressional leadership, and the Department of Treasury/Bush Administration - financial liquidity will evaporate and the Markets will crash and the American economy and much of the global economy will descend into deep, deep depression. There is no doubt that any deal that would be effective will cost hundreds of billions of dollars, hopefully it will be repaid some day.

The simple fact is - 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.

Could this happen anyway even with the bailout? Yes it could. But this buys some time and gives the chance for markets to stabilize.

If some people simply don't want to understand the situation. Then nothing can force them to.

I am not supporting the bailout as a supporter of Wall Street. I got rid of my stocks a long, long time ago. I say this as someone who does not want to see a depression. I say this as a lifelong democratic-socialist who believes humanity is more important than ideology.

I am afraid this is VERY, 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 days; well before the election.

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

[scarletwoman]

40. The core of your argument -- you even bolded it:

I am afraid

The bushies are pushing the fear button yet again -- it's really a pity so many are falling for it.

sw

[Douglas Carpenter]

52. listen, the whole world is following the markets right now and there is near universal agreement

that without major intervention, an economic meltdown is more than likely.

No, this is not something that just the Bush Administration cooked up invented. I wish it was.

Talk to anyone familiar with international financing, anywhere in the world.

[Kaleko]

60. Douglas, you're right. This isn't Bush crying wolf.

The wolf is truly at the door this time. What I think was missing in your analysis is the mess caused by CDSs (financial instruments called Credit Default Swaps).

Here's a good article describing how these instruments brought down AIG and triggered a worldwide domino effect:


Behind Insurer’s Crisis, a Blind Eye to a Web of Risk - NYTimes.com

http://www.nytimes.com/2008/09/28/business/28melt.html?partner=rssnyt&emc=rss

[Douglas Carpenter]

61. thank you for that excellent article regarding the derivative market

You are absolutely right that rabid speculation on financial derivatives are a major part of this - as is pointed out by this excellent and very detailed article.

I absolutely agree with those on the left who say that at the heart of the matter and beyond the question of this immediate crisis - are decades of rabid, out of control speculation - largely financed by rabid, out of control, borrowing and lending driven by an entire Reagan and post-Reagan era business ethos.

Frankly I and many other people of the left were predicting a collapse ever since deregulation and so-called "free market" economics become the dominant American policy, frequently with the support of many prominent Democrats.

What is happening is the natural consequences of rabid, deregulated -out of control market forces - the natural results of the transition in the Western world from a somewhat regulated production based economy to a deregulated, speculation based economy financed by rabid lending and borrowing.

There was a time when all respectable stock brokers advised their clients to carefully study their potential investments and cautiously buy on a gradual bases - and not to pay too much attention to normal fluctuations of market values - but through gradual cautious investment and holding on to their investments - a healthy nest egg would be accumulated over a period of decades.

There was time in which people bought houses for a place to live. Or if real estate was purchased for investment purposes, it was based like stocks on gradual cautious investment

Then this approach to solid conservative investing was replaced by a "business ethic" that demanded enormous returns - and investment took on the ethos of a Las Vegas casino on the high-rollers floor.

[girl gone mad]

66. Look, we're in trouble with or without intervention.

This bailout may be a case of the cure being worse than the disease and swallowing the medicine without due diligence is not a good idea.

ETA: it's not accurate to blame this crisis on the decline in real estate. The credit bubble was the primary culprit.

[Douglas Carpenter]

69. the decline in real estate market values is directly related to the credit bubble

There is absolutely no dispute about this whatsoever, among any economist of any school of thought. That is one thing that they all agree on without any exceptions. Rabid speculation created a rabid increase in inflated market equity values of real estate - thus the amounts banks were willing to lend based on these inflated equity values. Then the prices reached such a level that they collapsed.

Yes it is true that we are in trouble with or without the bipartisan intervention. The intervention offers the possibility of buying time to stabilize the markets. Will it work? Hopefully.

Just as expensive experimental chemotherapy - will definitely have some harmful side-effects and probably only offer a 50/50 chance of full recovery. But it will also almost certainly provide a longer life and remove some of the worst effects of the cancer - and might even produce a genuine recovery. Without the intervention, the patient simply dies.

[girl gone mad]

75. I've been reading about this crisis for 5 years.

Most of the economists and bloggers I read who accurately predicted the bank failures, housing collapse and credit crunch are opposed to this bailout plan.

[OmmmSweetOmmm]

35. IMHO, I start with the premise..do I trust Paulson, one of Shrub's minions. He was sitting

on a plan for months (by his own admission) and so why is it so dire right now? His plan was being bulldozed through with such fear tactics that I had flashbacks to the Iraq War Resolution and the Patriot Act (which was sitting for months waiting to be marketed).

I do believe there is a problem, but the Dems have to start from square one, not taking anything Paulson is espousilng into account as gospel.

I would also recommend that they ask for the immediate resignation of Paulson or start Impeachment proceedings against him if he doesn't resign. I think that he should be the first one the Feds investigate.

As I said earlier, he has been sitting with a plan, so what does he know and when did he know it?

[barbtries]

42. absolutely

as far as i'm concerned paulson shouldn't be within 100 miles of any so-called "solution" to this so-called "crisis." he has a clear conflict of interest. and you are so right, why did they wait until now to bring this before the people? the motherfuckers never get enough. i'm all for telling them to fuck off.

why don't we trust them? BECAUSE THEY CANNOT BE TRUSTED. this has been proven time and again. how much more proof do we need?!

[redqueen]

37. Thanks... I agree with you.

I'd like Dems to insist that all the capital be drained from shares before we give the banks one red cent, exactly like Sweden did... but hell, look where we live. I am demanding it... but I won't applaud anyone who seems to want perfection or nothing.

[PeaceNikki]

38. K&R

It's ridiculous that we're in this situation at all, but we need to take steps to insure that we won't be again. I think there are a lot of people who aren't convinced that a bailout will really keep the shit from hitting the fan anyway.

[SidDithers]

39. K&R. Really good post...nt

Sid

[annabanana]

41. How much inflation is"OK"?

I'm not talking about the ginned up CPI (no food, no fuel) numbers.. I'm talking about a loaf of bread, gallon of milk numbers. I have heard even strong proponents of both plans say that (or imply that) the governments pockets are bottomless because they can make more money. I know there's some "give" in the system for most Americans.. but the ones in tightened conditions already, and those on fixed incomes will be hurt badly if there is a measurable increase in the rate of inflation.

[jpgray]

45. Inflation dumps on the lower classes. That much is certain

Which is why any plan passed that blasts taxpayers for $700 billion is going to be very unpopular with average voters--it will likely cause inflation.

[bean fidhleir]

73. Good grief! Inflation *HELPS* the lower classes!! What's wrong with you, JP?

The poor borrow, the rich lend. Inflation makes it possible to pay back with money that's worth less than the money borrowed. That's why the rich hate inflation and love a balanced budget and even (a limited amount of) deflation.

This is bog-standard economics! How can you possibly not know this?

[jpgray]

83. I expressed myself poorly: what you point out is true, but that's not all inflation causes

Consider pensioners and other fixed income individuals, for example. Flexible wages and profits (guess whose are most flexible?) are much less affected. Further, it hurts what remains of our dismal trade balance, and that has a direct impact on manufacturing and hence the working class.

I shouldn't have been so declamatory about it, but I don't see inflation being primarily "helpful" in this case.

[bean fidhleir]

87. Well, I'm a pensioner and it's certainly true that my OAP income doesn't keep up with

inflation. But it's not hard to solve THAT problem, all it requires is basic humanity on the part of those in power (I realize that's a contradiction in terms, but still...).

I don't think I follow you on the harmful effects you claim for trade balance and what's left of our manufacturing. If anything, it should be quite helpful since the same process is at work: we contract for and are shipped (loaned, as it were) goods that we will later pay for with inflated currency.

I suppose it's marginally possible that some countries wouldn't want to trade under those conditions, but that seems like part of the upside, to me. As Jane Jacobs pointed out (Goddess love her, that woman died way too young!) a region becomes richer by replacing imports with local production. Trade primarily enriches traders, but localizing production enriches the local populace in general.

[jpgray]

88. It does give and take--note particularly the stagnant wages we're experiencing

Again I was way too exclusive in saying it dumps on the lower classes--I was thinking primarily of the dangers, whereas not all the effects are negative as you say. This sort of exclusivity and pretense of being "certain" is something I'm seeing a lot on DU, and it's a shame I've fallen into that trap myself--especially considering so few of us are serious experts.

[Individualist]

43. I don't buy anything the cabal and their DLC pals are trying to sell.

[jpgray]

44. It's a total "boy who cried wolf" situation

But Dodd and Frank are hardly spear-carriers for the DLC in my estimation. Both have made some great votes -against- deregulation and corporate welfare. Plus many progressive economists acknowledge that the -risk- at least is very real. Your doubt, however, is completely justified.

[JackRiddler]

46. 5. Those who are against plunder and for maintaining US solvency if still possible

First of all, the bailout is the kill shot on the dollar.

Second: Oversight, schmoversight. If it's not written into the bill that, for example, issuers of MBS get no relief, only buyers, and if there is no control over where the money goes afterward, it will disappear. This is a total plunder economy. That's why the crisis came to be in the first place. You give financial actors another $700 billion, they will disappear it.

Third, Bush. All they've done is plunder and diregard the law. You think anything else is planned here? Whatever oversight is put in place will never keep up with

All this is doing is foreclosing on the possibility of a real restructuring later, under a possibly less criminal government.

[madfloridian]

47. Read Pelosi's words

http://journals.democraticunderground.com/madfloridian/2795

I wasn't really for or against, but I am not sure of all of it. But I don't like hearing her say it won't help homeowners facing foreclosure because the GOP won't vote for it.

[jpgray]

48. I don't much like that either

My heart says "damn the torpedoes," that we should gin up the most reasonably pro-worker, anti-corporate bill we can think of and attempt to ram it through over any GOP objection. The problem is the blue dog coalition (GOP + blue dogs = 249 seat majority), and the likelihood that any bailout plan will be tremendously unpopular--it's unlikely even the best plan will stop the bleeding before November.

[avaistheone1]

51. Let it bleed. Or make the taxpayers stakeholders as

was recently done with AIG. The American taxpayer has a 79% stake in that company.

Did you notice when on of the senators asked Paulsen during the hearings if Americans could become stakeholders in return for our cash. Paulsen said he wasn't sure he could get the CEOs to sign off.
Another senator then said to Paulsen - "So the CEOs would rather see their corporations fail than give the American taxpayer an equity position"..... In light of personally witnessing this exchange on CSPANN I don't think there really is much of a crisis.

[Kolesar]

63. Recall the hesitation to allow Social Security to make ownership decisions on companies it would own

...under a SS privatization scheme. The government could have owned companies with "problems" in worker protection, or operations in countries that we "oppose", etc.

We're there, dude!

[fla nocount]

54. "My poor little dripping claws are tied..."

"throw me on my back, I think better about money with my heels in the air."

[leftofthedial]

53. "expert" opinion, meaning

ask a capitalist how to "save" capitalism from other capitalists and from its own unsustainability?

It is you I do not understand.

[El Pinko]

57. And I don't understand people who support either plan.

Both of them squander immense amounts of money while doing absolutely NOTHING to address the fundamental problems that have created this problem in the first place (long term massive current account/trade deficit, destruction of US industries, and stagnant wages), and I personally would not support any massive allotment of money that was not specifically aimed at fixing those problems. Both bailout plans will only exacerbate the problem and deepen the suffering a few months down the line by putting us further in debt and further devaluing the currency (read: impoverishing the populace)

I don't want to "do nothing", but both plans are unacceptable because both plans are aimed at fixing the symptoms of the disease rather than the disease itself.


I think on some deep intuitive level, most Americans, and most DUers understand this, and that is why so many oppose the bailout, despite the scaremongering by the White House and top politicians of both parties.

They are telling us to save the financial system via a large dose of what has wrecked it in the first place. Thanks, but no thanks.

[RainDog]

58. the reaction to this is a vote of no confidence in our govt and their corporate pimps

honestly.

I wouldn't trust a Bush administration to do anything. Everyone in it is entirely corrupt and has repeatedly shown (esp. as in Hurricane Katrina) that they do not give a damn about the American people. People have been hurting for decades who saw their manufacturing jobs move south and overseas.

At the time, they were told to deal with it because that's capitalism. Let them retrain. Let them work two jobs. Let them move from a union wage job to a minimum wage job with no benefits and shut up about it because that's life. Those people and others who know this history are now repeating what they were told. This is justice, in the world the republicans created.

Anyone in her/his right mind could not believe that Bush and the republicans are going to do anything that's fair. It's illogical. It's crazy, basically, to look over the last 8 years and think that anything Bush and the republicans do is going to be good for this nation.

If the gop only cares about the guys in the brooks bros suits, then why should anyone support this bailout? The republicans do not play nice. They are not reasonable. If you want anything, you have to be willing to let it all fail. If they will not negotiate in good faith, then they are the ones who are responsible for anything that happens. There needs to be punitive measures and regulation. Strip the banks. Fire the CEOS. move the money into credit unions that will make responsible mortgage decisions. Mortgages that work have traditionally been locally generated and maintained. They require responsibility.

You know, I have a real horror story that I've lived through for years now. Not of my making at all. I'm sure there are millions of others like me. When you have a shit-for-brains president who have actively worked to steal soc. sec. and to make health care MORE difficult, not better, a lot of people eventually get to the point where they do say.. let it all burn. so fucking what.

I'm not one of those people. Except -- I am one of those people if the bail out maintains the status quo. Things must change or I cannot find support for any deal. People who have not lived through hard times have no idea what it's like for others. No idea at all. And their voting patterns and their financial decisions have shown they don't give a shit. After a while, voters start to think that the "guillotine" is real justice. The reason for this mess is the hubris of the very rich and the cowardice of our govt. -- either cowardice or their corruption. yet another reason to ask why corrupt politicians should be allowed to bail out their corrupt partners in crime.

This is something that people really need to understand here. Democrats need to understand this.

Our govt has been unresponsive for years. People are pissed. At both dems and republicans.

[nolabels]

59. Many, my self included believe a much larger drop is needed

None of these folks are operating in good faith, it's all what's in it for them. I hope the gridlock continues and nothing gets done because it will serve the public better in the long run. The actual value of some these overvalued financial stocks will be realized and those who knew they were burning the wick too close will get what was coming to them. The whole thing looks more like a pent up market correction rather than some free fall.

[OakCliffDem]

62. Kick

[malaise]

64. When those IMF policies start biting

You'll understand.

[bean fidhleir]

67. DUers for the bailout/giveaway: you don't understand opposition because you don't

apparently understand the basic reality that the "problem" exists only because those who caused it demand that we believe it exists.

This "problem" doesn't have an existance independent of our belief, the way climate change does. It's not defined by the laws of physics, it's defined by wealthy people who want to stay wealthy at our expense, like one of those "problems" defined by the IMF.

Imagine it's you. You're very wealthy. To become even MORE wealthy, you buy up a lot of properties in Metropolis and only then find out that they're not worth shit, that people are walking away from them instead of continuing to pay them off. So you take out a full-page ad in the Metropolis Daily Blatt that says "Citizens of Metropolis! Everything is at risk! Unless you buy these properties back from me, credit will dry up because I won't have any money to lend you. You won't be able to get loans! Business will stop! You'll have no place to live! Schools will close! Rats will run in hordes through the streets! Citizens, ACT NOW!!!"

It's a scam. Many of us are calm enough and bright enough to see through it. What's horrifying is the number of DUers who, apparently, aren't.

[Two Americas]

68. you have to be kidding

There are hundreds of well documented and persuasively written posts explaining exactly why people are opposed to the bailout. Why don't you go to those threads and make your case in an honest and straightforward manner, if you can?

You mischaracterize people's positions, and then demand that they defend the positions and reasons that you have assigned to them.

You are setting up a series of straw men, and then knocking them down, all after saying "I don't understand you." Oh yes you do. You just don't agree, and you cannot defend your position so you use this sneak attack.

Shame.

[dailykoff]

70. Seriously. "The guy on tv says I'll lose my IRA unless we do this

so we better do this." Naive.

[mdmc]

71. The idea that because it is a Democratic Party plan it is above refute

is laughable.

I think the opposition to the bailout comes from the fear of corporatism / fascism - government ruled by corporations and not by the people.

If your #2 (Galbraith) plan could pass, I might support it.

As a big government liberal I don't mind government intervention. But in this case we need to restore good faith, trust. Without doing this, we are just adding to the problem.

[jpgray]

74. I would never say that the current plan is beyond refutation.

And I agree with many of your objections. My question is, can we afford to do nothing? It's unlikely in my mind that we can pass a robust New-Deal-style plan with our current torpid, disunited and skittish caucus. The 47 blue dogs are a huge part of our inability to push strong liberal ideals in the bailout, as together with the House GOP they leave us with only 186 seats out of 435.

[mdmc]

93. I think we can afford to "do nothing"

I really think this will hit "Main Street" either way. I've noticed that Wendy's no longer has 99 cent french fries (they now cost 1.19). If this bailout happens, I bet the small french fries will go up to 1.25 - without the bailout... I don't know...

[Zorra]

76. I'm the CEO of Dewey, Cheatem & Howe Mortgage, Unlimited. I'm against

any plan that will eliminate golden parachutes for unscrupulous Chief Executives of usurious loan establishments.

How will we be able to afford our private jets, yachts, and mansions? I mean, geez, all this national wailing and gnashing of teeth over a bunch of losers that forfeit their paltry, depressing little houses because we suckered them into usurious loans with incomprehensible fine print.

Can I get a maybe just a little sympathy here? Yuh, sure, we made a HUGH pile of cash on the scam, but it goes quick when you have enormous amounts of assets to maintain.

The original plan, which called for absolutely no oversight of the bailout by anyone, and which was wholeheartedly endorsed by my pawn, er, I mean friend, George W Bu*h, was the only sensible option in my estimation, and we are all very "greatfull" to this man who so enthusiastically supported our plan to rip off the People of the US in the name of fascism.

MISSION ACCOMPLISHED

[Mari333]

77. I have been sitting here for the last coupla weeks

thinking about my retirement account. Its sitting in mutual funds and bonds, and its not tax exempt. Ergo, I cannot re allocate my retirement funds anywhere without getting hit by capital gains. I wont receive SS til I am 60, so I have to live cheaply now.
This retirement fund is all that is between me and living in a box on the street. If I lose it, I end up in the street. I am 57. So, basically, I have been told to 'sit tight' and wait. Its unnerving. Nonetheless, if I do lose my retirement funds I have decided that there is one way out of this mess and that is to leave this physical world. sounds drastic, but I have been through enough in this life, and I am not going to go thru anymore. The one thing I had to count on was at least a remotely reasonable retirement. If that isnt going to happen, then, fuck it. Its the only logical thing to do. and no, I refuse to move in with my kids.

[Zorra]

79. If Obama wins, I believe that he and a large majority Democratic Congress,

will address the concerns of folks like you that were stung by this whole mess by enacting a "People's Bailout".

Honey, don't give up on hope...the cavalry is on its way.

[Mari333]

92. I wish that were enough reassurance

but by then, I am afraid it might be too late.

[SOS]

78. NYT, 9/28/08, page 1:

"both sides appeared to have given up on... a change in the bankruptcy laws sought by some Democrats to give judges the authority to modify the terms of first mortgages."

Unacceptable, outrageous and sickening.

[shanti]

80. i wasn't on board at first

but after several days of scrutinization, i see the light! however, this bailout is only acceptable to me in revised form, not straight from *.

[Odin2005]

82. A lot of DUers don't understand economics.

So they invent conspiracy boogymen instead. Or they want "the system" to collapse because of this lunatic belief rooted in Marxist and Anarchist thinking and Judeo-Christian eschatology that "the people" will rise up in some glorious revolution when "the system" crumbles.

[screembloodymurder]

86. A lot of DUers understand that no private equity firms were interested.

If these private wealth funds didn't think the risk was worth the reward, why should we? If the rich weren't willing to step up to the plate, why should we?

[Odin2005]

90. Because it is not in their SELF interest even though it is ultimately needed.

They only care about profits, not what is good for the US economy.

[Malidictus Maximus]

84. The onus is on someone pushing the plan to prove it is a good thing

not on the person who says the plan is at best a dumb idea.
YOU want to bail out the fat cats, people who bought something knowing they couldn't make the payments in a worst case scenario, and greedheads who bought stocks based on potential growth rather than a realistic price/earnings ratio to share valuation, YOU make the case. 700 billion needs a lot of 'splanin', saying "hell no, fuck off mr Paulsen (and anyone who has ever agreed with you on anything), you *ARE* the problem, does not.

[5thGenDemocrat]

85. The fix is in and both parties are going to roll over and play dead

I just took a look at opensecrets.org and discovered that the banking/finance/real estate sector has donated about $114.4 million this cycle to the two parties: $59.8 million to the Dems and $54.5 million to the Republicans.
Anybody want to convince me these political dogs won't heel when their masters snap their fingers?
Meet the new boss, same as the old boss. Only difference? Maybe the Dems will toss some scraps to us po' folks. Or maybe not.
John
Getting THISCLOSE to just not voting in November.

[cynatnite]

89. IMO, there is no good bailout plan and we have no choice but to accept one...

The consequences of not acting is far worse, IMO.

[Waiting For Everyman]

91. I say take the $700 bn and start a clean Bank of the US.

Let the rest fail by normal process, including guaranteeing deposits up to $100K.

Staff up the Bankruptcy courts.

I think a lot of additional money would flow into a new clean bank to boost that initial amount. At least it would be the beginning of a road to sanity.

Oh and swaps debts should be just plain voided.

Declare a foreclosure moratorium for 6 months as Hillary said, and sort this thing out now, only do it right.