The stock market can't be the most important measure of whether this bailout works, is it?

[bigtree]

We will still have record and increasing foreclosures. Can someone please explain to me what is in this bill that's supposed to convince lenders to start lending again? I'm looking at a report that some folks aren't even able to get car loans as a result of the banks' reluctance to extend credit for everything from cars to high finance.

I understand the danger of a falling stock market, but is there really anything in this bill which intends to do more than temporarily placate the market (down 500 as I write this)? I really can't see how there can be any lasting confidence builders in the bill without some effort to stem the growing number of foreclosures. Are the credit encouraging provisions in the legislation a fix, a crutch, or just an empty dodge?

[BlueInPhilly]

1. That F**** BILL NEEDED TO GET PASSED!!!

GODAMMIT!!! POLITICS FIRST, PEOPLE? ARE YOU GUYS HAPPY NOW???

This is one of the reasons why, after 4 years, I only have 300 posts to my name. Because I am extremely perturbed by some ignorance going on around here. It seems that stupidity is not monopolized by Republicans, afterall.

[Naturyl]

3. It was a bad bill. Handout giveaway for the rich. (n/t)

[avaistheone1]

6. Don't blame anyone here. The bill is bad. And the rush to pass a bad bill that could create more

weaknesses is the markets is a worse idea.

I think a bill could pass, but is going to need to be a better bill. There were few if any economic experts involved in drafting this one and it shows.

[girl gone mad]

8. It was a terrible deal for taxpayers..

it gave too much of the farm away.

The ignorance was on the part of the administration and congress who tried to drum up hysteria to get a bailout rushed through without reasonable discussion or debate.

I think you'll find that life will go on.

[bigtree]

9. obviously, something had to be done. I'm just not convinced what they've done is more than a dodge

. . .since they've ducked dealing with the root cause of the lending squeeze. There are still increasing record numbers of foreclosures. These debts they're unloading onto the government aren't going to increase in value anytime soon. I seems like folks are banking everything here on an uncertain and unaddressed future.

[TwilightGardener]

2. It allows investment companies and banks to unload their bad assets

to the government (us), so that they can start lending again with a clean(er) slate, is how I understood it.

[nadinbrzezinski]

4. You got it right

and I hope folks realize what happens next will be not fun

[bigtree]

7. thanks. I still haven't heard much from the banking industry

Do you know how they've received this legislation? I wonder if the bill will actually do what they've promised. And, I'm still not convinced that ANY fix makes sense without doing something to stem the rising number of forclosures.

[unblock]

5. no bailout means no lending to real companies.

real companies will go under or seek white knights to avoid defaulting on their existing debts that they can't roll over.

yes, bad mortgages are an ongoing problem, but the lack of lending now means that big problems affect wall street AND main street much faster.


they better come up with an alternative fast or we're seriously screwn.

[bigtree]

10. I still question whether anything in the bill will spur the credit market in any significant way

. . . at least in a way which would give confidence that we're not just shifting around debt, but actually doing something to alleviate the debts at the root of all of this, not just what the larger institutions owe. In my view, the credit market benefited from their ability to shift the debt around without much restraint. I think the crackdown and the attention will cause a lot of lenders to decide they just don't want to play anymore.

And, I don't think folks are taking into account that a lot of the 'risky' loans are the ones that average Americans rely on. It looks like this is just a temporary relief of the pressure. That pressure should continue to build because of the increasing debt out here and because there just isn't going to be any easing of cash for folks at the lower end of the economic ladder with this legislation. We're stuck waiting for the effect to trickle down, aren't we?

[HamdenRice]

11. Take a deep breath. The stock market is the side show.

The key is what happens in the inter bank lending market.

The greatest liberal economist of all time, John Maynard Keynes, once said that the stock market represents "what average opinion anticipates average opinion to be." In other words, there is a lot of game theory involved in the speculation going on in the market today.

In other words, many institutions, traders and average people are selling stocks today, not because anything has happened to those stocks or the companies they represent (yet); but because the vote in Congress might make other people believe that the vote will hurt those companies. So by pretending to anticipate what average opinion is of the bill, they sell, making the average opinion of average opinion a reality.

The key is what happens in the debt markets and money market. Will banks lend to each other today? And will companies be able to roll over their commerical paper? And will people with money market accounts start withdrawing money making it impossible for companies to issue commercial paper?

The main idea behind the bill was that it would allow banks to sell certain assets. Those assets are called mortgage backed securities. Two years ago, these were considered the safest investments available -- just below US Treasury bills in safety.

Then the housing market collapsed and many homeowners went into foreclosure. This banks to be unable to figure out what their mortgage backed securities were worth and to stop buying and selling them to settle debts between them. The bill allowed the government to step in, figure out what the mortgage securities were worth, and buy them -- freeing up lending between banks.

[bigtree]

12. How long are we supposed to have to wait for the benefits of the bailout to trickle down?

This bill is designed to allow lenders to dump subprime loans on the government. It shouldn't be lost on anyone that the majority of Americans, with modest (and decreasing) income are represented in that subprime debt. But, that debt shouldn't be looked at as completely the fault of the banks for making those loans. Folks need homes, folks need to live and survive. They need banks who will make those loans. Falling home prices exacerbated by the weak economy have taken away the best hope most Americans have to use that equity to borrow the money that most of us have relied on to survive day to day, year to year.

I can understand the principle that the larger banks need the government to relieve the pressure on them from this subprime debt to encourage them to loosen their credit and get back to making loans at some normal rate again. But it just doesn't pass the smell test that just allowing the banks to dump the debt that the majority of Americans rely on to buy homes, cars, health care on the government is any kind of a solution which has any hope of lasting or yielding any result which will encourage lenders to continue to make money available for the majority of Americans.


It's sad to hear the demonization of these subprime borrowers. Prime borrowers are in just as much trouble these days. Their plight is part and parcel of the refusal of Congress and the administration to directly assist homeowners and put forward any proposals which will directly deal with the housing crisis.

The stock market isn't the problem, it's what effect this action will have on the credit market. I understand the need to put out the fire, but I'm not convinced this action will keep it from just igniting again and again.