Posted on 09/30/2008 5:24:31 PM PDT by kellynla
I have read the posts here and elsewhere. Sometimes these things are made to look more complicated than they really are. From an economic perspective, if the problem is liquidity and credit, there simply is no need for the federal government to assume massive amounts of debt on its book by assuming loans in anticipation that their holders or borrowers will default.
(Excerpt) Read more at corner.nationalreview.com ...
“Socialism does not work. We shouldn’t support more of it.”
Yes thank you House Republicans. Now let us hope the Senate stands strong too.
They need to beat this thing back again. We need to melt their phone lines
Here’s the full text of Mark’s post.
A great post from the great one!
Thank You, House Republicans [Mark R. Levin]
I have read the posts here and elsewhere. Sometimes these things are made to look more complicated than they really are. From an economic perspective, if the problem is liquidity and credit, there simply is no need for the federal government to assume massive amounts of debt on its book by assuming loans in anticipation that their holders or borrowers will default. This seems to me like a brand new expanse of government power that is not justified (if it ever is) by the arguments made on its behalf. The government controls monetary policy through supply and interest rates, among other things. It can further ease money supply and credit, thereby increasing the flow of capital. The government controls tax policy. It can increase liquidity and the flow of new money into the economy both from within the country and from foreign sources by eliminating the corporate income tax and the capital gains tax even on a mid-term basis. No matter what is done, some financial institutions will fail, as they did in the 1981-82 recession and have since. And the Fed and Treasury and other instrumentalities of government will have to determine, on a case-by-case basis, whether to intervene and how to intervene. They will also have to determine whether other policies require modifying, such as the McCain proposal today, in which he suggests increasing federal insurance for individual depositors from $100,000 to $250,000. Other smart suggestions include modifying the mark-to-market rule requiring financial institutions to downgrade the valuation of assets. If the goal is to prevent panic in the economy by investors and depositors, then increase credit, liquidity, and the flow of capital, and deal with problem institutions that are significant enough in size that their demise could resonate to the wider economy. But the Soviet-style, top-down five year plan a la Paulson’s proposal, and to a significant extent the proposal that was voted down yesterday, could easily do more damage to both the economy and our governmental structure. So, in this respect, I must depart from NRO’s editorial.
Also, count me among those few here who want to thank the House Republicans for taking a bold stand against what had been a stampede on a scale I have never before witnessed on matters of huge consequence. Conservatism is more than a quaint belief-system to be embraced and debated over donuts at Starbucks. It is more than a list of talking points. It is the foundation of the civil society. The liberal uses crises, real or manufactured, to expand the power of government at the expense of the individual and private property. He has spent, in earnest, 70 years evading the Constitution’s limits on governmental power. If conservatives don’t stand up to this, who will? If they don’t offer serious alternatives that address the current circumstances AND defend the founding principles, who will? The House Republicans have done both. And I, for one, thank them.
Incidentally, if you want to buy a home or car today you can. And if your credit is decent, you can get loans at a good rate. Last week we were told that if a deal was not struck by last Friday, our economy would collapse. It has not. That is not to say the evidence of economic troubles or worse should be ignored. It is to say that now is a time for reasoned decisions based on tried and true principles, not for abandoning them. I notice that the socialist, who, for the last 30 years, has insisted that private institutions make risky loans based on non-economic factors, still has not abandoned his policies. Socialism does not work. We shouldn’t support more of it.
09/30 11:07 AM
I admit I’m confused about something...
For the last 2 years or so, the real estate market has been a buyer’s market...supply has far exceeded demand and I don’t see that the lack of demand had anything to do with or AIG or Fannie...(in regards to people buying houses over $350K say) simply...in a micro view...in the suburbs of chicago, my neighbor puts their house up for sale...months go by and little activity. In the housing boon several years ago, people built new houses and they are still in them. Lots of people are.
How does the bailout increase the demand for real estate market? Why will my neighbor start getting lots of interested buyers because of the bailout?
BTTT
TGO Ping
Mark Levin for President!!
Can you imagine President Levin taking a 3:00 am call from Senator Obama, “Get off the phone you liberal dummy!”
You are channeling Holman Jenkins - he says the Treasury Dept or the Fed or the FDIC need to take a bunch of foreclosed properties off of the hands of the banks and then demolish the homes built on them.
Mark - I love you. And I disagree with you.
The banking system we have is intertwined with our government. The Treasury maintains the currency and the Fed manages interest rates, money supply and lends to our banks on a daily basis. Our banks are insured by FDIC and our brokerages by SIPC - both backed by the full faith of our government (that would be us taxpayers).
The taxpayers are on the hook either way. Either we get some form of pre-emptive buyout of these bonds to try to stop the bleeding or we let bank after bank fail and let FDIC and SIPC buy in all the assets. The second option will be chaotic, put our financial system at risk and result in more taxpayer money being used. Either way, the taxpayers are on the hook.
We can talk about government interference and socialism all we want, but that doesn’t change our monetary and banking system. If we choose plan B, do nothing, we will get a chance to see real socialism in action. President Obama and Speaker Pelosi will make sure that those greedy Wall St. guys don’t ever take advantage of the poor folks again.
We haven’t seen anything of this magnitude since 1929. Our inept action back then caused half the world give up on capitalism and we ended up with the New Deal, Socialism, Communism, Fascism and World War II. I only pray we aren’t trying to win a battle that will cost us the war.
LOL!!!!!!!!!!!!!
Please send me the link to your wildly successful conservative radio show.
OK you’re wicked smart. Question...I actually wondered if demolishing foreclosed homes would increase demand but concluded no for 3 reasons: 1. Mean value of those homes doesn’t match up (different prospects) 2. Those people won’t be getting loans any time soon. 3. The buyers I’m talking about haven’t lost their homes..they are in them and paying their mortgages. Your thoughts?
Can I reserve my spot now in reeducation camp?
Jim — you are one of my heroes. I remember seeing you speak at the gathering of eagles at the mall in 1999 and was truly moved by your emotion and conviction in your beliefs. What you have built here at freerepublic is a force for good that is more powerful and influential than I think any of us realize.
I’m afraid we conservatives are going down the wrong path on this one. We are getting the bill to fix this either way and I’m very worried what might develop from this if it breaks the wrong way. Your free market principles and beliefs are as genuine as mine. But because of how our banking system works, we are at a point where the wrong move could have disasterous consquences. I pray I’m wrong.
We have people who want to buy homes and we have homes to sell. The only thing to negotiate is the price. That is what we have a free market for. The problem is that the financial services industry cannot suck enough blood out of the fees on the market price. They need some US government intervention to get an inflated price on what does sell, and they need a bailout for what couldn't sell. Un_believeable.
And now is the time to fix that.
Here's another conservative American discussing these issues:
You and I, as individuals, can, by borrowing, live beyond our means, but for only a limited period of time. Why, then, should we think that collectively, as a nation, we're not bound by that same limitation? We must act today in order to preserve tomorrow. And let there be no misunderstanding: We are going to begin to act, beginning today.The economic ills we suffer have come upon us over several decades. They will not go away in days, weeks, or months, but they will go away. They will go away because we as Americans have the capacity now, as we've had in the past, to do whatever needs to be done to preserve this last and greatest bastion of freedom.
In this present crisis, government is not the solution to our problem; government is the problem. From time to time we've been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden. The solutions we seek must be equitable, with no one group singled out to pay a higher price.
We hear much of special interest groups. Well, our concern must be for a special interest group that has been too long neglected. It knows no sectional boundaries or ethnic and racial divisions, and it crosses political party lines. It is made up of men and women who raise our food, patrol our streets, man our mines and factories, teach our children, keep our homes, and heal us when we're sick--professionals, industrialists, shopkeepers, clerks, cabbies, and truck drivers. They are, in short, "we the people," this breed called Americans.
Well, this administration's objective will be a healthy, vigorous, growing economy that provides equal opportunities for all Americans, with no barriers born of bigotry or discrimination. Putting America back to work means putting all Americans back to work. Ending inflation means freeing all Americans from the terror of runaway living costs. All must share in the productive work of this "new beginning," and all must share in the bounty of a revived economy. With the idealism and fair play which are the core of our system and our strength, we can have a strong and prosperous America, at peace with itself and the world.
So, as we begin, let us take inventory. We are a nation that has a government--not the other way around. And this makes us special among the nations of the Earth. Our government has no power except that granted it by the people. It is time to check and reverse the growth of government, which shows signs of having grown beyond the consent of the governed.
It is my intention to curb the size and influence of the federal establishment and to demand recognition of the distinction between the powers granted to the federal government and those reserved to the states or to the people. All of us need to be reminded that the federal government did not create the states; the states created the federal government.
Now, so there will be no misunderstanding, it's not my intention to do away with government. It is rather to make it work--work with us, not over us; to stand by our side, not ride on our back. Government can and must provide opportunity, not smother it; foster productivity, not stifle it.
If we look to the answer as to why for so many years we achieved so much, prospered as no other people on earth, it was because here in this land we unleashed the energy and individual genius of man to a greater extent than has ever been done before. Freedom and the dignity of the individual have been more available and assured here than in any other place on earth. The price for this freedom at times has been high, but we have never been unwilling to pay the price.
It is no coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government. It is time for us to realize that we're too great a nation to limit ourselves to small dreams. We're not, as some would have us believe, doomed to an inevitable decline. I do not believe in a fate that will fall on us no matter what we do. I do believe in a fate that will fall on us if we do nothing. So, with all the creative energy at our command, let us begin an era of national renewal. Let us renew our determination, our courage, and our strength. And let us renew our faith and our hope.
Excerpted from Ronald Reagan's first inaugural address.
For myself, I see several issues here. The first is that we have no idea what the extent of the bad debt is or how it is impacting our financial system? To know that we need to know what the debt is, who holds it and how much the property that secures it is worth. When you know that, then you know the extent of the problem. My fear is that Paulson has no idea what the numbers are because the banks have no idea what the numbers are.
By the way, I would point out that if Paulson doesn't know these numbers, then there is no basis for the $700 billion he is asking for.
Once you have an idea of the numbers, then you need to do one of two things. Either you do your rescue by focusing on the properties that underly the bad debt (i.e. the Paulson model) or by focusing your rescue on the banks themselves (i.e. the J.P. Morgan model).
If you use the J.P. Morgan model, then you figure out which institutions can be saved and which deserve to die. Then you save the ones worth saving and kill the ones worth killing.
In my opinion, Bush should have appointed a banker (i.e. a successful banker) to do the culling. This is what bankers do and a successful one will be more than willing to put the weak out of their misery.
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