Bush asks Congress for $700 billion for bailout

newok ^ | 09/20/08

[TigerLikesRooster]

Bush asks Congress for $700 billion for bailout

WASHINGTON - The Bush administration is asking Congress to let the government buy $700 billion in bad mortgages as part of the largest financial bailout since the Great Depression.

[wk4bush2004]

“Sorry, but there no longer IS “money” here. Just IOUs to be repaid by our kids and grandkids.”

Yeah, good point.

[atomicweeder]

Wouldn't a deep recession simply be a natural consequence that has to play out?

I would let it all collapse and then rebuild. (And I am NOT set for life -- I could lose my job, savings, etc.)

[Yardstick]

It's the only answer unless you want a deep recession. I've noticed some on FR would rather have that.

I'm torn over it. Obviously you don't want a deep recession, but on the other hand it's a bad pattern to have the govt saving the markets. It's setting up the "moral hazard" that economists warn about. Business will take greater risks when it knows govt with bail them out. Privatizing profits, socializing losses, etc. This just feels like it could be a short term fix to a much deeper problem that isn't being addressed and that in fact might be made worse. And even if it works, we lose. It makes the Keynesian types and the big-govt left look smart. People like Chris Dodd are going to wind up looking like heros. I'm a rank amateur when it comes to the technical workings of the markets, but as a matter of principle (a la Hayek and Mises and the rest) this does not seem like a good thing. Nor does it seem like the least bad thing necessarily. On the other hand, we live in a real world and there are exceptions to ideology. I don't know. Tricky stuff.

[Snurple]

Bush asks Congress for $700 billion for bailout

Reminds me of this scene from the Matrix....lol

Morpheus: I imagine that right now you're feeling a bit like Alice. Tumbling down the rabbit hole?

Neo: You could say that.

Morpheus: I can see it in your eyes. You have the look of a man who accepts what he sees because he's expecting to wake up. Ironically, this is not far from the truth. Do you believe in fate, Neo?

Neo: No.

Morpheus: Why not?

Neo: 'Cause I don't like the idea that I'm not in control of my life.

Morpheus: I know exactly what you mean. Let me tell you why you're here. You're here because you know something. What you know, you can't explain. But you feel it. You felt it your entire life. That there's something wrong with the world. You don't know what it is, but it's there. Like a splinter in your mind -- driving you mad. It is this feeling that has brought you to me. Do you know what I'm talking about?

Neo: The Matrix?

Morpheus: Do you want to know what it is?

(Neo nods his head.)

Morpheus: The Matrix is everywhere, it is all around us. Even now, in this very room. You can see it when you look out your window, or when you turn on your television. You can feel it when you go to work, or when go to church or when you pay your taxes. It is the world that has been pulled over your eyes to blind you from the truth.

Neo: What truth?

Morpheus: That you are a slave, Neo. Like everyone else, you were born into bondage, born inside a prison that you cannot smell, taste, or touch. A prison for your mind. (long pause, sighs) Unfortunately, no one can be told what the Matrix is. You have to see it for yourself. This is your last chance. After this, there is no turning back. (In his left hand, Morpheus shows a blue pill.) Morpheus: You take the blue pill and the story ends. You wake in your bed and believe whatever you want to believe. (a red pill is shown in his other hand) You take the red pill and you stay in Wonderland and I show you how deep the rabbit-hole goes. (Long pause; Neo begins to reach for the red pill) Remember -- all I am offering is the truth, nothing more.

(Neo takes the red pill and swallows it with a glass of water)

[what's up]

I would let it all collapse and then rebuild.

That's what Pol Pot said.

[rabscuttle385]

FYI Bloomberg is reporting $800 Billion, and knowing how our Government usually works, by the time this is all over, the figure will be probably in the trillions.

[yooling]

I'm confused by all of the figures that are being thrown about. The $700 billion is the amount of mortgages in default? Or is it the total of the outstanding mortgages?

If it is the latter, then while the risk is still there; 95% of mortgages are not in foreclosure. If it is the former, then we the people now own a $hit-load of real estate and we should be trying to sell it and recoup some of the money.

Either way that figure should go down. Correct?

[Technocrat]

As I recall, the RTC actually ended up losing very little money, or made some in the end (see http://en.wikipedia.org/wiki/Resolution_Trust_Corporation) If these portfolios are managed correctly, it wouldn’t surprise me to see the taxpayer make some money on this. There is also the potential for grand theft on an empire scale, but if there were ever two people who could stand in the way of that, McCain and Palin are those people. I don’t think this is the disaster people are making it out to be, especially if the govt can get these notes for ten cents or even thirty cents on the dollar.

[vietvet67]

Good questions for which I have no answers.

I suspect the govt will be overly generous on values to prevent triggering the derivative time bomb.

[TomGuy]

IIRC, it was Dagen McDowell on Fox&Friends this morning who was defending the Wallstreeters by saying they were hurting too, because their stock holdings are losing money.

Awwwww.

[what's up]

Thanks.

I've noticed a lot of "hate the rich" rhetoric flying thick and fast around here lately as people see this plan as some kind of corporate bailout.

Far from it. It's necessary to protect the weakest of the weak among us.

Challenges are ahead for McCain. But I think he just may be able to complete the task.

[Camerican]

Get real. McCain’s proposed spending cuts won’t even amount to a drop in the bucket that is our national debt.

[668 - Neighbor of the Beast]

Got debt? Max it out and file bankruptcy. Tell the gubmint to forgive you too.

[Lonely Are The Brave]

“The government solution to a problem is usually as bad as the problem.”

Milton Friedman

[Jacquerie]

When banks stop loaning money, the economy collapses.

Yes. We were at the edge of the abyss before the FED and Treasury stepped in. Banks had stopped short term loans to each other, several money market mutual funds were experiencing runs, the list goes on.

Had the government not intervened, a deflationary collapse was only a couple days away.

I suspect a calamity is only postponed. Congress will do what is politically expedient rather than fix the long term problem.

[Atlas Sneezed]

“If you don’t trust Silver & Gold, do you trust the logic of taking a pine tree, worth $4,000 - $5,000, cutting it up ..... turning it into pulp, putting some ink on it and then calling it one billion dollars?” - Kenneth J. Gerbino

---

Good quote, except that money’s made out of mostly cotton (25% linen), not wood pulp.

[what's up]

As I recall, the RTC actually ended up losing very little money, or made some in the end.

Yes. Similar to what may happen with the AIG "bailout". The final result may very well be that the taxpayer comes out ahead.

[Mr. Jeeves]

It's the only answer unless you want a deep recession.

It only postpones the deep recession/depression until after the elections - which both parties want because the Democrats aren't sure they'll be able to capitalize on it.

[TomGuy]

Cavuto on FoxNews: "We are getting word that it is a $700 billion minimum."

[Watch out for the fine print.]

[what's up]

McCain’s proposed spending cuts won’t even amount to a drop in the bucket that is our national debt

McCain's (and Palin's) general vision of reform in general which includes social security/Medicare/health reform along with a healthy dose of tax cuts?

Lots of hope there. Like I said, this may be the catalyst to shake people up and make them listen to some of these reform proposals.