McCain Should Say No to Bush and Senate Democrats on Wall Street Bailout

Townhall.com ^ | September 25, 2008 | Floyd and Mary Beth Brown

[screaminsunshine]

Yes he should but...Birds of a feather???

[nobama08]

I don’t know a lot about economics, but as a taxpayer, I think this “plan” stinks!

[kittymyrib]

With around 60% of the nation against this nationalizing of Wall St. risk, McCain should stand up for the taxpayer and let them know it.

[rintense]

If this passes in its current form, the next thing to be taken over will be the oil industry. Mark my words.

[LRoggy]

Just wonderful, talk about being above one’s pay grade.

And what do you then say if the market opens down 2000 points on Monday? If that happens, Obama wins 40 states and the Dems carry the 60 Senators. Then the Floyd Browns of the world can go back to permanent minority status as we were in the House for 40 years.

One of the biggest reasons for this bailout is not being mentioned because of the obvious political fallout. When these companies first got into trouble about 6 months ago, they first turned to foreign Sovereign funds, the GOVERNMENT investment arms of Singapore, China, etc. for help.

ALL OF THAT CAPITAL, MANY BILLIONS, IS NOW GONE.

Do you think, given all the Treasury debt they hold, that they will not retaliate? After all, they were encouraged to invest this money by OUR GOVERNMENT.

If you think this bailout is expensive, just wait to see the cost of having these funds send a message by selling 25% of their holdings at once, just to send a message. The dollar falls 10% in a day, mortgage rates go up to 8% overnight and the Dow falls another 2000 points (if you don’t think this is possible just remember tath the PE ration of the market was 8 before the Reagan led Bull Market starting in 1982. We are now around 15.

It seems vicerally pleasing to watch the bastards go down the drain, but the tangential effect is devastating.

If you want to make Ahmadinejad a prophet, just go right on thinking this way.

[LRoggy]

Sorry for the typos:

that, not tath
ratio, not ration
viscerally, not vicerally

I am too amazed taht our side is not getting the severity of this situation. This is not McCain’s strong suit and he can lose the election right here if he tries to take the other side in this. Public opinion is not always right, I would have thought Freepers would know this already!

[freekitty]

He sure should. Stand up and be a man of honor, McCain, like you say you are.

[fightinJAG]

That’s like calling a doctor and saying, “I don’t know a lot about brain surgery, but I think using that stent stinks!” ;)

[lovesdogs]

Thank you for posting that explanation of the situation. I had the hardest time getting my head wrapped around why such a grand over the top fix was needed. You neatly tied up all the loose ends that were giving me a week long headache.

[fightinJAG]

I for one do not want this critical, once-a-century response determined by a popularity contest.

If, for example, 60% of the nation is against something that actually is the right thing to do, and which should be done, then our leaders should take on the task of garnering support for it, not cave to those who are basing their opinions on everything but a deep understanding of global economics.

As Margaret Thatcher said, “Consensus is the antithesis of leadership.”

[fightinJAG]

It seems vicerally pleasing to watch the bastards go down the drain, but the tangential effect is devastating.

If you want to make Ahmadinejad a prophet, just go right on thinking this way.

I snipped out the above, but EVERYTHING you said needs to be repeated and repeated and amplified.

See also:

# 11

and

# 28

[dalebert]

15 months ago the stockmarket was at alltime high. Happens everytime Demcrats hold Congress. Republican congress saved Clintons rear.

[Notary Sojac]

“Solving” this problem by adding trillions more in debt is pretty much like curing a heroin addict by cooking up a major hit and jacking it right into the vena cava.

[fightinJAG]

Run on Hong Kong Bank

[LRoggy]

This problem requires a little deeper level of thinking than that. I expect more from Freepers, this is not the Huff Post.

[Travis McGee]

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

---Ludwig Von Mises

Paulson and Bernanke are choosing option #2.

[LRoggy]

. . . a voluntary abandonment of further credit expansion . . .

---

The abandonment has already happened. The CREDIT MARKETS ARE FROZEN. The government is making an EQUITY investment. They are buying time to UNWIND these assets.

The Financial Institutions they are buying these from have already written down over $500 Billion against their income statements.

The government will MAKE MONEY on this, reducing the deficit in the future. It will make money because the LOSSES HAVE MOSTLY BEEN TAKEN ALREADY BY THE FINANCIAL FIRMS.

Von Mises was talking about the PRIVATE SECTOR, not the PUBLIC SECTOR.

[Travis McGee]

The government will MAKE MONEY on this, reducing the deficit in the future.

Hahahaha! Does your mommy let you cross the street alone? BTW, I have a candy factory I will sell you, cheap!

[Wallace T.]

In the panics that hit the United States in the 19th Century and the early 20th Century, up through the crash of 1920-21, the Federal government adhered to a laissez faire attitude, allowing commodities, real estate, labor costs, and borrowing costs to deflate by market forces. State and local governments did likewise, with the partial exception of providing immediate relief to distressed farmers and workers. As a result, the economic downturns were generally short, though painful. Full recovery was achieved within a year, at most two. Inflation resulting from the Civil War and World War I was shaken out of the system.

After the Crash of 1929, President Hoover and his advisers (except Andrew Mellon) took an interventionist role, setting up the Reconstruction Finance Administration and other agencies in an attempt to prevent the same purgative process that benefited the economy in prior crashes. His efforts prolonged the agony, and FDR piled on with numerous other agencies, including a failed price stabilization attempt through the National Recovery Administration. As a result, the 1929 downturn morphed into a decade long depression unprecedented in American history.

As for the fact that sovereign nations such as China and wealthy investors such as various Arab oil sheiks own large portions of American government and private debt, this nation has always had foreign investment. We are still the most powerful nation in the world. In the early years of the Republic, British, French, and other European investors were major investors in state government bonds, railroads, canals, etc. There were several defaults on the part of American state governments and private companies that caused foreign investors to suffer losses. At the time, we were weak militarily. Nonetheless, foreign powers did not intervene to compel the Americans to pay their delinquent debts. China and other creditor nations would be fools to start a war with a nation with the strongest military. Rather, they will do the same as the Europeans did in the 19th Century and wait for full or partial recovery of their principal.

Any and all bailouts to the investment banks, commercial banks (beyond FDIC insurance coverage), brokerages, and insurance companies should be opposed. Let this country take the hit and move on, as we successfully did in the first 130 years of our national existence.