Posted on 09/27/2008 12:13:20 PM PDT by ReleaseTheHounds
A KEY reason the public hasn't bought the case for the $700 billion bailout plan is that the Bush administration hasn't explained why the financial sector is unique - unlike the auto industry or any economic actors who are hurting and asking for aid. Hence the opposition on the left, from those who want a broader bailout, and on the right, from those who want no bailout for anyone.
The basic problem is that the financial sector faces systemic risk in a way that no other industry does: By its nature, it is a house of cards that can collapse at a moment's notice.
Let me explain...
snip...
Bottom line: We're closer to the precipice than Congress or most of the public understands. Our entire economic system really is at stake - and those treating the bailout plan as just another government spending program are seriously wrong.
Failure of this plan risks another Great Depression. Really.
(Excerpt) Read more at nypost.com ...
Maybe all employees everywhere should work under these conditions.
$1 a year unless you perform. If you don't help to make the company turn a profit that year...sorry no more money for you.
In reality (thank God) every employee signs a payment contract, including CEO's.
The company offers what they think the job is worth. It's a contract just like is done for every employee. If WaMu wants to offer top dollar to try to get them out bankruptcy, let them.
As bad as the financial crisis is, it pales in comparison to what would happen if we spend trillions of dollars trying to fix something that really can't be fixed and the US dollar becomes worthless paper. If a lot of banks fail and we have a depression that would be bad enough. But if that happens, it's going to be a lot worse for the rest of the world, especially China & Russia. In that scenario, the US dollar would actually become a safe haven for the rest of the world, and any depression would be short lived for the US as large amounts of money would flow into the US, much of which would be looking for a return greater than the .25% currently yielding on the 3 month treasury note.
On the other hand, I could support a more limited bailout proposal as proposed by the House GOP. No pork and any profits from the bailout ONLY go to reduce the national debt. Since we would be borrowing money at the rate of 3-4%, based on the 10 year note, and hopefully getting the mortgages at a reduced price (60 cents on the dollar or better), there is a good chance that the plan would actually make money for the government. That kind of plan I could support, even though I foresee very hard economic times for the next several years.
Furthermore, there are lots of jobs out there that work is performed by contract, commission or by the piece.
What makes these feckless, corrupt thieve any different. Their pay should be based upon performance.
All that I am illustrating is this. All of these guys received millions to run their respective companies into the ground. Now they want ordinary, working-class taxpayers to bail them out while they still keep their ill-gotten millions.
I say no!
If there is to be a bailout, I want collateral. I want them to put up their homes, buildings, planes, foreign and domestic monetary assets, their mistresses, wives, kids and anything else that has value.
Then we might consider a loan. Period!!
You're painting with a broad brush. Not all these guys ran their companies into the ground. Many of the current execs have been brought on board only recently to fix their various crises.
The WaMu payout is not taxpayer money. And I understand why many companies want to pay top dollar for top talent.
HUH????
Punishment is always after the fact.
My concern is that if someone doesn't pay a really hefty price for this then all we've taught them is that they have to be sure they get the consequences serious enough that the rest of us won't risk not saving their buns AGAIN.
Bingo.
Bears repeating. I'm glad you shouted, too.
Yes, it's worth it to protect the cronies who feed them and keep their campaign skids greased. The ONLY thing that is worth more to them than protecting their cronies is protecting their seats in Congress and so far, there is NO JEOPARDY for Democrats, only for Republicans, so I fully expect them to fiddle while Rome burns. They will be the ones to "pick up the pieces" if the entire economy crashes, so there's no jeopardy for them in that respect either. And please don't think these s.o.b.'s haven't long ago divested of stocks and bonds like all the smart people and inside traders have done.
Sorry, I have to disagree. The public doesn't understand how all this relates to their own lives -- as the first reply on this thread said "I can't get a loan to keep my own small business going because of all this..." And for this, I have to say that I think Bush and Paulson have done a TERRIBLE job in explaining all of the ramifications. Maybe they don't want to cause a panic, but in being so inarticulate and closed-mouthed, they are keeping the public essentially in the dark about the possible outcome.
NOBODY WANTS TO TOUCH IT BECAUSE THEY DON’T KNOW HOW TO VALUE IT. The boneheads who generated these investment vehicles and their derivatives have spread this contagion throughout the retail and investment banking worlds and now look to Uncle for a handout stave off reckoning.
I agree but I also disagree. The regulators need to get rid of or at least modify the "mark to market" rule because that is pulling all asset values to the cellar -- the lowest common denomiator -- and that is probably responsible for 50% of the problems we are facing at the moment. Get rid of mark to market: your house's value shouldn't be assumed to be equivalent to the foreclosed property just around the corner that's being put on the market at a give-away price -- but that's what is happening in the financial world.
I know these are contentious issues, but I do believe a rational rescue can be constructed (and modified as needed). Unfortunately, this is another example when lousy communications skills in this Administration are contributing to the problems this country faces. Where's the Next Ronald Reagan when we need him?
I agree with you — thank goodness the House Republicans stood strong and demanded tax-payer protections and more free market principles be put into this rescue effort. Throw out all the Christmas tree ornaments and let’s get this plan back to reality. But we have to get a decent plan moving and approved otherwise watch-out with Monday’s market opening (maybe it will be the opening in the Far East or maybe it will be in Europe where a major financial institution is going under as we type). We can’t allow this contagion to take everything in our economy down into the dustbin of massive deflation.
“The WaMu payout is not taxpayer money.”
http://en.wikipedia.org/wiki/Washington_Mutual
Basically correct. It appears most of WaMu was taken over by JP Morgan Chase, for $1.9 billion at no taxpayer cost, and some of WaMu was retained by the FDIC in receivership.
So it can’t be clearly concluded if any taxpayer money is involved with the FDIC portion.
To date no taxpayer money has been invested in saving Fannie, or Freddie, either.
All this talk about taxpayer costs is in the future, should the public pay out to buy a mortgage, and then fall short of breaking even on the deal.
For Joe sixpack to understand the technical aspects will require hours if not days and weeks, to learn facts, terminology, etc.
Bank accounting is backwards from other businesses.
Banks have been regulated, deregulated, manipulated, targeted, used for financial trickery for so long, half the congress citters probably barely get most of the terms and concepts.
Obviously Bush and Paulson rushed to be the first to blink.
I truly hope McCain is quietly getting his facts and plan together, to unleash against the opposition is the final weeks.
He didn’t use the facts last night, when he could have.
There will probably be some kind of announcement Sunday night before the Asian markets open that there is a consensus on a bailout package, just as there was on Thursday and Friday. However, the slush fund issue has ticked off so much of the base, that the House GOP is probably feeling very emboldened right now and will not be willing to back down. We probably won’t see a final bill before next Friday, if at all, at this point.
According to FoxNews, there may be a vote as early as tomorrow morning — don’t know whether that will be on a final bill or some interim measure, but I think this is moving quickly. With Fortis Bank (Amsterdam) in trouble and now speculation about Wachovia, the pressure is going to continue.
When will the regulators reverse or pause the “mark to market” rule? This seems to be just insanity being allowed to control our financial markets. JMHO.
I feel for you, Always Right... You are probably a good example of the danger that this country faces -- heaven forbid that our system is going to let a business like yours (or any honest business in America) go down for lack of liquidity to meet our daily commerce needs. Maybe this is the wake-up call we need to get Freepers and Congress to respond.
Good luck to you, Always Right... We'll keep you and your employees in our prayers. I'm afraid you may be the canary being brought into the coal mine.
Would you agree with the following sentence, yes/no?
“The disaster in the wings is so great that I can live with the possibility that an Obama-appointed Sec of the Treasury would have the powers of the Paulson plan, under the oversight of Chris Dodd and Chuck Schumer.”
The first line was meant as sarcasm! That was the slow curve part of the pitch, the fast break was that we should insist on the resignation of some of the pols if they want to save their friends!
That's a well stated challenge and question... Please accept my "yes" as an admission of what I feel is the seriousness of the situation. As much as I HATE Chris Dodd, Chuck Schumer, Barney Frank and [you name it] all the usual suspects, I think we need this kind of plan (without all the crap that the Dems are trying to stuff into it, and hopefully with the market-oriented improvements that the GOP House is holding out for) to be passed ASAP.
If this crisis spins out of control this week, there will be more bank failures around the globe and I don't think anyone knows where the bottom will be.
I hope I'm just at the capitulation stage and my emotions are signalling a bottom -- but I worry where the bottom might actually be.
The bill that Bush is asked to sign could very easily contain giveaways to Democrat constituencies by the $100s of billions, and not one GOP reform whatsoever.
I've already posted elsewhere on FR what I think a bailout would have to have in order to be acceptable. That carries a corollary - that the lack of those things makes it unacceptable.
Is there any provision of a bailout plan which would be so odoriferous that you would reject the plan??
Yes: If the “20% of recovery” (or whatever the term they are using is) goes to organizations like ACORN rather than back to taxpayers — if that kind of crap isn’t corrected in the final bill then yes, I’d argue for the “no” vote and hold my breathe hoping that the financial calamity that I fear doesn’t materialize before a decent rescue plan is brought forward. Because the damage to our economy could be swift. Pray that I’m wrong.
When there is performance, then I will believe it.
How long ago is recently?
By all accounts this has been brewing now for a couple of years, if not more.
Without a doubt these top talents knew exactly what they were getting into. And, if they were top talent they would have known that eventually the 'jig' would be up . They had to know that what they were doing or what was going on was nefarious.
A reasonable answer. Thanks.
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