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The $700 Billion Bailout Is A Sham and Stocks Plunge
Townhall.com ^ | 10/11/08 | Philip D. Nathanson

Posted on 10/12/2008 9:08:51 AM PDT by Inkie

The bailouts of individual firms and the $700 billion Treasury package AVOID market pricing of assets and assure that essential information is kept from the markets, lenders and everyone else. Money is unavailable to many. This is occurring in an economy flush with cash, much of which will be used to purchase government securities. In other words, the Fed has flooded the system with liquidity, while at the same time preventing the needed market transactions to price hard - to -value mortgage-backed and other assets. Liquidity is not going to support productive economic activity, it is going into government bonds. Interest rates are low and credit is tight. Only the government can create such a conundrum. Top this off with inflammatory rhetoric by the Chairman of the Fed and Treasury Secretary, statements seemingly geared to implementing policies to greatly expand their control of the economy, and you have our current situation.

(Excerpt) Read more at econsense.blogtownhall.com ...


TOPICS: Business/Economy; Constitution/Conservatism; Government; News/Current Events
KEYWORDS: 110th; bailout; conservate; djia; economy; government; wallstreet
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A clear essay on how government stupidity and the "do something" syndrome has yet again distorted the market.
1 posted on 10/12/2008 9:08:52 AM PDT by Inkie
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To: Inkie
The bailouts of individual “Paulson approved” firms
2 posted on 10/12/2008 9:11:03 AM PDT by org.whodat ( "the Whipped Dog Party" , what was formally the republicans.)
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To: org.whodat

Last I read they are going to use a reverse auction where the securities offered at the lowest price will be bought first.


3 posted on 10/12/2008 9:14:39 AM PDT by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: Inkie

Heard a lot about this meltdown. Don’t undestand most of it myself but what I do know is that the people in charge don’t seem to understand either. It almost seems like there is no solution that can save us.


4 posted on 10/12/2008 9:18:32 AM PDT by teletech (Friends don't let friends vote DemocRAT)
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To: teletech
The intent is not to save "us".

As the previous poster pointed out, it is to save "them" - the investment banks with the right political connections.

They will do so because people don't understand what's happening, they know they can get away with it, and they think they are too important to fail.

As far as they are concerned they are "America". The rest of us just happen to work for them.

They are desperately trying to make sure that equation remains true.

5 posted on 10/12/2008 9:27:30 AM PDT by Regulator (Obama = Mugabe)
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To: Inkie

The $700 Billion Bailout Is A Sham and Stocks Plunge


DUH!


6 posted on 10/12/2008 9:27:48 AM PDT by CommieCutter (I'm voting for Sarah.......and that other guy.)
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To: Regulator

Some are talking about a ‘scorched earth’ market just to show them who is really in charge!


7 posted on 10/12/2008 9:29:49 AM PDT by griswold3
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To: Inkie

How about giving the $700B back to the taxpayers? They could pay off their mortgages, buy cars and other big ticket items and really boost the economy.


8 posted on 10/12/2008 9:30:02 AM PDT by SVTCobra03 (You can never have enough friends, horsepower or ammunition.)
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To: Inkie
Step one. Every mortgage is a signed agreement on how both sides should behave. Simply enforce it.

Step two. Bait and switch is bad for anyone looking to buy. Do not allow it. This calls for honest accounting.

Step three. Plan fir steps one and two to be ignored.

9 posted on 10/12/2008 9:33:14 AM PDT by Mark was here (The earth is bipolar.)
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To: Inkie
The Bailout in a single comic strip(SinFest):

Permalink

10 posted on 10/12/2008 9:33:50 AM PDT by Salgak (Acme Lasers presents: The Energizer Border: I dare you to try and cross it. . .)
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To: Regulator
The intent is not to save "us".

The "us" I refer to is the USA financial system.

11 posted on 10/12/2008 9:35:47 AM PDT by teletech (Friends don't let friends vote DemocRAT)
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To: griswold3
Some are talking about a ‘scorched earth’ market just to show them who is really in charge!

Wouldn't put it past them. The Banksters won't have to worry about where the next meal is coming from. The difference between living on forty million a year versus ten is a matter of style and not much more.

12 posted on 10/12/2008 9:43:39 AM PDT by Regulator (Obama = Mugabe)
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To: Inkie

It’s a good article. I’m glad to hear someone say the obvious:

The bail out caused stocks to crash.

More bail outs will crash the market more. George Bush is a moderate republican. Had he been conservative, he would never have proposed the bail out, stock markets would be high, and people could look forward to retirement. McCain is no better. (Obama is just awful.)


13 posted on 10/12/2008 9:51:06 AM PDT by ChessExpert (If it had been up to Hussein Obama, Saddam Hussein would still be in power)
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To: teletech
So, you don't consider yourself part of that?

If not, kinda proves my point, doesn't it?

14 posted on 10/12/2008 9:52:27 AM PDT by Regulator (Obama = Mugabe)
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To: Regulator
The intent is not to save "us".

As the previous poster pointed out, it is to save "them" - the investment banks with the right political connections.

They will do so because people don't understand what's happening, they know they can get away with it, and they think they are too important to fail.

As far as they are concerned they are "America". The rest of us just happen to work for them.

They are desperately trying to make sure that equation remains true.

BINGO!!!!!

15 posted on 10/12/2008 9:53:23 AM PDT by org.whodat ( "the Whipped Dog Party" , what was formally the republicans.)
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To: CommieCutter

Did you bother to read the article?


16 posted on 10/12/2008 9:59:29 AM PDT by Inkie (Attn Dems: Loose Lips Sink Ships -- but hey, I guess that's your goal))
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To: Inkie

Several points I’d like to make:

1. In bailout there is 100 million dollars for ACORN as proven last night is a post by a fellow freeper.

2. Obama has two bills that have passed the house and contain a whooping 1 trillion dollars for the UN.


17 posted on 10/12/2008 10:03:18 AM PDT by stockpirate (Congress created the right to own slaves, we're the slaves. To arms the Marxist are here!)
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To: Mark was here
Step one. Every mortgage is a signed agreement on how both sides should behave. Simply enforce it.

If someone with $30,000/year income takes out a 110% LTV mortgage on a "$400,000" house that's really worth $100,000 (getting $40,000 cash back) how exactly can that mortgage going to be "enforced"? Throwing the "lender" in jail would be a good idea, and perhaps the borrower as well (if he gave his real name) but there's no way that paper is going to turn into $400,000.

18 posted on 10/12/2008 10:15:34 AM PDT by supercat
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To: ChessExpert
The bail out caused stocks to crash.

Markets need rules to function. Good rules are best, but even bad-but-predictable rules are okay. Anarchy is petrifying.

The bail-out essentially says that the rules of the market place will be whatever Hank Paulson decrees them to be. If Paulson had a record of being a wise and benevolent--or even predictable--dictator, that might be tolerable. But the markets have no way of knowing what he'll do. Anyone who sells toxic paper to a competitor for pennies on the dollar risks being squashed like a bug if Paulson then buys the paper from that competitor at a much higher price. How can markets function in that environment?

19 posted on 10/12/2008 10:22:07 AM PDT by supercat
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To: supercat

So what you’re saying is there is no solution. And if that is what you’re saying, you’re right.


20 posted on 10/12/2008 10:22:46 AM PDT by Terry Mross
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