Marketplace

I’ve been annoyed by all the short sellers moping all day about how nobody appreciates their role in keeping market exhuberance under control. They’ve keep saying, ‘We’re the ones who spot trouble before all the cheerleaders.’ That’s fine. The problem lies in when shorting is motivated more out of bloodlust than by actual belief that a stock is really overpriced. Shorting my former employer, IndyMac Bank, was fine because it was early and justified by the belief of what would happen. The shorting we have seen subsequently was about seeing how low prices could go and how much money could be made. it was more akin to Iraqis looting their hospitals after the war than to correcting overvaluation. Thank goodness society stepped in and established some order.

I am disgusted. I am a responsible tax payer and property owner. We as tax payers are bearing the burden of the people and institutions who were greedy, manipulative, or kept their head in the sand.

I am tired of hearing stories of people “losing” their homes. Are those of us who were responsible and managed our risk within the bounds of acceptability going to be rewarded for this, no, we are paying.

It’s already a few days and nobody is telling us what on the hell the bailout money is coming from??? The government is running huge deficits, robbing social security funds to pay for so-called “war “and suddenly has cash for crooks and thieves. On the top of it we don’t see those guilty of this mess.Are we all stupid and let again our government do with us what they desire?????

WE bail them out, THEY keep the millions they made. It’s not fair!

It’s just another way that people who aren’t rich are being exploited by this government, which has deregulated everything, made the rich richer, and done irrevocable harm to our country.

I’m angry, disgusted, and scared, too. I don’t see much hope.

The thing that I find most troubling about the actions of the Federal government and Federal Reserve over the last couple of weeks is the lack of recognition being given to the destruction of the remnants of our once respected free market. The takeover of Fannie Mae and Freddie Mac amounts to nationalization of two of the largest corporations in the world, yet few people seem troubled by this step towards government control of the financial and other markets. If I were the CEO of any large corporation I would be very concerned. After all, what is to stop the Federal government from next declaring that the auto industry, to choose but one potential trouble spot, is too important to fail, followed by a government takeover of Ford, GM, and Chrysler? According to what seems to be current thinking, this is OK so long as it’s done to “protect” American jobs, taxpayers, etc. no matter the long-term damage that is done to our economy.

Combine the takeovers with the bailout of AIG and American taxpayers are now liable to trillions of dollars of debt. Now comes word that the Treasury department is considering buying up the bad mortgage assets that, according to Treasury Secretary Henry Paulson, “are clogging up the financial markets”. The new operation would be patterned after the Resolution Trust Corporation formed in the wake of the S&L failures in the crisis of the 1980s. The big difference is that the corporations from whom the debt will be bought will be allowed to continue in business. Does anyone else think that this will lead to yet more risky behavior by these businesses in the future? After all, the government will take care of any bad results that might occur. The only way to prevent this will be to heap yet more regulations and oversight on the financial markets. How can we still maintain that we have anything even vaguely resembling a free market?

And now, the SEC is getting in on the action by banning the short selling of the stocks of 800 financial corporations. This is supposedly going to be a temporary measure, but another precedent is being set, and the government will use its power again. Does anyone else find it troubling that the government has outlawed one of the prime price-finding mechanisms of the marketplace? All the government is doing is interfering with the efficient flow of capital within the markets - a move that will have unfortunate effects.

All in all, in my view, the government has effectively destroyed most of the remnants of the free market in the United States. The new regulations which will inevitably be put in place “to make sure this never happens again”, will continue that process. By putting further barriers to the free movement of capital in place in the U.S. the government will run the real risk of killing the Golden Goose of the U.S. economy. The average American doesn’t understand how much money the financial marketplace brings into the U.S.; money which goes far to offset the trade deficits we run with China and other developing economies. If capital is not free to move in the U.S. it will go elsewhere and U.S. financial markets will no longer be the most important in the world, with potentially devastating effects on our national economy. As Ronald Reagan so sagely observed, “Government is not the solution, government is the problem”. More Federal government intervention in our markets will lead to disaster and the more bailouts, loan guarantees, and other regulatory tricks that are used to prop up our shaky financial system are merely postponing the day of reckoning, and ensuring that the crash, when it comes, will be far deeper and far worse than it need have been.

Perhaps this means WaMu should have let those bankers out of the “bankers pen”? Maybe all those stodgy old guys in the “bankers pen” could have taught the hip and groovy spokesman a bit about risk, and capital preservation.

There is a reason bankers are supposed to be stodgy, tradition bound, unimaginative,and NOT “hip and groovy’. This is why.

So, OK. Let’s recap.

The failure of our entire financial system in ten easy steps:

1). Originate a mortgage loan for somebody who has no ability to pay for it, based on fraudulent statements, and ignore the fact that good-quality loans are how banks make money.

2). Package those loans as default credit swaps, and take them to a rating agency like Moody’s or Morningstar. Bribe said agency to give you a AAA+++ rating on those worthless loans.

3). Make lots of money by selling the loans to major financial firms like AIG or Bear Stearns as an investment. Repeat several times.

4). Wait until the loan gets foreclosed, along with millions of others, so that housing prices will plummet, people go homeless, and these major financial institutions fail, because they FILLED their entire portfolio with your useless and fraudulent securities.

Then after that:

5). Get sickeningly drunk on even more cash as you naked short-sell the stock of the aforementioned big financial firm you sold the bogus investment to.

6). Have a small chuckle and a beer while you think about how cool it is that you don’t ever have to even own or borrow the financial firm’s stock to naked short sell it. (But strangely though, if I sold you a car I didn’t own or couldn’t at least borrow to sell later, that would be, um- illegal??)

7). Watch in bemused “oh-well-darn-somebody-looked” befuddlement as the Fed and the Treasury Secretary get suckered into setting policy that prevents speculators from reaping billions of dollars in profit from naked short selling the stock of failing financial institutions. Meanwhile, watch the SEC Chairman (who is supposed to be responsible for formulating the aforementioned policy) attend a birthday party, and spend several weekends in the Hamptons.

8). Collect $600 as our bumbling buffoon of a president steps in to ‘help-ify’ the problem by sending you your own money in the form of a “stimulus check”, which you will be taxed again on later.

9). Watch in amazement as the Fed does nothing to interest rates, since it has its hands tied: Raising rates will cause further collapse of the housing market and more large financial institutions to fail. Lowering rates will cause massive inflation, a weakening dollar, and skyrocketing commodity prices.

…And this situation renders the Fed absolutely ineffective in doing the ONE job it is supposed to do: regulate inflation.

So then what does the Fed do?? It acts in a different way, which is equally as stupid, not in their job description- and much more like what the failing financial firms are doing out of pure desperation to save themselves.

…It offers to put the whole mess on the Federal Credit Card. That is, it decides to bail out all of these failing financial firms with current taxpayer dollars, and then decides to create more available credit for itself by auctioning off more debt in the form of increasingly worthless U.S. Treasuries.

…Wait- isn’t that what got us into this whole mess in the first place?? You know- borrowing money that will never get paid back? Oh wait- I forgot. The U.S. Government will never be insolvent- even with TRILLIONS of dollars of debt on its books. (or will it?)

…And now even GM and Ford are asking for a bailout.

Well, my heavens. I have some bills I need to pay. How about a bailout for me too?? …At least I’d know how to be responsible with the money.

10). Now, Laugh, Laugh, Laugh as the bill comes due, and the comet nears the horizon…

Brilliant.

Its always comforting to know that when corporate fiscal irresponsibility runs rampant, and causes the entire financial sector to fall to its knees, our Government will be happy to just cough over our hard earned tax dollars to float private businesses, and not bother sending anybody to jail.

And don’t even bother getting me started on all of these bloody subsidies, or this damn useless war that I have to spend the first 5 months of every year paying for.

…Why on earth can’t I get to choose how to spend MY tax dollars?? Only then will REAL democracy come in to being.

…Someday soon, I hope to send the Government itself to jail for faltering all over its vomit-laden pork-barrel and hold it to account for its own stupidity and pecuniary iniquity.

If the banking sector was dumb enough to buy up all these worthless investments, they should have to take the loss, just like everybody else.

The banks will be fine. Why is it that nobody is worried about the taxpayers??

An individual’s direct allocation of their tax payment to specific items or areas of the national budget would provide both a structural direct democracy and transparency to governmental affairs.

Simple solution:

1) Let the banks suffer from their poor actions. As they should.

2) Throw the accountants and CEOs of these companies in jail for fraud and treasonous activity.

3) Kick all those involved in the CRA out of office… along with any official that allowed off books accounting in Banks.

4) Give the billions (Trillions?) of dollars to the public. A check for everyone. After all, aren’t we the ones they’re so concerned about?

Think about it. It’s a perfect solution and solves the problem…. along with many others.

While the bailout may hold merit in the long run, it’s nothing short of rewarding irresponsibility. It’s like a parent being mad or dissappointed at their child when the child tears up their room when the parent left the sledehammer with the child. People ought to be held accountable and the canditates should actually speak above a 2nd grade level to about the issue to the American people and offer real, specific solutions that aren’t so broad that you can’t tell where they stand. Telling Americans, “I’ll fix it” or “We need to work together and fix it” tells me nothing. My co-workers have offered better rhetoric and solutions during our 15-minute break that the government or the canditates have.

Twilight Zone event alert: A Reagan era article that could easily be describing today’s situation: http://www.sustainer.org/dhmarchive/index.php?displayarticle=vn205indicatorsed . So, if the market is not the economy; what the hack will pumping billions into the real estate market do for the real economic indicators like unemployment, trade/budget deficit, health care cost, factory production, CPI, etc…..? Why is the media not talking about that instead of how wonderful the bailout will be or Palin’s school-mum glasses?

It takes a lot to get me upset, but when I heard that “our” government is planning to bail out the financial institutions of wall street I went past “upset” and just got plain and simply “PISSED OFF”!!!!!! Why would we want to bail out people that are just going to get into the same hole in a few years? Do the words “history repeats itself” mean anything to the IDIOTS in washington?? It’s hard for me to feel sorry for someone that has repeatedly shown that they have no respect for hard working law abiding citizens. It’s all about the money and nothing else, and when they get in trouble, just go to the taxpayers and they will bail us out and we can go back to our crooked ways. Well this is one “taxpayer” that says enough is enough!!! Let the fat cats of wall street take the fall and the consequences for making bad financial decisions just like the rest of us. I think that $700 billion would go a long way towards fixing Social Security, so that ordinary people like me would’nt have to worry so much about what their retirement will look like.

I’m waiting to see what the candidates do. One of them is going to be elected based on all kinds of promises to the electorate.They both made them! How the heck are they ever going to be able to do anything with insurance or education or any kind of tax cuts when we’re running trillions and trillions of dollars in debt? There’s going to be hell to pay whoever gets in. Cause they’re going to be viewed as lying (once again) to all of us. They better start dealing with the bad news before they take office.

If our financial system is the “house of cards” that Bush described (thank you for playing that sound bite, NPR!) and home prices returning to the level of four or five years ago is enough to start bringing the whole thing down then IT NEEDS TO COME DOWN.

Using over $1,000,000,000,000 of taxpayer money to save these people from the consequences of their bad investment decisions will only green light new levels of greed and corruption that will make the last ten years seem charitable.

The American system works only in the presence of personal responsibility — that means losses for those who make bad investments, jail time for anyone on Wall Street who deserves it, and maybe some economic pain for the taxpayers who voted these clowns into office. We deserve to feel the pain so we’ll change our ways.

Bailouts burden our children and their children with the taxes to make interest payments on this debt for the foreseeable future. They shouldn’t have to pay for our irresponsibility.

Mortgaging the incomes of our children to save the huge Christmas bonuses on Wall Street this year and perhaps make life a tiny bit easier on the average American today will only encourage another episode of incredible irresponsibility and greed, greed, greed among the people who profit by risking the money of others.

Why do we assume that the government will be able to get money out of the bad loans when the capital markets failed? Printing more money will not cover this debt. What sort of restraint will be applied to these “bailed out” banks to ensure they change policies?

I fear this is going to get very ugly.

necessary, better than jumping from lily pad to lily pad while rushing towards the waterfall. Still many people have gotten very rich off all this junk that has been done by Wall St and it’s the ordinary taxpayers who are paying for it in the end. in my opinion, there is no such thing as a “free” market. I hope this wakes up alot of people towards this blindness. My tax dollars have already gone to subsidize JP Morgan’s purchase, hmmmm, what is next? I want to sell my house, but I fear buyers can’t get mortgages…

My wife had an interesting question: does the “bailout” money have to be paid back or is it free and in the clear?

We’re assuming that we’ll be shouldered with the costs in ways not easily visible.

Like my fellow listeners/readers, I am so disappointed that those who follow the easy and irresponsible paths are rewarded time and time again.

It’s business as usual: Emperor Cheney hands everything to his corporate masters via his puppet George. In this case, they use the Treasury as their own personal ATM.
Why? because the financial system is “clogged”. How did it get “clogged”?
Not raided, not raped, “clogged”…by a total lack of responsible oversight that in a society of laws would result in criminal charges…luckily, as we all know, Emperor Cheney is above the law.
Witness two illegal wars which are draining this economy and for which no one will ever answer.
The bailout is just one more blatant example of naked theft committed under the banner of the Bush Administration, the real slogan of which has always been, “It’s all for sale.”

No to bail out. I do not trust any politician to spend that money wisely, and I truly believe there will be add ons to the bill as there was for the previous housing bail out. Any Senator or Congress Person who votes for the bail-out should not be re-elected.

I am a housewife with a degree in English Literature. I don’t profess to understand this financial situation’s complexities, but what I do know is this: If I don’t pay my bills on time, or bounce a check, or overdraw a credit card,I face a monetary penalty. There is no one to bail me out if that extra fee means my kids don’t get milk, so I have a budget and I’ve learned to live within it. I’m not sure what part of “budget” the government and banking industries don’t understand????? What kind of FICO score does one need to recieve a loan so large? Surely, someone with a bankruptcy shouldn’t qualify!

Two quick points:

1)This bailout should be a wake-up call to any remaining Chicago School economists. Saint Milton Freidman is wrong. Freemarket economics don’t work, financial institutions must have oversight. Keynesian capitalism is correct today as it was after the Depression.

2)The media has not reported the CEO’s threat this weekend, they would rather have their companies go belly up than not take ANOTHER few million bonus. If the public were to ever hear of their threat, I can’t imagine the fury our noble “representatives” would have to endure.

The base problem is accountability. Just like government spenders, the banks were allowed to create their own bank balances. And it’s too late this time to prevent the financial storm or to punish the people who contributed, even the local mortgage brokers who collected the commissions.

We just have to get through it any way we can, as we will be doing for the next decade. What I hope we do is learn who are the culprits - by following the money.

The country should have learned from history (chortle) after the S&L crisis caused by the last real estate bubble, and even from the 1929 market crash. We had Glass-Stiegel rules for a reason.

I think the other folks on this page who call for jail time are right on the money, but they didn’t break any laws. If the USA learns this time, we could have laws in place for next time. But they need to be written very carefully; we’ll need the wisdom of James Madison.

Clearly, we are in a Financial Armageddon, one in which the next buyout will not be so inexpensive… but expect the cost to be magnitudes higher in order to deal with the Credit industries house of cards. This will begin the Domino effect when we hit double digit unemployment.

What is clear here is that Wall Street’s investment advisers/pundits and prognosticators know absolutely nothing about investment nor giving advise, nor predicting the future — as always has been the case. For that matter I have to question the track record of all those economists (such as the quarterly email I receive from UCLA Anderson School of Management) — in fact where is that track record for everyone to see?

Even the good old DOW is a moving target and unreliable gage, —-if one stock does not perform move it out!

No - not all finance institutions and advisers are Crooks per se, but an entire Financial industry has been built up upon playing off the psychology and greed of the average investor. What is needed is someone to start a Financial Anonymous so that people who think they are investing can learn to say “I’m a Gambler and I’m a Looser” — and the only winners are the ones who handle the money.

Those are just a few of my thoughts on the debacle. Best

In our family, we have taught our children that their actions have consequences, and they have to face those consequences. We have been responsible with our money and bought a house within our means. We have not ran up thousands of dollars with foolish credit card purchases. I don’t think it is fair to expect us to pay for others who have not been responsible. Why should Joe or Jane tax payer pay for the foolishness of others. Our children’s children will be paying for this mess and the people who bought more house than they could afford will be rewarded.

I don’t see the point in buying up debt (non-performing mortgage loans. Why not buy the asset (the houses)- by paying off the loan at a seriously big discount. Create a new note for the homeowner that fits their budget. When home is sold, share in the profit (pre-arranged). This is a win-win for the banks and troubled homeowners. Of course, homeowners would have to prove hardship, just as they do now in work-outs with their lenders.

This proposed financial bail-out is a reckless attempt to excuse intentional “bad decisions” by these particular financial institutions. These companies obviously did not care about the possibility of this happening, no foresight of consequence… The tax payers should absolutely NOT have to take the hit in order to cover their mistakes…and that is assuming this plan would actually be effective, which in my opinion is rather far from practicality. If you stack up enough Band-Aids, eventually they will all tip over. I personally will be very upset with our government if they let this fly.

I share the same sentiments of the comments posted so far, anger, disgust, hold those acccountable that created the mess, I want solutions that will work for taxpayers and financial institutions, for the least amount of my taxpayer money. I am not a financial expert but I think that we’ve jumped right into this bailout option without at least addressing what truly could happen if we took another tack on this. Instead of just assuming the ‘experts’ are correct in this broad notion of economic failure, whatever that means, I would like to look at what would happen, if we use a different solution. My only question for NPR or any news organization is this:

What if we let the “free market” run its course (as I’ve seen Ron Paul propose) with some help or with no help from US taxpayers? We’re told, and I want to question the premise, that our markets will collapse if we don’t do something right now and for a lot of money.

We don’t hear enough reporting on the alternative to what is being proposed currently (that most American oppose anyway-from the polls that I’m seeing), a non-bailout solution.

I recognize that Congress is proposing changes to a major bailout and I have more comfort in seeing that option compared to the Paulson option.

I expect interest rates to increase, stock prices to continue to fall, and other financial effects, whether we pour money into this or not. And there are no guarantees that this will work or that more money would be needed in the future. I also expect, at some point for our economy to recover, in either scenario. I say we ‘Embrace the Suck’ and let these investment firms (not banks) fall on their faces and then spend some of the taxpayer money on something other than the companies that put themselves in this position.

Right now, no one really knows how much their homes are worth. That creates dangerous uncertainty that could have larger ramifications.

Months ago, a bailout plan was proposed for homeowners, with banks, such as Countrywide at the time, forced to refinance bad loans. Doesn’t sound so bad now, does it?

On the Unwisdom of Economic Interventionism
(c) 2008 Howard A. Landman

The economy has gone to hell. We can’t pay what we owe.
And now the politicians try to act like they all know
just what to do to fix it, but they haven’t got a clue;
‘cause they’re the ones who screwed it up, and if they ever knew
the way to fix things then they wouldn’t have made this mess at all,
but now they’re bleeding billions more at Wall Street’s beck and call.
What the hell are they thinking? Are they all drunk?
Don’t try to catch a falling knife until you hear the thunk.

Hello? Maybe if the banks would start looking beyond their customers most recent credit reports when considering home loans, give the people they threw out of their last home another chance to buy, they might start seeing some profit. There are hundreds of thousands of people that were FORCED into loans that they would never be able to pay off simply because home prices were so over inflated. Now, they will not lend to that person when they need it most? STUPID!

[copy of an email I recently received — obviously a spoof on the Nigerian Oil email scams, but amusing I suppose]

Dear American:

I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@ treasury. gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.

Yours Faithfully Minister of Treasury Paulson

No one is going to argue that the current state of affairs is nothing less than a complete mess. What I find surprising is how quickly so many people are pointing the finger at corporate America and the American government. Where in this process did individuals lose their responsibility? The mortgage meltdown has just as much to do with irresponsible borrowers as it does irresponsible lenders. I don’t view the governments actions as shouldering the taxpayer with the burden of paying for the mistakes of financial institutions. I view this as taxpayers shouldering the burden of the mistakes of other taxpayers. Homeowners and banks alike made plenty of mistakes along the way. And let’s not forget that companies pay taxes too. You don’t hear the tech industry complaining that their tax dollars are going to bail out the financial industry. This is a problem of our society and our society is trying to fix it.

If we taxpayers must step in, we should get a controlling equity share of any institution getting our money. Shareholders and directors should feel the bite of responsibility. Let them eat cake.

Its a silly romantic notion to think this bail out will have any lasting reform. Like raising children anything left to interpretation will be just that - left to interpretation. For real reform to manifist itself GAAP must be the target. This is where truth in capitalizm can be held accountable to stakeholders and to those who are charged with upholding a fair and level playing field. I would also venture that speculation in the marketplace would become more efficient and less volatile.

Regardless of who or what caused this mess, “The significant problems we face cannot be solved at the same level of thinking we were at when we created them…” If the government is going to be spending $700B, Then why not help out the american people and help the banks at the same time? The government could offer people who are having trouble financialy (credit card debt, mortgages, unable to get loans to refinance or consolidate loans, whatever, etc…) a way so they could get a loan from this $700B at a very low interest rate. That way anyone who has credit card debt, mortgage debt, etc… could pay the banks back, the banks would then be getting their income back up to get back on their feet, the people who get the loans would be out of massive interest rates from banks and financial institutes and be able to get back on their feet again, in all, it would give the banking system money again to be able to work with and increase the common peoples ability to be consumers again. The government would be getting interest to pay down the national debt, etc… and could even put people back to work, working on implementing this idea. The Government could even hire people from the banks, using the interest from the loans that were made, to run this thing. If the government uses the $700B to bail out the banking system, they probably are not going to see much on their return anyway, so why not help everyone and get the economy going again. Anyway, that’s my two cents worth, it’s about all I have to spare after all the bills are paid. (Unless this went through and I could get a loan at a lower interest rate, due to my poor debt to income ratio…LOL)

I don’t believe no one saw this coming which begs the question who stood to gain if it did happen. Let’s face it, the private corporation called the Federal Reserve can print money; they can bail out these criminals but who everntually pays for it? We need a Crime and Punishment novelist like Dostoevsky to tell us who should go to jail.

Wall Street execs are getting a well deserved trashing in the press, but let’s not forget the mortgage brokers, builders, real estate brokers and bankers who have oversold the housing market. Let us also remember the individuals who borrowed money without reading the fine print, mortgaged their home way beyond realistic value to help pay other debts and expenses.

Also remember the people who had never paid off or even paid on time any debt, who borrowed to buy homes because someone would let them. There is blame to go around — some for the greedy and some for the foolish. The bailout will be developed by smarter people than me and I hope they do the job well because I think it must be done. 700 billion won’t touch it in my opinion.

2nd shoe to drop.

I’m going to speculate that the reason why hank paulson has been scant on the details is that today’s (wed) “blame” - Credit Default Swaps, is now a cascade of (again, unregulated) hedge funds in danger of collapse. Apparently hedge funds even acted as insurance parties to which ubs demanded they up their proof they could pay in the event of default. Hedge fund participants include institutions (like harvard endowment) to achieve 12% returns when the s&p was loosing in the market. It is LTCM all over again and no one wants to admit yet another problem due to missing oversight.

When BSC was liquidated the story was: “doing what the market would do naturally, but quickly so as to disrupt the market”.

Preceding last fri, the story was: “need 700B blank check to mitigate problems by cdo’s and siv’s too complex to unwind”. (gave my own rebuttal here: http://www.dailykos.com/comments/2008/9/20/191440/829/498#c498 )

Today with paulson, the talk is of Credit Default swaps as the problem.

BOB MOON: 
The value of the entire mortgage market: $7 trillion.
The size of the credit default swap market last year: $45 trillion.
KAI RYSSDAL: That's a lot of money, Bob.

http://www.dailykos.com/story/2008/9/21/9322/74248/245/602838

Like the barrel of oil that trades 22 times on the nymex before being delivered, it looks like there are 6.4 dollars of “insurance” for every dollar of physical property.

so I’m guessing the public is being told “it’s serious” but not given the fine details of yet another grand failure. They would much prefer to hide fault if it can be covered up by relieving pressure on balance sheets that have not been made public yet.

It looks like we are going to get this bill, even though all of the public opinion I have seen is negative; further evidence that our government cares little for the people it is supposed to serve. It seems to me that all we can hope for is that Congress will prevent them from buying any credit default swaps, or any other such derivatives. We shouldn’t buy pure bets, and we need language inserted into this bill to regulate or even eliminate these instruments that have enabled this crisis. I don’t think markets can work when risk is divorced from the assets that are supposed provide security against the risk.

There was a reason that we once broke the big banks up, and only allowed them to operate in single states. Those reasons never went away, and were never more obvious than they are now. ‘Too big to fail’ must be eliminated from our economic system.

The goverment should not bail out these companies. If anyone gets bailed out it should be the taxpayers. They defaulted on loans, mortages etc. because of a bad economy and preditory lenders. Give the money to the people and maybe they can pay thier debt. Won’t the goverment be double dipping? They bail out these companies and the companies have to pay them back. Then the taxpayer still has to pay this debt sitting on their credit reports. Since the goverment owns the debt, the taxpayer will have to pay them, plus the companies will pay them back..double dipping. The taxpayers debt isn’t forgiven, no money is given to pay back debt. What about places like cashcall.com….why don’t they put them out of business? The FBI should be investigating them and making them pay taxpayers back, as well as other payday loans. How can you investigate mortgate and loan companies for making credit easy when you allow other predators? How can you bail out these entites and not help the taxpayers? This is absurd to pass this law. Just like the tax payer, sorry, you screwed up fix it or lose everything!!!

I like Mr Morley’s comments. I am 100% against the bailout. The governement is indeed the problem. A free market will correct itself and though it may be painful for a period of time, it is most likely good and necessary for things like that to happen.

From what I heard on NPR, the foreclosures are only 1.4 million of the 51 milllion new mortgages. That is only 3%, which, according to the report, is above the historical average. However, it is the securities based on these loans that are the problem. I would like to be corrected here if I see this fallaciously, but even if a foreclosure meant total loss (which it doesn’t), wouldn’t the securities or banking firms only lose about 3% of value? Banks don’t lose the whole value of foreclosures anyway; they auction off houses, from what I understand, and make back a portion of the profit. Banks can renegotiate the terms as well.

The way I look at this is that no one will be content not making money (that just doesn’t happen) and so let those who want to make money, but are at odds because the liquidity is down, eventually work out terms for business to go forward. And after that, hopefully we will have some more responsible businessman.

Again, not being an economics expert, I would appreciate any thoughts on what I suggest.

The Bail Out is a joke… tell me my tax dollars are going directly to the people to help them pay off these outlandish-interest-rate mortgages and I’ll be happy to do my part. But give $700 billion to the jerks who are bankrupting the American Middle-class and putting them out on the street???!!! Hell No!

I can’t tell you how many small, independent businesses have failed in my area…not because of bad business sense on the part of the owner, but because giant corporations and banks have forced them to fail. The government had no interest in bailing out the “little guy” aka- the common man.

These corporations and banks have failed- failed out of greed, callous and poor judgment. LET THEM FAIL! If the government thinks that will bring economic collapse, let them use the $700 billion to pay off people’s personal mortgages, excuse people’s credit debt with excessive interest and start up new, independently-owned businesses…betcha our economy would start to thrive.

Instead of the bailout of these banks and rewarding thoughtless risk, it may be a better idea to distribute $200,000 to everyone in the US. Most people will need no immediate credit, so banks need not worry about it. Spending will go up on its own and the feds will still save a bunch.

I proposed to government to bail me out. I am current on every bill, and I do not gamble.

Oh! I forget, government only helps those who cheat, deceive and are not accountable for their own actions. On top of that, I will have to pay for their screw-up.

That’s a great incentive to be good citizen!

It took longer than it should, but I finally realized why I was so angry about this bailout proposal and the current convulsions of our financial system.

We - the people of this country, along with our legislators and our entire government - are acting as co-dependants. As an adult child of an alcoholic, I should have seen it sooner, but knowing this makes it obvious to me that every move we make to rescue our failing financial system can only bring us to the beginning of another round of excess.

President Bush’s open mike comment that ‘Wall Street definitely got drunk’ should have been a wake up call for all of us. Who better to tell it like it is but an alcoholic?

We need to remember during all of this, that much as Paulson and friends would like us to believe otherwise, the financial system is not the same as the economy. They have a powerful effect on each other, but if we simply allow the financial system to fail, it will wipe out the den of thieves, their credit default swaps, and their shareholders (who should have been listening when Michael Greenburg told us about credit default swaps, and dumped their shares). Healthy banks will survive and new banks will arise to provide the financial services we need and we might then be able and enlightened enough to keep them small and diverse, and thus have a robust system that can deal correctly with risk. It will be a difficult time, but that is a given, no matter what we do at this point. We need to at least refuse to perpetuate the system we have now, because they will do this again, and again, so long as we continue to enable them.

300 million Americans, 700 billion in new debt. That’s 2,333 in new debt for every man women and child. As a family of four, how am I supposed to get a mortgage when I just received an additional $9,333 in new liabilities. It would be ok is we had no national debt but our country runs in the red in the best of times. Is borrowing more really going to help anything?

It’s the earmarked (though completely unbudgeted) $700 BILLION bridge to who knows where ! !

We need to have corporate leaders who will admit enough shame to put themselves on the Lee Iacocca $1/yr salary plan or have Congressional leadership that will enforce it.

How did we ever allow ourselves to capitulate to the siren song of “No oversight is always better?”

We are experiencing exactly what we deserve—the highest levels of chaos resulting from uncritical belief in a feel good dogma closed to all other views or concerns.

It has been obvious for a number of years that the housing market was in a huge bubble. The bubble is in the process of deflating and can’t be stopped. Buying up the toxic assets of unknown value just moves around the bad debt. It’s going to hurt, but there isn’t anything to do, but wait for the bad debt to come to light.

Efforts need to focus on preventing a similar crisis in the future. So far, no bailout packages have addressed this. Transparency is necessary. The mortgage backed securities prevent identifying the good and bad debt making it impossible to assess the value of the securities. As the securities have an unknown value, they are now being treated as worthless. The practice should no longer be allowed.

I would prefer to see a bottom-up approach (as the trickle-down of the past 27 years has failed to help the lower layers of the socioeconomic strata), but our government is so tightly tied to the financial markets that help will only be sent to those who caused the crisis.

Why would the Government even think this is their ball game? Let the banks fall, let irresponsible homeowners foreclose and move back into (oh no!) apartments, let the existing responisible loans be fire sold to responsible banks (which there are hundreds still left in the US), deal with the temporary stock market loss (even if its in the Trillons of dollars), let capitalism work…and…POOF over time, hardwork, and patience we are back to a stable and successful economy.

Government, get out of our business. No seriously. Get out.

As for all you who are worried about the unemployed, low-income, and poverty striken - actually give some of your time and money to charities that HELP THE POOR! Don’t complain if you haven’t done it. And while you’re at it, teach people responsible spending techniques, job skills, and work ethic to make them self-sufficient. Help others be responsible.

And don’t look at the Government to do this - they’re pathetic at it.

-Kevin from CO