$700 Billion BAIL-OUT Legislation

dys must be giving it alot of thought. LOL

Derivatives are financial instruments whose values change in response to the changes in underlying variables. The main types of derivatives are futures, forwards, options, and swaps.

The main use of derivatives is to reduce risk for one party. The diverse range of potential underlying assets and pay-off alternatives leads to a wide range of derivatives contracts available to be traded in the market. Derivatives can be based on different types of assets such as commodities, equities (stocks), bonds, interest rates, exchange rates, or indexes (such as a stock market index, consumer price index (CPI) " see inflation derivatives " or even an index of weather conditions, or other derivatives). Their performance can determine both the amount and the timing of the pay-offs.

well first of all i don't have hero worship re Paulson, in fact I disagree with many of his positions, however i think he is unusally ethical as well knowlegeable. If you have any interest, I can give more specific answers.

CJ, Glad to see someone in agreement with my assessment of Paulson. I owe you a drink or two.

cicerone imposter wrote:

CJ, Glad to see someone in agreement with my assessment of Paulson. I owe you a drink or two.

Yeah, we should have the next gathering in San Diego!

Is the bailout needed? Many economists say 'no'
Posted on Thursday, September 25, 2008

By Kevin G. Hall | McClatchy Newspapers

WASHINGTON " A funny thing happened in the drafting of the largest-ever U.S. government intervention in the financial system. Lawmakers of all stripes mostly fell in line, but many of the nation's brightest economic minds are warning that the Wall Street bailout's a dangerous rush job.

President Bush and his Treasury secretary, former Goldman Sachs chief executive Henry Paulson, have warned of imminent economic collapse and another Great Depression if their rescue plan isn't passed immediately.

Is that true?

"It's more hype than real risk," said James K. Galbraith, a University of Texas economist and son of the late economic historian John Kenneth Galbraith. "A nasty recession is possible, but the bailout will not cure that. So it's mainly relevant to the financial industry."

The Paulson plan will get some bad assets off the balance sheets of troubled Wall Street institutions and commercial banks. That may help thaw the lending freeze.

But it wouldn't reduce the crush of homes in or near foreclosure, said Simon Johnson, a professor at the Massachusetts Institute of Technology. That's a problem that will surely grow worse if the U.S. economy enters recession, leading to greater job losses, which feed a vicious downward spiral of even more foreclosures and defaults on car loans and credit-card debt.

Americans are spooked by talk that financial Armageddon awaits.

The global financial system nearly melted down last week when investors pulled out en masse from money market funds and the short-term debt markets that help corporate America fund its day-to-day needs.

These traditionally have been viewed as safe investments for ordinary Americans, so the flight from them struck fear in the hearts of policymakers.

Few economists, including Galbraith, are willing to discount completely the chance of a financial collapse, given the turmoil in credit markets and banking.

"My sense is it will delay a disaster, given that you only have three months left in this administration. But it will not cure the problem in the (financial) industry or prevent the shakeout and downsizing of the industry," Galbraith said.

Many lawmakers also expressed skepticism.

http://www.mcclatchydc.com/227/story/53107.html

Obama needs to remind McCain and Americans that Gramm is McCain's top economic's guru during the debate, and repeat what Gramm said about Americans.