Let it crash

@Ramafuchs,

With Congress preoccupied with the massive, $700 billion bailout plan for the financial industry, General Motors, Ford, and Chrysler have finally secured Part One of their own federal rescue plan. A bill set to be passed by Congress and signed by President Bush as early as this weekend"separate from the controversial Wall Street bailout plan"includes $25 billion in loans for the beleaguered Detroit automakers and several of their suppliers. "It seemed like a lot when we first started pushing this," says Democratic Sen. Debbie Stabenow of Michigan, one of the bill's sponsors. "Suddenly, it seems so small."

In 1980, Chrysler was a public company, just as GM and Ford are today. But last year a private equity firm, Cerberus Capital Management, bought Chrysler, taking the firm private. And there's little or no precedent for the government aiding a private company that has no stockholders among the publichttp://www.usnews.com/blogs/flowchart/2008/09/24/a-25-billion-lifeline-for-gm-ford-and-chrysler.html

1 Reply

@barackman28,

barackman28 wrote:

Are you saying that the Bush "bailout"plan is not putting power in the hands of the government?

No. Government already has the power. You can tell... because they're seriously considering it. Idea

barackman28 wrote:

Are you saying that the greedy insurance companies and the medical buracracies will not have to accept new regulations from the government so that our health system can be truly one that helps all people instead of only the rich?

I didn't say that either.

barackman28 wrote:

Are you saying that the Congress and President Obama(as he has promised) will not be able tocut taxes on the lower 95% of wage earners by taxing the greedy and overpaid CEO's?

I tend not only to doubt it... but seriously hope not. With our children and grandchildren already looking forward to a 10 trillion dollar debt; I consider tax cuts at this time irresponsible. A change in the tax system would be a good idea; but no, neither McCain's nor Obama's plans are that courageous.

barackman28 wrote:

Something is wrong in a society where one man or woman can make three hundred times more in a year than one of his or her workers!

I couldn't possibly agree less. I’d say something is very wrong in every society where a one man or woman can't make three hundred times more in a year than one of his or her workers! How many times more would you consider a fair cap, btw?

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@cjhsa,

cjhsa wrote:

The reason the market is crashing is simple. Leading edge baby boomers rejected everything their parents taught them. That and the fact we have a Dem-led congress filled with the dumbest bunch of loons that ever walked the earth. Hippies are knee-jerk loving douchebags. Welcome to the world I've been warning you about.

yeah. the one people like you have been running for the last 8 years.

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@barackman28,

barackman28 wrote:

Something is wrong in a society where one man or woman can make three hundred times more in a year than one of his or her workers!

Nonsense. If someone is worth more than 300 other people to a company they deserve the compensation. If they are not worth that much to the company there's something wrong with the company for paying it but not society for allowing it.

And before you claim there is no such thing: Steve Jobs is an example of a person who is worth much more than 300 other people to his companies and deserves his compensation.

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No matter what happens, bailout or no bailout, apartment renters who don't have the security of owning their own homes are facing the prospect of massive rent increases. Millions of ex-home owners will be competing for rentals while landlords take advantage of the situation. There will be no safety net of protection for renters. Once they are priced out of their apartments there won't be any credit cards or loans available to help them. They'll be the first ones out on the streets. Want to gauge how well any bailout or regulation is going? Just watch rental prices and their supply/demand. They'll be the canary in the mine.

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cjhsa wrote-

Quote:

Welcome to the world I've been warning you about.

Thorstein Veblen warned about it in 1910 and J.K. Galbraith 25 years ago and anybody else with eyes to see.

The productive worker has been carrying a heavy burden of drones. The Paperwork Party or the Lower Middle Class has been running riot.

Neither a borrower nor a lender be.

He looks the whole world in the face for he owes not any man. ~Henry Wadsworth Longfellow

Who goeth a borrowing
Goeth a sorrowing.
~Thomas Tusser

Before borrowing money from a friend, decide which you need most. ~American Proverb

Wouldst thou shut up the avenues of ill,
Pay every debt as if God wrote the bill.
~Ralph Waldo Emerson

In God we trust; all others must pay cash. ~American Saying

Creditors have better memories than debtors. ~Benjamin Franklin

Promises make debt, and debt makes promises. ~Dutch Proverb

Another way to solve the traffic problems of this country is to pass a law that only paid-for cars be allowed to use the highways. ~Will Rogers

Debt, n. An ingenious substitute for the chain and whip of the slavedriver. ~Ambrose Bierce, The Devil's Dictionary, 1911

Debt is the worst poverty. ~Thomas Fuller, Gnomologia, 1732

Buy what thou hast no Need of and ere long thou shalt sell thy Necessaries. ~Benjamin Franklin

There are plenty of ways to get ahead. The first is so basic I'm almost embarrassed to say it: spend less than you earn. ~Paul Clitheroe

No man's credit is as good as his money. ~E.W. Howe, Sinner Sermons

Who recalls when folks got along without something if it cost too much? ~Kin Hubbard

Today, there are three kinds of people: the have's, the have-not's, and the have-not-paid-for-what-they-have's. ~Earl Wilson

Christmas is the season when you buy this year's gifts with next year's money. ~Author Unknown

When a man is in love or in debt, someone else has the advantage. ~Bill Balance

The impulse dances inside the debt. ~Jareb Teague

Credit buying is much like being drunk. The buzz happens immediately and gives you a lift.... The hangover comes the day after. ~Joyce Brothers

Bankruptcy stared me in the face, but one thought kept me calm; soon I'd be too poor to need an anti-theft alarm. ~Gina Rothfels

Oh, for the good old days when people would stop Christmas shopping when they ran out of money. ~Author Unknown

You flew in the face of all that as a nation. It's the peoples fault. The buck stops there.

If you can't do the time don't do the crime.

Business is a form of ambush.

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@shewolfnm,

thank you Jesus.

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@JTT,

amen

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Yesterday several clubs got on line with my new promotion and brought me and my partners duet on board in their establishments. We went to dinner last night on a Wednesday and the place was on a big wait. I went to Game Stop to get a new RockBand2 controller and they're sold out but the manger wanted to bring me in to do a midnight rollout party.

I don't know why, but it's business as usual around here.....and I work for cash.....I'm stashing it.

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@Ramafuchs,

O my firm is like a pot of gold,
With plenty of cash to spare;
A lawsuit here, a settlement there,
The balance sheet has more to spare.
Those multi -million settlements,
Are peanuts for the house of Merill;
Lose one or two, you lose a few,
But eight billion is cause for peril.
Our balance sheet was hit real bad,
Our investor’s confidence was shaken;
But such is the strength of the Merill name,
And my options were still there to be taken.
Farewell my underling, farewell!
For I will certainly do!
I’m off to retire with my $160 mil,
And wish the best of luck to you.
http://theallnighter.blogspot.com/

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I think it would be irresponsible to let the market crash but just irresponsible to fix it in a haphazard manner with no real plan other than just throwing money at it.

This rush and pressure to do something anything fast is reminiscent of the rush to the Iraq with no plan B or even really a plan A.

http://www.forbes.com/home/2008/09/23/bailout-paulson-congress-biz-beltway-cx_jz_bw_0923bailout.html

Quote:

The more Congress examines the Bush administration's bailout plan, the hazier its outcome gets. At a Senate Banking Committee hearing Tuesday, lawmakers on both sides of the aisle complained of being rushed to pass legislation or else risk financial meltdown.

"The secretary and the administration need to know that what they have sent to us is not acceptable," says Committee Chairman Chris Dodd, D-Conn. The committee's top Republican, Alabama Sen. Richard Shelby, says he's concerned about its cost and whether it will even work.

In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

Wow. If it wants to see a bailout bill passed soon, the administration's going to have to come up with some hard answers to hard questions. Public support for it already seems to be waning. According to a Rasmussen Reports poll released Tuesday, 44% of those surveyed oppose the administration's plan, up from 37% Monday.

1 Reply

@barackman28,

barackman28 wrote:

Do you really want the country to be run by people like Buffett?

Bluster?

It is no bluster to say that Buffett is one of the richest Americans.

It is no bluster to say that Buffett has aligned himself with the CEO'S and WALL STREETERS by buying so much Goldman-Sachs stock.

It is no bluster to say that Buffett knows nothing about the suffering of blacks and hispanics.

.When Barack Obama becomes President I hope that he will not allow people like Buffett to tamper with our economy. I am sure that Senator Obama will look carefully to pick people who know about the sufferings of black and hispanic peoples---Governor Deval Patrick and Governor Richardson would be a good start.

Errr, you know that Obama and Buffett are fast friends, right?

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@Foxfyre,

Foxfyre wrote:

Yes, there is a difference between a commercial bank and an investment bank. But that isn't the same thing as saying that there is no intended oversight of the investment bank. Obviously it didn't happen. But there was a means to do that.

Not to beat a dead horse but there was a bunch of "not my job, man" reactions by the folks who were asked the question of why they didn't see this coming. If you've got specifics that show they were lying I'd like to see them.

1 Reply

@Robert Gentel,

Robert Gentel wrote:

Nonsense. If someone is worth more than 300 other people to a company they deserve the compensation. If they are not worth that much to the company there's something wrong with the company for paying it but not society for allowing it.

Word.

Quote:

And before you claim there is no such thing: Steve Jobs is an example of a person who is worth much more than 300 other people to his companies and deserves his compensation.

Isn't that still $1? Don't know if he changed that.

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@revel,

Thanks for the above article---Rama

It is a sign, rather, that we have allowed our monetary, fiscal, and regulatory authorities to lure us like lambs to the slaughter to the unwarranted socialization of the most important sector of the capitalist system.
http://mises.org/story/3117

Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike.
The events of the past week are no exception.
The bailout package that is about to be rammed down Congress’ throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder. Two weeks ago, financial analyst Jim Rogers said the bailout of Fannie Mae and Freddie Mac made America more communist than China! "This is welfare for the rich," he said. "This is socialism for the rich. It’s bailing out the financiers, the banks, the Wall Streeters."
That describes the current bailout package to a T. And we’re being told it’s unavoidable.
The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences " predictable, that is, to those who understand sound, Austrian economics " are being let off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!
The Treasury Secretary is authorized to purchase up to $700 billion in mortgage-related assets at any one time. That means $700 billion is only the very beginning of what will hit us.
Financial institutions are "designated as financial agents of the Government." This is the New Deal to end all New Deals.
Then there’s this: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." Translation: the Secretary can buy up whatever junk debt he wants to, burden the American people with it, and be subject to no one in the process.

http://www.lewrockwell.com/paul/paul479.html

1 Reply

@JPB,

JPB wrote:

Foxfyre wrote:

Yes, there is a difference between a commercial bank and an investment bank. But that isn't the same thing as saying that there is no intended oversight of the investment bank. Obviously it didn't happen. But there was a means to do that.

Not to beat a dead horse but there was a bunch of "not my job, man" reactions by the folks who were asked the question of why they didn't see this coming. If you've got specifics that show they were lying I'd like to see them.

You probably won't like the source, but here is the short and sweet version that identifies the first time the ball was seriously dropped. There are many articles and essays from all over the media spectrum giving the long version and those do not conflict with this report:

http://www.weeklystandard.com/weblogs/TWSFP/2008/09/how_did_we_get_into_this_finan.asp

It appears to me to be quite clear that our law makers were informed in plenty of time to head all this off. They didn't. And if they knew, you know the bank examiners had to know so it's pretty safe to say that a) they didn't do their jobs or b) they were not allowed to do their jobs. On that last point I don't know, but the fact that nobody in Washington is demanding full investigations and/or special prosecutors and/or demanding that heads roll, etc. says to me they know darn good and well any investigation is going to make them look really really bad.

The President's hands are pretty well tied right now as he has to have a bi-partisan solution to come up with a workable fix, and that is less likely to happen if he encourages any finger pointing right now.

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@Foxfyre,

Fox -- your link contradicts your statement that the SEC is chartered to oversee this industry. Regardless of why or how there isn't any oversight, the fact remains that the guys at the table who in effect said, "not my job, man" were not lying which is the opposite of everything you were saying last night.

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@JPB,

JPB wrote:

Fox -- your link contradicts your statement that the SEC is chartered to oversee this industry. Regardless of why or how there isn't any oversight, the fact remains that the guys at the table who in effect said, "not my job, man" were not lying which is the opposite of everything you were saying last night.

I posted rather extensive links describing what agency was in charge of oversight for what yesterday. Those links clearly stated that the SEC is in charge of oversight of investment banks. If you have credible different information, by all means post it. I'm not tied into defending any position. I can only go by what I read and/or have been taught. If that is wrong, so be it. But so far, I have found nobody with any credibility that says the SEC does not have oversight of investment banks.

And also I have found no credible source that says the Senate and House banking and financial committees are not charged with oversight of all government agencies related to banking and securities. So where were they? When Richard Shelby et al initially rang the alarm re Fannie Mae and Freddie Mac, Barney Frank publicly and adamently declared both agencies were just fine. Chris Dodd pretty much took the same position. Now both are ignoring that and trying to present themselves as leaders in coming up with a fix. Well if they can, that would be good. But neither, along with other people, did their jobs back then when he could have made a huge difference. Presumably neither did the SEC. Was it derelect? Or under orders not to do its job? This we don't know.

Once all this is over, I hope we find out so we don't wind up in this kind of mess again.

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@Ramafuchs,

Quote:

It is a sign, rather, that we have allowed our monetary, fiscal, and regulatory authorities to lure us like lambs to the slaughter to the unwarranted socialization of the most important sector of the capitalist system.

And since when have lambs being lured to slaughter have anything useful to say about any damn thing at all.

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Quote:

Deal said to be near on big financial bailout plan

WASHINGTON - President Bush is bringing presidential candidates Barack Obama and John McCain into negotiations on a $700 billion rescue of Wall Street as Democrats and Republicans near agreement on a bailout plan with more protections for taxpayers and new help for distressed homeowners.

Senior lawmakers and Bush administration officials have cleared away key obstacles to a deal on the unprecedented rescue, agreeing to include widely supported limits on pay packages for executives whose companies benefit.

They're still wrangling over major elements, including how to phase in the eye-popping cost - a measure demanded by Democrats and some Republicans who want stronger congressional control over the bailout - without spooking markets. A plan to let the government take an ownership stake in troubled companies as part of the rescue, rather than just buying bad debt, also was under intense negotiation.

http://news.yahoo.com/s/ap/20080925/ap_on_bi_ge/financial_meltdown

1 Reply

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