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.
There goes your country.
Even some so-called free-market economists are calling all this "sadly necessary." Sad, yes. Necessary? Don't make me laugh.
Our one-party system is complicit in yet another crime against the American people. The two major party candidates for president themselves initially indicated their strong support for bailouts of this kind - another example of the big choice we're supposedly presented with this November: yes or yes. Now, with a backlash brewing, they're not quite sure what their views are. A sad display, really.
Although the present bailout package is almost certainly not the end of the political atrocities we'll witness in connection with the crisis, time is short. Congress may vote as soon as tomorrow. With a Rasmussen poll finding support for the bailout at an anemic seven percent, some members of Congress are afraid to vote for it. Call them! Let them hear from you! Tell them you will never vote for anyone who supports this atrocity.
The issue boils down to this: do we care about freedom? Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for? Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care?
When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media?
Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.
posted
He sounds crazier the more I hear from him, which is a shame because the issues that he takes up are important and someone with his influence but with a less crackpot approach could save us from more really poor decisions.
Posts: 10177 | Registered: Apr 2001
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quote: 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.
A modified version of this section has already been proposed by the chair of the Senate Banking Committee:
quote:Any determination of the Secretary with regard to any particular troubled asset pursuant to this Act shall be final, and shall not be set aside unless such determination is found to be arbitrary, capricious, an abuse of discretion, or not in accordance with the law.
posted
Actually, I think he has offered his alternative. The libertarians offer a complete hands-off government. They would suggest that the alternative is to do nothing -- to let capitalism take care of itself.
Whether or not you agree with it, it is an alternative.
Posts: 2392 | Registered: Sep 2005
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posted
There are numerous things to criticize about the bailout. I fail to see what would not be solved by some very large loans that are on very favorable (long-term) terms for the gov't, where the liabilities of the loans are exempted (fully? partially?) from the maximum liability restrictions many industries are under.
Posts: 15770 | Registered: Dec 2001
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posted
Personally, I like the bailout a great deal. Best thing the American government has proposed in recent memory and with plenty of international support too.
quote:Originally posted by Mucus: Personally, I like the bailout a great deal. Best thing the American government has proposed in recent memory and with plenty of international support too.
Change is good.
Care to elaborate?
Posts: 2804 | Registered: May 2003
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posted
Hmmm, elaborate on which part specifically?
If I had to guess what you're asking about (the last sentence?), briefly, the American government of the last two terms is known for making decisions without consulting with the rest of the world.
AFAIK, this bailout has support from the central banks of each of the G7 nations. In Canada specifically, Prime Minister Harper approves of the plan. Stock markets in Europe and Asia also reacted positively to the news.
So international approval of an American decision made in consultation with the rest of the world, thats a good change.
Posts: 7593 | Registered: Sep 2006
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posted
So when you say that you love the idea, and that this is the best decision the American government has made in recent memory, international support is your sole criterion?
Of course, if I had a bunch of money in the stock markets of, say, Japan or Germany, and their governments suggested making their taxpayers prop up my investments, I suspect I'd be pretty supportive as well.
Posts: 2804 | Registered: May 2003
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posted
Gee, misinterpret and mind-read much? Maybe you should attempt to re-read my first two sentences and attempt not randomly guessing at what I'm thinking. You could even ask me why I love the idea rather than projecting your own feelings on the matter.
Posts: 7593 | Registered: Sep 2006
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posted
Not to dog pile, but that was what you were being asked. At least that is how it seemed to me...that he wanted to know why you were so enthusiastic about it.
I don't see any real alternative to the bailout...at least not any that would not result in another Great Depression....but I hardly love the idea. I don't have a high opinion of this administration either, but I don't know how much of a say the rest of the world is due when we are talking about our own economy.
China didn't ask us what we thought when they pegged the value of their currency to the dollar, keeping it at higher rates artificially. That had a HUGE impact on a lot of other countries, but I didn't hear anyone being asked, nor did I see any opposition to it being heeded.
Just an example, of course.
What do you feel is so great about these bailouts?
Posts: 15082 | Registered: Jul 2001
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posted
I thought he was asking me specifically about the last sentence, about why I think this bailout is a change.
Thats why I specifically said "If I had to guess what you're asking about (the last sentence?)".
My reasons for why this is a *change* overlap but do not fully include my reasons why I love the bailout.
Posts: 7593 | Registered: Sep 2006
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quote:Originally posted by Kwea: ... China didn't ask us what we thought when they pegged the value of their currency to the dollar, keeping it at higher rates artificially.
See? Thats a *change*. You're doing better than China and looking for international consensus. Nice, eh?
(In any case, I think China was practically at war with the States when they started the peg in the 50s. Also the Hong Kong dollar has been pegged to the USD for even longer IIRC)
Posts: 7593 | Registered: Sep 2006
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I'm not a financial expert, but here are just a few of the good points: 1) Revives the US financial industry which has lost much of its value in recent weeks and provides for many jobs within the US. Also, for respective industries around the world and associated jobs. 2) By buying up the toxic mortgage-backed securities, liquidity is restored to the system. Banks are free to lend money to each other, now that they have a better idea of what is on each other's balance sheets. This is a big boost not just to American students, homeowners, companies which require lending, but companies all across the globe 3) Starts to balance losses between shareholders and homeowners. Before, homeowners with bad loans had an unfair advantage. By bailing out the mortgage holders while receiving equity, shareholders are essentially wiped out while homeowners would probably receive aid in the form of the government attempting to subsidise mortgage payments to Freddie Mac and Freddie Mae (which is still on the table). The current plan should greatly boost share prices as the mortgages are bought up, in fact the market has partially priced this in already 4) The bailout will buy up securities not just from US companies that are affected. It also buys up securities that were fraudulently sold to foreign companies. The US taking responsibility for the mistakes of its companies and putting its money where its mouth is. Thats inspiring and a good example to present to other nations that sell fraudulent products. Whats the best way of limiting defective products from Chinese companies? Making the Chinese government pay. Financial incentives are good and this is a good precedent. 5) The Canadian banking system has already implemented the equivalent of a bailout for money market funds, in our case called ABCP. It worked very well and stablised the financial industry here. Granted, our approach was a bit different but its a different system. 6) The US government has to sell additional treasury bonds in order to raise money to pay for the bailout. This further puts the US in debt to foreigners and hamstrings the ability of the US to move unilaterally, which as a Canadian, is a very good thing. 7) By effectively nationalizing a huge portion of the US financial system, the US is moving closer toward socialism. As a Canadian, we started by socializing healthcare insurance rather than the financial industry as a whole ... but its a start 8) In order to pay back that debt, the US will be forced to either raise taxes or increase inflation. Hopefully, the former is chosen which just further balances the field between the US and other jurisdictions with higher taxes. 9) The criteria of international consensus that I mentioned earlier
So as you can see, international consensus is far from my "sole criterion." It is just one among many which make it a good idea. And don't think we're not pitching in, I don't know if its reported in the States, but every time the Fed announces a "liquidity injection" many banks around the world including the Bank of Canada pitch in as well and inject money as well. As I mentioned before, Canada already did a bailout for ABCP.
Don't get me wrong, international cooperation is important. As Paulson noted, if the bailout proceeded without foreign cooperation, foreign banks which contribute a good portion of lending to US banks would be newly burned, would be newly reluctant to lend to US firms or citizens, making the bailout much less effective.
Posts: 7593 | Registered: Sep 2006
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posted
Oh, did I mention that the current leading compromise between Republicans and Democrats on the bailout is a proposal to limit pay and benefits to CEOs and executives in the companies that take part?
Another good reason.
Posts: 7593 | Registered: Sep 2006
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quote:Originally posted by Kwea: ... China didn't ask us what we thought when they pegged the value of their currency to the dollar, keeping it at higher rates artificially.
See? Thats a *change*. You're doing better than China and looking for international consensus. Nice, eh?
I wasn't trying to China-bash, just used the first easy example that came to mind.
I don't agree that we SHOULD always look to other countries for internal affairs, particularly when it places American interests at home at risk. There are plenty of examples of conflicting interests between nations that would making such a move less than intelligent, let alone unbiased.
We aren't part of the EU, and I don't want to become one, thankyouverymuch. I would be interested in listening to opinions, but I draw the line at allowing such consensus to mean we don't have a right to act as we see fit.
Also, please note I said internal affairs, not foreign wars. Posts: 15082 | Registered: Jul 2001
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posted
Mucus, you seem to be nit picking. I read your posts and Speeds posts and without your further clarification it seemed he was responding to you appropriately. I am interested in why you think the bailout is a great deal outside of the international support.
Since it is related, I will post Ron Paul's column on Predictions vs Reality on Iraq.
quote:Predictions vs. Reality in Iraq
On September 10, 2002 I asked 35 questions regarding war with Iraq. The war resolution passed on October 16, 2002. Now today, as some of my colleagues try to reestablish credentials regarding spending restraint, I want to call attention to my 18th question from six years ago:
“Are we willing to bear the economic burden of a 100 billion dollar war against Iraq, with oil prices expected to skyrocket and further rattle an already shaky American economy? How about an estimated 30 year occupation of Iraq that some have deemed necessary to "build democracy" there?”
Many scoffed at my “radical” predictions at the time, regarding them as hyperbole. Six years later, I am forced to admit that I was wrong. My “radical” predictions were in fact, not “radical” enough.
I warned of a draining 30-year occupation. Now, politicians glibly talk about a 100-year occupation as if it is no big deal. On cost, according to estimates from the Congressional Research Service, we have already burned through around $550 billion in Iraq, at a rate of about $2 billion per week. Economist Joseph Stiglitz’s estimates are even higher, at $12 billion a month. It is a total price tag quickly heading into the trillions, if we don’t stop bombing and rebuilding bridges in Iraq that lead us nowhere but bankruptcy! Bridges in this country are crumbling along with our economy, while some howl about earmarks. Earmarks are a drop in the bucket compared to war and occupation.
Yes, I was wrong about Iraq. I knew it would be bad. I didn’t know it would be this bad.
The American people deserve better. Being asked to endorse such a farce is beyond insulting. Clearly, the rosy predictions of the neo-Conservatives from before the war are not coming true. Far from it! With a straight face, one official estimated the TOTAL cost of reconstruction in Iraq would be just $1.7 billion. Turns out that we spend more than that in ONE WEEK. Our friends are not pitching in to cover the cost. Expenses are not being covered by oil from a grateful and liberated Iraqi people. Rather, big corporate interests are benefitting, the price of oil has more than quadrupled, and the American economy is on its knees and sinking fast.
No one predicted the exact course of this war before it started. But to continue to listen to the foreign policy advice of those that were the MOST offbase will only lead to more foreign policy disasters. We need to keep this in mind as we think about Russia, Iran, Cuba and other countries. Keep in mind - the doomsday predictions on the Iraq War from six years ago, sound like a cakewalk today. While what leaders in the administration had predicted, reads like a fairytale. Ask yourself, when listening to the same foreign policy “experts” explaining situations around the world and suggesting policy positions: In light of the facts of today, and the predictions of yesterday, how expert have they shown themselves to be?
Passing HR 2605 to sunset authorization for the use of force in Iraq is the first step to stopping this bloody war, and the consequent bleeding of our treasuries. Serious fiscal conservatives will support it, as will those who have been paying attention to foreign policy predictions and reality.
The financial meltdown the economists of the Austrian School predicted has arrived.
We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.
Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over - not just for the past several days, but for years and even decades.
Still, at least a few observations are necessary.
The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?
We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.
Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).
Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."
Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?
Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.
It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.
The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.
F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:
Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.
To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.
The only thing we learn from history, I am afraid, is that we do not learn from history.
The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?
Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.
The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.
I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects - the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.
H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.
quote:I think I might actually vote for McCain if he'd commit to appoint Ron Paul Secretary of the Treasury.
Oh please no!! What the world economy needs right now is definitely not shock therapy and that is what Ron Paul is proposing.
Posts: 12591 | Registered: Jan 2000
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quote:I think I might actually vote for McCain if he'd commit to appoint Ron Paul Secretary of the Treasury.
Oh please no!! What the world economy needs right now is definitely not shock therapy and that is what Ron Paul is proposing.
The longer we wait, the worse the shock is going to be. Squeezing our eyes shut and wishing isn't going to change things.
It's like going to the doctor. Or rather, not going to the doctor. Waiting, because you're afraid it'll hurt. And it always winds up hurting more, the longer you wound up waiting.
Posts: 12266 | Registered: Jul 2005
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quote: The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.
It's good to see Paul get a sense of humor.
#2 Favorite line
quote: The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?
posted
I agree with Lisa, this is something that is GOING to happen eventually, the faster and earlier its done correctly the more quickly the US can recover.
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posted
From the economists I've talked to, as well as people well versed in finance (being an economics major myself), none of them would think Ron Paul should be in charge of anything. I find it strange that he would invoke the Austrian School and the Nobel Prize in Economics, while those Nobel Laureates (and obvious future laureates) who are proposing various solutions at the moment at direct odds with the courses of action that need to be taken are not considered. Even Ben Bernanke was a respected Economic researcher, with one of his specialities being the Great Depression.
A lot of Economists are firmly against the bailout, myself included. That said, if Civilisation is a race between Education and Catastrophe, I think that Ron Paul is hardly a likely candidate for our representative of the knowledge and expertise in this area.
Posts: 122 | Registered: Feb 2003
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posted
The bailout could be good under the following conditions:
1) The "junk" that we purchase is bought at a low enough price versus the total value of the real assets involved. Remember, we're talking real estate here. Every one of the 1st mortgages is backed by a piece of property somewhere that may not be worth 80 cents on the dollar, but it might well be worth more than the 22 cents on the dollar that some of these bundled loan packages went for in the last couple of weeks.
If that's true, we could end seeing a huge advantage to the taxpayers.
2) Property taxes get paid. Defaulted loans to failed banks mean that local governments lose out on taxes and may, eventually, end up owning the properties just for back taxes. In the meantime, they lose all that tax revenue and start seeing their budgets blown. Far better to have a majority of the loans performing at some level, and keep the tax receipt drop off on a more gradual trajectory.
3) Property values stabilize. That is, if the bailout actually does what it is designed to do -- stop the slide. It'll mean that we back away from this event horizon/tipping point/whatever you want to call it. A housing value crash would be terrible. Even people who could afford to pay their mortgages will decide it's not worth it and just walk away...at some point. Paying $2000 a month for a house that's only worth $80,000 in the depressed market? The more people who just walk away from loans under those circumstances, the less incentive there is for other folks to stay in there plugging away at their mortgages. When x% of houses in a neighborhood are "bank owned" and up for sale at vastly reduced prices, will the neighbors have much incentive to stick it out? If we can avoid that, it's probably worth it.
In the meantime, there'd better be some prosecutions over this.
And...realistically, I think the real estate industry needs a major overhaul. For one thing, a cap on commissions regardless of the price of the home would really make it less likely that markets would become super-heated. If buyers got real unbiased advice on how much they really should offer on a home purchase...we'd be less likely to repeat this bubble in the future.
Posts: 22497 | Registered: Sep 2000
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• 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.
Has anyone unpacked these two points?
(Which seem to me much scarier than the third point - letting the Treasury Secretary carry around a blank check for up to $700 billion could become a problem very quickly, and what privileges does a "financial agent of the Government" carry?)
The idea of a bailout at this point does not bother me so much as the speed it is trying to be passed through. Surely it would behoove us as a free democratic country to be sure the consequences of anything passed into law at this point will not infringe upon our liberties, taxes or financial and property assets at a later point once we have come through this crisis.
I think Congressman Paul often overstates his positions, however I'm glad we have some voices like his out there in times like this - hopefully it will give some of our lawmakers and elected officials some pause at least before they rush headlong into something most of them probably aren't experts on.
Posts: 382 | Registered: Jan 2008
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posted
I'm a bit on the fence. I think some bailout is needed to keep the banking industry from falling apart. While in the long term I think capitalism would succeed on its own, the time it took to get there would be very painful. I think it is important for the bailout to be temporary. We don't want to be saddled with it for decades to come. Also, the punishment for the company leadership should be harsh. If the government steps in to save the companies from the problems that their reckless behavior caused, then it will likely happen again. We don't want to teach executives that the government will save them from their mistakes.
I do think that the CEOs and upper level management responsible should be fired with no severance packages. Giving them the benefit of the doubt, they are negligent. I think more realistically they acted in a fraudulent manner. Either way, they should not be rewarded. Why should they get millions of what is no taxpayer money (since taxpayer money is keeping the banks afloat)? Besides, if executives know that future bailouts would save their companies, but at the same time destroy their careers, maybe they will try to avoid this type of mess in the future.
Posts: 1901 | Registered: May 2004
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posted
I'm with Lupus on this. If there is any government intervention here, then it has to be accompanied by some one being held accountable. The problem is, many of the accountable people have come and gone. They moved into the head of these companies, stayed a few year, pull their $100 million in personal wealth from the system, and left with their golden parachutes and stock options. The current CEO's and other board member are left holding the responsibility of people who grabbed the money and ran; people who are long gone.
Also, there was corruption in the system from beginning to end. The 'Fed' continually manipulating interest rates to 'stimulate the economy', stimulated it into an artificial bubble that could only 'pop' under it's own weight. Some time the economy has to fall. Sometime asset values need to go down. That is how the market stabilizes.
In my lifetime, we have had several housing bubble that, logically, 'popped'. And how could they not?
The more the Fed steps in to artificially prop them up, the high they rise, and eventually the farther they fall.
Real Estate agents are just as culpable as everyone else. Rather than accurately advise client on buying affordable houses. They simply encouraged them the BUY, BUY, BUY. What do they care if you can actually afford a house. They get their commission up front on the sale, and when it come crashing down, they are long gone.
What do banks care if you can actually afford a loan? They are going to sell it, and ultimately it will be someone else's problem. What to the people who buy individual loans care about whether people can afford the houses they bought. They are going to gather together bundles of mortgages and sell them to someone else. And the next person is going to bundle together bundles of mortgages and resell them. No where in the chain is anyone left with any responsibility. Every one makes quick and ready cash, and never has to face the consequences of their action; aided and abetted by the government.
I say no Bail Out, without very real and serious consequences to those who acted so irresponsibly, including those in the Federal Government whose policies and action encouraged the artificial and irresponsible inflation of the economy to the point where it collapsed under its own weight.
Let those who caused the problem bear some of the responsibility for the problem they cause. Without this responsibility, we are simply encouraging bad and irresponsible business practices on the belief that when it all comes crashing down, those responsible will escape with all their wealth and the citizens will bear all the burden.
posted
I agree that they should bear responsibility, and usually I'm of the opinion that a failing business should just be allowed to fail. But what do you do when the poor decisions of the high and mighty visit a lot of harsh consequences on people who were perfectly responsible? This could cost thousands of jobs, cause more and more companies to fold, and bring hte economy to even more of a screeching halt at a time when really, we need billions of dollars to be spent on upgrades.
$700 billion is a massive figure, but there's absolutely no proof that such a number would actually be necessary, it's arbitrary, and I'm glad that Dems forced through a measure to get that money in installments.
So long as the deal is structured in a way that guarantees taxpayer protections, whether that be a stake in the company that loans are made to, or some other guarantee to insure that this is a loan and not a bailout, then I'm fine with it. I also want to make sure every company that signs on board is thoroughly audited to see where they went wrong to begin with and why they kept doing it. That way we'll have a better idea of what kinds of regulations to put in place. I like caps on CEO pay too, but I suspect the CEOs will find a way around it, just like the last time CEO pay was capped in I think the 90's.
It all boils down to the fact that if it were JUST these companies that would fail, like it might be if say Caterpillar or Chrysler failed, then I'd be okay with it, but when the ripples can have devastating effects on a dozen different industries, then it's something we should look at fixing.
Posts: 21898 | Registered: Nov 2004
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quote:Originally posted by Lyrhawn: I agree that they should bear responsibility, and usually I'm of the opinion that a failing business should just be allowed to fail. But what do you do when the poor decisions of the high and mighty visit a lot of harsh consequences on people who were perfectly responsible?
I don't think anyone's saying that we should let these companies fail solely to spite the executives. If you read the letters, you'll find that Dr. Paul is aware that there will be consequences to the economy. His argument is that the consequences of continuing to prop them up will be worse in the end.
quote:Originally posted by Lyrhawn: $700 billion is a massive figure, but there's absolutely no proof that such a number would actually be necessary.
There's also no proof that it would be anywhere near sufficient.
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![[The Wave]](graemlins/thewave.gif)
for Ron Paul.
