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***US financial crisis/bail-out master thread***

Im surprised no one pointed out the most messed up part of the $634 billion spending bill that the senate passed to keep the government running.

Pentagon: $70 billion
DOD: $448 billion
Homeland Security: $40 billion

Perhaps wed have the money fix our government if the majority of our budget didnt go to the military

http://www.star-telegram.com/238/story/938230.html
 
Last night on Corbert Report Steven Corbert yelled and cheered at the rejection of the bill, which drew a simmilary enthusiastic reaction from the audiance.

The more tv I watch and radio I listen to, it is becoming very clear that powerful people want this bill passed, and average people do not. The reason being, no matter how you spin it, borrowing 700 bn to "save" millionairs doesn't sit well. They can blah blah blah it all day, but it looks like america would rather go into depression than give these assholes another dirty dime.

As SA said, the alternatives to this cash hand over are abundant. Why not go ahead and pay off the morgatges directly (I think this is not good btw)? That would also put credit back in the market. The reason this won't be considered is because it helps the lower/middle class and not the bankers.

Afghanistan, Iraq, and now this blindside. These people are devious.
 
Mehm said:
^^forget drugs, turn your front lawn into a food garden.
.
Most people in suburban homes that have been purchased in the last decade would get evicted for doing such a thing as it is in violation of neighborhood association agreements, I would venture to say it would apply to the backyard as well for a great deal of them as well.
 
Miron: Bankruptcy, not bailout, is the right answer

By Jeffrey A. Miron
Special to CNN
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Editor's note: Jeffrey A. Miron is senior lecturer in economics at Harvard University. A Libertarian, he was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan.
Economist Jeffrey Miron says the bailout plan presented to Congress was the wrong solution to the crisis

Economist Jeffrey Miron says the bailout plan presented to Congress was the wrong solution to the crisis

CAMBRIDGE, Massachusetts (CNN) -- Congress has balked at the Bush administration's proposed $700 billion bailout of Wall Street. Under this plan, the Treasury would have bought the "troubled assets" of financial institutions in an attempt to avoid economic meltdown.

This bailout was a terrible idea. Here's why.

The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.

Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared.

This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle.

Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets.

The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.

The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.

Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy's allocation of its financial resources.

Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time.

Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.

Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents.

The costs of the bailout, moreover, are almost certainly being understated. The administration's claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion.

If these assets are worth something, however, private parties should want to buy them, and they would do so if the owners would accept fair market value. Far more likely is that current owners have brushed under the rug how little their assets are worth.

The bailout has more problems. The final legislation will probably include numerous side conditions and special dealings that reward Washington lobbyists and their clients.

Anticipation of the bailout will engender strategic behavior by Wall Street institutions as they shuffle their assets and position their balance sheets to maximize their take. The bailout will open the door to further federal meddling in financial markets.

So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.

The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer.
 
SA said:
Why should the American taxpayer bear the burden of dozens of failed mega-storey condominium buildings in downtown Toronto, or a 1000-unit sitting-empty house development just outside London, or countless other regional real estate on non-real estate (just paper which was sold and resold interglobally) bad debt, none of which was financed by American banks to begin with?

Beg pardon, I thought you were implying that the bill should prevent foreign banks from being reimbursed for loans they'd made in the US, to Americans.

I'm going to stop posting here because I don't think I'm going to convince anyone, or vice versa. I suspect the guy quoted in Ernestorme's post is somewhat optimistic, but I hope he's right.
 
Word on the street is that the Senate has tacked on $150 billion to the bill to "sweeten" it for Congress. Leave it to politicians to make an unpopular, expensive bill more palatable by making it more expensive. Where's Lewis Carroll when you need him?
 
DigitalDuality said:
Most people in suburban homes that have been purchased in the last decade would get evicted for doing such a thing as it is in violation of neighborhood association agreements, I would venture to say it would apply to the backyard as well for a great deal of them as well.


I Hate those things, I dont even live in a fucking Subdivision and if I park my boat in the front yard i have a fine. If I move the boat 100 feet back, still in plain view, not in the back yard, its okay....
 
Beenhead said:
I Hate those things, I dont even live in a fucking Subdivision and if I park my boat in the front yard i have a fine. If I move the boat 100 feet back, still in plain view, not in the back yard, its okay....

How the hell do you get fined then? SOMEONE has to make you sign something to make you pay that shit, right? Or is it a town law?
 
foodisgood said:
Im surprised no one pointed out the most messed up part of the $634 billion spending bill that the senate passed to keep the government running.

Pentagon: $70 billion
DOD: $448 billion
Homeland Security: $40 billion

Perhaps wed have the money fix our government if the majority of our budget didnt go to the military

http://www.star-telegram.com/238/story/938230.html
so how much to incorporate gigantic pyramids to be built in D.C.?
 
Please Contact your Congressional House Representative

I know most of you are tired of hearing about politics this, and politics that, but I wanted to take a minute (or 10) to write about this topic as it affects you and me DIRECTLY. Not next year, not next week, but right NOW.

The bill for the Bail out MUST NOT PASS. I've been reading over it several times and each time it makes me cringe.

Contact your Congressperson NOW! (not later today, NOW!)
Tell them to NOT PASS "Emergency Economic Stabilization Act of 2008 HR 3997"
https://forms.house.gov/wyr/welcome.shtml

Reasons:

A) This bill is giving a 700 BILLION DOLLARS (about the current total cost of the Iraqi war) to the government to buy up bad debt from PRIVATE companies that made bad investment choices. So its like your neighbor defaults on his credit card, but you have to pay the bill for him because she won't/can't. I can bet there are a bunch of us that have had issues paying bills at one time or another. Yet, we dont expect the rest of the country to pick up our tab.

B) As many 'tax breaks' there are in this bill, there are very few protections that prevent the Federal Treasury from buying bad debt OUTSIDE of the USA. That means if a FOREIGN bank or FOREIGN company needs financial help, the Treasury can (and probably will) buy up their bad debt, which has little to nothing to do with Americans.

C) a FREE MARKET needs to be that. FREE of government meddling 24/7. I GUARANTEE you if the bail out bill does not pass housing prices will fall. What does this mean for the average American? Housing will become more affordable again. Housing prices will deflate to real value and banks will stop sub-prime lending with pick your payment / variable interest rates that cause issues.

D) Other sectors have also become OVER inflated due to government over regulation, such as health care, property taxes, car insurance, and energy.

E) If the government starts taking ownership of major companies in the US, that changes what our government is. We would no longer be a Republic, but a SOCIALIST government. Think about it. If the government owns a few MAJOR financial institutions, then next will be automotive groups, such as GM/Ford, then after that would be airlines, then telecom companies such as AT&T/Verizon, then American energy companies...

Do I believe that people would be hurt by the bill not passing? Yes, however 90% of those people would be the ones that have been living off the backs of the working middle class Americans for the past 30+ years.

I'm not the only one who believes this and knows it to be true. Ron Paul, a doctor, author, and congressman (I can't believe I agree with a Republican)

http://www.usnews.com/blogs/the-home-fro...e-the-last.html

The bill for the Bail out MUST NOT PASS.

It is time for us to stand up and speak up even LOUDER! We must not fear the unknown. We must, in our 21st century lives, speak AGAINST giving more government control.

Contact your Congressperson NOW! (not later today, NOW!) and tell them to vote NO for the Bail out Bill.
https://forms.house.gov/wyr/welcome.shtml


**Feel free to repost if you like. I wrote this myself and believe in everything I have typed here today***
 
^^thank you for the post, watch out for slippery slopes though ;)

Does anyone else feel like the media is shoving this piece of shit down our throats? Seriously, I think we'd rather have a recession so stfu and secure your viewer base.
 
WASHINGTON (Reuters) - Major automakers reported plunging U.S. sales for September -- led by a 34 percent slide at Ford Motor Co -- as an escalating credit crisis hit the slumping industry and raised new doubts about when the world's largest auto market would stabilize.

The 26-percent drop in industry-wide auto sales was sharper than expected and coincided with a crisis on Wall Street that automakers said rocked consumer confidence and made it harder for remaining shoppers to finance vehicles.

Sales were down 24 percent at Honda Motor Co, 32 percent at Toyota Motor Corp and 37 percent at Nissan Motor Co. Chrysler LLC sales were down 33 percent. http://www.reuters.com/article/businessNews/idUSTRE49092V20081001?feedType=RSS&feedName=businessNews&rpc=23&sp=true

It begins.
 
livin on borrowed time, and borrowed money
livin on the streets, yo it can't be funny


-beastie boys
 
m885 said:
WASHINGTON (Reuters) - Major automakers reported plunging U.S. sales for September -- led by a 34 percent slide at Ford Motor Co -- as an escalating credit crisis hit the slumping industry and raised new doubts about when the world's largest auto market would stabilize.

The 26-percent drop in industry-wide auto sales was sharper than expected and coincided with a crisis on Wall Street that automakers said rocked consumer confidence and made it harder for remaining shoppers to finance vehicles.

Sales were down 24 percent at Honda Motor Co, 32 percent at Toyota Motor Corp and 37 percent at Nissan Motor Co. Chrysler LLC sales were down 33 percent. http://www.reuters.com/article/businessNews/idUSTRE49092V20081001?feedType=RSS&feedName=businessNews&rpc=23&sp=true

It begins.

Bad union deals and poor planning. :\
 
Here we go. Let the real fun begin. Now that the government has made it clear that it has no intention of a genuine bailout of the root cause(s) and is only interested in shuffling some quick panic money into some favoured hands, we'll see the re-enactment of the Titanic accelerate in earnest.

MBIA sues Countrywide Financial

By Saskia Scholtes in New York

Published: October 1 2008 23:55 | Last updated: October 1 2008 23:55

MBIA Insurance is suing Countrywide Financial, alleging that the mortgage lender fraudulently induced MBIA to guarantee billions of dollars of Countrywide mortgage bonds that have cost the embattled bond insurer more than $459m.

The suit, filed in New York state?s supreme court, raises fresh questions over the extent of Bank of America?s exposure to potential legal and regulatory liabilities incurred by Countrywide, which it acquired this year.

The California mortgage lender is already facing litigation filed by borrowers and states? attorneys-general that claim Countrywide engaged in unfair and deceptive lending practices. BofA declined to comment.

MBIA said in its complaint that Countrywide had ?falsely represented? to both MBIA and investors that mortgage loans packaged into the guaranteed bonds had been originated in strict compliance with its underwriting standards.

MBIA said that as Countrywide battled for market share during the mortgage boom, the lender had developed ?a systematic pattern and practice of abandoning its own guidelines for loan origination: knowingly lending to borrowers who could not afford to repay the loans, or who committed fraud in loan applications?.

The bond insurer is suing over guarantees it provided for $14bn of Countrywide mortgage bonds that packaged home equity loans and second lien mortgages originated between 2005 and 2007.

Such loans have shown some of highest levels of late payment and default as house prices have fallen.

MBIA said in the complaint that it had paid out more than $459m on its guarantees for these bonds and that it was ?exposed to claims in excess of several hundred million dollars more?.

Bond insurers promise to make good on payments of interest and principal if an insured bond suffers losses.

The bond insurer asked the court to determine damages, including lost profits and opportunities, legal fees and payments on current and future claims under the bond guarantees.

MBIA lost its triple A credit rating this year after it was hobbled by multi-billion dollar losses on a variety of complex structured securities it guaranteed during the credit boom.

For years, bond insurers used their triple A credit ratings to guarantee payments on bonds issued by municipal and other relatively safe issuers. A move in recent years to guarantee riskier structured credit securities and mortgage debt led to a huge increase in expected losses.

source: ft
 
“These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people’s money to settle the quarrel.” – Abraham Lincoln, speech to Illinois legislature, January 1837

History repeats itself.
 
^
Since we're quoting history (and I can't find that image/cartoon thread), here's my contribution to the ever growing world of motivational posters.


democracy3.jpg
 
I am watching the VP USA debates in real time. ABC News is in my bedroom without a 7 sec delay and the debate with delay (your esteemed CEP mod can handle the latter)...

Joe Biden has fatally stuttered. Palin at least can stand up to this.

YIKES.
 
rubbing my crystal balls, i forsee this moneygrab of a blll passing and shit will hit the fan for the average joe anyway. then it'll be said "well at least we tried" and as everyone desperately tries to stay fed and sheltered, that whole lot of money will be forgotten.
 
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