$700 Billion - To Bail or Not to Bail...That is the question - Page 3 - U2 Feedback

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Old 09-26-2008, 01:16 AM   #31
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Originally Posted by sue4u2 View Post
Which begs the question, are they, just like cori said "pulling it out of their collective asses."
Maybe. I don't know how a meeting there looks like... or where it does take place exactly.
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Old 09-26-2008, 02:05 AM   #32
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I posted a link to this in the general discussion thread, but here's a draft of the "Economic Rescue Principles" that House Republicans are now circulating as their proposed alternative to the revised bailout plan:

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• Rather than providing taxpayer funded purchases of frozen mortgage assets, we should adopt a mortgage insurance approach to solve the problem.

• Currently the federal government insures approximately half of all mortgage backed securities. (MBS) We can insure the rest of current outstanding MBS; however, rather than taxpayers funding insurance, the holders of these assets should pay for it. Treasury Department can design a system to charge premiums to the holders of MBS to fully finance this insurance.

• Instead of injecting taxpayer capital into the market to produce liquidity, private capital can be drawn into the market by removing regulatory and tax barriers that are currently blocking private capital formation. Too much private capital is sitting on the sidelines during this crisis.

• Temporary tax relief provisions can help companies free up capital to maintain operations, create jobs, and lend to one another. In addition, we should allow for a temporary suspension of dividend payments by financial institutions and other regulatory measures to address the problems surrounding private capital liquidity.

• Increase Transparency. Require participating firms to disclose to Treasury the value of their mortgage assets on their books, the value of any private bids within the last year for such assets, and their last audit report.

• Limit Federal Exposure for High Risk Loans: Mandate that the GSEs no longer securitize any unsound mortgages.

• Call on the SEC to audit reports of failed companies to ensure that the financial standing of these troubled companies was accurately portrayed.

• Wall Street Executives should not benefit from taxpayer funding.

• Call on the SEC to review the performance of the Credit Rating Agencies and their ability to accurately reflect the risks of these failed investment securities.

• Create a blue ribbon panel with representatives of Treasury, SEC, and the Fed to make recommendations to Congress for reforms of the financial sector by January 1, 2009.
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Old 09-26-2008, 10:06 AM   #33
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Since the American tax payer is going to be getting the bill, and I am one of them. I want to know where each dollar is going.
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Old 09-26-2008, 10:17 AM   #34
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The head honcho at Lehman was making 17 grand an hour .
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Old 09-26-2008, 10:21 AM   #35
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The head honcho at Lehman was making 17 grand an hour .
And the average senior citizen makes less than this in one year.
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Old 09-26-2008, 11:18 AM   #36
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Originally Posted by yolland View Post
I posted a link to this in the general discussion thread, but here's a draft of the "Economic Rescue Principles" that House Republicans are now circulating as their proposed alternative to the revised bailout plan:
They are proposing more deregulation, corporate tax cuts, and for the free market to correct itself.

In case anyone is confused.
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Old 09-26-2008, 11:34 AM   #37
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So who is accountable for this? Surly, no one in my neighborhood, since we are not Wall Street investors. More, plan Joe and Jane, from America's Main Street.
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Old 09-26-2008, 01:40 PM   #38
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They are proposing more deregulation, corporate tax cuts, and for the free market to correct itself.
Right. I'm wondering though whether McCain's implicit endorsement of those principles yesterday (while refusing to actually commit to either plan) isn't now going to put the pressure on Obama to explain tonight why that approach won't work, and why a bailout plan with safeguards added is better. Because otherwise what a lot of voters get out of it might be "The Democrats asked me to bail out Wall Street and the Republicans didn't."
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Old 09-26-2008, 01:43 PM   #39
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I think its unfair for politicians to expect the American public to read up on issues like this economic crisis. There are so many good reality TV programs on every night and there are only so many hours in a day ...
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Old 09-26-2008, 02:24 PM   #40
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In our news they said that the bail out deal has a part for all the CEOs to get their salaries paid and their payout clauses because they have contracts and they come first.

How bullshit is that? Taxpayer money going to some bastards who ran companies into the ground and now get to feck off with millions of dollars in their pockets. Its just completely ludicrious
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Old 09-26-2008, 04:46 PM   #41
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Right. I'm wondering though whether McCain's implicit endorsement of those principles yesterday (while refusing to actually commit to either plan) isn't now going to put the pressure on Obama to explain tonight why that approach won't work, and why a bailout plan with safeguards added is better. Because otherwise what a lot of voters get out of it might be "The Democrats asked me to bail out Wall Street and the Republicans didn't."
Again, Krugman is really recommended reading. First he explains that the Republican (McCain) proposal is absolute garbage. Second, a nice summary of where we are and why.

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First of all, we have the Republican Study Committee blowing things up with a complete nonsense proposal — solving the crisis with a holiday on capital gains taxes. How is that possible? Well, if a party runs on economic nonsense for 25 years, eventually many of its foot soldiers will be people who actually believe the nonsense.

More specifically, though, the failure to get a deal reflects the betrayals of the Bush years. Democrats weren’t going to trust Henry Paulson, because behind him they see the ghost of Colin Powell (and Paulson’s “all your bailout are belong to me” proposal, aside from being bad economics, showed an incredible tone-deafness.)

And after the way the Bushies and their allies double-crossed the Democrats again and again in the aftermath of 9/11 — demand national unity, then accuse you of being soft on terrorists anyway — there’s no way Pelosi and Reed will do the responsible but unpopular thing unless the Republicans agree to share ownership.

So what we now have is non-functional government in the face of a major crisis, because Congress includes a quorum of crazies and nobody trusts the White House an inch.

As a friend said last night, we’ve become a banana republic with nukes.
McCain has come up with a horrific "plan" - that should be repeated again and again and again.

Even people who don't know shit about the economy - ask yourself a very common sense question: what capital gains tax are you paying on assets which you are selling BELOW the asset's cost base? We are taxing what gain, exactly? I mean, the sheer stupidity of it is astounding.
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Old 09-26-2008, 04:59 PM   #42
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And I thought sleep deprivation was the reason I was totally lost on the alternative proposal's economic sense in any way.

McCain might try to do campaigning with this crisis, but if he gets elected on that bullshit it will backfire.
Or his plan is rather kind of: Well, I'm going under in this campaign, but you will go under with me. I don't know.
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Old 09-26-2008, 08:59 PM   #43
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The ecomonic bail out explained on how and why we got there:

YouTube - Burning Down The House: What Caused Our Economic Crisis?
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Old 09-26-2008, 09:24 PM   #44
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Please understand.

The credit markets are seized. The bailout must happen. We can worry about the post-mortems later.

This is not the time for the luxury of a debate over who is to blame, whether bankers are over-paid or even how we got here in the first place, etc, etc.

The Republicans are fools, knaves and hypocrites, with the exception of Ron Paul. They didn't have a problem with Bushco's enlargement of the milit-ind complex over the last 8 years, but now they have decided to get on their high horses because they see electoral advantage. This is not the time to decide to metamorphise back into free market purists all of a sudden.

Actual post from a trader on another forum:


Quote:
In NY right now the brown stuff is really hitting the wall.

There are no t-bills or agencies available, none.
The overnight market is bananas....if this goes on much longer then there will be major major trouble.

At the moment, the sept t-bill, maturing in 3 days is trading above par, ABOVE PAR!!!....
I.E you have to pay money to lend overnight if you even have the cash which isn't there, everyone is hoarding everything and terrified...this has never happended before

Libor is 186 basis points above the fed and the municipal tax free rate is a whopping, enormous 7.96%

This rate is normally 70% of 3 month libor, so it should be about 3.50%
This is the rate the municipalities are paying in auction rate bonds, i.e. no one is buying.

The futures market is totally dislocated. Market makers are pricing it to close out the market as they don't want the business...the TED spread is over 300 bps, the highest level ever, the scariest thing the market has seen.

I'm not sure if this makes sense to many people over there as this stuff is a different market, but to put it simply the US is tethering on the edge of the abyss, if this doesn't calm down asap, there won't be much standing. Let’s see how the public service works when they don't get paid in the next few months as reserves dry up. Infrastructure can't be repaired or maintained....

you think that 1929 was bad, that was only equities and thier only a fraction of the fixed income market,

Weapons of mass destruction, now very very apt!!

Ambrose Evans-Pritchard in the Telegraph:

Quote:
Credit is the lubricant of a modern economy. A seizure now would probably lead to the bankruptcy of General Motors and Ford in short order, but it would not stop with the US car industry. Waves of job losses would set off a self-feeding spiral. Yet more people would default on their mortgages (and car loans), driving house prices down even further. That, in turn, would threaten the solvency of the best banks. That is the way to Armaggedon.

As Mr Paulson says, US taxpayers are on the hook whether they like it or not. A $700 billion fund to soak up toxic debt and stabilise the credit market is the cheapest way out. It is certainly cheaper than Depression.
http://www.telegraph.co.uk/finance/f...l-banking.html
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Old 09-27-2008, 04:55 PM   #45
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This is not the time for the luxury of a debate over who is to blame, whether bankers are over-paid or even how we got here in the first place, etc, etc.
That's true, but it's definitely time to debate whether a bailout will do anything to remedy the situation or simply delay the worst until after the election towards an even deeper crisis.

Perhaps the banks should continue to buy each other out rather than look to government (taxpayer) intervention.
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