Is the US bankrupt?

[anitram]

US taxpayers, you've won!! Let's see what's behind door #1....oh my, a trillion dollars worth of derivative losses.

Are they going to ban all shorting or just naked shorting? What about cross border stuff?

For years now we have been told that the free market will correct for everything. Unbridled capitalism works so super well.

I mean, we wouldn't want to nationalize profitable sectors! Nah, let's go with losing entities.

 

[ntalwar]

Hopefully the Dems will insist on an equity stake in some of the profitable firms like Goldman, at a minimum. They could also offer less than par value on these securities. Seeking Pelosi with Paulson was a bit disconcerting.

 

[Liesje]

Hmmm, maybe I should be glad I have next to no money in the bank and no other stocks or assets (besides two measly shares in Coca-Cola that my uncle gave me as a little kid).

 

[Lally1011]

Ohhh I get it now....

Now I know where my $600 refund check is going to go.

 

[financeguy]

Are they going to ban all shorting or just naked shorting? What about cross border stuff?

You are asking the right questions.

 

[deep]

I am starting to think this 700 billion bail out is a bad idea.

There is no real over sight.

 

[AliEnvy]

Section 8 of the proposed legislation says it all:

"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."

While Paulson and Bernanke hold a gun to the heads of Congress threatening worldwide financial armageddon unless they're given unchecked control to "control" a crisis they helped create.

That's rich. And brilliantly orchestrated frankly.

 

[Utoo]

I am starting to think this 700 billion bail out is a bad idea.

There is no real over sight.

Yeah, it needs some major oversight. It also needs to pay back the taxpayers in some way (I believe the FannieMae, FreddieMac & AIG included a tax on the companies that would ultimately act as interest).

Basically, this is Iraq. It needs both an entrance and an exit strategy.

 

[melon]

I am starting to think this 700 billion bail out is a bad idea.

There is no real over sight.

Welcome to the difference in how Republicans and Democrats write legislation. A McCain presidency will be exactly the same.

 

[Lally1011]

Bush's actions are a very clear sign that he doesn't give a shit.

Leave it for the next administration. He's too busy packing.

 

[Bluer White]

While Paulson and Bernanke hold a gun to the heads of Congress threatening worldwide financial armageddon unless they're given unchecked control to "control" a crisis they helped create.

This began long, long before Paulson and Bernanke were even a twinkle in George Bush's eye. Paulson and Bernanke are guilty of whistling past the graveyard like the vast majority of our politicians.

Unfortunately, this huge bailout has become a necessity for the U.S. economy and beyond.

 

[anitram]

This began long, long before Paulson and Bernanke were even a twinkle in George Bush's eye.

Yes, it began with that Republican visionary, Reagan.

 

[unforgettableFOXfire]

Yes, it began with that Republican visionary, Reagan.

You leave that brilliant actor out of this. His fiscal policies never hurt anyone. Let's hear it for Reaganomics! USA! USA! etc.

 

[deep]

Yes, it began with that Republican visionary, Reagan.

Hey, that man is Obama's inspiration.

Obama said, "I think Ronald Reagan changed the trajectory of America in a way that Richard Nixon did not and in a way that Bill Clinton did not. He put us on a fundamentally different path because the country was ready for it. I think they felt like with all the excesses of the 1960s and 1970s and government had grown and grown but there wasn't much sense of accountability in terms of how it was operating. I think people, he just tapped into what people were already feeling, which was we want clarity we want optimism, we want a return to that sense of dynamism and entrepreneurship that had been missing."

 

[deep]

Welcome to the difference in how Republicans and Democrats write legislation. A McCain presidency will be exactly the same.

Are you aware of Biden's relationship with the Banks that are all incorporated in Del.

How he got their bankruptcy legislation through at the expense of the working people?

 

[Se7en]

we should all be aware that politicians of any stripe are fully prepared to fuck us over when it suits their purposes.

 

[yolland]

.

by Andrew Leonard, Salon, Sept. 24


The senators, Republican and Democratic, who barraged Treasury Secretary Hank Paulson and Federal Reserve chairman Ben Bernanke with wave after wave of skeptical questions on Tuesday know full well that their constituents are royally pissed. A $700 billion bailout handed to the very people primarily responsible for making this mess--people who have fought against regulation and government interference in their business all their lives--makes for very bad politics. Americans are angry.

But Bernanke and Paulson did not give up an inch during the long hearing before the Senate Banking Committee. They were opposed to granting the U.S. government equity in exchange for purchasing "toxic" assets off of Wall Street financial institutions. They were opposed to any restrictions on executive compensation. They were opposed to giving bankruptcy judges the power to rework mortgage contracts.

Like many observers of this drama, I initially found this intransigence infuriating. I am not one of those who believe that simply because Bernanke and Paulson are Bush appointees they are automatically lying and the real goal here is to transfer a huge amount of wealth to Wall Street and cripple the next administration. Smart people on all sides of the political spectrum are deeply worried about the state of financial markets and the disastrous consequences their collapse could have for everyone. There is no question in my mind that Bernanke and Paulson believe that the nation--and the world--stand at the brink of economic chaos. As they reiterated time and again, the result of taking no action would most likely be far worse than the disgust and irritation all of us--including, I think, Paulson and Bernanke--feel at the prospect of fixing things up by saddling $700 billion worth of debt on American taxpayers.

But come on! A handout is a handout. Why aren't they willing to horse trade? That is the question. And the answer, I think, after poring over their testimony, is that they really believe that the key to making their plan work is to get as many participants as possible to buy in--not just the financial institutions on the brink of the bankruptcy, but also the reasonably secure corporations that just happen to have some toxic debt on their books.

What Bernanke and Paulson want to do is set up a series of auctions for various forms of securities that at present nobody wants to buy because they don't know what they're worth, and arrive at a price for them that is higher than the "fire-sale prices" that they currently deserve. They want to jump-start a new market, using as a carrot the prospect that the federal government will buy the bad assets at whatever the auction declares. This could be a "reverse auction" in which, basically, the holders of bad debt bid for the right to sell their securities to the government by lowering their asking price, or it could be some other kind of mechanism. In fact, there could be different mechanisms for different classes of securities. Bernanke and Paulson couldn't be explicit on the details, because, quite frankly, they haven't figured it all out. The words "complicated" and "complex" came up more than once in Tuesday's hearing.

But the crucial requirement for making this market work is to get the kind of "broad participation" that, as I understand it, will encourage sufficient numbers of institutions to compete to sell their toxic assets to the government so that a real price can be established for those assets. Viewed that way, it's easy to understand why the financial institutions that could survive without the help would refuse to participate in a system that promised punishment. But if the government restricted its efforts merely to attempting to recapitalize the companies that are in danger of melting down, the root problem of the current crisis would not be addressed--which is that no one knows how to value all this bad debt, and therefore, there is no market, no liquidity, and a very real threat of an enormous economic contraction.

Having laid all that out, let me say that I do not think it is realistic to imagine that Bernanke and Paulson will get their way without concessions. The overt politics of the bailout are too egregious. Some kind of compromise will have to be crafted that encourages participation in the Paulson plan, but extracts a pound of flesh from Wall Street and gives homeowners as much of a helping hand as investment bankers. I understand Paulson's point, which he made over and over again, that the only reason he and Bernanke had crafted the plan is because the taxpayer and the real economy are in dire danger, so that bailing out Wall Street, in effect, is bailing out the entire economy. But that just won't play with the man or woman on the street--something that any politician in a tight election 42 days from now is all too aware of.

The time pressure under which to hash out that compromise will be intense. But I have little patience with senators complaining that they have only a week to make a decision. That deadline is a result of Congress' intent to adjourn this week and head home on vacation to do a little electioneering. Puh-leez. We are staring at the greatest economic crisis since the Great Depression. Cancel your vacation. Because that's what the rest of us are doing, as we stare into the abyss.

 

[Vincent Vega]

FBI investigating bailout triggers for possible fraud - Sep. 23, 2008

Looks like they are at least trying. Maybe those managers were stupid enough trying to cover up that their banks were already lost in the crisis.
And maybe some can be charged for negotiating tripple A ratings for dirty loan packages and for hiding the real worth of CDOs. Hopefully.

But the initial problem remains: The disastrous deregulation of the financial markets in the first place that made all those financial instruments possible, and in itself legal.
I'm in serious doubt any of the top management of the banks etc. involved has to fear any dire consequences. Everyone beneath should be more skeptic.

 

[AliEnvy]

Whether legal or steeped in fraud, remember that execs' performance compensation packages and bonuses were based on illusory profits.

We Can Stop Paulson's Plunder

by David Swanson

There does not seem to be any way we are going to avoid shelling out a major amount of money to save banks from the unregulated greed of bankers. Dean Baker and Doug Henwood and every person with any economic expertise whom I find credible predicts disaster if we don't.

But, as Baker pointed out on Democracy Now! this morning, the bailout can punish those responsible rather than rewarding them. It can also be done without creating new dictatorial powers for the executive branch of our government.

Congress must reject Paulson's Plunder and enact a plan with these progressive principles from the Backbone Campaign:

A. The people who caused the problem or profited most should pay for it

1. Highly compensated executives total compensation should be capped or taxed heavily as a condition for being bailed out.
2. Tobin tax on all transactions in Finance, Insurance and Real Estate including currency transactions.
3. Government takes an equity stake, proportionate to the size of the bailout
4. Tax hedge fund managers' income
5. Accountability - fire executives of failed companies as done in the UK, and abrogate their severance packages.
6. Impose a five-year, 10 percent surtax on income over $1 million a year for couples and over $500,000 for single taxpayers.

B. Re-regulate to prevent this from happening again

1. Direct the Federal Reserve to intervene to prevent asset bubbles.
2. Extend reserve requirements to new security categories
3. Regulate the packaging of loans so they can be evaluated, rated, and priced rationally.
4. Regulate hedge funds and private equity funds in a way comparable to banks

C. Include Main Street in the bailout and invest in a new productive economy

1. Establish a moratorium on foreclosures, renegotiating mortgages or institute a rent-to-own plan to keep people in homes.
2. Create a major economic recovery package which puts Americans to work at decent wages, in productive jobs that add value to homes and communities.
3. Invest the taxes on speculation, executive compensation, and the surtax on the wealthy in clean energy, infrastructure, education, and health care.

You can send this proposal to Congress by clicking here:

Stop Paulson's Plunder | Democrats.com

 

[deep]

This has to pass by Friday!!!!!!


Paulson needs the authority to act unilaterally without cumbersome over sight.

One person needs to be the decider.


Let's leave the partisan politics out of this.

There is too much at stake!!!


700 billion dollars is less than .00000000173 % of the GNP*

*GNP Gross National Production of all Countries in the world for the next 100 years.​

 

[anitram]

NBC's Kelly O'Donnell reports, advisors say they are also reaching out to Obama Campaign Manager David Plouffe to discuss pulling ads as well. (That can be difficult once they are in station traffic rotations.)

McCain advisors say they will do all the debates but the schedule is up in the air.
They also deny that there is a political calculation in this and say without action the country could slide into a Depression by Monday and added "we'll see 12 percent unemployment" if action is not completed. GOP sources say they believe the current deal is dead on the Hill and reject suggestions that without McCain's vote Democrats would not support a package.

Look at this Republican BULLSHIT.

The Great Depression is the new Osama!!

 

[ntalwar]

^ Yeah, they have Palin saying the same now:

The Republican vice presidential nominee, Governor Palin, says America could be headed for another Great Depression if Congress doesn't act on the financial crisis.

Mrs. Palin's comments came in an interview today with "CBS Evening News" anchor Katie Couric.

Asked whether there's a risk of another Great Depression if Congress doesn't approve a $700 billion bailout package, Mrs. Palin said: "Unfortunately, that is the road that America may find itself on."

 

[anitram]

By Monday no less!

I have never prided myself on being an economic expert - I know enough for the purpose of my corporate job and that's about it. But this tone and tenor of the McCain campaign is appalling and shows that McCain and Palin know nothing at all about the economy. Nobody in their right mind agrees with this emergent timeline.

 

[Zoots]

God save this fucking country!

 

[elevated_u2_fan]

God save this fucking country!

I dont think even God has enough money

 

[anitram]

Allan Meltzer, professor of economics at Carnegie Mellon and an American Enterprise Institute Fellow says no bailout should be handed out. Interesting article:

ALLAN MELTZER: It's a terrible idea. It's undemocratic. It's bad economic policy, and it's bad social policy. And it has a very little chance of solving the problem in a meaningful way.

I've listened to governments tell me for 40 years that there was a crisis and the world was going to fall apart if we didn't do this or that. But there have been a few cases where they weren't able to do that.

One was the commercial paper crisis in 1970. There have been several others. The world did not fall apart. Last week, we had Lehman Brothers went into bankruptcy. Within three days, most of the assets were sold.

We had AIG turn down three offers to buy the company because they thought they would get a better deal from the government. It turned out they didn't get the better deal from the government. Now the stockholders suddenly woke up and said -- the major stockholders said, "We'd like to buy the company."

Well, that's what I think we need to do. We need to get the government's hand out of this, and let's see whether we can't get a market solution.

The market people caused this problem. They ought to be the ones that pay the cost of having it cleaned up.

I don't want to join a debate about different ways of picking the public's pocket. I think, if they're going to do something -- and I don't think that we really need to do anything. I've heard these stories over and over for 40 years. You know, maybe there will be a crisis.

But despite all the talk, Main Street is not doing so badly. And the fact is that they've been predicting disaster since January. It hasn't happened.

And if they're going to do something, then what they ought to do is make loans, which the financial institutions have to repay with interest. And if you think -- that's an idea which the Chileans have used in a bigger crisis than this for them in 1982, and it worked for them.

People paid back the loans. They weren't allowed to pay dividends until they repaid the loans. They weren't allowed to take bonuses until they repaid the loans. I think that's the way -- if we're going to do this, then that's the way we should do it.

I don't want to get into the distribution of income arguments that are so prevalent in the Congress. I'm against this mainly because it seems to me this is private interest activity at the expense of the public interest.

I mean, Mr. Paulson can talk about all the things that are going to be good for Main Street, but the fact is that Main Street is going to incur a huge debt and a big loss, for the reason that Paul Krugman just mentioned, because most of these assets are not worth much.

Well, let's do loans, which they have to repay with interest, and let's see what happens.

I know that many people think it can't happen. But, look, today, Morgan Stanley sold 20 percent of its company to a Japanese bank. There's lots of money out there, liquidity. The Chinese have it. Others have it. They've come in.

If the government steps aside and says, "Solve this problem," then we'll see more of that activity and people will begin to do it.

Merrill Lynch sold itself. It sold out some of its assets. It got 22 cents on the dollar. It's correct to say nobody knows how to value these things, and they won't know how to value them until the housing price reaches a bottom or is expected to reach a bottom, because you can't value the mortgages until you know what the underlying asset, which is the house, is worth. And nobody knows that.

 

[Irvine511]

all i know is that i wish George Bush would get off the damned teevee and stop talking about having any thoughts, proposals, ideas, or opinions on this whole damn issue. all that man will do is freak out the markets, unnerve the masses, and frighten small children. he's exactly the last person we want to be anywhere near a crisis, so i say we send him to Cheney's secret bunker until things calm down a bit.

 

[yolland]

Upheaval on Wall St. Stirs Anger in the U.N.

By NEIL MacFARQUHAR
New York Times, September 23


UNITED NATIONS — Wall Street and the Bush administration’s record of financial oversight came under attack at the United Nations on Tuesday, with one world leader after another saying that market turmoil in the United States threatened the global economy. “We must not allow the burden of the boundless greed of a few to be shouldered by all,” said President Luiz Inácio Lula da Silva of Brazil in an opening speech that reflected the tone of the gathering.

The annual opening of the General Assembly habitually casts a shadow over New York every September, snarling traffic and tempers. But this year it is New York, or at least Wall Street, projecting its shadow back across the United Nations.

Virtually every president or monarch from around the globe made some reference to the financial upheaval, and the looming cloud was also the buzz of the back corridors. With a pillar of American power—its financial leadership—so badly shaken, there was a certain satisfaction among some of the attendees that the Bush administration, which had long lectured other nations about the benefits of unfettered markets, was now rejecting its own medicine by proposing a major bailout of financial firms. But there was also serious concern that the United States had not policed its markets carefully enough to prevent the damage to its economy and others, making it much harder to raise money for the world’s most vulnerable people. “The global financial crisis endangers all our work,” said the secretary general, Ban Ki-moon, who used his opening remarks at the General Assembly to question the reliance on free markets. “We need a new understanding on business ethics and governance, with more compassion and less uncritical faith in the ‘magic’ of markets.”

President Bush, making his eighth and last address to the United Nations, with which he has had a troubled relationship, sought to reassure world leaders that his administration was taking “bold steps” to stanch the economic crisis in the United States, which, he said, “would have a devastating effect on other economies around the world.” Amid a long ode to the importance of continuing the fight against terrorism, he devoted one paragraph to the rescue plan. “We’ve promoted stability in the markets by preventing the disorderly failure of major companies,” Mr. Bush said. He noted that many were watching how the United States responded because economies were “more closely connected than ever before.”

But for some leaders, the Bush bailout plan seemed hypocritical given the tough course Washington has often advised struggling nations to take. “What you are seeing here is the letting off of some political steam,” said Mark Malloch Brown, a British cabinet minister and former senior United Nations official. “They are all remembering the very hard, unforgiving advice that they got from American financial institutions” to “deflate your economy, let your banks go to the wall,” he said. “There is a resentment at what they would see as a further evidence of double standards.”

The General Assembly has long served as a handy megaphone for American foes like Fidel Castro of Cuba or President Mahmoud Ahmadinejad of Iran—who this year delivered his standard diatribe against the evils of America and Zionism. The extraordinary nature of the outpouring on Tuesday, however, was that it came from some of America’s closest allies and trading partners—not from those the United States would label political outcasts, but from mainstream countries in Europe, Asia and Latin America. President Nicolas Sarkozy of France described the crisis as the worst financial mess since the Depression of the 1930s and the financial system as “insane.” He called for a summit meeting in November to determine how to address the problems and to develop greater international regulations of financial markets. Many leaders echoed that latter demand. Mr. Sarkozy also said that at a news conference he had talked with Wall Street bankers, but that they claimed not to know who was responsible for the mess. When banks and hedge funds hand out fat bonuses, they are all willing to gloat about their success, Mr. Sarkozy said, “but when there are deficits we don’t know who is responsible.”

During a brief appearance with Pakistan’s new president, Asif Ali Zarbari, Mr. Bush acknowledged that world leaders gathering in New York had questioned him about the turmoil and the administration’s response to it, “wondering whether or not the United States has the right plan to deal with this economic crisis.” The American ambassador to the United Nations, Zalmay Khalilzad, said he was not hearing complaints about the financial crisis at his meetings, and suggested that the world leaders accepted that the United States was facing the issue. “We are very agile and we are moving very quickly to deal with it,” he said.

Mr. Malloch Brown, the British minister, also noted that if the leaders lambasting the United States from the podium consulted with their finance ministers, they would be likely to find them very happy that Washington was planning a huge bailout. Yet doubts were being raised not just at the United Nations but farther afield, with Germany’s chancellor, Angela Merkel, among the most outspoken. She said that at last year’s meeting of the Group of 8, she had strongly urged both the United States and Britain to be more rigorous in supervising financial activities, and even offered specific proposals to be applied to banks and other institutions. But the United States was not interested, she said. She also seemed to express a certain exasperation that the United States was now asking Europe for help, after inflicting damage on the rest of the world that could have been avoided. “We did what we were supposed to do,” she said in an interview with Münchner Merkur, a German newspaper. “We adopted a decent E.U. regulation on the national statute books,” but “when it came to it, the Americans said, ‘That’s not for us.’ ”

The theme promoted for this year’s General Assembly is the development of the world’s poorest nations, laid out in eight targets, including universal primary education and the elimination of maternal mortality, known collectively as the Millennium Development Goals. Mr. Ban had been hoping that member states would renew their commitment to the tune of $72 billion annually, and evidently the turmoil in the markets threw that into question. He told a meeting of business executives on the side of the General Assembly that if the United States could promise $700 billion for Wall Street in one week, then $72 billion should not be such a stretch.

There was a certain amount of shellshock left from the wave of bad financial news, but African leaders in particular were holding out the importance of continuing aid. “You cannot but talk about it,” said Elizabeth Ohene, Ghana’s minister of state for education, science and sport, trying to remain optimistic that the huge bailout plan for Wall Street meant there would be plenty of money to go around. It would be far better to invest in the education of children, she told a luncheon gathering, than to use a bunch of fancy financial engineering to bail out Wall Street and other global financial centers. “Believe me,” she said, “it will be much cheaper.”

 

[KhanadaRhodes]

Look at this Republican BULLSHIT.

The Great Depression is the new Osama!!

not only that, how would higher unemployment rates affect me anyway when i'm already unemployed? (i'm being facetious, btw)

and i've just said this in another thread, but it bears repeating: i don't see how bush creating panic (in hopes that the bailout will go as he wants) helps at all. mass panic will create a depression. ignoring the problem won't help either of course, but panicking will make everything worse.

 

[diamond]

God save this fucking country!

at least mac is trying to put country first by returning to d.c until the crisis is resolved; the other is putting obama first.

i don't think sen o realizes the gravity of the situation.

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