What would happen if we didn't bail out Wall Street

[graywarrior]

I just attended a house party for Carol Shea-Porter in NH and from what I understand, she is going to Washington tomorrow to vote with congress to bail out Wall St. Although she has not totally committed, she claims she will support it and she said it must be done immediatley! WTF? Why? WHY? Why are we continuing to get fucked up the ass? We're in debt because of an illegal war for which NO ONE WILL EVER BE HELD ACCOUNTABLE, we have no medical programs, we're paying up the ass for gas, food, heat, water, and yet, we, the American people have to bail out Wall Street!

I am more than pissed. Mainly because it seems like another scare tactic. I've heard it all before. Terrorists, Weapons of Mass Destruction, blah blah blah. Now we must act immediately? Why? What would happen if we did not bail them out? People will lose the 401K's. I've never had a 401K. People will lose their homes? They are already and I don't own a home.

I'm told that this will affect health coverage that we've all been demanding. WTF WTF WTF?????

Can someone tell me what would happen if we just sit and examine this things for a week? Why do we need to jump in without any restraints on Wall Street and bail them out AGAIN. Meanwhile, they're building ferris wheels in Iraq with our tax money. Who approved this?

I'm seeing red right now. I'm pissed at the dems right now. I am sick and tired of having nothing and being asked to take out a loan to bail out mother fucking greedy fucks who want to continue to jam it up our asses. I don't give one rip about those executives and their concerns about walking away without their entitlements. They need to be indicted and imprisoned. But noooooooooooooooooooooooooo, we're gonna bail the fuckers out....again, and again, and again.

My head is exploding! Talk me down people!

[bemildred]

1. We would get those parasites off our backs for good? nt

[Runcible Spoon]

2. you've got it exactly right Graywarrior...it's fear mongering at its best, economic terrorism...

I understand why people are afraid to lose their homes, but what's losing a house compared to losing your COUNTRY, your CIVIL RIGHTS, your ECONOMIC FUTURE etc. etc. etc.

I am staunchly against the death penalty, but I rank what these fucks have done as HIGH TREASON!!!!!!!!!!!!! :mad:

[graywarrior]

4. Thank you. Am am unbelievably upset right now

That someone in my own party would even consider a bail out for these bastards who deserve nothing less than the worst kind of misery.

I guess the only thing I can do is hope enough of them come to their senses tomorrow and reconsider. If they don't, I may have to walk away and I really don't want to do that.

[CountAllVotes]

3. for those that don't have, they never will "have"

and the corrupt people in CONGRESS are making sure that they remain being part of the "haves" while the "have nots" will have even less!

The people being bailed out are those with their money in UNINSURED accounts! They know the accounts never were insured when they opened them. However, they are greedy and the see good #'s on Wall Street.

Greed overtakes them and they invest invest invest.

I hope they all go down with the Greed Ship Lollipop IMO.

P.S. I'm as p/o'd as you are so don't be asking me to "talk you down". I just emailed the senators and the rep. this a.m. What started out being a normal letter ended up with this: NO MONEY SHOULD BE ALLOWED TO BANKRUPT AMERICA BEFORE THE GOP IS KICKED OUT IN NOVEMBER! YOU KNOW IT AS WELL AS I DO!

That pretty much sums it up IMO!

:kick:

[graywarrior]

5. Yes! Not until the GOP is out.

No decisions made until every one of them is out, tracked down and skinned alive.

[CountAllVotes]

7. yes, they all belong behind bars

and they must "pay" with life sentences for HIGH TREASON GOD DAMNIT!!

:kick:

[mtnsnake]

6. I'm self employed, I don't have a 401K, & I don't invest in stocks

so I, too, am not very happy about bailing out people who screwed up things when they FUCKED WITH OTHER PEOPLE'S MONEY and blew it all away.

Maybe in the short run we'll ward off a crisis, but IMO all we're doing is enabling the same thing to eventually happen all over again. When will we ever learn?

[graywarrior]

8. And completely selling out our principles.

Walking away from what we stand for. We're just like them if we do this. I am so disappointed.

[CountAllVotes]

9. those that don't invest in stocks nor have 401Ks should not have to pay

for the crimes of these greedy SOBs!

:thumbsup: I don't have a cent in Wall Street either nor do I have something called a 401K!

:kick:

[mtnsnake]

21. Ya wanna know something else that really annoys me?

I live in a red area of NY, and I have some "friends" I used to have coffee with once in a while. I say "used to" because I eventually got sick of listening to them and their Republican views on life. We originally got together because of a mutual interest in hockey. These particular "friends" are nice guys, but they are Republicans, and whenever I had joined them for coffee, all they did was brag about their stocks and how so-and-so gave them some great stock "tip" for them to get in on in the market. Not that I would ever invest my hard earned dollars in somebody else's company, but none of these guys ever offered to include me in on one of their big stock tips. I only heard about their tips after the fact and when it was too late. So fuck them, fuck their devalued stocks, and fuck their incessant bragging about how much money they used to make in the market. Let them dig themselves out of their own hole.

Anyway, I'm with you!

[CountAllVotes]

27. I have a "friend" like that too

it is a woman and she inherited $850,000.00 and it is/was in Merrill Lynch. I told her to get that money away from that place when she got it but she did not take my sage advice (I am a retired bookkeeper and my own family lost it all in 1929 as my great grandfather was a bookkeeper as well and he was in it up to his eyeballs and I have the worthless stock certificates to prove it - they were kept for a damn good reason I believe as viable warnings that it could and will happen again).

She bragged about how all the money she made on Wall Street paid for her "new Volvo and the land bought to build a $300,000.00 house on" (note: all financed by Merrill Lynch mind you - loans from credible banks were not to be found being she has NO INCOME).

The last time I heard from her was the remains of a faint drifting voice on the answering machine a few days ago. That voice didn't sound so damn gleeful.

I'm with you - let these a-wholes rot in their own stink!

GREED DOESN'T PAY!

Maybe, just maybe, they have learned something I can only hope!

:kick:

[graywarrior]

28. I have experienced the same thing with past friends.

I am done with money centered people.

[mtnsnake]

33. Did you ever get stuck at Christmas parties with "money centered" friends like that? I have

but screw that. My wife and I won't subject ourselves to that kind of torture anymore. Trying to carry on an interesting conversation with shallow people like them is virtually impossible.

[graywarrior]

34. Know what I find even more disturbing?

People who have money then lose it and become one of us. Then they make more money again and suddenly, we're not good enough for them until they lose everything all over again.

[Zhade]

37. Your last point is why impeachment is necessary wrt to illegal wars.

Maybe some people here will finally wake the fuck up and realize that when you allow criminals to walk, it sets a precedent for future criminals!

[knowbody0]

10. I'd be okay with this move if:

spread it down to mainstreet - like cancel all our debt. we all start over with zero balances. no more income taxes. run the gov by donation only.

[graywarrior]

12. They're saying taking care of Main Stree AFTER we take call of Wall Street.

I'm sick of coming in second. All my life I've come in second. I'm done. Like a brain injured friend of mine just said to our local hospital's social service dept, "I'm not fucking around with you anymore. Give me what I want. I'm not fucking around anymore."

[knowbody0]

16. i'm pissin pissed as well

those nearby are treading lightly, my shadow appears to be growing.

just imagine if everybody got it at once. we'd be very powerful

[IndianaGreen]

11. They fear a 1929 Crash

but the 1929 crash led to the New Deal. Given the choice of bailing out Wall Street or burdening the working class with such massive debt for generations to come, I'll vote to kill this proposal.

Those that live by capitalism must die by capitalism!

[graywarrior]

13. Exactly.

If you play, you pay. YOU, Wall Street fuckers, not us.

[RichardRay]

14. Everybody would pay the price, not just the guilty.

I agree that the haste is unnecessary, but whatever gets done must be focused on solving the problem, not on punishing the guilty. How important is it to teach the bad guys a lesson? If it's the paramount need, then let Wall Street go up in smoke. Unfortunately, that will involve punishing a lot of folks who don't deserve it, some folks who deserve to get a little education, and some more folks who need to get their pee pee's whacked, but probably not cut off.

Credit would be completely unavailable. With the current US savings rate (pretty much zero that means nobody would be able to raise money for anything. Not for student loans, not for building new infrastructure (or, even more importantly, to replace the stuff we've got now that's in seriously bad shape), not to build a wind turbine plant or a solar farm - nada. Sure, keeping credit available will also cover some stuff you and I might not find necessary, but that works both ways. You say you have no 401k and no house - how about that computer you're posting on? or the Internet that's carrying the packets to DU? how about the ability to go to the grocery store and buy food?

A lot of folks would be out of work very shortly as the effect cascaded through the system. You think outsourcing and off shoring were a big deal? Just wait until the companies involved just plain die. The whole financial system is interconnected - it's as intrinsically interdependent as any ecology and it would be pretty hard to make certain only the guilty companies suffered. My mother worked through the Great Depression as a migrant stoop laborer (before she was in high school), she's perfectly willing to let the Bad Guys go live out their lives in comfort in a warm, sandy place as long as we don't go down that track again. To make certain all the guilty get punished you're going to inevitably punish some innocents, just as to make certain no innocents get punished you have to allow some guilty folks to get away. Personally I'll take the second one.

So, now you've got no investment and no labor. That pretty much means no money in the economy, and that pretty much means no tax base. You can either let everything go to hell in a hand basket, or you can try to do something about it. But there's no money, so the only thing left for the government to do is to create money out of thin air by printing it. Can you say Zimbabwe?

We all want to punish the guilty, but in this case it's like punishing my stomach because I ate too much and it hurts. Sure, my lungs, heart, liver and kidneys aren't at fault, nor is any other system that was working away doing it's job, but if I just sew my stomach shut it's not going to help anybody. Now, that's NOT to say that we need to encourage the guilty to continue to misbehave - if I eat too much, and my stomach hurts, and then someone gives me some medicine that makes it stop hurting, and I say thanks very much and go back to the table to eat some more - then it's not punishment I need, it's discipline.

I agree with a week, even a month, as long as the markets can see something being done, but I don't think we can just let it all sink messily into the deeps, as riveting as it would be to watch the drama.

[Demeter]

24. What Do You or I Need Wall Street For?

Wall Street is a street of lies and broken promises.

The people who need Wall Street live there. They need to steal immense sums for illegal or self-indulgent reasons.

We can have all our financial needs handled locally--in co-operative credit unions or the like. Provided Wall Street goes away and interest rates are allowed to reach realistic levels, and our jobs stay here because our taxes don't subsidize outsourcing. WE DON'T NEED WALL STREET!

And we never did. That's the sad part.

[graywarrior]

30. Thank you for that explanation.

That is what I wanted from my congresswoman today but did not get. I need to know the whys and why this minute. What is so crucial that we MUST make a decision tomorrow? Can we not meet for a few days and hash it out to see what the best solution is? It just makes it all looks like everyone is covering up something.

[DJ13]

15. This is the new Iraq War Resolution

No time to study the issue.

No time to debate and compromise.

Just sign another blank check and hope Bush doesnt use it (again) to further his agenda.

Bullcrap.

[Cleita]

17. If they don't, there will be millions more new homeless senior citizens

including me. Those of us who have put our life savings in modest nest eggs to retire on are going to lose it all and Social Security isn't enough to get by on these days especially with rising prices across the board. I do hope is that when they do though that they attach a bunch of strings to the bail out, like going back to the pre-Reagan regulations all industries were subject to back then before one check is written.

[IndianaGreen]

22. There is an emerging consensus that the bailout must be rejected

This bailout will do nothing for homeowners! There is an emerging consensus that the bailout must be rejected, and it is being posted on the internet as we speak:

Published on Sunday, September 21, 2008 by the New York Times
No Deal
by Paul Krugman

I hate to say this, but looking at the plan as leaked, I have to say no deal. Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets.

As I posted earlier today, it seems all too likely that a “fair price” for mortgage-related assets will still leave much of the financial sector in trouble. And there’s nothing at all in the draft that says what happens next; although I do notice that there’s nothing in the plan requiring Treasury to pay a fair market price. So is the plan to pay premium prices to the most troubled institutions? Or is the hope that restoring liquidity will magically make the problem go away?

Here’s the thing: historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions.

The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system — that is, convince creditors of troubled institutions that everything’s OK — simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem — which seems doubtful — or if Treasury is going to be paying a huge premium, in effect throwing taxpayers’ money at the financial world.

And there’s no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.

I hope I’m wrong about this. But let me say it again: Treasury needs to explain why this is supposed to work — not try to panic Congress into giving it a blank check. Otherwise, no deal.

http://www.commondreams.org/view/2008/09/21-2

Published on Sunday, September 21, 2008 by The Politico
'Taxpayer Ripoff': Many Economists Skeptical of Bailout
by Avi Zenilman

Many of the same economists and opinion-makers who'd provided a bipartisan sheen of consensus to Treasury Secretary Henry Paulson's previous moves have quickly begun casting doubts on the wisdom of a policy that would allow Treasury to purchase without oversight hundreds of billions of dollars of difficult-to-price assets from financial institutions.

Under the proposal, Paulson would not have to report to Congress until December, and the only safeguard for taxpayers was a provision that the “Secretary shall take into consideration means for — (1) providing stability or preventing disruption to the financial markets or banking system; and (2) protecting the taxpayer.”

Skepticism toward the plan reflected more than the predictable desires of the left to spread the wealth to Main Street or of the right to reject government bailouts, although those sentiments were also expressed.

"We need to take a bold move. In that sense I think Paulson is right," Luigi Zingales, a Professor at the University of Chicago School of Business who wrote a widely circulated short essay titled "Why Paulson is Wrong,” told Politico.

Zingales fears that the Treasury bailout would effectively turn the entire financial sector into a Government Sponsored Enterprise, complete with the same murkiness and moral hazard that sunk Fannie Mae and Freddie Mac. “It might achieve the final outcome, but it will do so at an enormous cost," he said. "All the troubles we’ve seen with Fannie and Freddie would be seen again and again across the entire financial sector."

President Bush is “asking for a huge amount of power,” said Nouriel Roubini, an economist at New York University who was among the first to predict the crisis. “He's saying, ‘Trust me, I'm going to do it right if you give me absolute control.' This is not a monarchy.” (Roubini told the New York Times that despite these concerns, he also thought the plan could help stave off a recession.)

http://www.commondreams.org/headline/2008/09/21-4

[Cleita]

29. I don't agree with how they are trying to do it, but there has to be

a way that protects both the homeowners and the modest investors. I would like to see those companies nationalized and the CEOs dumped out on their asses with no golden parachutes. The government then could issue reforms to repackage the bad assets they wanted to dump on the taxpayer, but still hold the valuable assets in the name of the people until this mess is straightened out.

In the meantime if I end up on the street, I will be pitching my tent on Nancy Pelosi's front yard for not impeaching the bastards.

[fed_up_mother]

18. We have a 40lK; my husband has no other options at his employment

And with generous matching funds, you're kind of sucked into taking it.

[goodgd_yall]

25. Same here.

I'm sure there are a lot of people in the same boat. I think the government needs to step in, but we need to ensure that steps are made so this doesn't happen again, in other words, we need to reregulate. And the CEO's and anybody else involved who has profited from the bad practices need to fork over their assets before taxpayers foot the bill.

[kath]

39. We have a 401K, but there are usually PLENTY of options as to what type of fund to put the money

in. See TIAA-CREF for an example: http://www.tiaa-cref.org/
Ours is all in BONDS, not stocks (an inflation-linked bond fund), so we have MADE money this year(not much, but still...), not lost it. I moved it out of stocks the last time things went south on WallStreet - 2002. (We lost a bundle that year- should have gotten out when Chimpyshit stole his way into office) Yeah, there were a few years in there were we would have been better off if I'd moved it back into stocks. But people have been saying the stock market is very shaky for a long time (as it usually is under Repugs), which gave me the heebie-jeebies. Overall, over the past 6 years+, we're now ahead of where we would have been had we stayed in the stock fund (or at least about the same), plus I've slept a lot easier at night.

Check out your 401K options - there is usually a whole menu of choices, with varying degrees of risk involved. The older you are, the less risk you should be taking.

[Demeter]

19. The "Smartest Guys in the Room" Would Have to Save Themselves

or go under. Or sue for better terms.

Never should we pay them for their fuck-ups.

If they wanted to, IF THEY HAD TO, they could come up with their own private solutions. Just like you and me.

[Alhena]

20. Wall Street has their billions- the turtles would retreat into their shells

to ride out the storm and let the little guy get screwed. That's why we do have to socialize the finance system. The problems in that system are real and, like it or not, we all depend upon banks being willing and able to loan to businesses and people instead of just hoarding money like they were doing in huge numbers last Wednesday.

The bailout was/is necessary- what we need to do is make sure that the financial system is socialized in a way that benefits the people. The Paulson "trust me" plan doesn't cut it, but we need some plan. I agree with the statement Obama put out today.

[greblc]

23. The rich would suffer.

A mass sell off of second homes, Mercedes dealerships & Marina's would close, and Golf courses would have to fall back to weekend hours only. That's just the start. Mayhem...

[IndianaGreen]

26. Those of us that play in municipal golf courses won't be impacted

Our fairways may look like crap when compared to a fancy private club, but the game is the same, even when the greens act like astroturf.

[abumbyanyothername]

31. The main thing the Pols are a scared of

is that the ROW (rest of world) shuts off our funding in the debt markets.

Our economy (joint private and government) needs over $2 Billion of foreign money imported EACH DAY.

I say, fuck it . . . let it collapse.

[graywarrior]

32. I think you just nailed it.

That's what they're afraid of.

[mtnsnake]

35. Good rant, interesting thread

and I forgot to K&R, so better late than never. :thumbsup:

[rateyes]

36. I'm with you. Mad as hell and not taking it anymore.

[Zynx]

38. The banking system will freeze up, credit will disappear, layoffs will soar

and unemployment will surge much further than it has already.

[ProgressiveEconomist]

40. IMO, Bernanke panicked because the Fed was losing control over the Federal Funds rate

However, I don't think it would be the end of the world if the Fed DID lose a little control of the financial system for a period of time. And I believe there are much better short-term alternative actions than a two-year $700 billion no-strings blank check for all financial institutions, healthy and unhealthy alike.

Imagine you are trying to drive your car down a stright-line road. Suddenly, your steering wheel loses its responsiveness, and you find yourself making 360-degree turns of your steering wheel every few seconds, just to stay on the pavement.

IMO, Bernanke panicked because he wanted to continue playing the game Fed Chairmen have been playing since before World War II, and his stash of chips was running out at the rate of 12 percent a day last week.

For many decades, the Fed has focused on daily Open Market Operations to keep overnight loans between banks at its target rate (currently 2 percent). It buys bonds from banks to lower rates, and sells bonds to banks to raise it. Before last Tuesday, open market operations seldom reached $15 million a day.

On Monday-Tuesday, Sept 15th-16th, the Fed pumped $120 billion of its $900 billion in unborrowed reserves into open market operations, and still did not hit its upside target (see the table at http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm ).

IMO, we do have a real crisis, and the Fed well may lose substantial control over interest rates for a period of time. But I think there are much less costly strong steps that could be taken instead of the blank check for $700B the WH insists be offered to financial institutions, healthy and unhealthy alike.

My alternative interim proposal would be (1) to follow Obama's principles and (2) put so many restrictions on companies that would sell illiquid assets to the Treasury that only the sickest of institutions would step up to sell. These restrictions would include

(a) a strict cap on leverage,

(b) COMPLETE weekly transparency on their operations for the next five years and last five yars,

(c) a five-year ban on stock buybacks,

(d) limits on executive compensation, and (e)ten-year warrants for the Treasury that would give taxpayers a chance for payback from future stock-price increases as well as from the illiquid securities Treasury would receive now.

IMO, what government MUST worry about is possible spread of financial crisis from failing institutions to healthy insititutions holding similar assets. This is what happened during the Great Depression. "Margin calls" gave failing institutions just hours in which to dump huge quantities of assets. When failing institutions dump illiquid assets all of a sudden, the value of holdings of healthy institutions can plummet. But if sales of assets are spread out in time so markets can digest them, downward price spirals can be avoided. Slowing down the liquidation of illiquid assets of failing financial institutions over the next 3-6 months is something the Feds can accomplish for much less than a trillion, and with the expectation of eventual profit for taxpayers.

IMO, if Congressional Democrats can resist financial lobbyists' pleas for a two-year universal bailout, and instead strive to slow down liquidation of illiquid assets for 3-6 months, we can gain time for a thorough debate of longer-term measures, and save hundreds of billions of dollars to give President Obama flexibility.

[kiranon]

41. Don't think anyone knows what will happen. Maybe nothing.