What do YOU think? Is the federal bailout of Wall Street a good- or bad idea?

[The Craw]

Are the doomsday scenarios Bush has put forward real, and avoidable if we go through with the bailout? Should this federal bailout of Wall street happen?

It seems to me once again the Republicans side with big business over the worker.

Is there an alternative approach to this situation?
I'm so used to Bush and the Republicans playing the fear card, they cry 'the sky is falling' like Chicken Little evey other week..This just seems more of the same..

[NeedleCast]

1. I think there are ways to make it a good idea

but I don't think that's what we're going to end up with...

[nradisic]

Agreed...there are ways to make it work.

We need to make sure that we attach many strings and do it right with further regulation of executive compensation, banking, Wall Street and redoing the bankruptcy bill to. If we are bailing out the banks, then even the credit card standards should be looked at. If we are bailing them out with our money, they cannot hose us on the other side with fees and ridiculous interest rates.

[NeedleCast]

8. Yup

I think if I were creating this plan, it would, at a minimum, come with the following strings.

1. No bonuses, raises or incentives of any kind for upper level managment until the loan is paid off.
2. Interest rate 15-20% on the loan.
3. 80% of profits (not gross) for any company asking for money used to pay off loan.
4. Full investigation by FBI into draconian lending practices. Prison time for anyone found guilty of breaking laws.

If the taxpayers are going to bail them out, then the taxpayers should see a profit for the loan...hell, it's the same thing many of these banks have been gouging middle-america with for years. I like the "bitter pill" irony.

[lifesbeautifulmagic]

2. very very bad idea

unless the bailout has some solutions to root causes, like limits on all executive compensation, making it very hard to ship jobs overseas, livable wages, health care solutions, mortgage regulation, the ability to renegotiate foreclosed home loans, but I doubt any of this will happen.

[shraby]

7. I think the plan is to come back after the

election and put together the regulations that are necessary. The Dems will be in a stronger position to put new regulations in place. Right now there are enough publicans to block such stuff.

[HeraldSquare212]

3. I think the money should go elsewhere.

The issue is that there's no money circulating in the credit system. The money doesn't have to go into the Wall St houses or big banks to start circulating. The multiplier effect of leverage is not going to come back anytime soon - the banks aren't going to go borrow a ton of money on a short-term basis to make a quick killing somewhere, as they had in the recent past. Those days are over for the foreseeable future. So putting the money through the banks doesn't achieve anything extra. Therefore, bail out the people and put the economy back on a solid foundation - housing and consumerism. You could do that by forcing mortgage and credit renegotiations, etc., and compensating the debt holders for some percentage of the amount they are forced to forego.

[gravity]

4. It is a good idea

This is hard because I don't trust the Bush administration, but this deal must get done to stabilize the financial system.

There still need to overhaul the regulation system afterwards, but this is needed for immediate relief.

[blueclown]

5. it's a good idea if it gets hammered out in a bi-partisan manner.

and the democrats get what they want in the bill.

the credit markets will begin to freeze next week if this bailout is not passed.

[El Pinko]

6. The doomsday scenarios are unavoidable, and the bailout will only make it worse.

People are about as good at controlling huge and complex economies as they are at controlling the weather.

[Marr]

9. The Bush Administration's plan is not just a bad idea, it's a massive scam.

It can be done responsibly, but the Bush plan is just robbery.

[AngryOldDem]

10. If there is no substantive help for homeowners, and if the execs can keep their salaries....

...then no, it's not a good plan, no matter how well they try to dress it up.

I still cannot get my mind around the fact that the people most responsible for this crisis will, in the very bitter end, escape unscathed.

And who's to say that they won't be back at some future point asking for the same amount, or more? What faith do I have in the system that they will take this $700 billion and use it responsibly?

I've never bought into the concept of rewarding bad behavior, be it a bratty 5-year-old or a simply greedy 50-year-old CEO.

[Gin]

11. the bottom is still to come...this will just delay the inevitable...and

reward the same crooks who caused it.

[AngryOldDem]

21. Exactly.

I just made a similar point on someone else's thread. To use the tired, old analogy, this is akin to putting a Band-Aid on a cancer. This meltdown has been coming for years, and you can't tell me that these financial wizards didn't see it coming. They most certainly did, but chose to ride the money pony until it died. And they should be rewarded for this criminality? (I can't call it negligence.)

It should be simple common sense (among other things): If you are going to let the CEOs continue with the million-dollar salaries, then also provide for those who have WORKED long and hard for their homes, and stand to lose everything else if this fix doesn't work. Fair is fair, for chrissakes.

[CoffeeCat]

12. I think the bailout is irrelevant...

The bailout is just an orchestrated heist.

What matters is that our economy will completely tank whether or not there is a bailout.

Infusing cash into a few large companies, will do absolutely nothing to stop the economic
meltdown that awaits our country. The dominoes have all ready started to topple. They'll
continue, and no amount of cash in Goldman's coffers is going to stop it.

I mean...really. Haven't we heard this before...that if we help corporate America, the effect will
"trickle down"???

Oh please! It's so laughable, just to write about the lies they're selling us.

A dramatic contraction in consumer spending is happening and will increase exponentially, as the economy
worsens. There will be less demand for everything--from carrots to cars. Our economy is artificially
bloated with borrowed money. Americans used credit cards for everything, and now they're maxed out, or they're in
savings mode--because they're afraid. People were also using their homes as ATM machines--borrowing
against their homes for vacations and more Pottery Barn.

People stopped doing this.

We're currently seeing evidence of drastic reductions in consumer spending, in the form of unemployment. It's
starting. Businesses are failing, because the boom that got our economy to its current size--is going to
burst. So many businesses will go under, fueling unemployment and less spending. A big downward spiral.

The argument being made--that infusing 800 million into these Wall Street investment houses, will free
up money. Now people and businesses will be able to take out loans and this will stimulate the economy.

This is such bullshit. How many people or small businesses are in a position to borrow money right now?
Everyone is maxed out. I'm not saying that no one will borrow. However, most will not. The economy
is contracting. People won't borrow enough to save the entire economy! It's ridiculous.

Sorry to rant on--but at this point--I'm beyond all of this--and it's irritating to have to deal with these
criminals who think they're being so clever. I know what's going to happen and I'm preparing.

The theater they're playing for us--is just a rouse to rob the taxpayers and shock us into submission--one
more time. I'm sorry, but I'm just not playing into their malarkey any more.

[anarch]

16. the consequence of a "consumer economy"

I mean, where so much of it was based on consumer spending, combined with no significant increase in average wages, and rampant unemployment, and out of control health care costs, the rising price of gasoline, and so on ad infinitum. I mean, really, what the hell did anyone expect would be the eventual outcome of all this?

[CoffeeCat]

20. And the timing is so obvious!

Bush has been bragging about the continued quarters of very healthy economic growth. That's how
he has justified his lie about the economy being healthy.

That growth was fueled by credit-card spending and people spending with money they obtained from
taking out home-equity loans. Furthermore, a lot of money was made in the housing industry and
industry-related housing sectors--because of the mortgage scheme, that is now a crisis.

Please. Does anyone think that they didn't know that this would happen????

Now.....as Bush prepares to exit---suddenly it's all going to hell. So, Bush could claim "healthy economy"
for eight years, and right as he leaves and after he leaves--it all goes to hell????

Coincidence? Yeah, right.

They think we're all dumb. But then again, they really don't care what we are. We're all insects to them.

[Venceremos]

17. No need to apologize for your "rant"

Yours is the best commentary I've seen on this situation - and I don't just mean here on DU - I mean the best I've seen anywhere. It's too bad that the "reporters" in our alleged news media and our politicians don't see things as clearly as you do.

[Javaman]

13. Really bad idea. we have already given wall street close to 800 billion already...

and what has that done? not a thing.

so now a sudden flush of money into an economy bloated with low value dollars will make things go from bad to worse.

The value of the dollar will plummet, inflation will go up, it will be much much much harder to sell t-bonds to keep our fiat economy afloat.

[Venceremos]

14. Bad idea

So many are saying how bad it will hurt the economy if we don't go through with the bailout. But what nobody is talking about is how bad it will hurt our economy if we DO go through with the bailout -- it will cause an even larger budget deficit than we're already suffering under and that's the last thing our economy needs.

[TahitiNut]

15. The "invisible hand" is flipping us the bird.

The 'market' has been overrun by con men ... three-card montie scam artists and protection racketeers. Fraud and corruption has been legalized over the last 30 years and until the people who've sold out are exposed and beggared, nothing can 'improve' a fundamentally corrupt 'market.'

The age-old maxim of con artists everywhere has been proven: "You can't con an honest man." Every con has its hooks in a target's desire to get something for nothing. For 50 years, we've been told that equities markets are a way to get something for nothing ... income for no work. "Let your dollars work for you" has been the con man's creed. What that means is that someone else's labor is supposed to enrich the indolent. There has been absolutely NO LIMIT on the expectations of "owners" to profit from the labor of others. The Greater Fool Theory inflation of the equities markets has merely put longer whips in the hands of the plantation overseers and more guest rooms in the mansion. It's an appalling corruption of an entire society.

[On the Road]

18. Bush is Clearly Fearmongering to Get Public Approval

Top politicians and economic officials don't use language like that lightly. Bad news is disseminated via hints and implications. When Cheney causally mentioned in late 2000 "I'm afraid we're on the verge of a recession," it was very unusual and extremely jarring.

The doomsday scenarios, however, are real. They have happened many times in US history. It is not certain that they would happen without a bill, but there is a very real chance. Just read up on bank failures in Wikipedia or any other source to get a sense of the history. It is worth a very high price to avoid the consequences, especially for the working class. The only ones who benefit from bank panics are rich financial predators.

There are certainly different ways to approach a federal action. A lot of the proposals (executive pay, equity positions, homeowner assistance) may be good, but miss the point that the goal is to prevent the US financial system from collapse. And it should be done in a way that minimizes the costs to taxpayers and prevents wherever possible the wrong people profiting.

Paul O'Neill's suggestion was that the US simply guarantee bad mortgages until maturity. There is a proposal on another thread that the government take over properties as they foreclose and charge rent so the occupants can stay in their home. There are probably many others. In all of these situations, there two major variables IMO:

- Does the government become proactive before a crisis or step in when a crisis is in progress? Prevention is costly, but the most recent meltdowns happened within hours, and taking over failed companies is generally more costly than preventative measures.

- How are failing mortgages valued? The government may be in the position to force fire-sale prices, but that has the perverse effect of further hurting the companies it's trying to rescue. Yet if the government pays too much it's essentially taxpayer money.

How people come down on those two questions is likely to determine what option they will support.

[wtmusic]

23. Is the US financial system on the verge of collapse?

I don't believe it.

Some banks are on the verge of collapse, like WaMU. I say let them. There was a run on Countrywide Financial as recently as last year; the sky did not fall.

If FDIC needs shoring up, that's the time to spend taxpayer money.

[Buns_of_Fire]

26. I think that's a simple, yet elegant idea...

If the neonuts are determined to spend $700 Billion we don't have, let them use part of it to shore up the FDIC. Mom and Pop are covered, and the banks can go belly-up for all I care.

They wanted a "free market," and I'm perfectly happy to give it to them. After all, "past performance is no guarantee of future profits," as the little disclaimers keep telling us.

[Greyhound]

19. Terrible action, typical of the disconnect between DC & Amerika.

We've been warning about this for years, consistently ridiculed and ignored, and now it is here. Once again, the truly deluded have decided to ignore reality and pretend that somehow giving them even more is going to change their nature.

We're screwed and this sham will only make it worse.

BOHICA

[sinkingfeeling]

22. Very bad idea. This is a $700 billion giveaway. It will NOT resolve the problems with

economy and will in fact make things worse. The US dollar will continue to plunge due to the addition of debt (all of it will be borrowed money). This 'troubled' lenders should be forced to raise equity and halt dividends and compensation to executives. If that doesn't work, then their creditors should 'eat' their losses. That's what happens to individuals with 'credit' problems.

Taxpayers are being forced to take on 'bad assets' at prices far above their current value. The collateral isn't any good.

Debt reduction across the board is the only solution. Borrowing more money is like throwing gasoline on a fire. Let companies, like Merrill Lynch, be sold for 22 cents on the dollar. Let the stock market suffer as it resets to actual value instead of hyper-inflated ones.

Take taxpayer money and stop foreclosures and refinace the mortgages. As unemployment climbs, use taxpayer money to create federal work programs.

P.S. How much has the infusion of $900 billion into the 'markets', Bear Stearns, AIG, Fannie and Freddie, FHA, etc. helped so far?

[Individualist]

24. Lousy idea

It's taxpayer extortion by the neocons and their DLC pals.

[dtotire]

25. It Had To Be Done

We may not like it, but the alternative could be worse. The Dems will make it feasable.