H8tank Posted September 22, 2008 Share Posted September 22, 2008 It is a classic case of socializing the risk while privatizing the profit. Quote Link to comment Share on other sites More sharing options...
Jimmy Neutron Posted September 22, 2008 Share Posted September 22, 2008 It is a classic case of socializing the risk while privatizing the profit. Shocking that the very basics of that story are not mentioned in the MSM. Obama and the dems have considerable blame in this, as do the republicans that ruled the Hill before them and the greedy SOBs that ran these companies into the ground. Everyone is playing the blame game and we're left holding the tab. Quote Link to comment Share on other sites More sharing options...
Jimmy Neutron Posted September 23, 2008 Share Posted September 23, 2008 Anybody think it's a good sign that Morgan Stanley and Goldman Sachs want a piece of this bailout enough to become holding companies subject to more regulation? Quote Link to comment Share on other sites More sharing options...
Jimmy Neutron Posted September 23, 2008 Share Posted September 23, 2008 Anybody satisfied that Poulson, who said the economy was on solid ground only two weeks ago, is pushing so hard for this bailout with as little delay and modification as possible? Quote Link to comment Share on other sites More sharing options...
Jimmy Neutron Posted September 23, 2008 Share Posted September 23, 2008 Everybody warm and fuzzy about the idea of this bailout also going to help foreign banks too? This just gets better and better. Shhh. Do you hear that? It is the sound of our collective bumholes being ripped to shreds. Quote Link to comment Share on other sites More sharing options...
Cunning Runt Posted September 23, 2008 Share Posted September 23, 2008 (edited) In no way, shape, or form do I profess to have a real grasp as to what this all means and how I'm going to be affected, but one thing strikes me in reading this thread: I'm reading a lot of criticism about the plan, but I'd like to know what the real alternative is. I've done some reading online and it sounds like we are/were truly in dire straits and that as much as it might pain us all, it sounds like this pain is a lot less than if the bailout didn't happen. I dunno though - just a layman's observation. Edited September 23, 2008 by Cunning Runt Quote Link to comment Share on other sites More sharing options...
wiegie Posted September 23, 2008 Share Posted September 23, 2008 I'm reading a lot of criticism about the plan, but I'd like to know what the real alternative is. OK, here is one. This alternative seems to be much better due to it having oversight and, although it is still a bailout, it is not nearly the give away that the original Paulson proposal could have become: Dodd Proposes Giving U.S. Equity Stake for Bad Debt (Update2)By Dawn Kopecki and James Rowley Sept. 22 (Bloomberg) -- Senate Banking Committee Chairman Chris Dodd offered an alternative today to the Bush administration's financial rescue plan aimed at giving the U.S. Treasury an equity stake when it helps companies burdened by debt. Dodd, a Connecticut Democrat, is circulating a draft of his bill as Congress seeks to deal with a financial crisis that has been called the U.S.'s worst since the Great Depression. The Bush administration is proposing a $700 billion plan to buy devalued assets from investment firms to keep the financial system from coming to a halt. Democrats have pledged to act quickly on the measure, even as they seek to create an oversight structure, limit the compensation of executives at the companies benefiting from the rescue and provide mortgage relief for struggling borrowers. ``We cannot just turn over $700 billion in taxpayer money and not insist that that taxpayer is going to be protected in this,'' Dodd told reporters yesterday. Treasury Secretary Henry Paulson has urged Congress to pass legislation without delay and without linking it to new programs. ``We need this to be clean and quick, and we need to get it in place,'' Paulson said yesterday in an interview with ABC News. Equity Stake The legislation requires Treasury to take an equity stake equal to the purchase price of the assets being bought. If the company isn't publicly traded, the government would take senior debt instead, placing it in the front of the line of debt holders for repayment in the event of a bankruptcy. Dodd's proposal also would create a five-member oversight board to supervise the Treasury secretary's purchase and sale of distressed mortgage debt. It would consist of the chairmen of the Federal Reserve, Federal Deposit Insurance Corp. and the Securities and Exchange Commission as well as two members from the financial industry designated by congressional leaders. The board would be authorized to set up a so-called credit review company consisting of Treasury employees to study the soundness of the purchases. Under the plan, the government would be required to obtain an equity stake equal to the value of the debt that is purchased from the companies, including those whose shares are not publicly traded. The Treasury secretary would also be required to issue weekly public reports on the amount of assets bought and sold by the U.S. Penalize Executives Dodd is proposing to penalize executives who take ``inappropriate or excessive'' risks. The executive compensation and severance packages could be reduced if that is ``in the public interest,'' the proposal says. It would also force executives to give back profits they earned that were based on company accounting measures that are later found to be inaccurate. Republican presidential candidate John McCain, who has supported giving shareholders a bigger say in executive compensation in the past, said today that taxpayers shouldn't foot the bill for ``golden parachutes'' for officers of companies that have crumbled in upheaval on Wall Street. ``The senior executives of any firm that is bailed out by Treasury should not be making more than the highest paid government official,'' McCain said at a campaign event in Scranton, Pennsylvania. The president is the highest paid federal official, with a salary of $400,000 a year. U.S. Representative John Campbell, a California Republican and a member of the House Financial Services Committee, said that while he supports the Treasury proposal, he's willing to consider the creation of an oversight board and executive-pay limitations. Committee Republicans plan to meet later today to discuss the issue, Campbell said. ``I don't think we have a lot of choice,'' Campbell said. ``And the consequences of doing nothing are unconscionable.'' Quote Link to comment Share on other sites More sharing options...
H8tank Posted September 23, 2008 Share Posted September 23, 2008 Dodd? Wedgie, are you serious? Please look into how much money fanny mae has given him. Quote Link to comment Share on other sites More sharing options...
Clubfoothead Posted September 23, 2008 Share Posted September 23, 2008 I hope I'm spelling everything correctly so I can get an answer this time instead of a few paragraphs of bull$hit and tap dancing. What are the unconscionable consequences of doing nothing? Specifically, that is. Quote Link to comment Share on other sites More sharing options...
Jimmy Neutron Posted September 23, 2008 Share Posted September 23, 2008 What are the unconscionable consequences of doing nothing? Specifically, that is. How dare you ask that? Quote Link to comment Share on other sites More sharing options...
wiegie Posted September 23, 2008 Share Posted September 23, 2008 I hope I'm spelling everything correctly so I can get an answer this time instead of a few paragraphs of bull$hit and tap dancing. What are the unconscionable consequences of doing nothing? Specifically, that is. I think the main thing might be that there could be a drastic reduction in the amount of lending that takes place in the financial system--which would then cause businesses to have to cut back on all sorts of potential projects which could dramatically slow economic growth. In fact, Nouriel Roubini (a pretty big-name economist) said if we don't pass some sort of bailout we could be looking at a severe recession lasting five years... with a bailout he thinks we will "only" be looking at a severe recession lasting 18 months. Quote Link to comment Share on other sites More sharing options...
AtomicCEO Posted September 23, 2008 Share Posted September 23, 2008 No you are not...at all, but you said the "innocent" customer need a bail out. This whole mess started with congress and the bush admin trying to increase home ownership for minorities. I'm an innocent customer. I didn't say all customers were innocent. If the bank collapse would tank people like me despite us doing nothing wrong, I want a bailout. That's what I meant. Quote Link to comment Share on other sites More sharing options...
muck Posted September 23, 2008 Share Posted September 23, 2008 I hope I'm spelling everything correctly so I can get an answer this time instead of a few paragraphs of bull$hit and tap dancing. What are the unconscionable consequences of doing nothing? Specifically, that is. I try to think in terms of probabilities rather than absolutes when it comes to this sort of thing...so: Bailout like the one that Paulson proposed (which included getting equity or warrants similar to the Dodd approach, fwiw): 5-10% chance of four consecutive quarters of growth starting in the 4th quarter of this year 10-15% chance of four consecutive quarters of growth starting in the 1st half of next year; rough stuff in the interim 15-20% chance of four consecutive quarters of growth starting in the 2nd half of next year; rough stuff in the interim 15-20% chance of four consecutive quarters of growth starting in the 1st half of 2010; rough stuff in the interim 15-20% chance of four consecutive quarters of growth starting in the 2nd half of 2010; rough stuff in the interim 15-40% chance for four consecutive quarters of growth starting in 2011; rough stuff in the interim Rough Stuff = unemployment going up; lots of foreclosures, bank and business failures; etc Do nothing; no 'bailout': 0-5% chance that 2009 is a year of growth 15-20% chance that 2010 is a year of growth and 2009 is a year dominated by recession 15-20% chance that 2011 is a year of growth and 2009-2010 are two years dominated by recession / tough times 15-20% chance that 2012 is a year of growth and 2009-2011 are three years dominated by recession / tough times 15-20% chance that 2013 is a year of growth and 2009-2012 are four years dominated by recession / tough times 15-40% chance that between now and 2014 (or beyond) the US economy is dominated by recession / tough times Quote Link to comment Share on other sites More sharing options...
muck Posted September 23, 2008 Share Posted September 23, 2008 Anybody think it's a good sign that Morgan Stanley and Goldman Sachs want a piece of this bailout enough to become holding companies subject to more regulation? i'm pretty sure that the conversion is not a prerequisite to participate in the Poulson plan. Quote Link to comment Share on other sites More sharing options...
muck Posted September 23, 2008 Share Posted September 23, 2008 I think the main thing might be that there could be a drastic reduction in the amount of lending that takes place in the financial system--which would then cause businesses to have to cut back on all sorts of potential projects which could dramatically slow economic growth. In fact, Nouriel Roubini (a pretty big-name economist) said if we don't pass some sort of bailout we could be looking at a severe recession lasting five years... with a bailout he thinks we will "only" be looking at a severe recession lasting 18 months. I can see this, absolutely. Quote Link to comment Share on other sites More sharing options...
cliaz Posted September 23, 2008 Share Posted September 23, 2008 This is why socialism works and capitalism doesn't. Quote Link to comment Share on other sites More sharing options...
budlitebrad Posted September 24, 2008 Share Posted September 24, 2008 (edited) It's gonna get worse before it gets better. No one in Washington seems to have any clue and they're more worried about their party looking good than how we're gonna get people to start buying these mortgage packages again and build some confidence in the market. Both candidates are weak on the economy and whoever wins is in for a long 4 years. They really should just change the topic of Friday's debate to the economy, since that's the only thing we want to hear about right now. Edited September 24, 2008 by budlitebrad Quote Link to comment Share on other sites More sharing options...
muck Posted September 24, 2008 Share Posted September 24, 2008 The bailout appears to be toast. One version of the gloom that prognosticators are putting forward due to the probability that this does not get passed: * unemployment hits double digits within the next 12 months (maybe by the end of the year) * business failures increase 5-10x due to the lack of available funds * the dollar will sink and imports will become relatively cost prohibitive Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted September 24, 2008 Share Posted September 24, 2008 The bailout appears to be toast. One version of the gloom that prognosticators are putting forward due to the probability that this does not get passed: * unemployment hits double digits within the next 12 months (maybe by the end of the year) * business failures increase 5-10x due to the lack of available funds * the dollar will sink and imports will become relatively cost prohibitive Toast? Not seeing this on the wires so far. Lots of arguing still going on. Quote Link to comment Share on other sites More sharing options...
CaP'N GRuNGe Posted September 24, 2008 Author Share Posted September 24, 2008 The bailout appears to be toast. One version of the gloom that prognosticators are putting forward due to the probability that this does not get passed: * unemployment hits double digits within the next 12 months (maybe by the end of the year) * business failures increase 5-10x due to the lack of available funds * the dollar will sink and imports will become relatively cost prohibitive Won't the dollar sink even more with a bailout? Isn't that move very inflationary? Isn't it recession versus inflation? Quote Link to comment Share on other sites More sharing options...
CaP'N GRuNGe Posted September 24, 2008 Author Share Posted September 24, 2008 Toast? Not seeing this on the wires so far. Lots of arguing still going on. The market is flat at the moment so I don't think it's toast. If it were toast we'd see a hugh drop I bet. Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted September 24, 2008 Share Posted September 24, 2008 save your money people!!! tough times ahead!! Quote Link to comment Share on other sites More sharing options...
muck Posted September 24, 2008 Share Posted September 24, 2008 (edited) The reports I heard had the citizenry calling into their elected officials offices and voicing displeasure at the plan at a 10:1 rate ... three months before elections ... You tell me it's not toast. ...I do hope I'm wrong, though... Edited September 24, 2008 by muck Quote Link to comment Share on other sites More sharing options...
muck Posted September 24, 2008 Share Posted September 24, 2008 This is more important than the stock market. Warren Buffett's view Quote Link to comment Share on other sites More sharing options...
CaP'N GRuNGe Posted September 24, 2008 Author Share Posted September 24, 2008 (edited) This is more important than the stock market. Warren Buffett's view Buffett is an Obama advisor, for whatever that's worth. Edited September 24, 2008 by CaP'N GRuNGe Quote Link to comment Share on other sites More sharing options...
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