Many economists skeptical of bailout

[Dark Silver]

[quote="AP via Yahoo News"]
Avi Zenilman Sun Sep 21, 8:58 AM ET

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.
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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.â€

[SirNitram]

It's a dumb bailout. Key Dems are getting out of their GOP-envisioned place and objecting, thank goodness, and Paulson is showing his fear: He's announced that there must desperately, absolutely, not be any restrictions on CEOs in the authorization(We know whose side he's on, it seems.).

Obama's response:

Link

[quote] The era of greed and irresponsibility on Wall Street and in Washington has led to a financial crisis as profound as any we have faced since the Great Depression.

But regardless of how we got here, the circumstances we face require decisive action because the jobs, savings, and economic security of millions of Americans are now at risk.

We must work quickly in a bipartisan fashion to resolve this crisis and restore our financial sector so capital is flowing again and we can avert an even broader economic catastrophe. We also should recognize that economic recovery requires that we act, not just to address the crisis on Wall Street, but also the crisis on Main Street and around kitchen tables across America.

But thus far, the Administration has only offered a concept with a staggering price tag, not a plan.

Even if the Treasury recovers some or most of its investment over time, this initial outlay of up to $700 billion is sobering. And in return for their support, the American people must be assured that the deal reflects some basic principles.

• No blank check. If we grant the Treasury broad authority to address the immediate crisis, we must insist on independent accountability and oversight. Given the breach of trust we have seen and the magnitude of the taxpayer money involved, there can be no blank check.

• Rescue requires mutual responsibility. As taxpayers are asked to take extraordinary steps to protect our financial system, it is only appropriate to expect those institutions that benefit to help protect American homeowners and the American economy. We cannot underwrite continued irresponsibility, where CEOs cash in and our regulators look the other way. We cannot abet and reward the unconscionable practices that triggered this crisis. We have to end them.

• Taxpayers should be protected. This should not be a handout to Wall Street. It should be structured in a way that maximizes the ability of taxpayers to recoup their investment. Going forward, we need to make sure that the institutions that benefit from financial insurance also bear the cost of that insurance.

• Help homeowners stay in their homes. This crisis started with homeowners and they bear the brunt of the nearly unprecedented collapse in housing prices. We cannot have a plan for Wall Street banks that does not help homeowners stay in their homes and help distressed communities.

• A global response. As I said on Friday, this is a global financial crisis and it requires a global solution. The United States must lead, but we must also insist that other nations, who have a huge stake in the outcome, join us in helping to secure the financial markets.

• Main Street, not just Wall Street. The American people need to know that we feel as great a sense of urgency about the emergency on Main Street as we do the emergency on Wall Street. That is why I call on Senator McCain, President Bush, Republicans and Democrats to join me in supporting an emergency economic plan for working families – a plan that would help folks cope with rising gas and food prices, save one million jobs through rebuilding our schools and roads, help states and cities avoid painful budget cuts and tax increases, help homeowners stay in their homes, and provide retooling assistance to help ensure that the fuel-efficient cars of the future are built in America.

• Build a regulatory structure for the 21st Century. While there is not time in a week to remake our regulatory structure to prevent abuses in the future, we should commit ourselves to the kind of reforms I have been advocating for several years. We need new rules of the road for the 21st Century economy, together with the means and willingness to enforce them.

The bottom line is that we must change the economic policies that led us down this dangerous path in the first place. For the last eight years, we’ve had an “on your own-anything goesâ€

[Dark Silver]

I'm open to other ideas, and I am looking for volunteers who want to hold the sons of bitches so I can beat the crap out of them.

We must find this Anonymous Man....and gift him with liquor and whores.

For he truly speaks for the People.

[truthiness]

But... they call it a stimulus.
Surely that means it's a good thing?
I mean - we should totally deregulate the economy so that those poor, poor investment bankers can make profits.
And then we need to cover their asses, because they have a god-given right to come away unscarred.

-

McCain's response to this could weaken him.
If he doesn't make a drastic change in response soon, that is.
So far he's been lukewarm on economic issues.

And for anyone with more intimate knowledge on this kind of thing,
how much more debt can the US take on (feasibly)?

[SirNitram]

As Much As They Damn Well Please.

What matters is not the amount of debt, but whether other countries still buy up dollars. Which was ensured with the Freddie/Fannie bailout.

[truthiness]

As Much As They Damn Well Please.

What matters is not the amount of debt, but whether other countries still buy up dollars. Which was ensured with the Freddie/Fannie bailout.

But would out-of-control borrowing (maybe moreso than now, even) cause other countries to lose confidence in the dollar? I mean, debt is already at something like two-thirds of the GDP.

[SirNitram]

As Much As They Damn Well Please.

What matters is not the amount of debt, but whether other countries still buy up dollars. Which was ensured with the Freddie/Fannie bailout.

But would out-of-control borrowing (maybe moreso than now, even) cause other countries to lose confidence in the dollar? I mean, debt is already at something like two-thirds of the GDP.

No. Never has, never will. Bankruptcy doesn't stop it. Spain did it four times under one Monarch.

[truthiness]

As Much As They Damn Well Please.

What matters is not the amount of debt, but whether other countries still buy up dollars. Which was ensured with the Freddie/Fannie bailout.

But would out-of-control borrowing (maybe moreso than now, even) cause other countries to lose confidence in the dollar? I mean, debt is already at something like two-thirds of the GDP.

No. Never has, never will. Bankruptcy doesn't stop it. Spain did it four times under one Monarch.

Alright. We've only done it once-ish so far, under this m-er, President.

Henry Waxman has suggested corporate government reforms, including CEO compensation, as the price for this.

Is there any way we can keep track of this and stop it, or is that impossible because we're only getting their debt, not their stocks?
It seems to me that that needs to be included in some criterion as well.

[SirNitram]

But would out-of-control borrowing (maybe moreso than now, even) cause other countries to lose confidence in the dollar? I mean, debt is already at something like two-thirds of the GDP.

No. Never has, never will. Bankruptcy doesn't stop it. Spain did it four times under one Monarch.

Alright. We've only done it once-ish so far, under this m-er, President.

No you have not. The debt has merely increased. Declaring bankruptcy is a very different process. It is somewhat vital to know how such things in a discussion about debt and lending, so I'm gonna just say: No. The USA is not Bankrupt. It's In Debt and In Deficit.

Henry Waxman has suggested corporate government reforms, including CEO compensation, as the price for this.

Is there any way we can keep track of this and stop it, or is that impossible because we're only getting their debt, not their stocks?
It seems to me that that needs to be included in some criterion as well.

Well, the 'debt' is literally buying up mortgages which have insufficient reliability for the groups looking to buy long-term sources of income. Buying the debt means, until a given loan goes bad, the USA receives the loan payments minus the service fee. While the rate of defaults will be high(I estimate as high as 90%, above the 30% or so the S&L crisis had), it's not a magic hole.

That being said, Paulson has announced he will stamp his feet and do hissy fits, likely on television, if someone tries to do anything but issue a blank check. The very institutions we're discussing saving are lobbying insanely hard to make it pass without any changes from the two and a half page non-proposal.

[SirNitram]

World is officially collapsing.

Link

Writing on The Corner, former House Speaker Newt Gingrich, R-Ga., has some questions about the Bush administration's proposed $700 billion taxpayer bailout of the financial sector.

"We are being reassured that we can trust Secretary Paulson 'because he knows what he is doing.'

"Congress had better ask a lot of questions before it shifts this much burden to the taxpayer and shifts this much power to a Washington bureaucracy.

"Imagine that the political balance of power in Washington were different.

"If this were a Democratic administration, the Republicans in the House and Senate would be demanding answers and would be organizing for a 'no' vote. ... Congress has an obligation to protect the taxpayer.

"Congress has an obligation to limit the executive branch to the rule of law.

"Congress has an obligation to perform oversight.

"Congress was designed by the Founding Fathers to move slowly, precisely to avoid the sudden panic of a one-week solution that becomes a 20-year mess..."

I could brave The Corner to pick up the full. I strongly advise those who have stress or blood pressure issues not to enter that site, ever, however. Attempting to read Kathryn Lopez alone will rip the sanity from your brain and set it on fire. If you must read anything by those writers, enjoy the satire site Sadly, No! instead, who helpfully breaks down posts into either revealing single-sentence summaries or dissects the madness with wit and humor.

[LadyTevar]

Newt Gingrinch is saying "Don't Do It"?


Are we sure the Hadron Collider didn't break the universe?

[Dark Silver]

As far as we know it didn't
but the breakjing could occur retroactively, and alter fundamentals, of the universe.....thus makings things go wonky.

Like Newty-Newt saying "fuck no" to this plan.

Honestly, I never expected that from him.

[frigidmagi]

I am looking for volunteers who want to hold the sons of bitches so I can beat the crap out of them.

Yo, I'm in for a plane ticket.

And yeah this is a completely ass idea. I'm gonna have to spend some time writing a letter to my Congresscritter that says something along the lines of "If you vote for this ruining your political career will become my new favorite hobby."

I mean another fucking 700 billion when we've spent 900 already? No, just fucking no, we're not blowing 1.6 TRILLION DOLLARS on saving the same small bunch of asshats so the pig fuckers can run out and do it all over again. There damn well better be strings so thick and strong on any more money that they can qual to hold up space elevators.