Bail out : the truth!

gregorvass · Joined: 21 Nov 1996 Posts: 1113 Location: Behind You

WINDSURFING IS A LOT OF fUN!

danovalo · Joined: 31 Jul 2004 Posts: 15

Who the hell cares what Michael Moore has to say. Nobody knew he was an economist until now. Where did he get his degree? In Moscow? So let me get this straight. Repubicans are all corrupted and Democrats were either scared of wall street or a heroes. What a bunch of crap. Go sailing and leave it to the market.

windoggi · Joined: 22 Feb 2002 Posts: 2743

RePUBICans??? You can't write this shit!!! Well done!

I WOULD be sailing if it was windy.

mac · Posted: Tue Sep 30, 2008 7:35 pm Post subject:

Now this is more interesting than reading the already converted parrot the talking points of their favorite right or left wing site. Two divergent points of view, both glad the bill failed, and both interested in more market solutions. The initial argument picked up the thread that this is really the fault of the Fannie May/Freddie Mac failure. Correct point that they made risky loans, and correct point that they were pressured by Democrats (and the real estate lobby) to increase home ownership. May have been a bad idea, but it is really only a relatively small part of the high risk loans. I don't have any data for 2007 or 2008, but in 2004 and 2005, sub-prime loans were running at about $700 billion a year. Bad loans, high risk, fraudulently packaged as securities and sold overseas. Some people deserve to lose lots of money on them, and some certainly deserve to go to jail. Unfortunately, the nature of the repeal of Glass-Steagall essentially forbid regulation.

Now the truly unnerving question is whether or not we can punish the perpetrators of bad loans without doing even more collateral damage to ourselves. I've studied US history a bit, and particularly economic history. The biggest and baddest recessions that we've had were exacerbated by bank failures and contraction of government spending. Essentially, the money supply disappeared. Like it sort of did last week. My fear, and why I would have voted for the bill, is that the contraction will hurt everyone, and have at least a three year effect on the economy. That means dropping revenues for businesses, local governments, and state governments. That means more people out of work--and thus less money in circulation.

At the same time, more time would mean a better solution. Don't believe either of the articles, but appreciate the fact that there is some information in the wildly divergent viewpoints. Mix your own kool-aid so you know it hasn't been spiked!

SPQR · Joined: 18 May 2004 Posts: 274

Well lets see, Franklin Raines, a liberal democrat and sometimes economic advisor to B. Obama was the CEO of Fannie Mae and paid himself over 90 million dollars in bonus money while he encouraged his company to take the bad loans that got them in trouble. Chris Dodd and Barney Frank received more campaign contributions from Fannie Mae than any other politicians, no wonder the democrats are not calling for an investigation into the Fannie Mae or Freddie Mac mess. Had this been a organization run by republicans the media would be calling for the heads of the former CEO's, but Jim Johnson and Franklin Raines are liberal democrats so a diversionary plan of attack is made so the democrats don't look bad. Even Bill Clinton's old advisor Robert Reisch (spelling) admits that this particular mess was started by democrats.

swchandler · Joined: 08 Nov 1993 Posts: 10588

I think that SPQR misses a crucial point here. Folks in Congress didn't make or accept any loans themselves. The "easy out" promoted by some here is to blame Congress, but the craziness comes from realtors, lenders and the stupid folks that thought they could gain from goofy adjustable loan contracts subject to change. I was offered the adjustable loan nonsense in 2004, and I knew it was totally a foolish path to be avoided at all costs. Why subject yourself to a possible Hell in the future?

Now some in government would like to avoid a financial meltdown, but really, everything is a crap shoot right now. The proper and appropriate path is more difficult too discern than ever. As most folks readily realize, the decisions will be made by others out there, for good or ill, and we will live through the results.

Is that comforting overall?

mac · Posted: Tue Sep 30, 2008 10:40 pm Post subject:

It is kind of amazing to try to do some research on this and see the spin machines of both parties trot out a small factual piece, and take it completely out of context. No doubt the Democrats got a lot of money, and back when the bill was active--and the Republicans the majority--the Republicans got a lot more. Now the Republican spin machine is trying to focus all of the blame on Fannie and Freddie rather than on subprime loans. Not only is this up on their sites, but Google reaches those sits when you search for any information. Hmmm--would contributions to Google spin the results? On the other side of the aisle, Dems spin only about Phil Gramm writing the bill and ignore that Clinton was glad to sign it. But if you step back from spin, and try to look at the facts, you find that the total value of bad loans by Freddie and Fannie were a tiny fraction of the nearly 2 trillion in sub-prime overall. Everyone was doing stupid things, and giving politicians of both parties lots of campaign money so they wouldn't end the party!

D-wo · Joined: 13 May 2004 Posts: 239

Below is a link to a "white paper" submitted to the U.S Congress and the Senate Banking Committee by two economists who work for the Weiss Research Inc. It's fairly long, but worth reading. The economists, who seem to be non-partisan, argue against the bailout in favor of shoring up the FDIC and SIPC. They also give a fairly sobering assessment of how deep (and consequently how costly) this credit crisis might run. The appendices list at-risk Saving and Loans ( You may want to check those out).

http://www.moneyandmarkets.com/files/documents/Final-Bailout-White-Paper.pdf

Personally, I am still undecided on the issue, but I does seem uncanny that Congress defeated the bill. I understand that folks on the right have little regard for Michael Moore - no he is not an economist - but listen to what he is saying. Certainly folks of any political persuasion can relish in the notion that, for once, politicians listened to the voices of their constituents and not the demands of their parties and their parties donors.

David

theq · Joined: 10 Apr 2000 Posts: 707

boggsman1 · Joined: 24 Jun 2002 Posts: 9120 Location: at a computer

Ill let your petty partisan BS linger but Ill interject some facts today. GE paper is at all time wides, LIBOR is at all time wides, money markets are frozen , thus halting the CP market, the ISM report today is at extreme recession levels, unemployment is skyrocketing -the data will show on FRIDAY, and finally the equity in the banking sytem cant handle the bad loans on the books. So you guys can bitch about Franklin Raines or who passed what legislation that caused whatever problems , but todays reality is the credit markets arent functioning and the "bailout" will actually releive the current pressures.
Boggsman