Analysts I'm hearing are saying the bailout won't make any difference

[whistle]

...and that Wall Street is going to drop another 10%. There are more days like today that will follow.

So, why doesn't Congress freeze the $700 billion bailout, fire Paulson now and devise a plan which will get the economy back on track?

Otherwise, this bailout is just good money going in after bad.

[Tansy_Gold]

1. analysts here on DU have been saying that for months

TG

[whistle]

13. It's only been called a bailout for several weeks, but I agree the meltdown

...possibility has been seen by some for a long time

[stray cat]

2. Because analysts are all over the place and many think it will be worse w/o intervention

The choice isn't between good and bad but bad, really bad, catastrophic and complete melt down and massive unemployment

[truedelphi]

12. NO you are really removed from the reality on this

ALthugh the media has been trumpeting how this is all the fault of the stinking low wage earners who insisted that they be offered sub prime mortgage, last night's 60 Minutes detailed a few of the underreported TRUTHS about this mess.
The problem is not at all the sub prime mortgages.

There were not enough marginally incomed folks buying houses to endanger our entire economy. Set it back 10 to 15 % sure, but not rip it apart by its gizzards.

What is undermining our economy are these damn "Credit Default Swaps" And those instruments were the insurance policies that were SOLD to the investors that bought up the SIV's (An SIV was a collection of huge bundles of many of the sub prime mortgages. Some of these bundles were sold over 35 times - sort of like if you Had twenty bucks, but you loaned it to yourself so now you have forty, so now you loan it to yourself and now have eighty, etc)

Now the Swaps were actually insurance so that IN THEORY no one would ever lose anything should any single bundle of sub prime mortgages default.

And as insurance they should have been regulated. Had they been regulated - they would have probably been regulated out of existence. But they weren't insurance - nudge nudge - they were SWAPS -- get it!! And as SWAPS - not a single one of the many regulators appointed to oversee insurance policies (and their sales) ever bothered to intervene and see that this mess was stopped before it brought the country down.

The whole mess stinks to high heaven. When you start to examine this stinking mess, as Michael Collins has been doing in his articles from Scoop that he generously re-posts here, you realize that there ae some 500 TRILLION dollars in assets taht are about to be announced as having been wiped away in the "derivative" market trades that are bottoming out as we type. (This 500 TRILLION dollars represents more worth than the global economy possesses - America's economy is only 13 Trillion a year in a good year) But since OUR GOVERNMENT let the insurance policies be called SWAPS - well that is something that indicates to me that We the People can no longer allow the government to oversee anything!!

If you and me go to "Humboldt County" er I mean, "Non Tokers County" to buy some er, let's call it OREGANO, do you think we would be left without regulation? Especially if we drove home in a stolen car at speeds in excess of 115 mph??

As far as I can tell the whole thing that has gone on in Wall Street for the last three to five years - it is nothing more than a rackets operation.

And then a bigger rackets operation was the House and Senate voting to take the money away from the middle incomed person through taxation and help the recovery of the very people who did this crap. And the people who perpetrated this on us are the same people who will be handling the BailoOut monies!! How is this any different than giving the Mafiosa half your money fromyour cash register to ensure your pizza parlor windows won't be kicked in? Except that the Mafiosa at least has the decency to NOT KNOCK in your windows if they are paid. The people who get the BailOut funds will NOT BE USING it to help us!!

And last week, right before this event were we not being told by the same experts that brought us this mess that the only way for our economy to avoid tanking was for this noxious Bailout Bill.

The actions of our House and Senate in approving this Bailout bill is nothing less than the theft of our Social Security. And just as importantly -- the Wholesale theft of our economy out from under us But guess what - our economy just tanked!! Even though we gave the country away!

[tavalon]

45. You're not supposed to talk about that!

Besides, that's just too complicated for widdle ol' Murkins.

[OwnedByFerrets]

3. If they were gonna use good sense, it wouldnt have

been passed in the first place. Dont hold your breath that our so-called leaders will reverse a bad decision NOW.

[sandnsea]

4. 10% isn't 50%

No massive bank failures yet, I mean complete and total with no back-up. The $250,000 FDIC calmed people's fears there. Nobody ever said this was all that needed to be done.

[JuniperLea]

8. Have you seen the bank risk list?

Could be as many as 100 failures between now and this time next year.

[sandnsea]

11. That's what this money is to try and prevent

Yes. I've posted that list many times. That's why we need to get this debt off their books and let them start lending again.

[JuniperLea]

16. How do you feel about bailout money going to foreign banks? eom

[whistle]

23. That is just plain wrong, we have a real rat hole with that policy!

[sandnsea]

24. We created the mess

Didn't we? Or at least our CEO's did. I would have to see how that works out before I made a judgment on it. Don't get me wrong, I hate this, the whole thing stinks to high heaven. I blame the people who concocted these mortgages in the first place. If I could see they were idiotic, and I didn't even graduate from college, I don't believe these financial titans couldn't see it. I still think the goal is to kill the FHA altogether and make real serfs of all of us. That's why I'm for this, to try to keep them from doing that. But I still think there's a danger of it, especially if we keep letting them blame poor people and minorities instead of the greedy fucks at the top.

[JuniperLea]

25. "If I could see they were idiotic"

Yep. That's the bottom line for me... If I knew it, by GAWD they all knew it!

The more I see of the actual numbers, the more I feel this bailout isn't going to scratch the surface. The bundled MBS were sold over and over again... and no one even called "churning"... but no one could have anticipated, I'm sure. :eyes:

The US will own all property... or China and Saudi Arabia will. The FHA may stay, but become our landlord.

[whistle]

28. $700 billion can't do it and neither would $750 trillion, there has been a huge fraud perpetrated

...and the guilty are vanishing like ghosts

[sandnsea]

33. I know, it's a horrible mess

But if the $250 billion doesn't make a dent, then we can rise up and stop the rest of it, or demand it come to the people to help us all through this nightmare. After all, it is "only" less than half the defense budget.

[whistle]

27. Who is "we"? Not I, I did not create this. But I know some people who did

...local developers, politicians, bankers, real estate appraisers, attorneys, mortgage brokers, investers, etc. who really should be the ones held accountable. They have long walked away with the cash leaving others holding the debt.

[anigbrowl]

5. Analysts may be missing that bailout is not directed at the Dow

The Dow alone does not tell you whether the plan is working or not, and any analyst who was expecting stock maraket volatility to disappear after passing this bailout is not thinking too far. I support this bailout, but unfortunately even if it works like a charm (with hindsight), we're still going to have a very unsettled month on the stock market.

The GOAL of the bailout is to get the credit markets moving again, and that's probably going to take several weeks, minimum.

[whistle]

15. I know, but it is directed at buying toxic [a.k.a. worthless] paper from those banks

...giving the banks some cash where right now they can't get any cash for those assets and letting the taxpayers foot the bill. If truth be known, I'll bet 99% of that worthless paper is backed up with absolutely NOTHING that is saleable....no mortgages, no real estate, no assets, nothing!

We tax payers will be forced or swindled into buying SMOKE!

[anigbrowl]

20. Why do you assume that?

It's geared towards buying mortgage backed securities, which are ultimately backed by real property. You can trace a chain of custody for such things. The fact that you can't sell something right now does not mean that it is worthless - in actual fact, that's a sign of EXCESSIVE belief in the market, because you're assuming that the lack fo market for these assets means their value in zero. In fact, these assets are still worth money (just as the underlying property still has a value), but the market itself has failed at its price-discovery function.

Look, if you have a house on the market and can't sell it, that doesn't mean the value of the house is actually $0.

[whistle]

26. I can guarantee that the so called "toxic paper" it just that, shit-box properties

...falling down, worthless, perhaps empty shells, that were over valued and the cash up and ran away. I know these bankers at least here in Florida and anything or value will have been removed or unbundled well before the taxpayer gets a shot at them.

[anigbrowl]

31. And you know this how?

sorry, but I think you're just making stuff up. It would help if you could give some concrete examples. If this is just a general 'I don't trust bankers in general' objection, then I share your feelings but I don't mix up my emotions with practical matters. In the case of the bailout, I'm pretty sure they'll be starting with securities that were highly rated and cross-checking them against the value and creditworthiness of the underlying contracts. Most of the so-called 'toxic waste' has already been written down and taken off books.

[whistle]

34. If you live in America, just step outside and walk around,

...here in Central Florida there are entire neighborhoods where homes are abandoned, business sections where stores have closed up, homes that have been on the market for over a year and no buyers, auto dealerships with thousands of unsold inventory on the sales lots closed, hotels with no one staying in them at all. This is something I've not seen on this scale in 37 years of living here in the Orlando area. In Florida, any structure that is vacant without cooling or periodic maintenance deteriorates very rapidly from exposure.

Now, our local bankers know this and I can see where they are picking over the good stuff and packaging the "death valley" properties into bulk deals to dump them. We have a lot of "bomb" factories in Florida thanks to the BushCo wars. When the wars are ended those housing areas will be the next to produce boarded up homes and businesses. So no I sure don't trust the bankers and attorneys on putting packages together with any value to the taxpayers.

[anigbrowl]

36. Now this makes more sense. However...

You know how mortgage securities were divided up, right? Some was rated AAA, some AA, and some was unsaleable and referred to by bankers as 'toxic waste' (because those were based on mortgages from borrowers that the bank thought were very likely to go into default). I suspect these properties you're referring to would mostly be the ones backed by toxic waste mortgages.

What I'm talking about with regard to the bailout is that there are a lot of mortgage-backed securities where the mortgages are not in default and not likely to go into default, but they're not tradeable even though they should be, due to the general lack of confidence. These are the ones the government is proposing to buy; the hopeless stuff was written down months ago, and at the time the various banks and the treasury (mistakenly) thought that getting rid of the non-performing assets would restore confidence in the tradeability of the performing ones.

I am NOT disputing your point about the huge economic damage in your neighborhood and many places like it - it's a massive problem, and I do hold the banks and the administration largely responsible. However, I think that that stuff probably only accounts for 5-10% of the total MBS market. Please don't take that o mean I'm brushing it off as unimportant, just saying that they don't represent the mortgage market as a whole.

[whistle]

48. Who certifies these mortgage securities? No one with any credibility

...and that is the point, there is and will be a lot of fraud in the claims on the condition of these mortgages and with millions of such packages who will take the time to sort through them with a fine tooth comb. Not the government which is pressured to "dp something now". The devil resides in the details.

[depakid]

32. Somehow one doubts that you have the sophistication to make "guarantees"

Will the government overpay for many of these securities? Probably- but over time, they'll be revalued and some of the losses recouped. How much is anyone's guess.

[whistle]

35. Right....and over time all of us die and in the meantime life is hard

[depakid]

39. If you want to be taken seriously, then have a go with policy

as opposed to platitudes.

Maybe you can do it, but you won't know unless you try.

[whistle]

47. Check out the video on today's home page of the Rachel Maddow interview

...with economist Paul Krugman if you wish specific policy and assessments

[AndyTiedye]

6. Bailing Usually Doesn't, if the Ship is Still Taking On Water

[chimpymustgo]

7. That's what many economists - most regular folk - have been SCREAMING since this bullshit bailout

was first proposed.

[JackRiddler]

9. The bailout is probably making the DOW fall...

Something about which I'm neutral, since far as I'm concerned you can screw the DOW, it's a measure of corporate capital accumulation, not of actual economic well-being for the majority.

But anyway, the bailout promises a huge raft of new T-bills, which are for some unfathomable reason considered far more secure than the DOW, since the USG will never lose its AAA rating, and God backs the debt, etc. So that's where much of the money leaving the stock market has already been fleeing. Which is one reason why the dollar still looks so solid.

[whistle]

17. Uhmmm, another sound fundamental of the economy...T-bills

[Warpy]

10. The bailout and the stock market are two different things

The bailout was done because credit has been frozen. Banks have lent out more than they reasonably should have, given the amount of toxic paper on their balance sheets. They simply can't afford to do things like carry commercial accounts with overdraft protection and lines of credit. That means that businesses that depend on a 30 day grace period to pay the bills didn't have it. It means that it's been nearly impossible to get a loan of any type, even a car loan, through a bank. If it had gone on, there would have been serious trouble at all levels of the economy.

The stock market is something different. Stocks started to dive last week because of a run on hedge funds, who then liquidated assets to be able to allow people to cash out. Now a mild panic is feeding itself, as nervous types seek to protect their dollar amounts by shifting out of stocks and into T-bills and other fixed investments. Add to that the fact that the market has been overvalued since the inflation of the 90s, and there is significant reason for the market to decline independent of the credit squeeze.

The bailout had to be done. Had. To. Be. Done. For one thing, it'll buy us some time to get a Democratic Congress in there. For another, it's the last gasp of the supply siders, the last proof anyone will ever need that they're full of shit and their dogma will never work.

Yes, it will fail the same way it failed when Hoover tried it and when Japan tried it. However, they always have to do it. It's the last thing that is necessary to discredit them totally.

[whistle]

18. But connected, selectively dump $700 billion into the coffers of Bush crony slime mold

...then watch them slither into the dark places and let the rest of the country go to hell.

[johnaries]

19. Thank you.

The DOW dropped Friday because of the unemployment report. They dropped today because of problems in the EU market - which doesn't have a bail-out plan and wants one, but probably can't get one because of the different governments involved.

Regardless, the plan is not about the market. It is about the credit freeze. The market affects investors. The credit freeze affects EVERYONE.

And as you said, it only buys us time until we can get a Democratic President and Democratic Congress in place to FIX the causes.

Even now, the Supply-Side/Trickle-down Corporate whores are trying to spin that the cause was "too much regulation" and the Democrat's fault, when it is obvious the opposite was true. THIS is the battle we muct fight and overcome.

We need a bottom-up, consumer-based economy with consumer protections: a return to Keynesian Economics, which have always WORKED!

NOTE: during the Nixonian regime, they tried to blame "stagflation" on Keynesian Economics. Yet, the Fed used a modified version of Keynesian Economics to fix it - all the time Republicans were claiming the victory for "Supply-side". Fucking Liars!

[whistle]

29. The more open discussions there are the clearer this mess becomes

...even if a solution remains out of reach. I just hope and pray that the guilty are caught and punished and if anyone makes a windfall profit from the bailout, that profit should be taxed at 100% including foreign bailout recipients. Just withhold their bailouts until they can be audited.

[seasat]

37. Brad Delong seems to think they could also buy equity under this bill.

He didn't explain what part of the bill would authorize it but he made this comment on his blog.

Every other country that is in this business is nationalizing the banks and injecting capital into them. Only the United States is operating on the asset side along. It's unlikely to work, and Neel is now responsible.

Time to shift the focus of the TARP: it shouldn't be buying up assets, it should be injecting capital and taking equity instead--which it can do, the way that Dodd and Frank have written it. But it probably won't do until Paulson is replaced.

I would guess that it comes under the portion of the bill that allows purchases of other types of debt instruments. Maybe a Swedish style plan is possible under the recently passed law. If this is true and the bail out doesn't produce any improvement in currency flow between banks over the next 4 weeks, then maybe they could convince Paulson to purchase equity in these firms. Delong seems skeptical that he'd do it, though.

[whistle]

49. That's what Krugman seems to be suggesting in his Rachel Maddow interview

...from last evening and you can watch it on the DU home page video section.

[johnaries]

14. Either I am hearing different analysts, or you are misunderstanding them.

The analysts I've heard are saying that it will probably drop another 10% before it gets better, and that probably more needs to be done, but NONE of them have been AGAINST the bail-out.

[whistle]

22. NPR Market Watch analyst said that 10% drop is going to happen

...even with the bailout, but so far no actual bailout funds have benn dispersed so the market is still doing its thing. So even the news that the bailout will be implemented is having no positive effect that is no reversal of market pessimism.

[leftofthedial]

21. it'll make a big difference to the wealthy few who end up with

their share of that money in their pockets.

[whistle]

30. Tax the shit out of them!

[MissB]

38. The local financial dude put it this way:

The bailout will help get the economy back on track in only five years instead of ten. But the next few years will suck. Badly.

[whistle]

51. That has to be considered unacceptable by the voters, we need a real

...plan that will begin to make a positive difference right away. Congress should step in now and freeze all further primary home and commercial bank foreclosures by enacting the Home Owners and Bank Foreclosure Protection Act.

Place everything else in the financial system which has become inoperable into bankruptcy reorganization. Dump all the speculators and gambling bet shysters into non-secured status and let them fad away. Then introduce a New Bretton Woods Fixed Rate of Exchange Currency system with the U.S. Dollar as the standard joining forces with Russia, China, India, Brazil.

Establish fair trade agreements among these nations and begin a 50 year plan of infrastructure and economic development among the U.S. and these other four nations for long term prosperity and addressing the needs of the 3.3 billion people in the nations (rebuild roads, bridges, mass transportation, 4th generation nuclear power, health care, grow food so no one starves, etc.).

Other countries will come on board with this as they realize that it is cooperation and sacrifice not greed and exploitation which works in the long run.

[Triana]

40. Absolutely. Rescind the bailout - it was extortion and robbery anyway...and WHY is Paulsen Secy

of the Treasury?

This is a gross CONFLICT OF INTEREST - having an ex Wall Street tycoon running our national treasury?!

:wtf:

And worse, some other former Goldman Sachs creepazoid has been told that he can "now begin spending that $700BN" that was just stolen from our treasury under gunpoint (ie: threats of stock market crashes, which are happening ANYWAY, and under threat of martial law).

:mad:

WE ALLOW THIS? Does anyone else see what might be WRONG with allowing WALL STREET operatives to run our federal treasury?

Excuse ME?

Someone explain to me WHY this is OK and HOW this isn't a conflict of interest? And how it ISN'T extortion and ROBBERY?

[whistle]

52. Or redirect the bailout, none of the $700 billion has been used yet so freeze it

[struggle4progress]

41. Nonsense: it will enable hundreds of top CEOs to get $400 million bonuses

It may not help you; it may not help me; it may not help the general economy much -- but those who are helped by it, will surely notice the difference

[whistle]

55. Cronyism has only a short time left to flourish, so issue it as food stamps and make these bastards

...line up for them in person

[JVS]

42. Information that would have been useful LAST WEEK!

[whistle]

56. Congress needed to conduct hearings

[LynnTheDem]

43. But it will make things worse.

Give it time.

[Kartius]

44. We need to correct this financial crisis no matter what

This includes socializing all financial institutions if necessary. There is no new deal, there is no deflation, there is nothing if this ship sinks. We are a debtor nation and a debtor people. If the financial system fails, America is bankrupt. That means no oil and no oil means no fertilizer. No fertilizer means low crop yield. Low crop yields means starvation. A vast number of American will be layed off and their will be rioting in the streets.

I previously compared this to the Great Depression. Now I fear this will be far more painful than the Great Depression. I am scared of waking up in the morning to hear the name of the next bank to go under. I am scared that with each failing bank we are ever closer to falling over the precipice. I don't like the bailout as is. I don't like Paulson. I don't like Bernanke. But at this point we have very little choice. If this bailout does not work, then we will have to socialize the financial industry. The only chance we have is to do everything we can to keep the financial system alive.

[whistle]

57. Yes, but if your car doesn't start, you don't just automatically assume it is the

...battery which is gone dead and install a new one, then when it still won't start, swap out the alternator, and then the starter motor, and so on. That is the path which BushCo and Paulson are leading us down.

You first find out what the real problem is and that problem is that the entire financial system is bankrupt. Now based on that there is a logical way to proceed. Obviously BushCo and McCain and many in congress don't want to admit that the system has failed, but until we address the real problem fixing the symptoms only delays the inevitable and makes the ultimate solution that much harder to implement

[Virginia Dare]

46. It's not big enough, that's what they're saying...n/t

[whistle]

50. God, I hope this Congress won't fall for that line, we need a real plan

...not more cover-up crap from BushCo

[findguru]

53. so nice

so nice man very good keept it up

[ProfessorGAC]

54. That's Because The Legislation Doesn't Correct The Problems

It just puts a pillow over the stain.
The Professor

[Hidden Stillness]

58. This is Just More Proof of the Now-Totally Corrupting Influence of Corporations

This whole process only shows the corrosive, poisonous influence of corporate lobbyists on Congress, and how they have got them so totally isolated and manipulated during the writing and voting of the bill, that only the narrowest corporate interests will remain at the end. There was a great cartoon during the bastard Reagan era, showing corporate interests as "the people," and the real, ordinary citizens and their needs, as "special interests," and the same applies here. The corporate mind-set is so ingrained in these people by now, that they think things no one ever would have before, ever, and do not question anything anymore: no one is more duped by "framing" than the advertisers. "When banks compete, you win." "Well, there isn't a lot the Government can do about market forces; it doesn't really have that much of an influence." "Lowering taxes on business helps the economy." What??

The members of Congress themselves admitted that they were so frightened and stampeded by Paulson, and threats of dire consequences if the bill were not passed NOW, that they actually feared another day going by; they themselves admitted they were ignorant. They have also reached the stage where they don't think we the people have anything to do with the situation anymore, and are offended when we "intrude." The constant and exclusive contact they have with their financial friends leads them to a narrow focus centering on several corporations and their activities, and nothing else. Whether or not "this one," or "that one" survived, was "crucial," and no large or long range focus at all. They do not even consider helping people, (as the New Deal, etc.), by giving direct cash payments, having jobs programs, etc.--because of the way it might effect the "economy"! They actually are alien to the idea that Government is bigger, and should step in and stop corruption at all! Their sole focus, because of all the lobbying, money, propaganda, personal connections, is to side with management (the "industry"), and investments, no matter how corrupt or damaging they are to the actual economy, which involves people and society. All their "solutions" are so narrowly focused, unbalanced, (and still no regulation!), with such totally corporate premises for the "planning" of it all, that it leaves untouched the entire problem, because it involves all the "wrong sort of people." They have an exclusively "individual-corporation" approach, bizarre; no larger sense of any world at all beyond it, except more corporations, elsewhere.

[newtothegame]

59. It seems like scam; even on "good news" the markets fall...

[TexasObserver]

60. The bailout will help a handful of private interests and create jobs for Bushies.

It is not going to slow down the effects of this decline, any more than a speed bump will slow down a tank.

The bailout is going to be used to save selected companies, and help the big get bigger.