Of course, Republicans want to blame Clinton, in this case for repealing the Glass-Steagall act in 1999. Well, for years it was REPUBLICANS who pushed for repeal of Glass-Stegall, arguing that repealing it would be a great improvement to the free-market system, and that economic growth would ensue if the artificial lines between types of banks were removed. The repeal was sponsored in both houses of Congress by REPUBLICANS and pushed by REPUBLICANS. But now, Republicans argue that Clinton did the wrong thing by giving them exactly what they wanted!
We’re in this mess because of Republican policies, and the last 8 years of outrageously profligate spending by a Republican president the a lot of help by Republican control in Congress.
The FED is at the center of the cause. But we all know this, right? Rush to buy a house because rates are low? Banks lend because credit is easy…
The problem is the FED and not regulation; Abolish the FED and return monetary control to congress
check out mises.org
What a MESS! These gurus were paid millions to mess up the economy and now the Fed wants to bail them out for their gamble. What a joke. This mess is affecting far flung corners of the globe with world wide loss. Fix the system so people can’t sell what they haven’t got. (This is pure theft from mums and dads and pensioners accounts)Limit lending for share market speculation. Make share buyers hold those shares for a specific time before reselling – say 7 days. What? They won’t like that? tough luck!!!! We are always being told that shares are a long term thing. So why are the “EXPERTS” constantly buying and selling if the Mums and Dads are told to hang in there? Hang those gurus that have caused these problems, or at least throw them into jail. Sorry. This mess has to be fixed properly, once and for all.
Here’s the real news!
In 1999 the Clinton Administration relaxed the rules and caused this problem. The Democrats in congress ignored the warning signs and blocked the Republicans from correcting it before it got this far first in 2004 and again in 2006. John McCain himself warned about Fannie and Freddie and the High risk mortgages two years ago. The Democrats blocked passage of his bill that could have prevented this.
In other words, John McCain saw it coming and tried to convince congress to act. The Democrats blocked him while Barack collected the 2nd most in donations from Fannie and Freddie.
The media is not interested in this fact… Instead, they’re more interested in how many cars John McCain owns.
I challenge CNN to make that headline!
Fed is doing a band aid job. I have not heard Bernanke say a word as to what does he propose so this won’t happen again? Oops, that may mean regulation. Ouch.
HELL NO!! Let them fail and rebuild their businesses and consolidate…Paulson is making this look more complicated than it really is…FACT: GREEDY Financial institutions of all kinds BORROWED up to $40.00 for every $1.00 dollar invested-great when the markets are going up they make their money at a 40 to 1 clip on all these mortgage back securities and other phony investments over the past 7 years…now that the market has gone against them and FALLING at a 40 to 1 clip they want the american taxpayers unborn grandkids to bail them out…remember they took all their PROFITS all the way up for 6-7 years to the tune of 100s of billions of dollars, where are all those profits to back up their now huge losses…OH YA!!they want me to pay for their incessant greed. This bailout WILL NOT benefit main street AT ALL, GUARANTEED!! HEY PAULSON, WHERE IS MY BAILOUT, I’M LOOSING BOTH of MY HOMES DUE TO WALL ST. EXCESSIVE GREED
THE FED SHOULD INSTITUTE REGULATIONS THAT LIMIT DEBT AND ENCOURAGE SAVINGS. IT IS CLEAR THAT MANY PEOPLE DO NOT HAVE THE COMMON SENSE OR SELF CONTROL TO HANDLE DEBT WITHOUT RESTRICTIONS.
CCN’s EXPERT Financial Panel last night said “if ONLY people could be MADE to UNDERSTAND”.
That if only people could be “properly EDUCATED”.
That we ARE our Brothers’ Keepers in today’s financial (and thus social) calamity.
That we should be WILLING to have government extend public money to help our flailing, failing financial institutions.
RIGHT.
The CNN panel says that “by extending money NOW, we are avoiding a WORSE catastrophe LATER”.
“If you help your neighbor then your own property values will STAY HIGH, otherwise they will fall.”
This is following a template, a rule book, a world-view, that says that if you keep ZOMBIE companies afloat, for only a “short” period of time, THEN everything will return to normal.
That even the dollar amounts which are given and the loan guarantees that are extended are only ‘bridge’ loans and that public money will be returned back to the public “with interest”. We will end up MAKING MONEY on this!
Right.
I also have some condos for sale in Florida that maybe I could interest you in buying?
The same technique was tried in the Great Depression, and people wonder why it dragged on for so long.
Chairman Bernanke thinks that the approach of “throwing-as-much-money-at-the-problem-as-you-can” was NOT tried in the Great Depression. That it was not done early enough. That the money supply was allowed to contract. That DEFLATION set in when too many banks and savers’ deposits were lost.
That he can show us how the “FIX” is REALLY SUPPOSED TO BE DONE.
That TIMELY throwing of cash at the perceived problems will help get us away from the EDGE of the abyss.
This is a simplistic view. This is not a problem of liquidity. THIS IS A PROBLEM OF SOLVENCY.
Please see http://money.cnn.com/galleries/2008/fortune/0809/gallery.kimes_prophets.fortune/3.html
Does the FED really think that by making these ZOMBIE companies flush with cash and making them solvent again, will help? Japan tried the same thing — keeping the banks afloat for years with their bad debts. The only difference is that now these bad debts will be MOVED to the U.S. public’s balance sheet. What’s the difference? Are the banks all of a sudden going to start lending? Who is going to borrow?
Does the FED think that the public purse is THAT deep?
Although America IS the richest nation in the world, even Uncle Sam’s wallet has a limit to the HIT it can take.
Remember Argentina?
All we might end up doing is moving the STATE of INSOLVENCY from the bankrupt financial institutions TO Uncle Sam HIMSELF.
Then what?
This is not an issue of ‘confidence’ unless you mean in the sense of a ‘confidence game’.
Please see http://money.cnn.com/2008/09/17/news/newsmakers/paulson.friendly.fire.fortune/index.htm
We cannot move the disorder, the entropy, of the private financial sphere to the public sphere and expect the problems to GO AWAY.
This is financial, thermodynamic MADNESS.
To Mike in Redwood City, CA:
You say “Fortunately, Bernanke is a student of the Great Depression, and the current Fed is correctly handling the situation.”
Are you serious?
The only good thing is that the FED is doing what was done to “get us out of the Great Depression” — in fact he (and Paulson) are doing EVEN MORE of the “SAVING” then what was done back in the 1930-s.
But Bernanke’s take on the Great Depression is that we DIDN’T DO ENOUGH and WE DIDN’T DO IT EARLY ENOUGH.
That is, not enough banks were “saved” and the money supply was allowed to contract.
Well guess what?
What is going to happen this time?
Exactly the same outcome, only much, much WORSE imho.
That is the “good thing” I refer to.
Maybe once, and for all, we will finally put to bed the idea that the people trying to “save” us from the Great Depression did NOT do ENOUGH.
Because, by God, we are certainly not making THAT ‘mistake’ this time.
But “luckily” we will finally PROVE that it DOES NOT MATTER — when you are insolvent, guess what?
YOU are STILL INSOLVENT.
Shouldn’t we look at giving money to the industries that provide a product that can be sold and make money for the citizens of the United State? After all it is our money being spent. Sarah MI
This is great. Instead of the market correcting itself it is getting force fed by the government. All this does to the average Joe, many who are already struggling to make ends meet, is push up inflation and keep prices artificially high. Since rumors of the bailout gas has risen and the dollar is falling again.
Does anyone really believe this transition wasn’t months in the making (likely years), that Bernacke and Paulson really buckled down, ordered in some dinner, pulled and all nighter and came up with this? This consolidation of power and consolidation of the banking industry and legislative cooperation between countries is why they allowed the bubble to happen in the first place – so it could be crushed at the right moment, the situation could be presented as a crisis in jargon even people in the financial industry are not savvy enough to question and then the normal checks and balances that protect us from tyrannical use of power to help private industry are thrown out the window. The CEOs of the institutions and their advisers are the same people you will see in the Treasury Department and Fed board in an ongoing game of musical chairs instated to keep control over the economy in the hands of the few and ensure the most profitable circumstances possible. This situation was created to enable them to get rid of policies in the way of profit under the guise of crisis. It sets a precedent so the government oversight and anti trust laws and the free market in general can be gotten around in the future. $200 billon is too much for a war, $100 billion is too much for a healthcare system out from under the HMOs but $600 billion is supported without discussion because it is put in terms that intimidate the average person and not questioned at all by the media that is supposed to be distilling the situation for the public so that they can have so say in what is done with their tax dollars, and to protect the value of their currency down the road.
Would these bail-outs be happening if this was not an election year? This is a plan to save the Republicans and its Wall Street friends.
I find it laughable that Bernake, Pulosi, and Paulson can get on TV and pat themselves on the back for acting in a bipartisan way to solve this credit crisis for the good people in our land. Do they really have any other choice? Now lets all get down and praise the wisdom of our leaders people. Come on everyone, lets get together to hail all of the same idiots that got us into this mess in the first place. How ironic. The real issue is not weather they need to do this or if it is the right thing to do, but when we as a country are going to get angry enough to barr all the lobbying in Washington once and for all and take back our government. Because in case you haven’t noticed people these people do not care about us. A case in point,they received a 170 million dollars from Freddie and Fannie over the last ten years in lobbying money to turn their backs when there were calls to look into the business practices of these organizations back as early as 2000. Now they are on TV patting themselves on the back on what a great job they have done to solve this crisis. Good greif. Please don’t insult my intelligence. Leave that for the rest of the land of stupidity.
Come on..all they have done is put a plaster on a bullet wound, this is going to get a lot more serious in the coming weeks !!
The Fed created this mess! How can you say that the Fed is doing a good job cleaning up the mess that it created in the first place? Free markets work and they would have been fine if the Fed had not held the rates to low for to long. Now the taxpayers are left holding the bill, it’s really sad.
It looks to me that this country is not anymore the land of free. We are enslaved by financial institutions and managers who use the Wall Street and even worse, our treasury, at their own will. They made billions by using exotic financial securities and our retirement money and now they make more money from the bailouts the feds wants to put in place. Just to remind you, the treasury secretary was the CEO of one of the investments banks for a while… They created this bubble type paper money economy that served mainly their interests and now use political power to get out clean from their own mess. The Roswell case pales in comparison with this one.
The Fed is going to break the entire economy of the US at this rate. The government is now printing out hundreds of billions in new cash. Every new dollar created out of thin air with out any asset backing is making every value of the dollar less. This economy is going to collapse to hyper inflation.
Fact is, all these bail outs were more than necessary. Who knows if it will they will be there will ever a potential profit for the government dollars spent but we all know there would be a collapse if nothing was done. Who cares about the fact that this is a form of anti capitalism the governments job is to protect the citizens of their country and the fact is that America dodged a bullet that could have wiped out it’s position in the global market.
The RTC was created to offload assets that were seized during the S&L crisis when banks failed. Now they are going to buy assets off banks that have not failed? Keep the same management teams in place who caused the mess? When do they pay the price for their bad judgements and the error of their ways? Why stop there….I think we should prop up the stock market indefinitely so stocks never go down. Backstop everyone’s 401(k) plans so they never go down. Make all hospitals/doctors visits free. Require all pharmaceutical companies to give out free drugs to all citizens. Free rent at all retirement homes. We can all join the federal labor union, work 35 hours a week and go to work and collect our weekly allowance and bottle of vodka. This will take generations to pay off and we will all be Chinese debt slaves because we all know the USA does not have this money we will borrow it like drunken sailors in Tiajuana for the weekend.
Jump on the band wagon and stop paying your bills like the other who got us into this mess and the banks who gave them the credit in the first place.
The Fed is not doing a good job of putting an end to these financial crisis because an end can’t be put to them.
We are told that these bailouts are “investments” and “loans” and “insurance”, that wont really the Taxpayers that much in the end.
But that statement is made on the assumption that the economy will “rebound”. If it tanks, we (The People) lose a bundle. A big bundle.
So, how does the future economy look?
oh, yeah, 70% of our economy is consumer spending. Something that has to continuously INCREASE for our economy to even work. But the increases of the last decade (and more) have been as a result of increasing debt. We have finally hit a practical debt limit (now called a credit crisis). The average American consumer (when did we stop being citizens?) is up to his/her eyeballs in debt, has increasing expenses, decreasing wages and withering investments.
Consumer spending is probably not going to be going UP anytime soon.
Our economy is way over due for a large correction and the Fed can bail all they want and they will never keep up with the water.
…and who oversees the bank overseeing the other banks?? as an artist in NYC, i cannot wait to start working on a series of portraits of Paulson and Co. sitting on top of a donkey sh*tting on the little people underneath.
Big Headline: Paulson, Former CEO of independent bank Goldman Sachs, supports New Deal type agency that supports banks and rids their balance sheets of their trashetts. surprise surprise.
Yes. I’d give the Fed an ‘A’ +/- for a grade in the handling of the current financial crisis. We’d have to go back to the 1930s to find a financial crisis that was this severe; then, it was handled very badly, turning what would have been a recession into the Great Depression. Fortunately, Bernanke is a student of the Great Depression, and the current Fed is correctly handling the situation. There is nothing more for the Fed to do, except keep up the good work and hold the line against bailouts: no giveaways of taxpayer money. There is a great article at: http://en.wikipedia.org/wiki/Great_Depression
There are two things that could be done by the SEC and the CFTC, respectively, and they should be done immediately:
Ban shorting of all stocks until at least the end of this year to let the stock market cool off;
Ban uncovered trading in oil (no more paper trades; you must either take or make delivery) until at least the end of this year to stomp out speculation in oil.
These steps will quickly help America.
You said, “Clearly, the move to put more money into what are, to put it mildly, fragile markets is a good thing.”
No, not clearly. I’d say it’s a bad thing. A stupid thing. A criminal thing.
Has anyone known a better time to get out than Mr. Greenspan? With all due respect, Mr. Greenspan was at the wheel when many people made tons of money but when he saw things spinning out of control he bailed. I’m sure he forewarned those at the helm, but those at the helm create their own illusions.
I firmly believe part of the overall process of resurecting Wall Street is to dump the rating agencies – Fitch, Moody, and S&P and have a Government run agency do it. Many point to ‘Big Government’ but what else are we to do? Proof positive – the ratings agencies downgraded AIG only AFTER the damage was done. What a pathetic joke. You want confidence restored? Scorn the few who affect so many and tell them they were WRONG.
Any other ideas out there?
Posted By JOHN, NORTHBRIDGE MA.: September 18, 2008 2:03 pm
John,
Morphing into STATE CAPITALISM! It has nothing to do with socialism or communism. Theoretically, the latter two would benefit the “little people” – you and me. Besides, the tractor plant has already been dismantled and relocated offshore with the communal farm privatized and sold off to CARGILL, remember? But your idea of the GULAG has much to recommend it!
Trouble is… good job/bad job? More like a blow job with the FED on its knees – not Wall Street – giving head to come what may because they cannot swallow the losses fast enough to digest the housing bubble. And so long as its out there with the ever growing debt mountain, STATE CAPITALISM will ensure that the needs of CAPITAL – not the people – will take precedence. Now, instead of the mythical invisible hand it will be the heavy-handed fist of the state.
Rather than see this intervention by the FED/govt as “proof” of the failure of neoliberal economic policies, perhaps it might be more accurate to view it as their successful culmination. As Milton Friedman often pointed out crises offer opportunities to wipe away impediments to capital accumulation. And Pinochet in Chile effected his policies with a vengeance… Need I say more.
Look forward to hyperinflation if the Fed keeps this up. Pumping money in to prop up the stock market is, simply, an abuse of power. And now a plan is being floated to create another entity to buy up the garbage debt that WE the US Taxpayers (and our descendants, sadly) will wind up footing the bill for. We are talking possibly TRILLION$ here. This is an OUTRAGE!
Boa should not even attempt to buy LB. With their acquisition of Countywide Mortgage, and now ML, they should be busy integrating both firms, WITH DIFFERANT MANAGEMENT AT REDUCED SALARY LEVELS. Get rid of the board of directors of each firm and replace it with middle management employees that have a vested interest in seeing the firms prosper. When BoA makes these investments, it does not appear that they have the stockholders in mind, just how big and poweful the BoA can become.
The Fed, banks, FDIC, SEC are all predictably scrambling to find enough scotch tape with which to patch up a system that is strained by YEARS of greed and excesses. We’re simply paying the price for the largesse of the past. I have said in these comments as long as 8 months ago that we are in a “slow motion” version of 1929 all over again, and nothing has changed ny view. By mid 2009, the credit crisis will have radiused to include credit card debt along with commercial loans and the effects then will be the equivalent of a financial armageddon. Take it to the bank and YES, the pun is intentional.
MY MY …THE GOOD OLD DAYS OF LETS GET GOVERMENT OFF THE BACKS OF COPORATE AMERICA HAVE FINALLY COME FULL CIRCLE. WE NOW ALL SEE THAT WITH LITTLE OR NO REGULATION UTTER CHAOS REIGNS. THE VERY SYSTEM OF CAPATALISM IS NOW CONVERTING TO A FORM OF SOCIALISM OR SOME FORM OF COMMUNISM. LETS ALL NATIONALIZE MORE COMPANIES. PRETTY SOON WE CAN ALL APPLY FOR JOBS AT THE TRACTOR WORKS OR THE COMMUNAL FARM. MAYBE ONE FACTOR THEY SHOULD CONSIDER IS A NICE CHEERY GULAG FOR SOME OF THE EXECS AND CEO’S THAT HAD A HAND IN THIS MESS!!
The Fed has been inundating the market with money for the past several months-what results actually came from all those auctions it ran??? I haven’t heard a concrete success story from them…Those billions of dollars didn’t loosen anything up other than the nuts and bolts that keep the Fed’s printing presses together and moving.
The latest injection seems more like a psychological thriller than anything else- how will that help the housing market, and the value of mortgages as well as the securities behind them.
Honestly.. the Government did what they had to do.. But instead of just bailing them out and taking them over.. The Government needs to Break up these huge corps that are failing.. Sell them off to Smaller corporations and make back the money used to bail them out, and allow the Economy to grow..
We can point fingers all day at the politics. but the Bottom line is the Corporations failed as they were. Lets Fix them and get back the money we lent them by breaking them up and letting other corps that haven’t failed Fix the problem
As a Canadian, we have several crown corporations (Government backed). They are never run as efficient as private business and often cost the tax payer more than they are worth. The US free market where you stand or fall on how good or bad a company really is…has always inspired me to know that my cousins south are not burdened with the taxing issues we bare with respect to proping up government bail outs of private business and the years of costly voids that follow.
Yesterday’s AIG fiasco and the infusions of cash that your treasury department (TAX PAYER MONEY) is infusing into the system…will cost your people for years past the time it should if you’d let them fall as they should.
Canadian’s have heard for years that our system is flawed because of the Government intervention. I wish American power brokers would stop for a moment and read a book on the CBC TV Network…and the Billions it has cost us since our politicians took it over.
If you want to see where AIG and Freddy will wind up…You don’t have to look much further than your Fanny right now.
Garett Eggink
No, because they aren’t dealing with the fundamental problem. If you allow the rich and greedy to run these companies unregulated, you get the mess we have now. Until we get used to the idea that Republicans are actually anything but fiscally conservative, and that you have to have proper taxation and regulation to balance the books, this free market economy will always be an epic fail.
Republicans have always presided over the worst deficits and uncontrolled spending while they reside in the White House. They then blame democrats for being forced to clean up their mess with the required taxation and regulation.
I also forgot that Paulson declared “Raw capitalism is dead.” in the most recent Fortune magazine. That should give us an indication where the State is taking us.
Paul,
I will rehash my entry from the earlier “Rates” atrcile you did. Here you go:
You are right the Fed shouldn’t cut rates, but that is not what he will do. We are in an election cycle and, like it or not, the Fed is a political animal. The powers that be are going to try to keep the economy limping along with bailing wire and bubblegum until after the election.
Personally, I would like to see the Fed abolished, let the banks and our currency compete in the open market and back our currency with something other than faith. Outside of my little dream world, the best medicine that our little cartel of bankers could give us is a rate increase to help the market accelerate into a much-needed correction. The sooner we get to the correction, the sooner our recovery will be. Otherwise, the Fed could keep doing what he is doing and we can keep dying the death of a thousand cuts (both literally and figuratively).
The bailout(s) seem to be the lesser of evils vs. doing nothing. But that wan figure at the side of the road, is the consumer. Real wages are down. Jobs are being lost. Basic living expenses are getting overwhelming. What credit is left, people are using to survive on. A close friend lost a car and a house both within the last month. But these big bailouts wouldn’t have helped even if months earlier. And the ‘mortgage relief bill’ help, he didn’t qualify for. There is nothing for ordinary citizens in any of this. And consumers are going to show the effects increasingly in coming months.
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802)
3rd president of US (1743 – 1826)
No-No-No… The Fed has no place in providing bailouts or as it was put yesterday, “playing sugar daddy”.
We are a capitalistic society and therefore, should let these firms fail, regardless of the “global” ramifications. How does the FED have the right to devalue my savings, my income, my buying power by thinning the dollar’s value with massive cash infusions, keeping these law breaking and highly unintelligent companies in business or even better. How is it that the government now owns Freddie, Fannie and 80% of AIG, but I paid for it? Will they be able to manage these firms properly and what is my ROI?
Bailouts equal higher taxes, so thanks to the Republican base. You have proven yourselves once again inept at managing your irresponsible fiscal cowboy mentalities.
The CEO’s fly away in their new Honda Jet while the middle class carries the bill for future generations to absorb… Until it happens again.
So… the Dow drops 500+, 300+, 400+ & Lehman Bros is going down! AIG & WAMU next, etc…
Osama & the other weezil terrorists took down the WTC on 9/11/01 with the goal of destroying the US economy.
Here we are 7 (unlucky) years later & their goal has been attained & the worst part is that this crime against us has been committed by, allowed, fostered & encouraged by the US Govt (dems + rep), the SEC, & Wall Street.
Look like what Osama couldn’t do with 747’s; Wall Street, mortgage banks & builders not only did, but they made themselves wealthy doing it!
Thanks!
I think this is tantamount to the Y2K scare where it was believed a systemic breakdown was imminent when the year 2000 rolled in.
Bankruptcy and the demise of Wall Street firms who’ve made mistakes is not going to bring the world down. It’s going to allow capitalism to work as it should.
Bailing out these firms as “too big to fail” is dumb and only prolongs the inevitable collaspe.
The only ones losing are guys like Paulson, Fuld, Thane, Greenberg and other Wall Street fat cats who are having a hard time accepting their folly and their fate.
Don’t let Wall Street bankrupt the rest of us!! Why are we taxpayers allowing our money to go to these greedy, corrupt Wall Street idiots that brought this whole thing upon themselves with the complicity of Washington?
It’s an outrage!! They are spending our money proclaiming they are protecting us from ourselves when the truth is they are trying to maintain their “fat cat” status.
The quicker Wall Street fails and is eliminated the better America will be!!
And maybe we can get out from under these 32% interest rate credit cards!!!
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We have a fiat currency bubble burst.
Financial Crisis Fundamental Foundation Flaws and Solution
On http://coinage.me/
The flaws are articulated in detail as well as the solution which involves a New Global Value Exchange Accounting System they have a list of power questions that media and journalists can ask.
One interesting ironic insight is a small fortune can be made off pennies as a result of the amazing paradox resulting from current market conditions. 1 lb of pennies is worth $6.00 tangible and only $3.00 intangible.
They make an interesting point why shouldn’t the bail out (citizens going into debt) go to pay off the mortgages and then trickle down to those firms needing to be bailed out?
Read the power questions. http://coinage.me/power_questions.htm