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United States of America Plays Politics While Wall Street Burns

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Source: All Hat No Cattle and BU Family Member X

While Republicans and Democrats play the blame game, the DOW Jones declined 778 points by close today. Financial Analysts estimate that the stock market was devalued to the tune of 1.2 trillion dollars. Senator John McClain suspended his campaign last week to go to Washington to bring leadership to the bailout plan, but instead all hell has broken out and the US financial market maybe about to go belly up and take global financial markets along for the ride.

Although the polls indicate that Obama is pulling ahead, the BU household continues to be amazed that White America is not prepared to give Obama the overwhelming support which the current state of the economy and foreign policy merits. Even in the face of the most idiotic selection of Sarah Palin to be his running mate, we have intelligent Americans who see the logic in the McClain selection.

The other side of the coin to this issue is that the protectors of fthe ree market system hail the defeat of the bill today as a victory. Time will tell if the attempt to make Wall Street pay for his skulduggery is correct. Should we mention that Wall Street may have been suckered by the politicians to go the route of offering generous financing to low risk homeowners?

Political pundits know that the  Palin selection was a knee jerk reaction by the maverick McClain, when Republicans refused to agree to former Democrat and Independent Joe Lieberman.

The Republican Party is about to implode.

The polls show that Obama is inching ahead in the  polls.

Obama may just win after all.

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152 responses to “United States of America Plays Politics While Wall Street Burns”

  1. John Avatar
    John

    Adrian

    I don’t know why anyone after all these years would spend time trying to belittle you and not address your contribution.

    By now I would have thought everyone would have twigged to the fact that it is an utter waste of time.

    I have not followed the “crisis” but gut instinct tells me it is all about theft and using innocent people’s money to shore up something that is unworthy of being shored up.

    The prisons need to get some of the perpetrators sent to them …. a bit like here but on a bigger scale.

    Everybody will be better off.

    When a boat gets bailed out the unwanted water that is sinking it gets thrown overboard.

    That’s what I think the bail out should have as its primary objective, get rid of the unwanted ….. theft.

    Then think about spending money to get things right and fix the holes.

  2. Adrian Hinds Avatar
    Adrian Hinds

    Digied // September 30, 2008 at 11:41 am

    Honestly, I agree and disagree with David’s stance. On the one hand, the free market, pro-deregulation policies of Bush did have something to do with the situation the US financial markets have found themselves in now.

    There is a useful NY times article about it here(http://www.nytimes.com/2008/09/20/business/20prexy.html?_r=1&ref=business&oref=slogin)

    And McCain, who until recently supported deregulation and whose chief economic adviser Phil Gramm was instrumental in pushing regulation, is linked with that.

    Whereas Obama had called for stiffer regulation and oversight for a while.

    To put it simply – these financial types needed to be put on a leash, not given freedom to run wild. And Obama saw that.

    But (always a but) the rather scary truth is that the US president does not have as much influence on the economy as they would have you believe during election time. Or as much influence as the executive does under the Westminster system of governance (i.e. ours).

    This is because the US presidency is a constitutionally weak position, made so deliberately by their founding fathers to ensure that there were checks and balances on executive power and that the presidency could never devolve into a monarchical-type position.

    Newsweek had a good article on it (http://www.newsweek.com/id/143513)

    Truth is, the head of the Federal Reserve has more power to affect the US economy in the short term than the president.

    Anyhow, we’re also discussing this over on the forums on nationnews.com so feel free to leave a comment there as well for our Feedback Feature of the day. 🙂
    ===========================
    First to your offer to post on that Nationnews i say with all the Sarah Palin intoning possible ” Thank but no thanks” I wouldn’t even buy a nationnews paper, or take one for free. 🙂

    What role exactly does deregulation play in this current crisis?

  3. Adrian Hinds Avatar
    Adrian Hinds

    John Thank you. Americans live by some very simple rules, rules that my mother who never left Barbados also thought me, one of which is, if you do wrong you must pay for it. It is unfathomable that no one is under investigation in a rigorous way for this crisis? and at the same time we are asked to pay for mistakes made, not even for my son am i willing to bailout without punishment. Americans are once again showing other citizens of the world what coming together can achieve in their very own interest. Is this not something to celebrate? We must never trust government.

  4. Adrian Hinds Avatar
    Adrian Hinds

    Inkwell // September 30, 2008 at 12:01 pm

    Adrian

    If you read my post carefully, I did not say that you are stupid. I said that you are an apologist for American stupidity. The two are miles apart. Further, maybe I am wrong, but I supposed you to be a Barbadian living in the US. If I am wrong and you are in fact American, I apologise, for my comment was not meant to be directed at you personally. If, however, you really do not get my point I may have to review my stance.

    Now I have to claim stupidity as I cannot understand your statement that “Wall street fat cats responded by purposely pulling back the Dow index by 700+ points.” I didn’t know that “fat cats” controlled the DOW. I’m surprised. I simplistically thought that it was the ordinary investors’ buying and selling of the thirty stocks that constitute the DOW that influenced it.

    Further, you misread my post by suggesting that I want the American people to panic. My suggestion was in fact that the administration by its tone and body language seemed close to panic. Read it again. You are allowing your emotions to get the better of your reason.

    Again, if you would read the last paragraph of my post with any level of perception, you would be able to deduce what the bailout was supposed to achieve.
    ===========================

    Sorry Inkwell i prefer to think that you intended such and it’s quite alright. Whatever it takes for you to make your points though weak they maybe I will encourage. 🙂 Further to this I also prefer not to expend any more energy on your previous article, If I need to parse it to find points of agreement and or points that are relevant and non-partisan then you should think of rewriting it, rather than have me re-read it.

    Now i will move on the singular point of my rebuttle that you have single out for comment.

    It is not only individual stock holders who buy and sell in the markets, in fact i would suggest that the individuals who do are small in number, and that it is the large institutions whether they be individual mutual funds, Investment firms like Vanguard, and Fidelity and other corporate entities are the largest players on the market, and there resides the complex linkages and integrations that makes my proposal of colluding amongst these fat cats more plausible in causing Dow Jones downed percentage point figure (700+)to match the dollar value of the bailout (700+)they did not get yesterday. By and large average Americans have visibility in the stock market via mutual funds via their 401k, IRA, and 529’s etc. where day trading is not allowed or is but is prohibitively expensive and complex to discourage the activity.

  5. Bush tea Avatar
    Bush tea

    …Brave words indeed, Adrian Hinds..
    +++++++++++++++++++++++++++
    ‘…at the same time we are asked to pay for mistakes made, not even for my son am I willing to bailout without punishment’
    ++++++++++++++++++++++++++
    …especially for someone sitting in a storm, on the ship that needs to be bailed out.

    So you see no merit in preventing the ship from sinking FIRST!!?? …and then punishing the naughty son (who you allowed and defended while he was making holes below deck)

    …how….. American!!!!

    What a time to take a ‘moral’ stand.

  6. Digied Avatar
    Digied

    Adrian… so does that mean yes then? 🙂 Since we now know that Sarah Palin did in fact say yes to the ‘bridge to nowhere’ at first?

    As to the role of deregulation in this current crisis – this helped foster an incredibly bullish atmosphere in financial markets where bigger and biggers risks were taken. The White House could have stepped in to regulate banks and mortgage brokers, stopping them or at least mitigating the frankly absure sub-prime loan lending that has underpinned this crisis. But they left it to the Federal Reserve.

    Aside from deregulation, Bush appointed Treasury secretaries with little or no background in finance who just did not understand what was going on.

    When former SEC chair Donaldson pushed for stricter regulation of mutual and hedge funds, he was resisted by the de-regulatory minded White House.

    And so on.

  7. ROK Avatar
    ROK

    I think this was all pre-planned and instigated to help the Republicans (McCain) win back the Presidency. I think it also backfired and that Obama pre-empted them by being the first to call for a solution.

    This also caught both McCain and Bush off-guard and they had no answers. Therefore, like a dog with his tail between his legs, Bush called for Obama to try to save face.

    This Republican Government don’t fool me: 911, Iraq invasion, Wall Street crash. What next?

  8. Adrian Hinds Avatar
    Adrian Hinds

    Bush tea // September 30, 2008 at 12:49 pm

    …Brave words indeed, Adrian Hinds..
    +++++++++++++++++++++++++++
    ‘…at the same time we are asked to pay for mistakes made, not even for my son am I willing to bailout without punishment’
    ++++++++++++++++++++++++++
    …especially for someone sitting in a storm, on the ship that needs to be bailed out.

    So you see no merit in preventing the ship from sinking FIRST!!?? …and then punishing the naughty son (who you allowed and defended while he was making holes below deck)

    …how….. American!!!!

    What a time to take a ‘moral’ stand.
    ===========================

    ha ha ha everybody is a “gotch yah” mood. The difference between the two is that bailing out and punishing my son is done by me, in such a case the sequence matters less, as my son would know base on how i interact with him over the years that there will be a penalty to pay. In the case i what i see as Theft of private wealth by the colluding of socialist democrats that are both republican and Democrtic party members in congress and the whitehous and the inate greed in all of us in this particular case concentrated amonsgt the Lenders. No one is making a sufficiently strong case of possible malfeasence and the willingness to rigoursously investigate with intent to procecute. Therefore a bailout without punishment. But i ask what is the storm? do you think an uptick in the ongoing credit crunch will only hurt main street? and not wall street? if so why are we giving them 700 billion? or do you see the A”crisis” as something else?

    This supposedly has global implications no doubt, so why are American Tax payers the only one being asked to foot the bailout bill? are we only bailing out the American economy or the global one? ? ?? do you know?????

    Hardly American, my approach is very bajan. 🙂

    I have no doubt that Wall street will win the day and get some funds, I am not so sure that anyone will be held to account except for some politicians feeling the wrath of their consituents at the polls come November.

    Morality???? do you have an issue with morality? is morality now like the child who should be seen and not heard? I don’t know what exactly you mean by “what a time to moralize” and would love to hear more! What codes do you live by? morals? (yours of course) moral and laws? or just plain static law void of any morals (yours of course). Your answer and no answer will feed into any response i make to any future comments you make. 🙂

  9. American Avatar
    American

    As a really white American (who loves Barbados and its people), all I can say is, I am completely discouraged and mystified as to why my fellow Americans behave the way they do, or why they vote en masse for Bush and others like him. It defies everything I know to be rational. I’m getting really tired of apologizing to my overseas friends. But I’m fighting to change things politically, and know others doing the same. Let’s hope it’s enough.

  10. Adrian Hinds Avatar
    Adrian Hinds

    Digied // September 30, 2008 at 12:59 pm

    Adrian… so does that mean yes then? 🙂 Since we now know that Sarah Palin did in fact say yes to the ‘bridge to nowhere’ at first?
    ===========================

    What is her current position on the Bridge to nowhere? good you got it. 🙂

    So you really believe that the Lenders were so blinded by greed that they threw out all the traditional proceeces for vetting borrowers who they would be required to demonstate that they were a GOOD CREDIT RISK, all on their own? That they were never threathen with the community reinvestment act and further encourage to loan to risky borrowers by congrees via Fannie mae and Freddie mac? Are you willing to deny or do you even know that the government did try to regulate Fannie mae and Freddie mac but lost on a vote to so do? What about Alan greenspan’s prophetic warning in 2005? Do you know of these things? More importantly do really want to know? or are you like David statisfied with your partisan take on thing?

  11. John Avatar
    John

    I just can’t get my mind around the $700 Billion US figure. It is like some magic number someone came up with.

    The entire GDP for Barbados is about $2.5 Billion US.

    Something or someone caused this problem.

    When ENRON went down, there were identifiable individuals who it was alleged were responsible.

    Why don’t we see that here?

    Why put $700 Billion into a busted system without identifying its weaknesses and fixing them?

    What is to say that after the injection of $700 Billion another $700 billion won’t be needed in six months.

  12. Adrian Hinds Avatar
    Adrian Hinds

    Folks please do not forget that Congress and the whitehous voted 300 billion to rescue Fannie mae and Freddie mac and that it is business as usual at it’s core i.e. loaning and backing mortgages to risky and unqualified borrowers, renamed as low income earners.

    Please do not forget that Alan greenspan warned about this very same crisis in 2005.

    Please do not forget that a bill to raign in Fannie and Freddie was defeated in congress.

    Deregulation: do you know that goldman sachs and J.p.Morgan recently change their status from investment banks to plain vanilla ordinary banks? How is this possible? Do you know that Barclays bank bought parts of lehman brothers? how is this possible?

    Do we understand what was regulated and what deregulation changed?

  13. Adrian Hinds Avatar
    Adrian Hinds

    John all good questions, but i think this forums is incapable of proferring possible answers, and this is so as the result of locked in partisan positions. 🙂

    If we truly believe that the collapsing housing market is the core cause for this crisis, and as house prices continue to fall, raising the specter of more deliberate foreclusures as persons with good credit and the wherewithall to pay decides to no longer pay above rate on a property with declining value, and the remainder of the subprime loans made in 2004, 5, and 6 are due for an adjustment in two years raising the specter of further forclusures, Needing more bailout money in six months is entirely possible.

  14. Inkwell Avatar
    Inkwell

    Folks, to bring you up to speed….

    The chaos in the US financial market is having serious repercussions in Japan: The entire banking system seems to be crumbling.

    The Origami Bank has folded, and Sumo Bank has gone belly up.

    The Bonsai Bank has announced plans to cut many of its branches.

    Yesterday, it was announced that Karaoke Bank is up for sale and will likely go for a song.

    Shares in Kamikaze Bank were suspended after they nose-dived.

    Samurai Bank is soldiering on following sharp cutbacks.

    Ninja Bank is reported to have taken a big hit — but they remain in the black.

    Meanwhile, 500 staff at the Karate Bank got the chop…

    And analysts report that there is something fishy going on at Sushi Bank, where it is feared that the staff may get a raw deal.

    I wonder when it will hit Barbados.

  15. JC Avatar
    JC

    John Doe // September 30, 2008 at 12:14 am

    ha ha ha I loved that comment!

  16. Adrian Hinds Avatar
    Adrian Hinds

    American // September 30, 2008 at 1:33 pm

    As a really white American (who loves Barbados and its people), all I can say is, I am completely discouraged and mystified as to why my fellow Americans behave the way they do, or why they vote en masse for Bush and others like him. It defies everything I know to be rational. I’m getting really tired of apologizing to my overseas friends. But I’m fighting to change things politically, and know others doing the same. Let’s hope it’s enough.
    ===========================

    Your entire contribution rest on your being an American which i doubt. :0 lol!

    in which election did Americans vote “EN MASSE” for Bush? in 2000 he barely won, some say he actually lost. 🙂 in 2004 less than 3 million seperated him from John Kerry. In both election years the result was decided one state. Bush got 62,040,606 to Kerry’s 59,023,109 of the popular vote.

    Yep i doubt you are American but it is clear that you are a liberal or in the least finds comfort in liberal talking points, hence the ease with which they are refuted by facts. 🙂

  17. John Stoute Avatar
    John Stoute

    The Illumanati tried to hoodwink the American people and they told them to take a hike,this bailout would have been the biggest robbery and transfer of wealth Americans had ever seen if congress had passed that bill,good for the people let the “RICH” bailout Wall Street,they can afford to.

  18. Adrian Hinds Avatar
    Adrian Hinds

    Inkwell // September 30, 2008 at 2:43 pm

    Folks, to bring you up to speed….

    The chaos in the US financial market is having serious repercussions in Japan: The entire banking system seems to be crumbling.

    The Origami Bank has folded, and Sumo Bank has gone belly up.

    The Bonsai Bank has announced plans to cut many of its branches.

    Yesterday, it was announced that Karaoke Bank is up for sale and will likely go for a song.

    Shares in Kamikaze Bank were suspended after they nose-dived.

    Samurai Bank is soldiering on following sharp cutbacks.

    Ninja Bank is reported to have taken a big hit — but they remain in the black.

    Meanwhile, 500 staff at the Karate Bank got the chop…

    And analysts report that there is something fishy going on at Sushi Bank, where it is feared that the staff may get a raw deal.

    I wonder when it will hit Barbados.
    ===========================

    I have not even research my on founded ascertion on this, but i would greatly suspect any Japanese bank failure on the credit crisis in the US. This tentatively informed by what i remember as the Japanese lost decaded due to the Governments willingness to prop up failing Banks rather than take corrective measures work out the issues. Prove me wrong as i have not research what is just a hunch at this time. 🙂

    COULD IT HAPPEN IN BARBADOS. IF you mean a credit crunch cause by bad loans. No way. Banks in Barbados don’t even want to lend to person who are by all standards good credit risk. If you mean from being highly leverage with investments in the US, I read this article in the Nationnews that i otherwise don’t read. 🙂 lol!

    quote:

    CRUMBLING MORTGAGES should not occur in Barbados’ financial market because of the risk averse nature

    of the system here.

    Rey Royer, vice-president of RBC Royal Bank Barbados, said RBC managed its exposure to risk in a variety of ways and did not place its investments in any one sector or any single company.

    Nationnews Date September 25, 2008
    titled “Banks On A Sound Footing”

    In other words we don’t lend to people who absolutely don’t meet our critieria.

  19. Deng Xiaping Avatar
    Deng Xiaping

    Can someone please explain Obama’s position on the bail out plan? First he is critical of it, next minute is urging American to support it.

  20. Inkwell Avatar
    Inkwell

    Adrian,

    You should really do some research if you want to comment intelligently on this subject. Hehehe…

  21. Hopi Avatar
    Hopi

    Comme d’habitude, Adrian bHinds is always out of his league. Constantly jumping ship when its convenient for him, yet one can tell that he is an ardent lap-dog for the right-winged republicans who won’t even piss on him. He speaks as if living in the US qualifies him as being informed on any subject matter. At 1st he’s blaming “poor” folk for this heist, now he’s changing his tune. By the way, ADRIAN please get some coherence in writing. You’re all over the place. Really showing up de amerrycans.

  22. Adrian Hinds Avatar
    Adrian Hinds

    Inkwell // September 30, 2008 at 3:42 pm

    Adrian,

    You should really do some research if you want to comment intelligently on this subject. Hehehe
    ===========================
    Is that it????? set me straight Inkwell, if you can. ha ha ha ha ha

  23. Zauditu Avatar
    Zauditu

    OK Adrain child, keep moving, as I ain’t gat time fuh your myths, becasue now you mixing up what Mama said in Barbados with this statement of Americans are simple people who believe that if you do bad you must pay. Yeah, right, so many of them
    doing bad things and not paying back, that the country is on the verge of collapse, look they even stole from a hapless immigrant as myself, now that is the height of desperation, if you ask me, but I telling you all, you have not seen anything yet, for I predict a total collapse of America as the Bush Presidency ends.

  24. Zauditu Avatar
    Zauditu

    Adrain Hinds is Guyanese you all. I know so. He jump ship long time, now he in the thick o f things in New York, but with the collapse there he has resorted to the devil’s drink and is now in a drunken stupor, duh is we Adrain Hinds in a nut shell.

  25. Adrian Hinds Avatar
    Adrian Hinds

    Hopi // September 30, 2008 at 4:00 pm

    You’re all over the place. Really showing up de amerrycans.
    ==========================
    I am not sure what you are taking issue with. Is it my bad spelling, grammar mistakes perhaps? what exactly has you confuse as a result of these errors?
    ….Coherance? are you suggesting that i am not consistent? Blaming poor people? no I am blaming people who agreed to taking on a mortgage that they could not afford, as i am blaming the lender for offering such a loan, as i blaming fannie mae and Freddie Mac for back such loans, as i am blaming government (both republicans and democrats) for encouraging the offering and issuance of such loans. There is enough blame to go around.
    …So i will respond when partisan hacks and persons who don’t know that taxes come from private wealth seek to blame one person or one part of government when both the executive and the legislative branches and both equally culpable.

    People cannot afford loans for a variety of reasons. People can be earning above the poverty line and yet cannot meet the mortgage payments of a particular loan amount, but if you are issuing lier loans then you have given the only way you can tell if someone is a good credit risk.

  26. Zauditu Avatar
    Zauditu

    Is it for real in truth all the Japanese banks going out of business?

  27. Adrian Hinds Avatar
    Adrian Hinds

    One of the most memorable months in Wall Street history ended in a sea of green on Tuesday, easing some the pain from the turmoil that has slammed the nation’s financial system over the past four weeks.

    The Dow answered its worst ever single-day point loss with one of its best point gains in history, in part on hopes Congress will eventually pass a financial rescue bill that may be more favorable than the one it rejected a day go.

    Today’s Market

    The Dow Jones Industrial Average jumped 485.21 points, or 4.68%, to 10850.66. The broader S&P 500 Index added 58.34 points, or 5.27%, to 1164.73, while the Nasdaq Composite Index picked up 98.60 points, or 4.97%, to 2082.33. The consumer-friendly Fox 50 Index rose 42.24 points, or 5.17%, to 859.05

    “Yesterday was about fear, panic and frustration. Fear and panic that things were going to get a lot worse and frustration over the House’s inability to pass the bailout bill,” said Michael James, senior equity trader at Wedbush Morgan Securities. “Certainly there’s a little bit more optimism about things today. We’ll have to see if it comes to fruition.”
    ==========================

    Bunch a scare mongering elitist thieves. 🙂 🙂

  28. Adrian Hinds Avatar
    Adrian Hinds

    I found this article on the Japanese lost decade to be a good read. 🙂

    http://www.aei.org/publications/pubID.27568/pub_detail.asp

    The section “Lessons for America” seems to agree in large part with Straight Talk opinion re.

    “The remedy must involve all financial entities (remaining) must open their books and have a true valuation of the entire sector’s assets.
    That is at current market value.”

    In his post:
    http://bajan.wordpress.com/2008/09/29/united-states-of-america-wall-street-obama/#comment-41099

    de Ink well like it dried up. 🙂

  29. Adrian Hinds Avatar
    Adrian Hinds

    Bankruptcy, not bailout, is the right answer

    Story Highlights
    Jeffrey Miron: Government encouraged lenders to relax their standards

    Mortgages were given to people unqualified to repay them, he says

    Miron: Rather than a bailout, government should let firms go bankrupt

    Talk of economic Armageddon is scare-mongering, Miron says

    By Jeffrey A. Miron
    Special to CNN
    Editor’s note: Jeffrey A. Miron is senior lecturer in economics at Harvard University. A Libertarian, he was one of 166 academic economists who signed a letter to congressional leaders last week opposing the government bailout plan.

    CAMBRIDGE, Massachusetts (CNN) — Congress has balked at the Bush administration’s proposed $700 billion bailout of Wall Street. Under this plan, the Treasury would have bought the “troubled assets” of financial institutions in an attempt to avoid economic meltdown.

    This bailout was a terrible idea. Here’s why.

    The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.

    Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared.

    This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle.

    Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets.

    The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.

    The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.

    Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

    In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This “moral hazard” generates enormous distortions in an economy’s allocation of its financial resources.

    Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time.

    Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.

    Further, the current credit freeze is likely due to Wall Street’s hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents.

    The costs of the bailout, moreover, are almost certainly being understated. The administration’s claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion.

    If these assets are worth something, however, private parties should want to buy them, and they would do so if the owners would accept fair market value. Far more likely is that current owners have brushed under the rug how little their assets are worth.

    The bailout has more problems. The final legislation will probably include numerous side conditions and special dealings that reward Washington lobbyists and their clients.

    Anticipation of the bailout will engender strategic behavior by Wall Street institutions as they shuffle their assets and position their balance sheets to maximize their take. The bailout will open the door to further federal meddling in financial markets.

    So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.

    The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer.

    The Author is a libertarian who teaches at Harvard.

  30. PiedPiper Avatar
    PiedPiper

    I, for one, will be disappointed if the U.S. congress caves under the pressure of all the screaming hysterics demanding a bail out. The very idea of bailing out those who took a calculated risk and lost flies in the face of Capitalism “You pays/plays yer money and takes yer chances”.
    A country built on the concept of Capitalism should not be in the business of artificially propping up it’s economy. I say let the cips fall where they may. Many of these bankrupted businesses/banks will be taken over by other institutions and at a very reason rate and over all this may wind up being better for the consumer.

  31. PiedPiper Avatar
    PiedPiper

    that should be “reasonable”

  32. Zauditu Avatar
    Zauditu

    The US does not know it but it is entering the third stage of Karl Marx’s four epochs of history, you know agrarian, industrial, socialism, and communism. I learned the above at UG in Georgetown, so as they head into the third epoch of their history it is only fitting that the Government bail out the banks.

  33. David Avatar
    David

    @Adrian

    You are contradicting yourself. The DOW has risen in anticipation of a bailout. If there is not bailout the DOW will react.

    Why are you using the argument and or taking comfort that the market is moving upwards?

  34. Adrian Hinds Avatar
    Adrian Hinds

    Go slowly your penchant to fall victim to “uh gotcha” make you seem infected with childish impatience.

    You use the 700+ fall to signal armegeddon (not your actual words) althought the choice of Photo to caption this thread suggest such. I use the rally to signal otherwise, and to further my contention and that of 200 to 1 americans that we are being bullied into backing this PAYBACK. Don’t you even realize that measuring stick has moved? If no bailout soon all hell will break loose, then it was by monday or else, and now it is sometime next week .

  35. David Avatar
    David

    No problem Adrian, in the meantime banks around the world continue to collapse.

  36. Straight talk Avatar
    Straight talk

    Inkwell:

    You could have saved your posting for April 1st, but maybe it was too good to delay.

    Everyone is just two clicks from being informed on different takes of everything which happens in the world affecting us.

    It is such a pity that most people do not fully utilise the wealth and spectrum of info, freely available via the http://www., before joining debates without a deeper understanding and a more informed viewpoint to advance the thread.

    Obama- Black- Good.

    Palin- white- naive- MILF- bad.

    Such shallow perceptions to attribute to persons who may seriously influence our lives for the next five years.

    Research them…it’s all available.

    They are all dupes to the system.

    I detect that Hopi has recognised the obvious, and whilst being a touch more forthright in his analysis, has come to the same conclusions as others here e.g.ROK, Green Monkey, Rumplestilskin and myself.

    We are being manipulated back into servitude, and most do not even realise it…even worse they think it is good for us.

    The mind is like an umbrella, an encumbrance until it is opened, and only then gives protection from the prevailing inclemencies.

  37. Chris Halsall Avatar
    Chris Halsall

    @All… For the record, I continue to laugh…

    Here’s a wild idea… Rather than give USD $700 billion to those who caused the crisis…

    Why not give $2 million to each US citizen? (and save somewhere around $50 billion based on current census data…)

    Imagine what that might do for the sustainability of the US economy? People would keep their homes; they’d buy cars. Hell, they wouldn’t have to worry about loosing their jobs, because they wouldn’t care!

    (But of course, the counter is, “but the taxpayers will have to pay for that!”. And my counter is, *exactly*…)

  38. Adrian Hinds Avatar
    Adrian Hinds

    Straight Talk what is the problem? Just because Inkwell was successful in playing a joke on me, you think it is cause for concern? or that my take on things is any less believable? I am at a lost as to why you think your recent post is needed in order to understand anything of importance to the subject at hand.

    ….If “They are all dupes of the system” as oppose to “we” which means you are excluded, and therefore not a dupe of the system and assuming there is something bad in being such a dupe, why don’t you teach us how not be, better yet demonstrate by personal example how you have been able to escape the clutches of the system.

    Could you also explain to me how “we are being manipulated back to servitude” who is this “we” anyway?

  39. Bush tea Avatar
    Bush tea

    Inkwell // September 30, 2008 at 2:43 pm

    Folks, to bring you up to speed….

    The chaos in the US financial market is having serious repercussions in Japan: The entire banking system seems to be crumbling.

    The Origami Bank has folded, and Sumo Bank has gone belly up.

    The Bonsai Bank has announced plans to cut many of its branches….
    ++++++++++++++++++++++++
    Zauditu // September 30, 2008 at 4:25 pm

    Is it for real in truth all the Japanese banks going out of business?
    ++++++++++++++++++++++++

    Zauditu, you do realize that that whole post is a www. Japanese joke …. don’t you?!!!

  40. Chris Halsall Avatar
    Chris Halsall

    Oh, come on…

    Someone call me on this… I’m only off by three orders of magnitude…

    LOL…

  41. Adrian Hinds Avatar
    Adrian Hinds

    David // September 30, 2008 at 5:51 pm

    No problem Adrian, in the meantime banks around the world continue to collapse
    ===========================

    Le them fail. 🙂 are you a socialist or not? really i don’t know!

    Althought i now realize that Inkwell played a good one me ( I am not too big to admit it) It still affored me an opportunity to bring to memory a event that helps to shed light on this “crisis” The Japanese lost decade has several lessons for America as it faces this crisis. Thanks Inkwell the joke is on me. 🙂 and i gladly accept, now don’t expect me to shut up. 🙂

  42. ROK Avatar
    ROK

    Zauditu

    I challenging you on Marx, man. If I could remember. No cheating.

    communalism
    Divine Rule
    This one here I can’t remember – Nobility
    Serfdom/slavery/indentureship
    This one here I can’t remember –
    apprenticeship
    industrialisation
    capitalism
    socialism
    communism

    I can’t believe myself. I used to know this thing by heart.

  43. ROK Avatar
    ROK

    Chris

    When you play a game of draughts or chess, after the winner is declared you reset the pieces and create an even playing field again.

    No problem in doing what you said, reset the game. Let’s see who will be able to keep theirs and see how long it takes Wall Street to collect the 700 Billion.

    The game is over if wall street gets 700 B or if the citizens manage to hold their wealth and crash wall street.

    Then you reset again.

  44. Zauditu Avatar
    Zauditu

    Hi Rok, I had to remember it for a final examination at the University of Guyana in the early 70’s. I had totally forgotten about it, but it just came to me as I read all the posts here tonight, but especially Pied Piper’s, who said the US economy is based on capitalism, and I thought WOW, but could we be seeing Marx’s final epoch being played out right before our eyes, with the US Government buying the bad loans and so on. I do remember the prof at UG constantly saying in his lectures how the US will be the first country in the world to have gone through Marx’s five epochs of history. You are right, the five epochs of history are primitive, fuedal, slave, industrial and socialism/communisim. I wrote down four, in my previous post, but it is five. Anyway, isn’t it funny how things come to you after so many years of dormancy.

  45. Zauditu Avatar
    Zauditu

    Bush Tea, I am not familiar with Japanese banks, so I thought the ripple effect had begun. I know Chase Manhattan Bank, Bank of America, Republic Bank Guyana, and Bank of Nova Scotia

  46. Deng Xiaping Avatar
    Deng Xiaping

    @ Halsall,
    Your plan would work if the definition of a billion was the British version (one followed by 12 zeros). However the US bilion is a one followed by 9 zeros, so your plan will cost six hunded thousand billion (US) dollars. The proposed plan $700 billion equates to an increased burden of $2,334 on every man, woman and child in the US.

  47. John Avatar
    John

    Zauditu // September 30, 2008 at 5:09 pm

    The US does not know it but it is entering the third stage of Karl Marx’s four epochs of history, you know agrarian, industrial, socialism, and communism. I learned the above at UG in Georgetown, so as they head into the third epoch of their history it is only fitting that the Government bail out the banks.
    +++++++++++++++++++++++++

    What phase would Russia be in at the moment and what can China look forward to?

  48. John Avatar
    John

    ROK // September 30, 2008 at 9:36 pm

    Zauditu

    I challenging you on Marx, man. If I could remember. No cheating.

    communalism
    Divine Rule
    This one here I can’t remember – Nobility
    Serfdom/slavery/indentureship
    This one here I can’t remember –
    apprenticeship
    industrialisation
    capitalism
    socialism
    communism

    I can’t believe myself. I used to know this thing by heart.
    +++++++++++++++++++++++

    Not surprised you can’t remember.

    We getting old ……. and besides, the application of Marx’s theories in Russia is forgettable.

  49. Adrian Hinds Avatar
    Adrian Hinds

    WOW! in here gone very quite, and the reminiscing of a failed,…am was it an economic or government system? Feeling irrelevant? why?
    The markets and the bias news media must not be promoting fear and trepidation,…. fire and brimstone on hold?
    ha ha ha ha ha

  50. Wishing In Vain Avatar
    Wishing In Vain

    PBS anchor Gwen Ifill, who is moderating Thursday’s VP debate, is releasing a new book on Barack Obama

    They say where ever you go you will find a Bajan, this is just the case here, yet another person of Barbadian decent making a mark on the world stage.

    I must take my hat off to Gwen Ifill, Mr Holder and our own Hartley Henry for making a mark on the worlds stage.

    Gwen Ifill
    Born 29 September 1955 (1955-09-29) (age 53)
    New York City, New York, USA
    Education Simmons College
    Occupation Journalist
    Notable credit(s) The New York Times
    News Hour with Jim Lehrer
    The Washington Post
    Washington Week
    Gwen Ifill (born September 29, 1955) is an American journalist and television newscaster. She is the managing editor and moderator for Washington Week (PBS) and a senior correspondant for The NewsHour (PBS). She is a political pundit, appearing on various programs.

    Early years
    Ifill was born New York City, the fifth child of African Methodist Episcopal minister, Urcille, Sr. and Eleanor Ifill, a Panamanian of Barbadian descent who emigrated from Panama and Eleanor who was also from Barbados. Her father’s ministry required the family to live in several cities throughout New England and the Eastern Seaboard during her youth. She graduated with a Bachelor of Arts in Communications from Simmons College in Boston, Massachusetts in 1977.
    Career
    Ifill worked for the Boston Herald (1977-1980), Baltimore Evening Sun (1981-1984), The Washington Post (1984-1991), The New York Times (1991-1994), and NBC.[4] In October 1999, she became moderator of the PBS program Washington Week in Review. She is also senior correspondent for the NewsHour with Jim Lehrer. Ifill has appeared on various news shows, including Meet the Press.

    On October 5, 2004, she moderated the vice presidential debate between Dick Cheney and John Edwards. In the debate when Cheney asked for more than 30 seconds to react to a particular statement, Ifill told him “Well, that’s all you’ve got”. Ifill said that though it was not her intent, Democratic partisans were delighted with her because she was seen as being “snippy” to Cheney. She also co-hosted with Kaitlyn Adkins Jamestown LIVE!, a History Channel special commemorating the 400th anniversary of Jamestown in 2007. On August 5, 2008, it was announced that she would moderate the vice-presidential debates on October 2.

    She serves on the board of the Harvard Institute of Politics, the Committee to Protect Journalists, the Museum of Television and Radio and the University of Maryland’s Philip Merrill College of Journalism.

    On October 2, 2008, she will moderate the first Vice-Presidential debate between Joe Biden and Sarah Palin at Washington University in St. Louis.

    On January 20, 2009, Inauguration Day, her new book The Breakthrough: Politics and Race in the Age of Obama, will be released.

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