[dax]

Hi,

As some of you know, the US Congress is preparing a big check (700$ billions) for bailing out Wall Street banks saying otherwise there is a possible threat to US economy. The US economy and world economy actually will go through a contraction in the coming years anyway, and this is mainly because of the mess big banks, the FED and US Treasury created using cheap credit, inflating house prices, greed.

Those banks need to take their medicine because they are ill; house prices need to go down so that people can afford them again. If left alone, a free market will eventually do that. But US Treasury wants to stop that so banks don't suffer losses. In the same time, because of houses are still to expensive, people don't buy them. Revenues are down, unemployment is soaring. No authority in the world can stop a recession.

It's not fare for those who created the mess to get away with a big check of 700$ billions. We will suffer, but they don't have to be saved. Capitalism is not suppose to work like that.

If you live in US, here is how you can stop this fiscal insanity. Call you senator NOW and say NO to the bailout with your own words!
http://globaleconomicanalysis.blogspot.com...-sells-out.html



If you agree with me, send this to your friends too.

[Mythos_Ruler]

There's nothing "free market" about the coming Recession. It needs to be managed (carefully and thoughtfully) or else there is a risk of, however small, of a protracted recession or depression. Deregulation of the credit and banking industry was the cause of this foul up. The Reagan/Bush philosophy is as bankrupt as a Wall Street Bank. Phil Gramm, John McCain's chief economic advisor and possible Secretary of the Treasure, should McCain win the election, is responsible for inserting legislation into the 1999 Federal Budget that gutted the Glass-Seagal Act and allowed Credit Companies, Traditional Banks, Mortgage Brokers, and Stock Market firms to merge and buy each other out. The protections put into place during and after the Great Depression of the 1930s have finally been eroded. The final ingredient was in place for the laissez-faire recipe of financial disaster. Fortunately for Gramm and his ilk they managed to rake in $billions before the whole scheme collapsed.

Three major Wall Street collapses within 25 years is no accident - the past 30 years have been spent worshiping at the altar of Reaganomics. Take the reins off of the big money interests and all they'll do is strive to make more big money, any way possible, at any cost, with no planning for long term sustainability. With fraudulent credit ratings, pyramid schemes, criminal, immoral accounting practices, cheap money from the Fed, and yes, a slackening of mortgage lending practices to people who really shouldn't have bought homes, our failure has been complete. This is Capitalism Gone Wild, and instead of seeing bouncing @#$%, we see our homes foreclosed and more jobs shipped overseas. We believed these laissez-faire merchants of death because we had to in order to sustain our American lifestyles - what we believed was our god-given right to SUVs and the "American Dream" of a 4 bedroom home, a cat, and a dog. We forgot the horrors of Generations past. I guess it's time for us to painfully relearn the lessons we should have learned from our ancestor's mistakes. Instead, history repeats itself - after a decade-long gilded age, where economic growth actually meant the people saw less, where increased worker productivity saw a decline in wages, a decade of wild corporatist exuberance, ultimately it is you and me and our children that suffer, as they did back in the 1930s.

This post has been edited by Mythos_Ruler: 25 September 2008 - 09:47 PM

[dax]

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There's nothing "free market" about the coming Recession. It needs to be managed (carefully and thoughtfully) or else there is a risk of, however small, of a protracted recession or depression.

No authority in the world can stop recessions. There is no such thing as infinite growth. There are economic cycles, and the economists demonstrated it.

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Deregulation of the credit and banking industry was the cause of this foul up. The Reagan/Bush philosophy is as bankrupt as a Wall Street Bank. Phil Gramm, John McCain's chief economic advisor and possible Secretary of the Treasure, should McCain win the election, is responsible for inserting legislation into the 1999 Federal Budget that gutted the Glass-Seagal Act and allowed Credit Companies, Traditional Banks, Mortgage Brokers, and Stock Market firms to merge and buy each other out.

It looks to me that all sorts of "Acts" are the root cause of this plus the micromanagement of interests rates by the FED, which created cheap money. Look at them now trying to do something, even if nobody knows what to do. Actually, all they are trying to do is postpone Armageddon; the storm is still out there and will hit even harder. More they do, more damage will be.

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Take the reins off of the big money interests and all they'll do is strive to make more big money, any way possible, at any cost, with no planning for long term sustainability. With fraudulent credit ratings, pyramid schemes, criminal, immoral accounting practices, cheap money from the Fed, and yes, a slackening of mortgage lending practices to people who really shouldn't have bought homes, our failure has been complete.

That's why all those companies need to go under. They proven criminal, liars, greed. Instead what they are trying to do is pump even more money in these blackwholes! This is insane. Bad management, go away. Capitalism has failure as alternative; we use to give a prize even to those who didn't diserve it these days. Failure is not an option anymore. This is utopia and complete disaster.

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We believed these laissez-faire merchants of death because we had to in order to sustain our American lifestyles - what we believed was our god-given right to SUVs and the "American Dream" of a 4 bedroom home, a cat, and a dog. We forgot the horrors of Generations past. I guess it's time for us to painfully relearn the lessons we should have learned from our ancestor's mistakes.

And we will pay for those. 1930 is back in worse. Coming years will be bloodbath, we'll all suffer. But there is no reason to give even more credit and more money to banks who created the problems. I saw yestarday the salaries of these CEOs in the last 3 years; those are numbers with 9 digits. I guess they will make it through recession much better than the rest of us. What they are asking now is spend their 2008 Christamas on their yachts; they don't want to leave them. That's too easy I think.

[Mythos_Ruler]

The $700 Billion bailout, as is, will cause inflation as much of that money will be created out of thin air by The Fed. Once foreigners see how much the US Dollar is tanking they will stop buying dollars, oil will stop being traded in dollars, and then we're seriously screwed.

[dax]

I'm not sure about that. For now, we have deflation (prices go down). What they're trying to do is inflate, but I think 700$ billions is far from enough. It will just patch the black wholes banks have on their balance sheets. It will do nothing to the economy. Inflation will be later, after 10 other Paulson plans. This is the first in a series. But the point I'm defending here is the plan is not fair, it creates no jobs, it doesn't help the economy. It's stupid to buy 'illiquid assets' and pump money into moribond institutions (they will die anyway, just that it will be within a year). In the meantime, you spent hundreds of billions for nothing.

So then, call you senator TODAY and say NO to this if you think is bad and of no use for the economy.

[janwas]

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The $700 Billion bailout, as is, will cause inflation as much of that money will be created out of thin air by The Fed.

I'm not sure about the inflation either, but what irks me is the attempt to hide the fact that the taxpayer is paying for all of this. Printing more money or the other Republican suggestion (tax breaks) - both are disingenuous, the latter hiding behind a higher deficit and long-term debt.

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But the point I'm defending here is the plan is not fair

Amen! Bailing out the greedy crooks that lied to their risk-management systems isn't fair, and worse, won't exactly discourage future shenanigans. For the "self-interest" prerequisite of capitalism to work, there has to be some disincentive for risk and failure like this.
As others have noted, this doesn't sound like (even regulated) capitalism anymore. Instead, FDR had it right:

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The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism—ownership of government by an individual, by a group, or by any other controlling private power.

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(they will die anyway, just that it will be within a year).

You may be right about them eventually going broke, but it's interesting that so much effort is going towards papering things over. Sounds to me like someone knows that the entire financial system is a house of cards and that they have to try to intervene.

This post has been edited by janwas: 27 September 2008 - 08:33 AM

[Justinian]

Not sure if this has been raised already (TL:DR) but if the US government gives 840B USD to the people responsible won't they just hold on to the cash and say screw you to the government...

I'm happy that I'm on this side of the Pacific (the Aussies are only paying 4B AUD to SMALLER loan businesses).

[dax]

Scipii_Alemanus, on Sep 28 2008, 01:10 PM, said:

Not sure if this has been raised already (TL:DR) but if the US government gives 840B USD to the people responsible won't they just hold on to the cash and say screw you to the government...

I'm happy that I'm on this side of the Pacific (the Aussies are only paying 4B AUD to SMALLER loan businesses).

We don't know, but that's an option, for sure. Why those people, with billions of $ in their accounts asking for a bailout on other individual's money invoking is good for everybody as the government will recover toxic assets as they will grow in value over time, don't put their own money at work? They will make a good deal based on what they're saying, right? Well, I think they don't really believe it! Thos papers are iliquid and toxic because nobody wants those; their market value is a big ZERO.

[dax]

They are trying to pass this through Senat now. Don't give up and call your senators if you think this isn't fair, as I do. Send this to your friends and ask them to do the same.

Here is what to do and the list of senators' office phone numbers.
http://globaleconomicanalysis.blogspot.com...e-in-house.html

Participate in this poll and stop this madness. It won't create a single job; these are losts money US won't have for something else. Supporting moribond institutions is not the smartest thing to do these days.
http://www.cnbc.com/id/26945250%20

[Mythos_Ruler]

I'm starting to think we should do nothing and let these banks either go bankrupt or be bought out. Then once everything shakes out, institute common sense regulations, including the banning of sub-prime mortgages.

[Justinian]

Personally I think this could hve one of two lasting effects for the World Economy.

Either it will speed up Globalization due to everyone not wanting to spend too much in one place in case that place screws itself up bad.

Or it will stop Globalization due to everyone being scared.

[dax]

I heard this on news yesterday evening. The FBI started to look into emails, documents, etc. the bank employees were exchanging already by the end of 2006 regarding the financial products and their investments.

"We are creating a monster. I hope we'll be rich and retired when this will bust".

So they were aware of what they're doing but the greed didn't stop them. At the moment when the bonuses and the champagne were on Wall Street, we weren't invited at the party. Today, we are asked to pay the bill.

Paulson nationalized Fannie & Freddie the other day saying he will stabilize the system. Did it work? No sir. Does he have any credibility? No sir. Is he having friends on Wall Street? Yes sir.

Call your senators, participate in the polls, send this to your friends and say NO to this intellectual fraud which they're are calling 'saving the system' if you believe it is such: a fraud.

This post has been edited by dax: 01 October 2008 - 09:20 AM