$700bn Wallstreet Bailout REJECTED

[indy500fan]

The DOW went down, what, 7000 points (though I may be wrong)?

 

 

 

:lol:

 

 

 

EDIT: Oh and I just wanted to put my two cents in, I was against the bill. The main mortgage problem started back in '99 when the Clinton administration pressured to artificially lower interest rates so poor people would buy houses they couldn't afford. Now because of increased prices in food and gas those poor people can barely afford to survive anymore, and their biggest payments (house) they just don't pay. So is this all the poor peoples fault? Of course not, at the time because of the artificially low interest rates they were living within their means by buying houses that they normally wouldn't be able to afford.

 

 

 

The Dow going down 778 points isn't as bad as it sound either. Overall that was a 7% drop in a day, right after 9/11 there was something like a 15% drop and that didn't cause a depression. What it just means now is that a decent amount of rich people just became a little less rich. For 95% of the population it's just a bump on the road, when you invest in stocks you invest for long term (like 20+ years) and this won't be that big of a difference. Also if you don't have any investments started and have some extra money lying around today would be a good day to buy before the market goes back up.

 

 

 

EDIT2: My first point was just to point out that this wasn't the problem of free market capitalism, wasn't taking a stab at Democrats.

[Woodcut Lvr]

 

Like I said

 

We could but Federal Taxes on the wages of prostitutes to gain money to pull us out of the crisis. Just a thought.

 

 

 

And in the process creating a whole new can of worms in the way of poverty traps. Most of those girls will not be using protection, will be having babies which now need to be taken care of which qualifies them for welfare which leads right back into the welfare trap and sucks more money out of the government's pocket. Yeah. Great plan.

 

 

 

Um. Joke?

[indy500fan]

Economist explains why the bailout was a bad plan

[assassin_696]

Would $700B (or lower, as it will now be for a re-vote later this week) actually restore that confidence enough?

 

 

 

It's not just about restoring confidence, the money would be used to buy the toxic assets which would free up the liquidity of a lot of the major banks, allowing them to function normally again. Granted, confidence won't be restored overnight, the last time this kind of thing happened it took months for the trust to be set up that could start buying up the bad assets.

 

 

 

Some form of bailout will be passed. If not, the only alternative is that every major US bank will fail and every British bank will be nationalised. It's time to put aside niceties and hypotheticals about moral hazard and do something about this crisis.

 

 

 

Economist explains why the bailout was a bad plan

 

 

 

He talks a lot of sense, but most of it's simply with hindsight. I think he's underestimated just how bad this crisis could be if some sort of a bailout isn't approved. I agree that in principle, the taxpayers bailing out financial institutions (and Henry Paulson's) mistakes is far from desirable, but unfortunately it seems to be entirely necessary.

[dusqi]

Your American politicians are scared. It came down to the fact that most of them wanted the plan to go through, but they didn't want to go down on record as voting for it in case it went wrong and they were blamed in future for "socialism". In the end, the politicians were as surprised as everyone else that the bill failed.

[BlueLancer]

People who are against the bill amuse me. Most like to use the "I don't want to pay " without realizing 1.) Very few people were complaining when they were reaping the benefits of the government's/Wall Street's/the bank's mismanagement of capital and 2.) the plan is better than standing in line for 14 hours just so you can get a piece of bread and soup, which is what will happen if nothing is done.

 

 

 

Taxing $2,000 out of every american citizen's pocket to bail out failing, private owned subprime lenders and banks doing irresponsible overnight loans... The above article sums up well why the bankruptcy of those companies is the correct answer, and fortunately enough the congress did reject the $700bn bill.

 

 

 

Bankruptcy doesn't mean those companies and banks disappear. The profitable aspects of the business still stay, just under new management. But their mistakes shouldn't be paid by the "average Joe".

 

 

 

"Average Joe" didn't force those banks to grant $200,000 loans to people with broken credit scores, lending hundreds of millions per night to other, unstable banks playing on currency futures as if it's a game of roulette.. Those institutions will need new, more competent management which is also objective & critical to pressure from the congress.

[Ginger_Warrior]

I like this conversation. This proves the need for building societies to remain exactly that, instead of the Tories solution of allowing them to "demutualise" into banks and putting themselves into financial impossibility (re: Bradford & Bingley - yeah, I bet they wanna work with Labour on that one).

 

 

 

If you wanna solve the problem of debt, don't force everyone to take a bank account with an overdraft limit, and don't allow them to take out money they simply do not have, or take out mortgages they cannot repay. Building societies ensure both.

[deloriagod]

People who are against the bill amuse me. Most like to use the "I don't want to pay " without realizing 1.) Very few people were complaining when they were reaping the benefits of the government's/Wall Street's/the bank's mismanagement of capital and 2.) the plan is better than standing in line for 14 hours just so you can get a piece of bread and soup, which is what will happen if nothing is done.

 

 

 

Taxing $2,000 out of every american citizen's pocket to bail out failing, private owned subprime lenders and banks doing irresponsible overnight loans... The above article sums up well why the bankruptcy of those companies is the correct answer, and fortunately enough the congress did reject the $700bn bill.

 

 

 

Bankruptcy doesn't mean those companies and banks disappear. The profitable aspects of the business still stay, just under new management. But their mistakes shouldn't be paid by the "average Joe".

 

 

 

"Average Joe" didn't force those banks to grant $200,000 loans to people with broken credit scores, lending hundreds of millions per night to other, unstable banks playing on currency futures as if it's a game of roulette.. Those institutions will need new, more competent management which is also objective & critical to pressure from the congress.

 

 

 

I think this is what a lot of people are not understanding. They're hearing "this $700b bailout plan will save our economy" and not think twice about how it's going to hurt the country. The gov't isn't going to put up the money to save companies that have made bad choices. It's going to be us, the taxpayers. Already many of us are in financial problems, so why would anyone support paying MORE taxes to save somebody else's company? If your local MacDonalds was going out of business, you wouldn't walk in there and hand them a check big enough to to cover what they need to stay in business. You'd wonder where you're going to get your burgers now. So why pay for some big company to keep up their terrible practices when they're going to land us in the same situation again? Let them crash and burn. New companies will soon replace them.

[limpbizkit]

Meh, nevermind. Got nothing useful to contribute.

 

 

 

Heh, I've written two texts, simply to delete them, rewrite them and eventually post something. I found it very difficult to say something sensible, considering that I'm not an economist...

 

 

 

Quite frankly, the machinations behind what is going on with the world economy at the moment are a mystery to me, and I depend on articles, the press and clever economists to get a vague idea.

 

 

 

Is it me or am I the only one thinking:

 

Oh look ... all them have the credit crunch .. ha well never have that .. ARGH [bleep] WE HAVE A [bleep]ING CREDIT CRUNCH.

[Will H]

where would we come up with 700 Bil if it got approved? Democrats are trying to kill the economy :roll:

 

 

 

Borrow it from other nations?

 

 

 

You could borrow it from the IMF and learn waht its like to be a 3rd world country and send al your money of to them...

 

But up here in alberta, we have maybe $15 billion saved away if we were to go all depressiony again.. so its all goodish here.

 

Yeah but Alberta has oil. That doesn't count. :|

 

 

 

I don't know enough about this bailout plan to be confident in an opinion, but I am pretty sure that it's going to be tough few years to come.

 

 

 

Ah, Que Sera Sera.

[magekillr]

I'd rather we didn't let these banks fail. You know, Americans still deal with high college costs, and I kind of need loans to continue. At the rate the banks are falling, I won't have anyone willing to lend to me for next semester.

 

 

 

I'm glad I didn't pick Wachovia; they wanted 10.5% interest so I picked someone else. I also almost picked "My Rich Uncle", and they're not lending as they were under the L. Bro's.

 

 

 

Comon Key Bank!

 

 

 

edit: and about the Clinton admin making it easier for banks to lend out...I believe it was a Republican dominated Congress for one, and for two:

 

 

 

http://www.businessweek.com/investing/i ... ogspotting

 

 

 

Nonetheless, the whole issue/problem/blame rests on the shoulders of both parties.

[Lenticular_J]

Yeah, right now students are being screwed over without mercy. If you come from anything other than a rich family, and don't get a complete scholarship, well... :?

 

 

 

Hope this is resolved by the time I'm collegin' it up.

[deloriagod]

Eh, I'm not too worried about college. I'm taking a year off after I graduate this spring and getting a job. I figure I can get a full time job at a security place (where my best friend's dad is the operations manager), live at home, save up money and college won't be quite as rough.

[dusqi]

A lot of people don't seem to be taking the next mental step on from the bailout. That is, if the banks aren't confident to lend to each other, then they won't lend to consumers either. That means no college loans, expensive house loans leading to lower house prices, businesses can't get loans to fund investment leading to lost jobs, so then people can't buy things, so businesses lose sales... and the recession becomes a very big problem.

 

 

 

On the other hand, if the government takes the "toxic debts", it can sit and hold onto them, until such time as the market goes up again, and then it will sell them on or wait until they're paid back. The banks can't do that, because other banks lose confidence in each others' ability to pay back loans, but the government is so big that people won't lose confidence in it. It's not as if the government is just giving $700Bn away - as far as I can tell, there is a fair record in other countries of these interventions actually turning a profit in the long term. Even if it doesn't turn a profit, I thought that there were clauses in the legislation that would require banks to pay to fill any loss.

 

 

 

Of course, people are simple, and simple messages like "omg, the government is spending your $700Bn and giving it to rich banks" makes a nice sound byte.

[indy500fan]

A lot of people don't seem to be taking the next mental step on from the bailout. That is, if the banks aren't confident to lend to each other, then they won't lend to consumers either. That means no college loans, expensive house loans leading to lower house prices, businesses can't get loans to fund investment leading to lost jobs, so then people can't buy things, so businesses lose sales... and the recession becomes a very big problem.

 

 

 

On the other hand, if the government takes the "toxic debts", it can sit and hold onto them, until such time as the market goes up again, and then it will sell them on or wait until they're paid back. The banks can't do that, because other banks lose confidence in each others' ability to pay back loans, but the government is so big that people won't lose confidence in it. It's not as if the government is just giving $700Bn away - as far as I can tell, there is a fair record in other countries of these interventions actually turning a profit in the long term. Even if it doesn't turn a profit, I thought that there were clauses in the legislation that would require banks to pay to fill any loss.

 

 

 

Of course, people are simple, and simple messages like "omg, the government is spending your $700Bn and giving it to rich banks" makes a nice sound byte.

 

 

 

Except this bill wasn't going to return anything to us at all. Much of the money was planned on being given to Chinese and Middle Eastern banks, with no chance of the American people getting it back. The people who caused this problem, the managers of the banks who were lending out money to anyone who asked are going to be the only people getting anything out of this, they will continue to get their million dollar a month paychecks.

 

 

 

This bill will just help the rich, while letting these companies go bankrupt could put us in a recession now that is much better than an all out depression later because the middle and lower classes are being taxed an extra $5000 a year.

 

 

 

I'm sorry, I don't feel like getting taxed a few grand more a year so that these bank manager [bleep]ers can keep their huge [wagon] houses and multiple cars.

[Barihawk]

Actually just the middle class. If you or any one of your dependants make under the poverty line you are exempt from taxes. So when people say "taxing the lower classes" they are just spreading fertilizer. The middle class is like a big [wagon] bell curve. It makes up 75% of the equation. So most people will be paying taxes, but not the lower end of the spectrum.

[Powman3]

The DOW went down, what, 7000 points (though I may be wrong)?

 

 

 

:lol:

 

 

 

 

778*

 

 

 

If we fell that far down we'd be extremely [bleep]ed.

[Claremont]

This 700b bailout would fix the economy for a total of... 1 day? If that. The problem isnt the falling stock prices, its the confidence of mum and dads out there that are pulling their money out of banks and the stock market following. One bank closes because they couldnt give the money back to people as it was out on mortgauge, the bank has to foreclose itself and anul or setup debtor payments, they offload the debts to other banks, people panic, keep pulling money out and it becomes a spiral. All the 700b is ment to do is restore confidence.

 

 

 

It George had any idea how the stock market worked he would say 'this will be fine' not announcing that all americans are panicing as the stocks fail....

 

 

 

its like if you announce your companies shutting down departments and making cutbacks, there will be a loss in stock costs, if you say your expanding and building (even if you not) there will be confidence and stocks prices will be bolstered and you may just wether your financial difficulties.

 

 

 

GG America.

[Ginger_Warrior]

Actually just the middle class. If you or any one of your dependants make under the poverty line you are exempt from taxes. So when people say "taxing the lower classes" they are just spreading fertilizer. The middle class is like a big [wagon] bell curve. It makes up 75% of the equation. So most people will be paying taxes, but not the lower end of the spectrum.

 

Inability to pay tax =/= lower classes. Another misuse of the term "middle class".

 

 

 

You are only part of the middle class when you no longer have to work in order to live. People in the middle classes are typically successful business owners and chief executives. Above all else, basic social economics should tell you 75% of a population cannot be part of a middle class, as that would leave only ~20% to work for them. Even if you take one business to one worker, that still leaves over half of them without any at all.

[chris1216]

Wrong again. There are no differing opinions on whether or not to let the housing crisis run its course because there is no other choice.

 

 

 

You're also wrong in implying that the problem is banks being unwilling to lend money. Again, even if banks were willing to give out loans to everyone with good credit, people are still overall unwilling to buy into the housing market.

 

 

 

ONCE AGAIN, from the cnnmoney article: "Home prices, while sharply off from the 2006 peaks, are still high in comparison to long-term gains in income, rents or overall prices, suggesting that they still have a way to fall, according to experts."

 

 

 

So, assuming the housing crisis can only be solved by crashing, shouldn't we make sure the banks don't crash with it? As in, the 700Bil bailout. This would at least give people the option of taking out loans and would allow banks to loan money to firms.

 

 

 

I'll admit though, I still don't understand how the housing market crash can't be stopped.

 

 

 

 

 

The reason the bailout in all the forms it exists right now is total crap is because that it either is giving those banks a blank check to do whatever they want, or it doesn't.

 

 

 

The current forms don't offer nearly enough protection for the taxpayer.

 

 

 

Instead of the government recieving equity from these banks in the form of senior preferred stock (something that Warren Buffett was smart enough to do when he personally bailed out Goldman Sachs), the government gets warrants FOR stock. This of course gives banks endless opportunities to lobby congress into never cashing in those warrants, and even if Congress does, they get nonvoting stock. This gives them no leverage over these companies that screwed up and got bailed out and allows them free reign to do whatever they please.

 

 

 

 

 

There is nothing wrong with helping these banks restore liquidity. I think Obama put it perfectly in a recent speech, where he compared the financial sector crisis to that of a neighbor's house being on fire:

 

 

If your neighbors house is burning, youre not gonna spend a whole lot of time saying well, that guy was always irresponsible. He always left the stove on. He always was smoking in bed, Obama told the crowd of 12,000 at the University of Nevada - Reno. All those things may be true, but his house could end up affecting your house.

 

 

 

Weve got to make sure that we put the fire out and then go start making sure that these folks stop leaving the stove on.

 

 

 

 

 

 

 

As for the housing crisis bit, yes it's true that any bailout of the financial sector doesn't solve the main problem, which is that people keep on being forced out of their homes because of mortgages that readjust to prices they weren't able to pay.

 

 

 

To solve the housing part, Congress might have to bite the politically suicidal bullet and go as far as to either declare a moratorium on foreclosures or force renegotiation of adjustable rate mortgages between the homeowner and the bank.

 

 

 

Banks hate the idea because for some reason they'd rather foreclose than be forced to accept a lower rate mortgage. This doesn't yet completely make sense to me because at this rate, foreclosing a house that the bank won't be able to sell for years doesn't seem as good as just renegotiating.

 

 

 

Many ordinary citizens might hate it because people like me, who have good credit and won't/didn't spend beyond my means will have gotten basically screwed- the government would be helping people who applied for loans THEY COULDN'T AFFORD and are now allowed to keep their houses at a better mortgage rate.

 

 

 

The problem

 

 

 

(Insert synonym for "In Conclusion" here), a real solution will have to be twofold: restore liquidity to banks by buying their assets or shares of preferred stock at market price while also keeping people in their homes by forcing banks to renegotiate those loans and putting down a moratorium on foreclosures.

[assassin_696]

Taxing $2,000 out of every american citizen's pocket to bail out failing, private owned subprime lenders and banks doing irresponsible overnight loans... The above article sums up well why the bankruptcy of those companies is the correct answer, and fortunately enough the congress did reject the $700bn bill.

 

 

 

Bankruptcy doesn't mean those companies and banks disappear. The profitable aspects of the business still stay, just under new management. But their mistakes shouldn't be paid by the "average Joe".

 

 

 

"Average Joe" didn't force those banks to grant $200,000 loans to people with broken credit scores, lending hundreds of millions per night to other, unstable banks playing on currency futures as if it's a game of roulette.. Those institutions will need new, more competent management which is also objective & critical to pressure from the congress.

 

 

 

I really don't think we should underestimate just how badly not only the world's financial sector but also many other industries will be hit if the bailout is rejected entirely. Once every large American bank starts failing (which they will) the stock market will crash further, millions of investors (average Joe's with a few shares) will lose their savings. Larger companies, Ford, General Motors might start going under taking thousands of jobs with them. And all for what? Some nicety about moral hazard?

 

 

 

I don't see how you can think that the rest of the world's economies are so insulated from what would be the almost complete collapse of the financial sector. The bailout is currently the lesser of two evils.

[tintin113]

That $700,000,000,000 comes from the tax payers' pockets. Why the hell should I pay for the mistakes some big badass businessmen made. They screw up, and get paid. Sounds like [cabbage] to me.

 

 

 

Because if taxpayers don't then we could end up in another Great Depression that would not only effect you but your children and they rest of the world. Don't be such self-centred [cabbage] and try to think about why you pay taxes at all.

 

 

 

EDIT: Also you didn't impress/intimidate anyone by writing out $700b in numbers, we all know how much it is.

[deloriagod]

That $700,000,000,000 comes from the tax payers' pockets. Why the hell should I pay for the mistakes some big badass businessmen made. They screw up, and get paid. Sounds like [cabbage] to me.

 

 

 

Because if taxpayers don't then we could end up in another Great Depression that would not only effect you but your children and they rest of the world. Don't be such self-centred [cabbage] and try to think about why you pay taxes at all.

 

 

 

EDIT: Also you didn't impress/intimidate anyone by writing out $700b in numbers, we all know how much it is.

 

 

 

They're approaching this the wrong way altogether. They're going to save these big businesses and let the rest of us rot and pay for it. It's not going to solve anything. Most of us know why we pay taxes, and we don't pay taxes to save big businesses that are going to give nothing back to us besides more products and such (which we will continue to pay for). I think you need to think about why we pay taxes. You'd have to be an idiot to think this bailout is actually going to save our economy for more than a few months. How about instead of giving that $700b to a few companies, they instead split it up between the citizens age 18+. Know what we could do with that money? Pay back those loans that got these banks in so much trouble. If you just hand the banks the money then everyone with loans is still in deep [cabbage] while banks making bad decisions just got off the hook and it going to continue coming after you for the money you owe them. And eventually they'll make the same stupid mistakes again.

 

 

 

Also, you're even more of an idiot if you think he was trying to impress or intimidate anyone by writing out $700b. $700b doesn't look like much but when you put all the zeros on there you get a better realization of what we're talking about.

[Ginger_Warrior]

Taxing $2,000 out of every american citizen's pocket to bail out failing, private owned subprime lenders and banks doing irresponsible overnight loans... The above article sums up well why the bankruptcy of those companies is the correct answer, and fortunately enough the congress did reject the $700bn bill.

 

 

 

Bankruptcy doesn't mean those companies and banks disappear. The profitable aspects of the business still stay, just under new management. But their mistakes shouldn't be paid by the "average Joe".

 

 

 

"Average Joe" didn't force those banks to grant $200,000 loans to people with broken credit scores, lending hundreds of millions per night to other, unstable banks playing on currency futures as if it's a game of roulette.. Those institutions will need new, more competent management which is also objective & critical to pressure from the congress.

 

 

 

I really don't think we should underestimate just how badly not only the world's financial sector but also many other industries will be hit if the bailout is rejected entirely. Once every large American bank starts failing (which they will) the stock market will crash further, millions of investors (average Joe's with a few shares) will lose their savings. Larger companies, Ford, General Motors might start going under taking thousands of jobs with them. And all for what? Some nicety about moral hazard?

 

 

 

I don't see how you can think that the rest of the world's economies are so insulated from what would be the almost complete collapse of the financial sector. The bailout is currently the lesser of two evils.

 

There is boom, there is bust. Bail-outs, tighter regulation, more stringent enforcement - they don't make one iota of difference to that basic rule.

 

 

 

I support this Bill because I'm not naive enough to believe that if the world economy does suffer as a result of this Bill's rejection, that it won't be the poorest who are unfairly hit hardest. I hope this will soften the blow, albeit, the rich bastards that put us into this position will still get away with the millions they earned for their own irresponsibility.

 

 

 

It is wrong to believe this is the "silver bullet" people are hoping for. Don't join the 'faith before facts' crowd.

[RSBDavid]

Weren't the banks partly responsable for the great depression as well? They are the ones who will [bleep] all of us up.