The bailout isn't going to bear fruit at all. The only people benefiting from this is the large businesses and politicians, who are getting paid and escaping personal responsibility yet again for making bad decisions. I can only see the economy getting worse from this point, and anyone with a solid background in economics can see it. Ron Paul predicted this mess was going to happen now, and if he and other economists are accurate about other things he has written in the past, we should expect something comparable to a depression in the future. It's too late to remove Obama and McCain's names from association with the bailout, as many news outlets already made it clear that they both voted for it in the senate.

It depends on what you think the bailout is for. It is simply to stop a recession from turning into a depression, nothing else. The bailouts primary purpose is to spur private capital into action. That will take some time to come because confidence is more tentative than fear.

Ron Paul predicted this disaster? I guess that makes Ron Paul some kind of expert on the way forward for the financial markets Never get your economic information from politicaians. As a general rule, you will be misled. The only reason I have a modicum of confidence in this deal is because Bernanke and other experts are behind it. I predicted this disaster back in 2003. It was quite easy to figure out that many people were taking loans that they couldn't pay back and someday, somehow, the lenders will suffer from it. Even in my infantile mind, I could see the problems ahead. So I guess that makes me just as qualified as Ron Paul to comment on this situation.

Japan implemented a similar bailout in the late 1990's after the crash of 1997 and whilst it did not help them get out of the recession whih still lasts till today, it saved them from a depression. This bailout is just the first step on a very long road to recovery. Many economic policies have to be fixed after this.

Even with Bernanke behind it, I still have no confidence that the bill will do much to sustain the economy at a recession. The truth is that no economist, especially ones appointed by Bush, truly knows what is going to happen. So why rush $810 billion, which will burden taxpayers further? The best course of action would have been to let the damage happen. At this stage, we know where we stand, and we can pick up the pieces, rebuilding the economy to one day be stronger, as bankers now know that when they intentionally make bad business decisions, nobody will be there to save them. There are other economists (who are not affiliated with politicians) who see this, but are effectively muted by Bush's fear mongering, and pressure from the senate and house. I may still be learning on my free time about economics, but it looks as if we're simply trying to solve a credit problem with more credit. Does that make sense?

"No Banker Left Behind" is going to crash and burn in our faces. It may not happen for a little while, but it will happen. The US Dollar is about to be taken for a wild ride.

When you look at the bailout from a domestic perspective, it is an idealistic but irresponsible action.

It is idealistic because the leaders believe in American self-sufficiency and see it a national duty to rescue the backbone of its economy with national resource.

It is irresponsible because the same leaders that are promoting domestic solutions are already eyeing the $700b as a windfall and are calculating how their constituencies could benefit from the resulting expansion in funding.

Here is a caption from a CNN article on the strategy employed in the Senate to push the bill through to the House, . .

"Because tax bills must originate in the House, the Senate attached the rescue plan to a bill that deals with renewable energy tax incentives. This allowed the Senate to vote before the House to approve a bailout bill."

I am sure you know what this is - PORK BARREL!

Renewable Energy on its own is a public works project but when you attach tax incentives to it, then you are advancing bids for technological development and which of course expand industrial growth and employment. But then you must ask, why is public works project associated with credit reinvigoration of Wall street?

There are four Cabinets in the Bush Administration that could on its own sponsor or jointly co-sponsor this project without burdening the already insufficient bailout fund but Congress choosed to "pork barrel" it into the bailout fund instead. This is the first evidence of irresponsibility and unaccountability on a bailout fund just signed into law. The ink has not even dried on the paper yet and its already flawed. This is the sign of many worse things to come!

Why couldn't these Departments sponsor the renewable energy project - Commerce; Energy; Interior; Labor ?

Oh, I should have finished reading the entire article before reacting, it gets worse. Here is the full page.

For those of you supporting Obama and his change slogan, and some of you even believe that his Presidency will benefit blacks. Look in the following and tell me where the benfits from all these barrels is going. These are not targeted to reward or benefit black people. If you live in any of those state that dont pay income tax and you will have a sales tax deduction out of Federal tax, then I encourage you to start keeping every sales receipt. Again, white people do things like that because they itemize their returns. Black folks just take the standard deduction of $2500 or so.


For example, the proposal includes an excise tax exemption for a very specific type of arrow used by child archers.

According to Steve Ellis of Taxpayers for Common Sense, a nonpartisan watchdog group, current law places an excise tax of 39 cents on the first sale by the manufacturer, producer or importer of any shaft of a type used to produce certain types of arrows.

"This proposal would exempt from the excise tax any shaft consisting of all natural wood with no laminations or artificial means to enhance the spine of the shaft used in the manufacture of an arrow that measures 5/16 of an inch or less and is unsuited for use with a bow with a peak draw weight of 30 pounds or more," Ellis wrote.

The estimated cost of the proposal is $2 million over 10 years, he wrote.

Oregon Sens. Ron Wyden, a Democrat, and Gordon Smith, a Republican, were the initial sponsors of the arrow provision. According to Bloomberg News, the earmark provision would be worth $200,000 a year to Rose City Archery in Myrtle Point, Oregon.

A Wyden aide said the Oregon senator did not ask that the provision be added to bailout package, but that doesn't fly with Ellis.

"The bottom line is, this is benefiting a very few manufacturers, and I think most Americans who are either concerned about the bailout package or concerned about the economy are going to be wondering why a provision benefiting wooden arrow manufacturers is catching a ride on the package," Ellis said.

The Taxpayers for Common Sense also reports that the proposal includes such mouthwatering morsels as these:

Creation of a seven-year cost recovery period for construction of a motorsports racetrack: Track owners currently follow a seven-year depreciation schedule and write each year's depreciation off their taxes. The IRS wanted to increase the depreciation timetable to 15 years, which would mean the track owner's depreciation would be cut in half. The measure in the keeps the seven-year depreciation schedule for two years and would cost taxpayers $100 million.


A refund of excise taxes to Puerto Rico and the Virgin Islands for rum (Ogogoro, Burukutu): A $13.50 per gallon excise tax is placed on rum imported into the United States. The measure extends to December 31, 2009, a refund of $13.25 per gallon tax back to Puerto Rico and the Virgin Islands, which are both U.S. territories. The refund has been in place since the early '90s. The measure would cost taxpayers $192 million.


Income averaging for amounts received in connection with the Exxon Valdez litigation: The measure would allow the plaintiffs who won damages from Exxon Mobile for the oil spilled by the Exxon Valdez to average the award over three years rather than treating it as income in a single year. The measure was backed by Alaska Rep. Don Young and would cost taxpayers $49 million.


Secure rural schools and community self-determination program: The program replaces revenue rural communities used to enjoy from the sale of federal forest land. The measure is sponsored by lawmakers from Oregon and Idaho. The program would cost taxpayers $3.3 billion.


Deduction of state and local sales taxes: The measure allows citizens who do not pay state income taxes to deduct the amount of sales tax they pay over a year from their federal income tax for two additional years. States that benefit include Texas, Nevada, Florida, Washington and Wyoming. The measure would cost taxpayers $3.3 billion.

If you live here, when you shop keep your receipts and itemize your deductions in Federal return.


Provisions related to film and television productions: In order to keep movie production in the U.S., production companies would be allowed to deduct the cost of producing the films from their taxes. Rep. Diane Watson, D-California, has been one of the program's biggest supporters. The measure would cost taxpayers $478 million over 10 years.


Extension and modification of duty suspension on wool products, wool research fund and wool duty refunds: The measure helps U.S. worsted wool fabric makers and clothing manufacturers. The bill extends provisions through 2014 or 2015 that were originally sponsored by Reps. Louise Slaughter, D-New York, and Melissa Bean, D-Illinois, in 2007. The measure would cost taxpayers $148 million.


Extension of economic development credit for American Samoa: The measure would extend for two years provisions meant to help economic development in the U.S. territory of American Samoa. The measure would cost taxpayers $33 million.


Transportation fringe benefit to bicycle commuters: The measure would allow employers to provide benefits to employees who commute to work via bicycle, such as help purchasing and maintaining a bicycle. The measure would cost taxpayers $10 million

Wow, this gets better and better. . .

Change we can believe in, right?

What does Obama have to do with the bill? Did he sponsor it? Did McCain not vote for it? Get the phock out of here!

Most of those pork barrels were even added to entice Republican senators. We know they all love pork scratchings. 

Ibime:

What does Obama have to do with the bill? Did he sponsor it? Did McCain not vote for it?

Yes.

Get the phock out of here!

Most of those pork barrels were even added to entice Republican senators. We know they all love pork scratchings. 

. . .Yet still more democrats voted for it than republicans (even Obama, when the bill went through the senate). According to the breakdown of who voted, more democrats switched positions from nay to yay on the bill, so I guess the democrats were more attracted to whatever that was in those 400+ pages. McCain voted for it too, and since you brought up Obama, they have recently shown to have the same position on different issues, such as FISA immunity. Besides, no one directly mentioned Obama. I just said a common phrase that people like to throw around this year, ignoring that these jokers in Washington represent more of the same crap, so chill out.

I think it's stupid, but if you understand human nature, it's normal not to want to accept consequences.

Simply put and for the last time, there is nothing wrong with the bill, especially the initial one. . . .the bill is vital. . . . but these pork scratchings do nothing for the bill's popularity.

Here is the statement I made a few days ago:

Ibime:

Make no mistake, bailout or no bailout, the market is determined to root out the weak ones from amongst it so more banks will fail. Certain banks like Barclays, JP Morgan, Santander and even Citigroup see this as an opportunity to grab more market share and carry out more horizontal and vertical integration by taking over failed banks.

And this is what is in the Sunday Times this morning:
[size=14pt]
[center]
JP Morgan ‘brought down’ Lehman Brothers[/center][/size]
[center]Iain Dey and Danny Fortson[/center]

JP MORGAN has been accused by its Wall Street rivals of dealing the final hammer blow that forced Lehman Brothers into collapse in a sensational claim that threatens to spark a colossal legal battle.

The giant American bank is alleged to have frozen $17 billion (£9.6 billion) of cash and securities belonging to Lehman on the Friday night before its failure.

According to Lehman’s biggest creditors, this was what precipitated the liquidity crisis that embroiled the firm, forcing it into Chapter 11 bankruptcy protection on the morning of Monday, September 15.

The allegations have been raised in a filing at the bankruptcy court in New York, lodged late last week. Lehman’s biggest creditors include almost every big firm on Wall Street, most of Europe’s heavyweight banks and insurance companies as well as a slew of Japanese and Chinese institutions that are owed several hundred billion dollars.

The funding lines provided to Lehman to finance its everyday operations amount to $188 billion, according to court filings.

The creditors are now demanding that JP Morgan open up its books to the bankruptcy court to allow the transactions to be assessed.

“The creditors’ committee understands that LBHI [Lehman Brothers Holding Inc] had at least $17 billion in excess assets which were held at JPMC [JP Morgan Chase] on the Friday going into the weekend before its bankruptcy filing,” the documents said.

“The creditors’ committee further understands that, on September 12, 2008, JPMC refused to allow LBHI access to its excess assets and instead ‘froze’ LBHI’s account. In freezing LBHI’s assets, JPMC was purportedly holding all of LBHI’s assets as a potential offset against any claims JPMC may have had against LBHI.”

The filing goes on to claim that “as a result of JPMC’s actions, LBHI suffered an immediate liquidity crisis, that could have been averted by any number of events, none of which transpired”.

Lehman’s collapse is fast emerging as the single biggest event of the credit crunch, sparking a number of unexpected effects.

The unravelling of the firm’s prime brokerage operations has already forced a number of hedge funds out of business.

Olivant, the investment group run by former Abbey boss Luqman Arnold, revealed last week that its 2.8% stake in UBS was held through an account at Lehman in London which the firm’s administrators are refusing to release.

Previous court documents have suggested that JP Morgan was owed $23 billion by Lehman in secured loans.

JP Morgan said: “These assertions raised by the creditors’ panel are unfounded conjecture. We will address them at the appropriate time in bankruptcy court.”

In London, Price Waterhouse Coopers, the administrators to Lehman Brothers in Europe, is wrangling with more than 60 stock exchanges and clearing houses around the world to recoup up to $3 billion that it says is owed to the defunct bank.

LCH Clearnet, the clearing house, has returned £217m to PWC in recent weeks and Eurex is also thought to have returned some funds.

The cash was held as margin – money that exchanges require in case a company goes bust.

LCH is one of the largest holders of these reserves, reflecting Lehman’s standing as the biggest trader on the London Stock Exchange.

An LCH spokeswoman said: “We have already given the administrators £217m of the margin we held for Lehman and it would be imprudent of us to return all the remaining margin until this has been completed.”

Tony Lomas, the lead administrator at PWC, said “constructive discussions” were continuing with other exchanges.

The art on the 30th and 31st floors of Lehman’s Canary Wharf headquarters in east London has been removed after appraisers valued it and is being stored in a “safe place”, Lomas said.

It will “be dealt with on another day when we have resolved more pressing matters”, he added. The works, which include oil paintings and bronze sculptures, are understood to be worth millions of pounds.



http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4882281.ece

The bill is vital. . . in destroying the value of the US dollar. Bailouts don't work. By passing this bill, we added tons of dept, adding to the already bad inflation we're experiencing. The additions essentially transformed the bill from bad to worse, meaning for more money coming out of nowhere. Do people not see that solving a credit crisis with more credit is a horrible idea, no matter who it's backed by? A recession is unavoidable, and by simply papering over it over the past decade made the bubble worse. Let the recession happen, but no, we must keep up with our bad spending and escape any consequences. If AIG couldn't handle $85 billion without getting in a worse state, how what is going to happen with this $800 billion? By passing "No Banker Left behind", a depression is all but guaranteed.

Orimili:

(1.) The bill is vital. . . in destroying the value of the US dollar. Bailouts don't work. By passing this bill, we added tons of dept, adding to the already bad inflation we're experiencing.

(2.) Do people not see that solving a credit crisis with more credit is a horrible idea, no matter who it's backed by? A recession is unavoidable, and by simply papering over it over the past decade made the bubble worse. Let the recession happen, but no, we must keep up with our bad spending and escape any consequences.

(3.) If AIG couldn't handle $85 billion without getting in a worse state, how what is going to happen with this $800 billion? By passing "No Banker Left behind", a depression is all but guaranteed.

Spoken like a true novice.

It is OK skimming over the topic with elementary knowledge, but lets get specific here:

(1.) I have already addressed the negative effects of the bailout including National Debt, falling dollar, inflation etc. Tax cuts also increase the deficit as does war so what are we getting at here?

(2.) Wrong Question! The question is not whether the economy needs more credit. It certainly does! The question is whether the bailout will succeeed in providing this credit by easing up the freeze. This is fundamental - The movement of money is vital for the function of an economy. It keeps companies operations going. We have had many recessions before without Government intervention so that is not the issue here. Credit is the lifeblood of capitalism. Every new venture starts with a loan. Credit[b] IS[/b] the economy. This bailout is simply to take away the cause of 'fear' which stops banks from lending to each other. That cause of fear is the subprime mess. Banks fear that other banks suffered more losses than they claim so they do not want to loan them money. Take away the fear and the economy can start the recovery process. In times of economic stress, cash is King. Banks certainly do not want to let go of their liquid assets because anything could be around the corner. A lot of these banks have enough to survive - but they do not necessarily have it in liquid form, which is the problem right now. Government has always tried to exert some influence on the credit markets through the fed funds rate and overnight credit lines so your assertion that Government should not be concerned about credit is simply untrue. I am not speaking to you from a position of lacking knowledge. Trust me, my knowledge of the markets is very broad. Now, this bailout has entered the political sphere and every Joe Public has an opinion on it, based on their political view. What is the practical view?

The practical view is this: AT&T, Caterpillar, McDonalds and numerous others have been denied loans recently. Loans they would normally recieve. This is not new - within the markets, Banks have been denying each other loans for the past year. This is just the first time it has hit Main Street. It's been on Wall Street for a year already. Banks have folded just like companies would fold without credit. The virus is spreading. Anything that Government can do is essential.

(3.) How is a depression guaranteed by "No Banker left behind?". Please show us the economic model that shows that this $700 bailout bill will lead to a depression. This is absolutely silly and completely ideological. We have tax cuts totalling $1.3 trillion till 2012. Does that not add to deficit? A trade deficit is not necessarily a bad thing. It depends on what you borrow the money for. Do you borrow it to grow your economy or to spend on Social Welfare or other irredeemable projects? That is the question.


An astute mind would read some things into my posting about the JP Morgan-Lehmann credit withdrawal namely:

Ibime:


(1.) The giant American bank is alleged to have frozen $17 billion (£9.6 billion) of cash and securities belonging to Lehman on the Friday night before its failure.

(2.) The funding lines provided to Lehman to finance its everyday operations amount to $188 billion, according to court filings.


(3.) Lehman’s collapse is fast emerging as the single biggest event of the credit crunch, sparking a number of unexpected effects.

The unravelling of the firm’s prime brokerage operations has already forced a number of hedge funds out of business.

Olivant, the investment group run by former Abbey boss Luqman Arnold, revealed last week that its 2.8% stake in UBS was held through an account at Lehman in London which the firm’s administrators are refusing to release.

Previous court documents have suggested that JP Morgan was owed $23 billion by Lehman in secured loans.

In London, Price Waterhouse Coopers, the administrators to Lehman Brothers in Europe, is wrangling with more than 60 stock exchanges and clearing houses around the world to recoup up to $3 billion that it says is owed to the defunct bank.

(1.) Just shows how simple lack of credit could turn a sick patient into a dead one.

(2.) A medium-large size bank like Lehmann brothers requires $188bn just to maintain it's operations daily. How much would a larger bank need to maintain daily operations? i.e Credit must flow in order to maintain daily operations. If you do not get it, all you have to do is understand this. It will make the picture clearer: Many banks borrow billions overnight and return it in the morning. We are not talking about 5-year loans here. We are talking about one-day loans, one-week loans etc, just to keep operations going and moving money around to where it's needed. Credit is their modus operandi. This alone should explain why maintaining credit fluidity is vital to the economy. If someone calls in a loan at the wrong time and you do not have liquid cash to meet it, you could go bust there and then. Hedge Funds ran on Bear Stearns asking for all their loans back. Lack of credit crippled them at that vital moment.

As I showed before, Goldman Sachs made money from the subprime mess, yet the vultures were hovering two weeks ago due to lack of capital/credit to maintain their operations. It wasn't till Warren Buffet invested $4billion in Goldman Sachs that investors started throwing money into them, easing their capital needs. I also gave the same example with JP Morgan and you can say the same for every other bank who did not lose from the Subprime mess. Many banks did not lose from subprime but they are still affected. I am still waiting for a counter.

(3.) Just shows the domino effect and how other parties get hurt. The banking sector is like a hub in the middle of a bicycle wheel. If the hub falls, all the spokes fall. Full stop. Almost every other sector is simply a spoke in the wheel. If they break, the bicycle keeps moving. Thats why Govt didn't step in during the tech crisis of 2000/2001.


I don talk my own finish. I no get time for hardheadedness.

Well, you keep telling yourself that, and one day even you will believe it. You have no idea what my level of education is. Where are your credentials? You copy and paste information that I've seen before, and trust me, it doesn't help your argument at all. It's also fundamental for businesses to to fail when leaders make irresponsible decisions, and bankers are not exempt. When you ignore a problem of such magnitude and keep feeding to it, especially with bailouts and such, it only gets bigger. To have the government jump in every time you have a problem, defeats the very purpose of capitalism. If the public has to foot the bill every time a banker is in trouble, they have every right to have an opinion, even if they do not know much about economics. If anything, they, like myself, take the little time that I have outside of classes, to better understand how bad the credit situation is.

True, a single $700 Billion payout is not going to screw the economy, but that money is the maximum that can be taken out at a single time. If AIG could burn through $61 billion in less than a couple weeks, I'm sure that in a few months, the US will want another $700 billion, and in a few months another, and another, ad infinitum. You are an 'expert' at this, so you know where this is going. This money isn't growing the economy at all, and you know that, so let's not continue to play ourselves.

Orimili:

Well, you keep telling yourself that, and one day even you will believe it. You have no idea what my level of education is. Where are your credentials? You copy and paste information that I've seen before, and trust me, it doesn't help your argument at all.

Here we go. . . . everybody has credentials. This is a public forum and anyone can claim anything. Everything I tell you is from my study of the markets and my work with my Investment club. I do not copy and paste anything like those who read others opinions on blogs and accept it as truth. Infact, I have never read a single write-up about the bailout except to see the details of Paulson's plan. Everything is from my head and is stuff that's been in the financial papers for the last year. Thats why I back my arguments with emperical evidence of what is happening on the ground in terms of the banks. Connecting the dots is essential. Even if you have something in front of you, you may still misrepresent the information it contains. Everything I write on here contains information and knowledge that took years of grooming. Even if you disagree with the bailout, my posts should give you a sense of how the markets work. You are a student. Keep studying. But remember that not much is/was learned in school. As for School levels, lets just say I don pass postgraduate level.

Orimili:

It's also fundamental for businesses to to fail when leaders make irresponsible decisions, and bankers are not exempt. When you ignore a problem of such magnitude and keep feeding to it, especially with bailouts and such, it only gets bigger. To have the government jump in every time you have a problem, defeats the very purpose of capitalism. If the public has to foot the bill every time a banker is in trouble, they have every right to have an opinion, even if they do not know much about economics. If anything, they, like myself, take the little time that I have outside of classes, to better understand how bad the credit situation is.

@ Bolded - again, we drift into ideological talk.

Banking crisis is like no other. Credit crunch is a network failure. If the automotive or any other sector fails, the whole economy will not be affected much except the Banking sector is heavily invested.

The last time we had such a debt crisis and a subsequent credit/capital squeeze was 1929. Go figure!

People underestimate the effect of panic and disinvestment. Panic drives money out of the capital markets. That in turn drives capital out of Main Street and the rest is history. The overwhelming supplier of capital to Main Street is the Capital markets. Again, what more can I say?

On top of that, every other company in every other sector will only collapse after a lengthy period of downturn. A bank can fall in a day. All it takes is for investors to make a run on it. And by investors, I am not talking about Joe Public. Rather, I am talking about other banks and Hedge Funds who are it's creditors and equity holders. Even bad rumours can lead to fatal divestment. Ditto the run on Northern Rock by Joe Public. Whichever way you look at it, the banking sector is a unique sector.

Orimili:

True, a single $700 Billion payout is not going to screw the economy, but that money is the maximum that can be taken out at a single time. If AIG could burn through $61 billion in less than a couple weeks, I'm sure that in a few months, the US will want another $700 billion, and in a few months another, and another, ad infinitum. You are an 'expert' at this, so you know where this is going. This money isn't growing the economy at all, and you know that, so let's not continue to play ourselves.

What attitude is this? You sound like all financial institutions know how to do is burn money. You are starting to sound like a marxist. Again, surface knowledge does you no favours. Sorry to take a harsh tone with you but if you keep insisting on putting out these half baked arguments and be stubborn about them at the same time, then. . . . .Firstly, I was never behind AIG's initial bailout the same way I think Government made the right decision not to bailout Lehmann Bros. . . . .However, I did support the Govt takeover of 80% of AIG. They should have done it earlier instead of giving AIG money. . . .However, AIG did not blow the money. They already had other operations outstanding which they had to pay for. It is not like they went and lost all of Government's money. On top of that, they also had to unwind their derivative positions and payout all their counterparties. . . .even still, creditors called in their loans, leaving AIG in a terminal situation. . . . . finally, stop taking financial arguments from politicians.

Orimili:

Well, you keep telling yourself that, and one day even you will believe it. You have no idea what my level of education is. Where are your credentials? You copy and paste information that I've seen before, and trust me, it doesn't help your argument at all. It's also fundamental for businesses to to fail when leaders make irresponsible decisions, and bankers are not exempt. When you ignore a problem of such magnitude and keep feeding to it, especially with bailouts and such, it only gets bigger. To have the government jump in every time you have a problem, defeats the very purpose of capitalism. If the public has to foot the bill every time a banker is in trouble, they have every right to have an opinion, even if they do not know much about economics. If anything, they, like myself, take the little time that I have outside of classes, to better understand how bad the credit situation is.

True, a single $700 Billion payout is not going to screw the economy, but that money is the maximum that can be taken out at a single time. If AIG could burn through $61 billion in less than a couple weeks, I'm sure that in a few months, the US will want another $700 billion, and in a few months another, and another, ad infinitum. You are an 'expert' at this, so you know where this is going. This money isn't growing the economy at all, and you know that, so let's not continue to play ourselves.

That is one of my fears!!

It amazes me really that the Feds are able to blow billions monthly in Iraq, spend so much on bailouts (including this mother of them all), and not raise taxes. In fact, both presidential candidates are still promising tax cuts in light of this major spending spree seen in recent weeks. This nation is now closer to financial ruin. They just print more dollars instead of actually creating them.

Even when taking the cost out of the picture, imagine if America used that $700 billion to actually help the people instead of the companies. This government does not know how to spend money correctly.

Ibime,

You are not pumping $700 billion dollars into a responsible and accountable market. You continue to look at what the money will do. You don't need to be an award winning economist to connect the dots and to know what the money will do. Use your firm understanding and analytical ingenuity to tell us how the implementation of the bailout will succeed in the hands of corrupt thieves. Thats what I want to know.

You have $5,000 of your own money in savings. You blew it. When asked to account for what happened, you are incoherent and worse, you confessed that after blowing your own money, you also went into debt for another $2,500.
Now, you are $7,500 in the hole. You come to NL and asked to be bailed out so you do not loose your valuables to the debtors.

Oga Seun, says no problem. We will take a vote and see what can be done to rescue you. All day long you tell us about what the bailout can do to help you save your valuables. How?? I am willing to vote in favor of the aid but I am asking simple question here, . . .

If you could not manage your $5,000 and beyond that $2,500 and can't even articulate what happened to it, what guarantees are there that what aid we will give you will not end up similarly as did the $7,500.

We don't want to hear what $7,500 can buy.

Credibility has been assassinated and so has character. Far more than what can be rescued with $700 billion, how does Wall street regain its virtue? Help us understand that.

So what do you guys feel about the $2.3 trillion bailout in Europe. Is that also wrong? I did not hear any Europeans complaining about it.

Ibime:

So what do you guys feel about the $2.3 trillion bailout in Europe. Is that also wrong? I did not hear any Europeans complaining about it.

all the bailouts(nationalisation) are WRONG.

I hope AFRICAN countries can now see through the LIES of the WEST and do whats right for their people.

The points to take home:

1. Market Forces is myth. It does not exist

2. Privitization is rubbish. It does not work.

3. WEST, apparently does not understand their own economics.

4. Dont TRUST the west. Dont believe the west.

5. Globalization is not answer but nationalization

2. Privitization is rubbish. It does not work.

can u support this claim.

bawomolo:

can u support this claim.

Lehman Brothers was private establisment and it has collapsed like pack of cards.

British Railway is private but its rubbish compared to Deutsch Bahn, which is Government Owned.

So turning 'Nigeria Railway' to private establishment(privatization) does not mean it would not collapsed.

It all depends on the 'interests' of the people in charge!

ROFLMAO! ! ! kAI ! ! !

Anything that requires human input is prone to inefficiency because humans are inherently inefficient. That is why extreme socialism didn't work and that is why extreme capitalism and deregulation has fallen flat on it's face.  They both rely too heavily on human input. Just because one fails, that doesn't mean the other is correct - and vice versa. (At this point some will insert argument about the subprime crisis being caused by social policies, neglecting that the market for CDO's is worth $48 trillion; and these CDO's are what brought down the economy. This is akin to placing a grenade next to a nuclear bomb and then blaming the grenade for acting as a detonator when the nuclear bomb wipes out the city)

I think the following copy and paste is very interesting. It's the best thing I have read all week on political economy:


http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article4937563.ece


Two fundamentally American ideas have dominated global thinking since the early 1980s, when Ronald Reagan was President. The first was a vision of capitalism which argued that low taxes, light regulation and a pared-back government would be the engine for economic growth. The second was America as a promoter of liberal democracy around the world.

It's hard to fathom just how badly these features of the American brand have been discredited. Between 2002 and 2007, as the world was enjoying unprecedented growth, it was easy to ignore those who denounced the US economic model as “cowboy capitalism”, but now the American economy threatens to drag the rest of the world down with it. Under the mantra of less government, Washington has failed to regulate adequately the financial sector.

Democracy was tarnished even earlier. Once Saddam Hussein was proved not to have weapons of mass destruction, the Bush Administration sought to justify the Iraq war by linking it to a broader “freedom agenda”; suddenly promotion of democracy was a chief weapon in the war against terrorism.

The Reagan-Thatcher revolution caused a huge amount of pain as industries shrank or shut down. But it also laid the groundwork for three decades of growth and the emergence of new sectors such as information technology and biotechnology.Like all transformative movements, however, the revolution lost its way because it became an unimpeachable ideology, not a pragmatic response to the excesses of the welfare state.

Two concepts were sacrosanct: that tax cuts would be self-financing, and financial markets self-regulating. Before the 1980s, conservatives were unwilling to spend more than they took in in taxes. But Reaganomics introduced the idea that virtually any tax cut would so stimulate growth that the government would take in more revenue in the end. In fact, the traditional view was correct: if you cut taxes without cutting spending, you end up with a damaging deficit - the Reagan tax cuts of the 1980s produced a big deficit; the Clinton tax increases of the 1990s a surplus.

The fact that the US economy grew just as fast in the Clinton years didn't shake conservative faith in tax cuts. And globalisation masked the flaws in this reasoning for several decades. Foreigners seemed endlessly willing to hold US dollars, allowing the US Government to run deficits and enjoy high growth. That's why early on privates Cheney reportedly told President Bush that the lesson of the 1980s was that “deficits don't matter”.

The second article of faith - financial deregulation - was pushed by an unholy alliance of true believers and Wall Street. It produced the flood of innovative new products such as collateralised debt obligations at the core of the present crisis.

Financial institutions are based on trust, which can only flourish if governments ensure that they are transparent and constrained in the risks they take with other people's money. The sector is also different because the collapse of a financial institution harms not just its shareholders and employees, but a host of innocent bystanders as well.

Signs that the Reagan revolution had drifted dangerously have been clear over the past decade. An early warning was the Asian financial crisis of 1997-98. As Thailand and South Korea liberalised capital markets, hot money started flowing in, creating a speculative bubble, and then rushed out again at the first sign of trouble.

And China and other countries began buying dollars as part of a strategy to undervalue their currencies. This meant that the US could cut taxes, finance consumption, pay for two expensive wars and run a fiscal deficit. But the mounting deficits were clearly unsustainable; sooner or later foreigners would decide that America wasn't such a great place for their money. The falling dollar indicates that we are at that point. Clearly, deficits do matter.

All this suggests that the Reagan era should have ended some time ago. It didn't partly because the Democratic Party failed to be convincing but also because, in America, less-educated, working-class citizens can swing either left or right. This group of voters will decide next month's election. Will they tilt toward the more distant, Barack Obama, who more accurately reflects their economic interests? Or stick with people they can better identify with, John McCain and Sarah Palin? It took the economic crisis of 1929-31 to bring the Democrats to power. We may again have reached that point.

No matter who wins the presidency, a new cycle of American and world politics will have begun. Which candidate is better positioned to rebrand America? Mr Obama obviously carries less baggage from the recent past, while Mr McCain may be the only Republican who can bring his party, kicking and screaming, into a post-Reagan era. But one gets the sense that he hasn't fully made up his mind what kind of Republican he is, or what principles should define the new America.

American influence can and will be restored. The US has come back from serious setbacks in the 1930s and 1970s. Still, another comeback rests on some fundamental changes. It must break out of the Reagan-era straitjacket. Tax cuts feel good but do not necessarily stimulate growth or pay for themselves; Americans must be told honestly that they will have to pay their own way.

Of course, there's a danger of overcorrecting. Financial institutions need strong supervision, but it isn't clear that other sectors of the economy do. Free trade remains a powerful motor for economic growth. If tax cutting is not a path to automatic prosperity, neither is unconstrained social spending. The cost of the bailouts and the long-term weakness of the dollar make inflation a serious threat.

The biggest change that America must make is in its politics. The Reagan revolution broke the 50-year dominance of liberals and Democrats in US politics but what were once fresh ideas have hardened into dogmas. The ultimate test for the US model will be its capacity to reinvent itself. Good branding is not a matter of putting lipstick on a pig. It's about having the right product to sell in the first place. American democracy has its work cut out.

This thread is tight. Kudos to all the level-headed poster!

landis:

Lehman Brothers was private establisment and it has collapsed like pack of cards.

British Railway is private but its rubbish compared to Deutsch Bahn, which is Government Owned.

So turning 'Nigeria Railway' to private establishment(privatization) does not mean it would not collapsed.

It all depends on the 'interests' of the people in charge!

so you came to that conclusion because of two examples

This is from post # 16 on this thread, written on October 1st.

. . . . . Let us assume that Wall street and Banks are bailed out for credit solvency. What would happen if next week the Telecomms companies cry that they are in financial problem? You definitely cannot let telecomms go belly up can you? What happens if airlines come the upper week and say they are in financial problem and are ready to pack it in? What happens if the food supply industry or the hospitals say they are in financial problems?

. . . the auto manufacturers are asking for bailout from the treasury. Looks like the government has started a cycle that eventually will bankrupt the treasury either way you look at it - upfront by paying bailouts and keeping jobs or backdoor by allowing companies to fail and then cushioning the laid off workers with unemployment insurance and other social services.

Any input . . .?

It is not today that Government has been bailing out Auto-industry. This has been going on since the 1990's. It means nothing, and is not a bailout per se, certainly not on the scale of the financial crisis.

We have seen bailouts in every major country since the Yankee bailout. I think that alone should end the debate.

Ibime,

I didn't think it will be productive to respond to you with what I thought of your remarks but I want to be kind and share an article with you. I don't know how much personal money you have in investments in America but please take time to read Ms Klein's article. I hope you begin to see this bailout issue as a calamity and respond with such gravity of conscience as to show sympathy rather than a dismissive and cold remark that gives it justification on account of traditional cycles. There is nothing traditional about this at all and in terms of human experience this is actually a violation of peoples rights, one that the US would have championed valiantly so were it happening in Russia or China instead of its own soil.

http://www.naomiklein.org/articles/2008/10/bailout-profiteers

Negro_Ntns:

Ibime,

I didn't think it will be productive to respond to you with what I thought of your remarks but I want to be kind and share an article with you. I don't know how much personal money you have in investments in America but please take time to read Ms Klein's article. I hope you begin to see this bailout issue as a calamity and respond with such gravity of conscience as to show sympathy rather than a dismissive and cold remark that gives it justification on account of traditional cycles. There is nothing traditional about this at all and in terms of human experience this is actually a violation of peoples rights, one that the US would have championed valiantly so were it happening in Russia or China instead of its own soil.

http://www.naomiklein.org/articles/2008/10/bailout-profiteers

Negro, I don't know what your article is trying to say and how it affects the price of fish in the market. Infact, it was a long piece of story story story. All I can read is some allegations that the job of administering the bailout was given to Paulson's guys with no open bidding process involved. I would have you know that I do not care. I only care for expediency: whether that comes through delegation or bidding process, I don't care. All that matters to me is that I can get back into the market and whatever needs to be done to stop the bleeding and restore confidence should be done. That people will profit from the bailout is expected. That is the nature of capitalism. People also profit from building roads, but how does that change the fact that we need roads for transportation? As for the China and Russia example, you know, I lose interest when ideology enters a debate.

As for the auto-industry, I care not whether they are bailed out or not. That is a matter for Govt to decide whether they are in the national interest or not and whether they want Japan to pull ahead in the new era of fuel-efficient cars or not.

All that matters to me is that credit crunch is easing thanks to the bailout, LIBOR rate is going down and there is no longer much moral hazard in the market. There are no more rumours of banks collapsing as we had daily before the bailout.  The Bailout has worked. We have been hovering between 8500 and 9200 on the DOW for the last month and that indicates that we have hit the bottom. We will stay at this bottom for the next couple of months and then pick up again. Financials started this recession, and it has almost completed it's cycle, ending with Industrials. Financials and Consumer Cyclicals are showing signs of picking back up again and they will take us out of this recession, just like they started it. The economy cannot recover until the sector of the economy that caused the problem picks back up. It is a great time to invest and a great time for Obama to take over as President if he wins. This is not the first time we have had bailouts. The nature of our economy is such that lending is encouraged, and whenever the lenders are in trouble, Govt steps in. Hate it or love it, thats the nature of the game. You can go back in history to the S&L crisis. Our economic history is just a cycle of debt and bailout, debt and bailout, debt and bailout - especially where the financial sector is concerned. All this bailout stuff is not unprecedented. Capitalism must move on. Our economies are fuelled by debt and credit.

As for the China and Russia example, you know, I lose interest when ideology enters a debate.

Thanks, this closes the discussion.

Negro, this is all I am concerned about. It is important to know the economic times you live in. We are in a late bear, and the 2 sectors to lead us out of it are the 2 sectors that started it. If not for the bailout, the financial sector cannot lead the economy out of the recession. This is how the investors think. They will not invest unless the financial sector recovers. This is why I think the bailout was an essential proposition.