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1.
September 30, 2008 6:54 am
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It was blind ideological deregulation that allowed investment and insurance executives to take as personal bonuses money that should have been held in reserve against changes in the market.The people that run Wall St companies acknowledge they are greedy. They described the derivates they sold as “pure profit” to their boards of directors. Calling them “pure profit” meant far bigger personal bonuses. Why did the counterparties to these derivatives spend money on them if there was no risk.Paulson was largely responsible for implementing the Republican ideology that caused this mess.The banks and finance companies that bought the derivatives did so to mitigate risk.The executives of the bank and finance companies that were counter-parties to these derivatives told their boards of directors and investors that there was no risk. There for all the interest and premiums were pure profit.All the interest supposedly being “pure profits” meant extravagant bonuses.If the interest and premiums had been held as reserve against the changing market conditions, instead of being paid out as bonuses, no bail out would have been required.You have to restrain the arsonist and put out the fire before you rebuild the kitchen.If we bailout before we do a first aid fix on the causes of the problem we are just wasting $700 billion.We’d still have the problem, but we would no longer have $700 billion to fix it with.We have to do a quick fix on the causes of the problem before we can do the bailout.Unbelievably, the bailout would reward Paulson’s failure in management and oversight, by giving him increased power, giving him the ability to bailout his friends, and not bailout others, as he chooses.The "bailout" left restrictions on executive pay and golden parachutes to the discretion of Paulson to impose for each company.The agreement gave Paulson discretion to pick and choose who he bailed out.
— Keith T, Winnipeg Canada
Recommend Recommended by 13 Readers
2.
September 30, 2008 6:54 am
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This is very simple. we shouldn't let the arsonists (Bush, Paulson) put out their own fires with their only tools: gasoline.The sky did not fall, as bush predicted. His dire proclamations sound fishily similar to the ones he came up with leading up to the 2002 mid term elections, when he said that if we didn’t immediately invade Iraq, the whole world would end on that day too, and there would only be mushroom clouds to prove he was right.The more time we have to calmly step back and think about this latest bush debacle, this huge attempted robbery, this prime example of the bush shock doctrine, the more time we have to calmly entertain ideas that hopefully come from as far from the bush administration as possible. We can think about ideas that will actually benefit the country instead of strangling it.Author Thom Hartmann had some thoughtful ideas that I think would actually take this bush created mess and fix it.The money is out there. It is just a matter of tweaking some of the rules that have fallen away under the last few, deregulatory administrations.In his article, "How Wall Street Can Bail Itself Out Without Destroying The Dollar," which you can find here http://www.commondreams.org/view/2008/09/26 Thom Hartmann lays out whose policies brought us to this moment--Grover "drown the government in a bathtub" Norquist, for one.Mr. Hartmann suggests that we do some of the things FDR did in the 1930's--the last time republicans brought us to this point financially.Instead of giving all sorts of money with no strings attached to the very culprits that started this, he suggests we create an agency to fund the bailout, loan that agency the money from the treasury, then have that agency tax wall street to pay us (the treasury) back.That is much more palatable than just borrowing and throwing more good money after bad, because all that will happen is they will run out of that too, and at some point there won't be anybody left in the world to borrow it from and then we'll be in for a serious collapse.
— davekliman, Glen Cove, NY
Recommend Recommended by 6 Readers
3.
September 30, 2008 6:54 am
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This year the self-deprecating motto of our presidential candidates ought to be: "It's not the economy stupid; it's the stupid people in charge of the economy."
— MJM, Denver, CO
Recommend Recommended by 10 Readers
4.
September 30, 2008 6:54 am
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How about they dig up the idea that you don't get something for nothing. Interesting reading some of the world media's take on the U.S. bailout plan that just sunk in comparison with the idea of fully nationalizing failing banks, as is just happened in the UK. Here's a direct quote:"But many banking analysts argue that the nationalization of the bank could be a boon to taxpayers one day, unlike the U.S. bailout plan, in which the government is simply buying up bad debts."Well now there's an idea. Instead of privatizing gains and socializing losses, let's have it be all one or the other. We'll even let the bankers choose which they prefer. Now that's got to be fair.
— Dutton, CA
Recommend Recommended by 5 Readers
5.
September 30, 2008 6:54 am
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Here's the rescue plan: The banks start lending money to each other and to credit-worthy borrowers. The banks write dowwn their bad debt and stop crying about their losses. American investors lost big time during the collapse of the dot-com bubble and the world did not end. Allowing some banks to fail and others to take their losses will not be the end of civilization.Once banks demonstate that they trust one another, the public will again trust the banks.Let our leaders lead the way and stop whining about having the taxpayer buy their bad debt for greater than it's worth. The American saver/investor is no longer that stupid.
— jojo1232, San Francisco, CA
Recommend Recommended by 9 Readers
6.
September 30, 2008 6:57 am
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One question. Paulsen claims that there isn't sufficient liquidity for investors to buy up these mortgage backed securities even at the current depressed prices.But today, investors sold billions worth of stock in the DOW. That means they have cash on hand now. What is preventing them from buying up these securities, now that they have sold off a lot of stock in other companies?Just fear? How about providing some incentives to buy off these distressed assets, like a tax break, or something.Here's another idea. Lets raffle off Air Force One. Everyone who buys $1,000,000 in mortgage backed securities gets one ticket. What jet-setting hedge-fund manager wouldn't like that?
— Theresa, Arizona
Recommend Recommended by 4 Readers
7.
September 30, 2008 6:57 am
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Cheers to our United States Representatives! They served their constituents well today. They listened to the people and it wasn't too difficult to understand that the people are angry and will not be fleeced. What was difficult was taking a stand against tremendous pressure applied to them by Wall Street con men and their government cronies who just want to maintain their status quo. But our Representatives withstood the pressure and did the right thing. Now they must hold their stand while the markets fall, as market forces do what is their nature, and then, as investors see bargains, they rise again. Good job U.S. Representatives! Stand strong!
— Acorn1, Phoenix, AZ
Recommend Recommended by 11 Readers
8.
September 30, 2008 6:57 am
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One question. Paulsen claims that there isn't sufficient liquidity for investors to buy up these mortgage backed securities even at the current depressed prices.But today, investors sold billions worth of stock in the DOW. That means they have cash on hand now. What is preventing them from buying up these securities, now that they have sold off a lot of stock in other companies?Just fear? How about providing some incentives to buy off these distressed assets, like a tax break, or something.Here's another idea. Lets raffle off Air Force One. Everyone who buys $1,000,000 in mortgage backed securities gets one ticket. What jet-setting hedge-fund manager wouldn't like that?
— Theresa, Arizona
Recommend Recommended by 4 Readers
9.
September 30, 2008 6:57 am
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That last paragraph says it all. For that reason alone, some sort of bailout plan needs to be approved, as distasteful as it may be to some of us. Now, it's not just the U.S. economy that waits for Congress - it's the rest of the world.
— Jaime Herrera, El Paso
Recommend Recommended by 2 Readers
10.
September 30, 2008 6:57 am
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Here's another idea.Require everyone who buys treasury bills to also buy 5%-10% of the value worth of mortgage-backed securities. That way the same people who are flying into a panic about them end up being the owners of them. Poetic justice.
— Theresa, Arizona
Recommend Recommended by 3 Readers
11.
September 30, 2008 6:57 am
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Enough is enough. We are bankrupt. We are borrowing from China to pay for a plan that many economists are convinced will not work. These guys took the money, do you understand? They TOOK IT. It's in their off-shore accounts. Now, middle class people are being asked to clean up the mess. THAT JUST WON'T STAND. Prohibit the OTC derivatives market that got us into this mess to start with. Raise taxes on the wealthy to 75% to pay for any bailout and I'll consider it. Raise taxes on hedge fund management fees to 50% while you're at it. Impose a tax on trades. Give judges the right to cram down mortgages. Start with that, and then ask me to support throwing good public money after bad private bets. It's time to let the gamblers fail and to learn our lessons.
— joe (new york), New York
Recommend Recommended by 16 Readers
12.
September 30, 2008 6:57 am
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I would like an explanation of the timing of this generalized "meltdown". All the necessary conditions for this meltdown were present twelve months ago.Why now? Why five weeks before an election?
— David Healy, Montpelier VT
Recommend Recommended by 11 Readers
13.
September 30, 2008 6:57 am
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What gets lost in the New York Time coverage is that the COUNTRY doesn't support the bailout and is it pushed down our throat. BRAVO to the US Congress who voted NO with their constituency. Bravo to all the Representatives who had guts to withstand the pressure. Taxpayers are already burdened with paying trillions for a war they didn't want that benefited only a few. We are sick to do the same with this bailout. It's time for WS to taste the challenges of real life with no huge bonuses for trading air and creating no lasting value.
— Alex G., New York, New York
Recommend Recommended by 19 Readers
14.
September 30, 2008 6:57 am
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"WE have nothing to fear but fear itself!" Relax America, the worthless paper shuffler economy is dying. We will be fine without Credit Default Swaps and SIV's, you will see. Our Parents did pretty well without them.
— Cynical Yes, Midwest
Recommend Recommended by 8 Readers
15.
September 30, 2008 6:57 am
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Your reporters assume that the bailout is needed. American economists presume we're ignorant if we're against it. But it's our economists, trained under Federal Reserve sponsorship, who are ignorant. The bailout won't help: we got where we are because the Federal Reserve system and the fiat dollar allow our politicians to keep spending more than they have, and allow the financial system to create more credit than the economy needs, thus distorting the free market while making believe they're giving us a free lunch. Things will get better faster if goverment stops meddling and keeps within its budget. Americans have to choose between deluding themselves with a free lunch and living without the Federal Reserve system and the fiat dollar, neither of which will last beyond the collapse they've been destined to bring about.
— hugues da mousse, chapel hill
Recommend Recommended by 4 Readers
16.
September 30, 2008 6:57 am
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Now, imagine a similar crisis next year (not hard to imagine), at a point when McCain is disabled (or gone) and Palin is president.Talk about faltering leadership?If that prospect doesn't disturb you, go ahead, vote for McCain/Palin.
— RWeber, Geneva
Recommend Recommended by 7 Readers
17.
September 30, 2008 6:57 am
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1) In a credit squeeze, it would be politically convenient to point out that the Fed's discount window is available as a lender of last resort. This calamity is not due to the lack of money at the banks, it is due to a chaotic financial miasma that has arisen due to an archaic accounting system. Banks can not close the books for the fiscal year since they do not know what the valuation of their MBS and derivatives are.2) It is important to increase the limits of FDIC coverage for deposit accounts to reflect the current reality. Most people do not have deposits over the limit, but those who do would be encouraged to move their money from "papers" with no legs to real monetary deposits, at whatever interest rate. If the banks have deposits on their books, they can presumably resume their normal lending.3) Reducing the reserve requirement for banks may provide an immediate boost to the credit market. In theory, this may pose a danger, since this measure is meant to provide solvency to counter a "run" on the banks, but is it really necessary, given the FDIC backup, and the new flexibility in bank mergers? As a measure of last resort, we could limit cash withdrawals to $100.- a day per account, both at the ATM's and at the teller windows.4) We can flat line both the real and the virtual mortgages at their origination date, by rewinding the computer tapes as it were and rebuilding the balance sheets based on an accounting concordat that is legally binding. Banks can close out with a valid result, because both the MBS underlying nominals and the real mortgages are symmetrical. See the article at vantari.com/economic. Insurance could be issued to cover mortgage payments at this valuation level until the MBS expires, because the actuarial formula can be computed using the fixed property valuation that has been agreed to, by law.The "balloon" resulting from a drop in assessed valuation is a homeowner liability that is due when he sells the property, not before, giving us time to work them off when valuations once again increase, or to roll them over as legally registered liens, for the new owners to dispose of. This speculative "balloon" becomes a deferred payment that can be passed along to the MBS trunches for each mortgage that is in trouble since the total indebtedness does change at that level. The assessed valuation of the underlying real estate in the MBS trunches and of the real estate mortgagees themselves would remain as it was at loan origination, for those loans which were underwritten during the period of speculation.Dean H Steelehttp://www.vantari.com/
— Dean Vantari, Atlanta, GA
Recommend Recommended by 0 Readers
18.
September 30, 2008 6:57 am
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All of these things including the mother of all bailouts seem like colorful kiddie bandaids put on some mangled body hit by a roadside bomb.It seems that the US economy has to rebuild itself from the ground up. That's only going to happen with genuine leadership and a comprehensive, intelligent and fully modern master plan for our economic, cultural and political future.
— Don, Madrid
Recommend Recommended by 8 Readers
19.
September 30, 2008 6:57 am
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So starts the New Great Depression. The Republicans didn’t learn from the 1920s and all of us, apparently, are destined to repeat that mistake. We’ve had trickle down, deregulation, tax breaks for the very wealthy, endless war and now the bill is due. There are plenty of names to name, but what it amounts to is the ghost of Herbert Hoover. Let’s not forget all of those little people preaching from rightwing think tanks and lobbying on K Street. Oh, yeah! The geniuses on Wall Street, too. Oh, yeah, again! The voters who go to the polls wearing their designer blinders.So thanks a lot, fellows. See you in the soup line. Except that, because you’ve had your hands in the till for the past twenty something years, we won’t.
— Spence, Bellingham, WA
Recommend Recommended by 4 Readers
20.
September 30, 2008 6:57 am
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Europe is bailing out it's banks.Why is the congress not in usa ?Democrats control congress.They must be responsible.
— P.A.Pointon, USA
Recommend Recommended by 0 Readers
21.
September 30, 2008 6:57 am
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The vote failed because it has been presented to the people as a "bailout of Wall Street" The Man on the Street" who have been calling their representatives does not understand that this affects him as well as us all. Needs a better PR person that can tell it like it is! Not George Bush--he's not trusted!
— Anna L, Pinehurst, NC
Recommend Recommended by 5 Readers
22.
September 30, 2008 6:57 am
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Treasury secretary Henry Paulson and Federal Reserve chief Ben Bernanke, having led us into this mess, should be fired immediately -- and should in no case be trusted to solve the enormous mess they allowed to happen on their watch.
— polymath, British Columbia
Recommend Recommended by 3 Readers
23.
September 30, 2008 6:57 am
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Putting this whole battle in terms of “Wall Street versus Main Street” ignores the fact that “Wall Street IS Main Street”. I hope everyone who was concerned about having their taxes raised $2400 a year realizes they probably lost that much from their 401K in one day with yesterday’s drop on the Dow. And to hear Fox News and other voices of the right blaming Democrats for not rallying every one of their House members to support what is essentially a Bush plan is particularly galling. The populist voices on both the right and the left seem so intent on sticking it to the Wall Street whiz kids that they’re willing to sacrifice their families’ economic security to do it. And I envy executives’ compensation packages as much as the next person, but that money is a small drop in the bucket compared to the hundreds of billions the recovery package includes. The bottom-line lesson I hope everyone learns from this is that 25+ years of Republican opposition to regulation, oversight and government intervention has come home to roost in the form of this crisis. I’d like as much as anyone to rub their noses in their mess, but not at the expense of my family, my job and any hopes I have for living off of my diminishing retirement savings.Fiftysomethingman.blogspot.com
— Davis Whiteman, SC
Recommend Recommended by 12 Readers
24.
September 30, 2008 6:57 am
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Great! (sarcasm) So now the Treasury is printing more money? You know what this means, don't you? They are out of "fixes" for this financial meltdown, and are using the only weapon left in their arsenal. This action is only going to lead to more world-wide inflation of prices. It isn't going to change the fact that nobody knows the worth of their paper assets anymore, and bankers aren't loaning money to other bankers. Simply putting more money into circulation isn't going to help much with these issues, if at all.Everybody needs to take a few deep breaths, have a few stiff drinks and ride this thing out. Things will be rough for awhile. But it is going to take a minimum of a year to know where the financial dead bodies are buried, then to figure out what the remaining paper assets are worth, if they are worth anything at all.So, good: we get back to tangible basics: houses, buildings, infrastructure, machinery, gold, metals, commmodities, etc. We have needed to do this for the past 10 years, or more. Now is the time to take stock in the things we can see, eat and build capacity with.Stop with the phony, short-term, hysterical financial bail-out "fixes", which are only going to put the U.S. taxpayer on the hook for something that is going to happen anyway: a world-wide recession/correction. Perhaps a good recession will force a return to instituting intelligent financial regulations, and to stopping shoddy, predatory lending practices. One can only hope.BUT NO MORE BAIL-OUTS OF FINANCIAL CORPORATIONS BY U.S. TAXPAYERS! STOP WITH THIS GARBAGE NOW!
— Rob L, N Myrtle Beach, SC
Recommend Recommended by 7 Readers
25.
September 30, 2008 6:57 am
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Paulson and others are running about shouting "The sky is falling, the sky is falling..." without explaining clearly what that means. What, exactly, are the consequences of doing nothing? They say that the $700bn bailout will save the day (year?). How, exactly, will it do that? No mumbo jumbo, please! Just the facts and the possible scenarios!
— Stephen White, San Clemente, CA
Recommend Recommended by 7 Readers
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